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The Small Car Industry Five Forces Model In April 1994, General Motor's senior managers invested $900 million in the Saturn project to launch a new brand of cars in the U.S. small car market segment. A Five Forces Analysis provides insight into the industry at the time of investment (Appendix 1). Suppliers' Power: Because Saturn made the vertical integration of suppliers, inconvenient location of the complex did not adversely affect Saturn. Buyer' Power: Buyers are price sensitive and tend to shift to luxury segments. Though retailers are required to exclusively sell Saturn cars, they experienced high customer satisfaction. Substitutes: Cars in other segments, especially mid-size cars, are substitutes for small cars. Public transportation such as bus, taxi, and train also could be classified as a substitute. Potential Entrants: Due to the huge capital investments for car manufacturing, entering the market is difficult for new manufacturers. Existing vehicle manufacturers could easily enter the...

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