Internal Environment Analysis
Value chain
Primary activities
Inbound Logistics
Ford utilizes the plant-centric approach that allows the suppliers to make multiple deliveries of the same parts to different plants. The storage involves input control and warehousing of all materials or different parts.
Operations
The company transforms the raw materials into finished goods while creating the most direct value in their manufacturing process. The manufacturing process is environmental conscious because it involves environmental management, sustainable mobility, efficient energy and oil consumption, and health and safety.
Outbound logistics
The company has adopted a build- to order fulfillment strategy to reduce the cost pressure from the rising stocks. The company also utilizes the third party logistics to supply their manufactured vehicles in different parts of the world. Ford is also using the customer relationship management to add value to their products.
Marketing and sales
The marketing and sales strategy of the company involves utilizing the social media network and online marketing strategy to reach the global customers. The company also uses print ads, reality TV series and TV spots, celebrity advertising such as Kelly Clarkson.
Services
The company has achieved 85 percent reduction in customer back order line. In addition, the company has utilized SAS platform to enhance customer relationship management. The company also offers repair services to enhance and maintain their automobiles.
Secondary Activities
Procurement
Procurement contributes 25 percent of the value chain, and this requires the company to pay more attention in this area. In this case, the company is reducing cost in this area by working with suppliers to reduce waste.
Technological development
The company has invested in research and development area in order to boost their productivity and produce efficient and high-quality vehicles. For instance, the company has adopted “EcoBoost” technology that is anticipated to increase 20 percent fuel efficiency and lower carbon emission by 15 percent.
Human resources management
Ford has an effective Human Resource Management Team that enhances the relationship between the companies the employees in various countries. The team fundamental goal is to obtain, train and retain high skilled and professional workers in the company.
Firm infrastructure
The company has a flexible global strategic model that enables the management to adjust their business strategies in line with the various factors such as transportation and infrastructure. In addition, the company is investing in heavy infrastructure in the developing countries.
Barney’s VRIO model
External environment analysis
PEST Analysis
Political Factor
Ford is a multinational company that enjoys the political alliances between different countries. Countries are forming International Corporations to ensure that the political environment is conducive to business. The ability of the company to penetrate growing global market has created opportunity for the Ford Motor Company. There are also favorable laws and regulations in the automobile industry.
Economic factors
Over the last few months, the global prices for oil have significantly reduced hence creating a potential increase in demand for the automobile industry. Increasing the growth of the global markets is accompanied by the currency alteration, which has affected the productivity and profitability of the Ford motors.
Social factors
Ford offers manageable and average price automobile that can be afforded medium class individuals. The customer mental outlook for the ford motors is positive because people usually associate the brand with the United States top officials.
Technological factors
SWOT Analysis
Strengths
The Ford Motor Company enjoys strong brand reputations and a strong customer base from various countries in the world. The company had continuously and constantly improving the research and development department to improve their products and hence met the global automotive standards. The company has also employed high-skilled and efficient employees in their different plants to enhance the customer value.
Weaknesses
The company has more liabilities than assets. In addition, some customers have bad perception and experience with Ford brands. The fluctuating foreign exchange has lessened the company to produce standardized prices of their products in different markets in the world. Ford has a low customer base in developing countries because customers perceive that their cars are expensive.
Opportunities
The company can develop hybrid vehicles and fuel-efficient cars in order to achieve the global sustainability and environmental-friendly goal. The company also can expand its consumer base by penetrating into new global markets such as China, India, and Africa market. The emergence of electronic payment has enabled the company to create an effective payment link with their suppliers and customers in various places. The company also have an opportunity for acquisitions and merger with other companies.
Threats
The automotive industry is anticipating challenge brought be increasing substitute products such as air and rail transport. In addition, the increasing cost of raw materials such as steel is anticipated to increase the costs of manufacturing. The improved development of competitors such as Toyota, BMW, Honda, and General Motors has enhanced competition in the automotive industry.
Porter’s five forces analysis
Purchasing Power of Buyers
In the automobile industry, there is high bargaining power for the consumers because there are different car models. The customers in the automobile industry are price sensitive, and they are looking for reliable, fuel efficient and durable cars from a number of alternatives.
Bargaining Power of Suppliers
The suppliers’ bargaining power is considerably low. For instance, the Ford’s suppliers are controlled by the company, which has made commitments and arrangement with the suppliers to enhance operations and reduce cost. The company has many suppliers who rely heavily on the company to buy their products. Consequently, they have no great influence on the price of the commodities.
Threat of new entrant
The threat of a new competitor in the automotive industry is medium. In the automotive industry, the new entrants are challenged by the brand loyalty of the consumers for the existing companies. However, some companies, such Toyota, Honda Motors were able to penetrate into the U.S. Automotive industry easily.
Threat of substitutes
Ford Motors Co. faces the low threat of substitution. Although there are many substitutes in the automobile industry such as subways, buses, trains, and bicycles, the demand for cars is very high. With the increasing prices of fuel in the global market, people are shifting from public transportation to the private and hence increasing the demand for cars.
Competitive rivalry
The competitive rivalry in the United States automobile industry is very high. Therefore, Ford Motors is facing the stiff competition for various companies that have high brand recognition in not only the local market but also global. The exit cost and switching cost that is involved in the automobile industry is very high making the rivalry very high.
Strategy formulation
Porter’s Generic Strategy
Cost leadership
Currently, Ford Company has developed an international corporate strategy labeled “One Ford” that makes the company more efficient. The strategy will also help the company to enhance cost effectiveness through the cost-reducing economies of scales. Marketing economies of scale also benefit the company by having a broad and simultaneous global marketing strategy. The company also have an effective logistic network that utilizes build-to-order fulfillment strategy to reduce the cost pressure in warehousing of both the inputs and outputs.
Differentiation
Over the years, the company has failed to differentiate its products since it has been selling homogeneous products in different markets. Although differentiation is an effective and competitive strategy, Ford embraces on the standardized Ford Focus that offer the targeted global economy. However, the “One Ford” strategy should integrate differentiation to ensure that their products sever the different markets’ preferences.
Focus
The company has concentrated on the cost-leadership strategy through the “One Ford” initiatives. The company has focused on reducing their cost in order to reflect the impact on their prices and hence enhance their ability to attract the prospective customers in various market segments. However, without differentiation strategy, the company is constrained by the inability to change quickly in response to the ever-changing business environment.
The Ansoff’s Matrix analysis
Market penetration
With the wide range of the products, Ford Company aims to penetrate the existing current market with the existing products. In order to achieve this, the company is utilizing “Global Marketing” and “One Ford” strategies to offer communication and awareness of the products. To penetrate into other global markets, the company integrate quality and innovations with cost efficiency.
Product development
The company has formulated strategies to develop new products and make them appropriate in the existing market. The company is inventing new fuel efficiency car and utilize the “One Ford” marketing strategies to reach the potential and existing customers. The company has achieved brand loyalty by integrating the supply chain, employees, and global agencies.
Market development
The strategy involves acquiring new markets by selling the existing products. The primary objective of the Ford Company is to reduce the cost while maintaining high quality in order to develop competitive advantages in markets such as India, China, and African Countries.
Diversification
The company is continuously developing new products through the “One Ford” strategy. The new products include fuel-efficient small cars such as plug-in hybrid, smart cars, and battery powered vehicles.
Directional corporate strategies
Growth strategy
The company’s growth strategy is based on the One Ford plan that have been guiding the company since it was established in 2007. In order to achieve growth, Ford Company focuses on building significant and competitive products and high business. The chief goal focuses on extending the ford’s market to the new markets such as India and China markets. Major steps are taken by the company to enhance this goal.
Concentration: the company delivers highly fuel efficient, customer and environment-friendly, and innovative vehicle to concentrate on quality rather than quantity.
Vertical integration: The Ford Company has a credit company that offers loan to support the parent company. The company also offers leases and credit to their esteemed customers and offer business loans to the dealers offering Ford products. Therefore, this has enabled the company to achieve dual objectives of being a distributor, as well as the supplier hence attaining forward and backward vertical integration.
Horizontal integration: Chrysler and General Motors are among the oldest competitors of Ford Company. Therefore, the companies could not collaborate and seek other methods to solve the crisis.
Diversification: The Company is continuously developing new products through the “One Ford” strategy. The new products include fuel-efficient small cars such as plug-in hybrid, smart cars, and battery powered vehicles.
Stability Strategy
The stability strategy of the Ford Company focuses on maintaining and improving on operational changes. For instance, the company has recently launched the Next Generation Stability Control Technology that aims to predict the potential spinouts hence maintain the company’s status quo. The technology ensures that the cars are stable and hence able to maintain the profitability of the company.
Retrenchment strategy
The strategy is aimed at cutting the costs through reducing the company workforce. However, the company has not undertaken the retrenchment strategy for the past few years. Instead, the company reduces cost through other strategies such as the close relationship with suppliers to reduce waste.
Bibliography
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Kirtane, S., Shukla, R., Wang, L., & Zhan, J. (n.d.). Is The Way ForwardReally Ford’s Way Forward? Retrieved from http://economics-files.pomona.edu/jlikens/seniorseminars/oasis/reports/f.pdf
Supporting One Ford - Sustainability Report 2013/14 - Ford Motor Company. 2014. Retrieved from http://corporate.ford.com/microsites/sustainability-report-2013-14/people-workplace-employees-oneford.html
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