Part one solution
Ford Motor Company is an American multinational company that manufactures and sells automobiles, and recently it indulged in the production of motorcycle engines.
A general environment refers to the elements existing within the society which impacts organizations and firms that operate within a given industrial segment. These elements cannot be directly curbed by the management of a company. Global segments, technological, sociocultural, legal, political, and demographic segments make up the general environment. The demographic part represents the population characteristics of a given geographical area, province, as well as a nation in the world. Also, the segment is inclusive of some other factors such as education, income, and age among others. The data collected in the demographic segment is very crucial as it helps in comprehending the patterns and trends in customer actions. Economic part defines the direction and the nature of the economy that a firm operates. Some of the important economic factors that affect the performance of a company include budget surpluses or deficits, trade surpluses or deficits, investment rates, business savings, interest rates and inflation among others. The legal and political concepts intermarry and therefore are considered as one. They refer to ways which organizations and firms influence government actions as well as how the government legal steps impact their activities. Socio-cultural part defines the cultural values and social attitudes of various communities across the globe (Kokemuller, 2016). The institutions that are involved in the creation of newfound knowledge that is translated into materials, processes, products, or outputs fall under technological segment. For the company under study, the global and the economic environments pose the highest risk.
The economic environment affects the company in the following ways. Firstly, the company purchases materials used in production together with other parts from various suppliers. Some of the suppliers are based outside the United States. Thus, an increase in prices charged for the supplied products will have an impact on production costs. The rates of interest in the United States affect the company, but hedging policies are being implemented to reduce extra expenses incurred due to increasing rates. In case there is a default by any of the counterparties to the contracts made, the company will be adversely affected. The global environment also affects Ford Motor Company significantly. As a result of globalization, various nations have embarked on transforming their policies that regulate fuel economy, safety, noise, and emission levels which have affected the operations of the company.
Industrial impacts
Inflation that has been persistent in the economy has caused an upsurge of automobile prices. The core external element is the dependency on oil that affects the elasticity of prices. On the other hand, global environment also affects the industry. The changing policies to regulate emissions, noise, and to ensure vehicles have increased safety levels in case of an accident have significantly impacted the automobile industry.
Part two solution
Michael Porter suggests that five forces of competition can be used to carry out competitive analysis. The five factors are; threats from substitutes, rivalry among the firms existing in the market, suppliers bargaining power, customers bargaining power, and threats from new companies entering the market. Clients and suppliers bargaining power are the most crucial for the company. The reason why Ford Motor Company has been able to survive in the automobile industry is the good relationship it has made with its suppliers and customers. The company operates globally, and its product consumers want reasonably priced and top quality products. Various competitors need a supply of similar products as those required by Ford Motor Company. The competitors have engaged in the production of similar products that are cheaply priced which has led to shrinkage of the market share of Ford. Suppliers bargaining power also has an impact on the company’s operations. External as well as internal suppliers are equally important to the company. The company has to get supplies used in production in a cost-effective and efficient manner. Ford Motor Company can control some of the factors such as competing with other manufacturers in acquiring supplies. In case a key supplier is lost, the capacity of production might be affected leading to increases in production costs (Hubbard & O'Brien, 2006).
Part three solution
The company’s name is popular across the world due to the high quality of products it manufactures. The above-pinpointed forces can be dealt with using in the following ways:
Under customers bargaining power, the company can try to reduce the levels via production of fuel efficient and high-quality vehicles at competitive prices. Ford can embark on fitting cars with engines that consume less fuel and fitted with additional safety features. There are some clienteles in the market who also go for the appearance of the vehicles. The company has to design vehicles that have good and attractive appearance, fitted with additional safety features and low fuel consumption engines to beat competition posed by other industries operating in the automobile industry. The suppliers bargaining power has also to be addressed. Ford Motor Company relies on many suppliers for components together with supply of raw materials for production. The firm is working with its suppliers to come up with ways that can lead to a reduction of costs as well as other high valued activities of engineering. This will see the company acquire production materials at lesser costs. Currently, the company is undertaking the perfections through supplier’s club. All the suppliers for the company are club members. Meetings are often organized where suggestions from suppliers are encouraged for ways that the supply process can be improved together with reducing costs.
Part four solution
Increased competition is one of the factors affecting the company. This has been due to new developments made by firms already in the market through restructuring as well as new entrants. Thus, the company faces competition from both small and big automobile manufacturing companies. Secondly, reducing prices of fuel affect the company. The company focusses on hydrogen, hybrid and flexible fuel engines vehicles. These type of vehicles are not attractive to customers if prices of fuel are low. Thirdly, increasing costs for purchasing metal used in vehicle and engine production affects the company. Lastly, Ford Motor Company has manufacturing facilities in other countries such as Vietnam, China, Taiwan, and India. Prevalence of natural disasters in these countries hampers the production volume of the company. The opportunities for the company will be rising prices of fuel, expansion through acquisitions, and promising outlook for the worldwide motorcycle industry. The engines fitted to vehicles made by the company are fuel efficient and will pay off as a result of rising prices of fuel. The motorcycle industry is growing significantly with a forecasted of 6% by the end of this year. The company having ventured in the manufacture of motorcycle engines, there is an opportunity to expand and grow its annual sales. Lastly, the company can reap a lot from strategic acquisitions and partnerships of smaller competitors (Krugman & Wells, 2009).
Part five solution
Strengths of the company
Distinctive products
Durable brand
Leadership when it comes to market share
Improved innovations
Increased research and development of new efficient and effective products
Clientele satisfaction
Weakness of the company
Repute being underpowered
Weak position in the European Market
Part six solution
The core competencies of the company are as a result of a combination of technical capacities and skilled knowledge allowing the company to continue its operation in this highly competitive industry. The principal competencies for the company are:
Ford believes in a top to down approach strategy.
Diversification.
Designing, developing and building with efficient and more effective engines.
Use of computerized systems to monitor excellence product performance.
Part seven solution
Value chain analysis
Almost 73% of the production costs are due to material components which have made the company try to have a closer integration with suppliers to see if the expenses can be reduced. Therefore, it is crucial narrow down logistical costs when procuring factors of production. Inventory lessening has been applied to try cut down on requirements for working capital. To enhance its operations, the company has turned to use of Just in Time system. The company uses an elevated level automation and pursues lean manufacturing, reduced cycles of operating and cash to ensure low inventory production and high efficiency while improving conditions of working capital. Through proper use of outbound logistics, the company satisfies the demand for its products through exporting to its customers globally (Makos, 2015). The effort of the company is to make sure that clients are provided with fewer periods of waiting or catering for the demand of markets in different regions based on predictions made and market trends. The company is among the best firms that offer exemplary after sales customer service. The company has a toll-free number that clients can reach various departments in the company. Also, inquiries can be made online through the company’s website chat section. Warranties for products are also provided and in the case of a failure; a replacement is made for the same.
References
Hubbard, R. & O'Brien, A. (2006). Macroeconomics. Upper Saddle River, N.J.: Pearson Prentice Hall.
Kokemuller, N. (2016). What Are Internal & External Environmental Factors That Affect Business? Smallbusiness.chron.com. Retrieved 9 May 2016, from http://smallbusiness.chron.com/internal-external-environmental-factors-affect-business-69474.html
Krugman, P. & Wells, R. (2009). Macroeconomics. New York, NY: Worth Publishers.
Makos, J. (2015). Internal Factors that May Affect the Business Organization. PESTLE Analysis. Retrieved 9 May 2016, from http://pestleanalysis.com/internal-factors-affect-business-organization/
