Analysis of the Engineering Industry

Analysis of the engineer IndustryExecutive summeryIn the naming below, the plan persistence is critically analyse by studying its characteristics, identifying and analyzing its key areas and its current position and how it is affected by micro and macro environmental factors. All these abstract is d adept by development analytical tools like Porters Five Forces framework, PESTEL analysis, Industry Life-Cycle analysis, drivers of change within the industriousness, etc.The mechanical manufacture after carefully analyzed, important hereafter long scenarios subscribe been made demonstrating on how the sedulousness will act and perform in innovative long term run based on the present analysis and trends in that particular attention. in any case, one most likely situation has been identified, with relevant reasons, which the industry will most likely to face in the future.The entire assignment is based on the applied science industry in Indian markets being considered as the support to conduct appropriate researches.Introduction to the industryThe industry is one of the biggest and most refined in India and similarly in the world which provides the latest engine room not merely to the fast growing multinational companies but also to the global market. Some of the worlds biggest design companies largely depend on the automotive industry of India. It is a diverse industry with a number of segments, and can be broadly categorized into two segments as follows(1) Heavy technology(2) Light applied scienceThe engineering sector is relatively less fragmented at the top, as the competencies required are high, while it is highly fragmented at the set about end (e.g. unbranded transformers for the retail segment) and is dominated by smaller players.The engineering industry in India manufactures a wide range of carrefours, with effectual engineering goods accounting for bulk of the growthion. Most of the leading players are engaged in the production of he avy engineering goods and mainly shits high-value products using high-end technology. Requirement of high level of capital investment poses as a major entry barrier. Consequently, the small and unorganised firms yield a small market presence.The light engineering goods segment, on the different hand, uses medium to low-end technology. Entry barrier is low on account of the comparatively lower requirement of capital and technology. This segment is characterized by the dominance of small and unorganized players which manufacture low-value added products.Classification of the Engineering Sector in Indiahttp//www.dnb.co.in/Engineering/images/Classification.gifSource http//www.dnb.co.in/Engineering/overview.aspPortors five forces frameworkFollowing are the external environment of engineering industry by analyzing the Porters 5 forceshttp//2.bp.blogspot.com/_H2CekjGxczE/S05y_FXRRhI/AAAAAAAAAHM/RZqdnnXkpHM/s400/porter.jpgSourcehttp//2.bp.blogspot.com/_H2CekjGxczE/S05y_FXRRhI/AAAAAAAAAHM /RZqdnnXkpHM/s400/porter.jpgThe five forces are as follows1 The threat of new freshmansThe threat of new entrants for engineering industry in India it is a very low threat Factors to examine for this threat of new entrant in India is include all barriers to entry into this market such as upfront capital requirements, brand equity (a new firm may present none), legislation and government policies, (safety) ability to distribute the product .2 The bargaining power of buyers/customersCustomers consider both purpose and price the engineering companies are attempting to produce engineering products that compete in various price segments. In India bargaining power is lower which is creating a more favorable situation for the engineering industry but not the buyers. The quantity a buyer purchases is ordinarily a good factor in determining this force, even in the engineeringwhen buyers only usually purchase one at a time, they still possess considerable power (Car freaks, 2008-10). Howe ver, this may be different in other markets.3. The threat of exchangeIn Singapore the threat of substitute is high because of the numerous other forms of tran genetic mutationation substitutes are available, but none of them offer the utility, convenience, independence, and value afforded by bid cars. Substitutes such as rental cars, Sport bike industry, Rental Sport car clubs like Luxe athletics club in Singapore Millionaire asia singapore, 2010). (For details please refer Appendix no 4)4 The bargaining power of supplierThe bargaining power of supplier is low in Singapore because of the approachability of substitutes and the amount of competition in the sport car industry. Suppliers dont have a great deal of influence in the terms of supplying the sport cars parts. The sport car industry which refers to all the suppliers for the parts, such as tires, components, electronics, and even the assembly line workers. Some suppliers are small firms who rely on the carmakers, and may o nly have one carmaker as a client. So this force can be tricky to evaluate in the sport car industry in Singapore market (For details please refer to appendix no 5).5. The competitive rivalry within an industryIn Singapore sport car industry competition between existing automobile companies is high because sport car carmakers are engaged in fierce competition. Prices, ad campaigns, and product developments keep them on the edge of innovation and profitability. Margins are low and pressure between rivals is high. This may cause the sport industry earning lower profits when the cost of the competition is high (Car freaks, 2008-10).PESTEL ANALYSISSourcehttp//www.business.gov.sg/NR/rdonlyres/06030A45-6CCF-45BC-8F2C-F2833D5D44B4/6514/entrepreneurguide.pdfWell use the PESTEL to analyze the macro-environmental changes and influences on the engineering industryPoliticalMajority of the companies like, etc. have their manufacturing plants in India because of cheap labour and low cost of prod uction. But these countries are usually politically unstable and can create hindrance for the companies.EconomicEconomic retardent such as the recent recession can have negative impact on production and gross revenue of the engineering companies. Also other economic factors like the economic policies of European Union member countries make it tougher for the industry participants to penetrate the engineering market.Socio-culturalThe social and cultural restraints and obligations immediately affect the buying image of people, the brand loyalty, female share of the market, etc. also the companies now-a-days thrive to keep up with corporate social responsibility to maintain their Public relegation status.technicalThe technology keeps changing and varying from place to place. Techonology plays a vital part in the engineering industry. The engineering manufacturing companies have to keep abreast with the changing technology so as not to give a competitive edge to competitors by speed ing up their change of products and designing ability.EnvironmentalMany industry participants have become aware of environmental hazards and are putting in efforts to do their bit for environment and the society with activities likeLegalCompanies in the engineering industry in India face many legal matters usually pertaining to labour wages, working conditions, etc. or that of contract manufacturing and copying of products or ones related to wiliness agreement.Structural drivers of change for Engineering industryI have identified some of the drivers of changes that have impact on the engineering industry.The following are the morphologic drivers which bring about changes in the industryTechnologyTechnology is the most vital driver of change in engineering industry. Introduction of internet has sky-rocketed the sales for the companies. Also it helps the RD departments to come out with new engineering products quickly and efficiently.Industry driverlamborghini_headquarters_italySour cehttp//www.egmcartech.com/wpcontent/uploads/2008/05/lamborghini_headquarters_italy.jpgRelated and supporting industries are extremely important because engineering product manufacturers live and die by creative and innovative design engineering (Automotive industry, 2010). India offers support to other industries such as, steel, rubber, petroleum, oil gas, transportation industries. Indias infrastructural facilities helps to setup a engineering industry in form of power supply, machinery, capital, raw materials and labour which will raise foreign direct investments have led to the rapid gain in terms of engineering goods production and exports (European foundation, 2004).Mergers and Take-overs-t=1usg=__vO8BPfXSsu76pCVOchvBejU2hUg=Source http//www.vr-fullerton.com/images/223069.jpgOne of the most significant drivers of developing in the engineering industry is the trend of mergers and acquisitions. such(prenominal) buyouts and mergers enable manufactures to build up their techno logy and service scale up to the mark, the two factors essential to gain competitive edge. Outsourcing of design and engineering functions, leading to growth in companies offers high value-added Services.Life cycle sample for the industryCUsersVishikadDesktoplife cycle.bmpSource Adopted from (Johnson et al., 2008)The Engineering industry as per the life cycle model sh ingest above is currently at the Shakeout stage for the following reasonsThe buyers are becoming more selective of their purchases due to brand loyalty and performance according to their own preferences taste.Also as far as the competitive conditions are concerned, the major engineering products manufactures have started innovations and sales promotion activities to attract more and more buyers towards companys product range.The engineering companies also exhausting to shakeout their industry rivals by acquisition or merger processes with other engineering manufactures. This way they can have their monopoly over the engineering markets as well as minimising the competition within the engineering sector.Scenarios for Long term future of the industryThe following scenarios based on the research on Indias engineering industry that indicates the possible long term future of the industry(1) Scenario Increase in sales, product diversification advanced RDThe attitude of selling the products into engineering market is changing day by day. Engineering companies trying to connect with the customer directly. This will done by opening up showroom or signing contracts with large MNCS like Also the engineering product makers will focus on advanced RD whereby, they not only focus onperticular group of buyers. Also the companies are diversifying their products more too international engineering product manufactures.This scenario will benefit the industry in the following mannerIt will help engineering companies to connect with their buyers and thus understand their likes, dislikes and expectations, preferenc es about companies offering.The companies can get direct feedback on their products so that they can improve on overall performance of the company..Most credibly ScenarioThe most likely scenario applicable in the future is the 3rd scenario. Following are the reasons supporting my conclusionThe companies can alter their engineering products, design as per the customer reaction to their previous products. This can be done by feedbacks and data collected which wont be lost or manipulated as itll directly go to the company.The companies are already starting to do intense and advanced RD to introduce new technological aspects The customers are always keen on trying out new exciting products and the failure of such products is very rare.Also the Engineering industry is growing at a rapid pace. All other industries are now trying to sell their products at retail prices which is the same the Engineering industry is going to do in the future.ConclusionIn India the future of engineering indu stry seems encouraging. In terms of the expected surge in global demand and rise in foreign investments. Several trends such as developed markets, globalization, technology advances, regulation and environmental consideration, and market fragmentation and product diversification will result in the rapid growth of this Engineering industry in India.