Business
Question one
The South American auto market involves three major countries that deal in the motor production;Argentina, Venezuela, and Brazil. The market is characterized by fierce competition and strict government restrictions that play a role in dictation of market aspects such as entry and importation. Weak currencies and introduction of trade limitations in some of the countries have also affected the auto market outlook since it has affected profitability and manufacturing. For instance, the Brazilian currency has weakened and has affected investment and sale in the country.
The region is a steadily growing motor market with Ford standing as the top brand despite the fierce competition from the Chinese and South Korean brands. The region’s top suppliers of motor vehicles include General Motors, Fiat SpA, and Volkswagen AG. By the year 2012, there were new plants in the region that made more than 50 percent of the South American motor sales. The new plants could produce a surplus of 20 percent of the vehicles that the market can handle, which will eventually imply that the auto sellers will have to reduce their prices in order to capture the market and sustain their markets. Some of the automakers enter in the South American market and inculcate the strategy of aggressive pricing for their vehicles and establishment of local production.
The argentine market has nine players who produced an estimation of 7.1 million vehicles in the year 2010. Approximately 50 percent of the vehicles in 2010 were over eight years and close to a third of the rest ran on compressed natural gas. Since the year 2003, the argentine market has experienced increased sale in new vehicles. The prices of argentine automobiles are slightly higher than the prices in other countries in the region.
Challenges facing ford
FORD faces numerous challenges in the region including imposition of trade restrictions, increasing competition and the weakening local currency.
Competition is another challenge and threat for the firm. For the past several years, there have been increased influx of Chinese and South Korean players in the South American market and have gained a considerable share; hence, posing a challenge for Ford. Additionally, there are new plants built in the region and have taken more than 50 percent of the market.
The third challenge that Ford has in the region is the increasingly weakening currency and inflation in the region, which challenges the profit margins. The weakening currencies against the United States dollar will lead to losses for the firm.
Question two
Argentina is one of the most developed automobile markets in the region, in which the industry dates back in 1950s with nine firms. The extensive market has nine firms that share the market, which is difficult for a foreign player to enter due to the harsh restrictions. The country has an automotive cooperation agreement with the Brazilian market, which permits integration of a bi-national manufacturing of vehicles and places limitations on importation of trucks and automobiles from third world parties. The government is implementing such strategies in order to prevent entry of new players into the market and promote the consumption of homemade automobiles.
Additionally, the argentine vehicles are more expensive than from other countries due to the high cost of insurance. Other factors that make the argentine market expensive and restrictive include factors such as the market does not allow leasing of the automobiles coupled with the high accident rates and theft rates.
Restrictions have resulted to high prices of the vehicles; hence, the demand for the vehicles within the country is low in comparison to the demand out of the country. Most of the Argentines prefer manual transmissible cars; hence, accounting for more than 85 percent of the car sales in the country.
Question three
In order to keep operating in Argentina, auto industries are compelled to come to terms with government restrictions and agreements with the government. For instance, the government introduced the “dollar to dollar” scheme, which compels the firms to balance between their imports and exports. The balance will eventually lead to a surplus in exports by the firms due to increment of exports in cars and parts.
The restrictions help the country to sustain its market and increase its exportation to international markets. It also restricts entry to the local market by other players; hence, lowering competition and eliminating threats. The local automobile firms in the country have maximized of entry prohibitions to increase their productionand have increased domestic sales and exportation to other countries.
The current global environment requires trade restrictions in order to protect the local players and to boost production of homemade goods. Therefore, the restrictions are appropriate in the current global environment.
Question four
Many firms in different industries have used different marketing strategies in the past; for instance, motor industries such as CMC have used movies to advertise their products. Ford resorted to the use of theatre in advertising its truck in order to capture the Argentine market. The firm used its advertisement agency, JWT, to come up with plays depicting the traditional Argentine superstitions in the launch of the firm’s Ford ranger pickup truck. The fact that the pickup did not bear a difference from the previous products inspired the fact that it could be putto the attention of the consumers through telling stories, with the pickup in the background.
The disadvantage of using such a means of advertisement is that it has a limited audience, yet it faces stiff competition from other firms that use a worldwide media in advertisement. Additionally, the advertisement requires a mature audience if the pickup has to be viewed as a key feature. The audience has to depict the significance of the pickup, yet the plays do not bring out clearly the fact that the aim is to advertise the pickup rather than entertain the audience.
The tactic that the company applied is product placement, and to some extent, one can argue that it is working. The tactic of advertisement is unusual, yet it seems to have captured the market and has become a worthy competitor for the Toyota Hilux pickup. The teaming up with the advertisement firm, JWT, helped the strategy to increase the market share due to the new stories about the truck reflected through theatre. The strategy has worked for the firm since it has earned it brand recognition in the local region and connotations of the cultural aspects.
