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MGMT 510 Strategic Management

Published : 23-Oct,2021  |  Views : 10

Question

Ford Motor Company is a massive organization. There are many directions one can go with this company in this case analysis. There is no single case write-up such as the previous four that could do justice to Ford as a whole.  Therefore, you will need to do your own research on the Ford Motor Company.  I would start at its home website, where investor information can be obtained.  I would then expand to Internet searches, YouTube documentaries, etc. For this paper, you should write it as an external researcher. Do not write as if you are an employee of FORD. 
 
Do not break any of the aforementioned rules regarding plagiarism or collusion.  Doing so will result in an “F” in the course. No exceptions. This case will require students to follow closely to the same method as individual cases, but a much more holistic and rigorous analysis is expected.  The minimum standards for this paper listed below. Please use Times New Roman, 12-point font.
  
One example of a format the paper can follow is below. This contains the bare minimum information required and expected. 

After the introduction of the problem the company is facing, you need to discuss each subsequent section with the problem in mind.  For instance, in the Technology section you can give possible solutions to the problem(s) facing the company through technological advancements or retreats.  Then you should, discuss financial performance, and how your idea will affect financial performance or how finances are sufficient to accommodate your proposal.  Explain what you base it on (maybe benchmarking, or shifting customer demand, etc.). 

Answer

Introduction

Strategic management is an important aspect for each and every organization. It is the process for evaluating current strategies of an organization and finding out the position and efficiency of that organization in perspective industry. In this paper, the report examines an issue, which is faced by Ford Motor Company. After mentioning the issue statement, it includes different strategic aspects regarding the same organization. Ford Motor Company is one of the largest manufacturers of automobiles and largest truck producer in the world. The organization is implementing different methods for mass production and made the vehicles more affordable for middle-class people.

This report examines the strategic direction of Ford Motors by incorporating its vision, mission and marketing strategy. After that, it examines the strengths, weaknesses, opportunities and threats of company. It includes different tools to analyze the strategic position of the company. Furthermore, it includes the summary of financial and operational performance of the organization. At the end, it includes the organizational issues and solutions related to technology and ethics. This report can help in understanding different aspects regarding Ford Motor Company.

Company/Industry Overview 

Automobile industry is a well-established industry that includes companies, which produce automotive vehicles that consist of range from street performance to truck to off road. The industry has various leading players, like; General Motors, Ford Motors, Toyota, Honda, Renault etc. The industry is growing with a considerable growth rate. Now, the industry is dominated by many firms, so it has become more competitive. In automobile industry, Ford Motor Company is a well-known name that covers a significant market share in the same industry. Ford Motor Company is a one of the largest organizations in automobile manufacturing industry and largest manufacturer of trucks. The organization was established by Henry Ford in the year 1903. In 1919, it has become second largest manufacturer of cars all over the world (Ford Motor Company, 2007).

This corporation includes Ford South America, Ford North America, Ford Europe, Ford Asia Pacific, Lincoln Motors etc. It also owns Troller, Brazilian SUV manufacturer and Australian Performance Car. Previously, the organization also manufactured tractors and automotive parts. Ford Motors Company owns 8% stake in Aston Martin of UK and 49% stake in Jiangling of China (Yang, 2014). Currently, Ford has 246,000 employees and 95 manufacturing plants worldwide. It is adopting new and innovative methods of production and implementing effective strategies to enhance its strategic position. The company has different product lines, like; Ford Fiesta, Ford Escape, Ford Focus, Ford Ranger and other products or Ford. The target market of the company is high class people for luxury products and young people and ladies for other products (Rosevear, 2013).

Issue Statement 

Ford Motors Company is facing some issues, which are affecting its strategic position in automobile industry. To deal with these issues, company is making so many improvements in its new cars and trucks over its old models, but company is getting knocked in the quality management survey. The organization has faced the troubles in launching its new products. To some level, it was the mistake of suppliers of Ford more than company itself (Anderson, Narus & Narayandas, 2009). Quality perception of Ford has become a big concern one year ago. Some year ago, the company was ordered by court to recall its 7.9 million cars and trucks because of its faulty ignition module. The location of module on top of the distributor will cause it to fail and overheat, that can cause the vehicles to stop and lose the control of braking and steering. Quality issues of Ford are definitely well-known and it has faced the issues so many times. The people are facing other quality issues, like; problem in MyFord Touch System, user interface, safety issues etc. The issues are already addressed and company has used effective ways to resolve the issue (Martinez, 2017). It has quickly updated the software, so it has become so much better. But it was not so much good, as it should be.

Strategic Direction

Vision, Mission and Strategy 

The vision of Ford Motors is “to become a leader in Automobile industry in terms of being fuel efficient and offering the fueled cars and trucks at an affordable cost with higher quality to customers”. The company is making efforts to be the one that when the people talk and think about Ford, they will think about innovation and quality (Andersen & Andersson, 2017).

The new mission statement of company will be “Ford Motors will become a quality vehicle provider to cover its market share that was lost in global competition. By this mission, the company is expecting to recover its sales, profits, market share, when enhancing its brand image worldwide (Rothaermel, 2015).

Cost Leadership

In order to deal with the issues, Ford is implementing cost leadership, in which the organization enables it to offer the products at lower costs in comparison to its competitors. As an innovative organization, Ford is urging pricing strategies to its vehicles. To improve the quality of services, the organization is incorporating some innovations in its products and providing them on accessible prices (Gabor, 2007). As compared to its major competitors, i.e. Hyundai and Toyota, the pricing strategies of company is competitive with position to new technologies, which it integrates. Thus, the organization is shifting to the virtual link on level of pricing with great style, high quality and interior and fuel economy techniques (West, Ford & Ibrahim, 2015).

Focus Strategy 

Focus strategy is the strategy, in which the organization aims its products and services at market with accuracy, knowledge, capabilities to assist its strategic position in the perspective industry. For dealing with the issue, the company is implementing “One Ford” vision to improve the effective quality and cost saving communication (Galliers & Leidner, 2014). It is making expansion in licensed merchandizing worldwide to improve its brand image.

SWOT Matrix

                           

Figure 1: SWOT Matrix of Ford Motor Company

Source: (Rosevear, 2013)

Summary of Operational Performance 

Financial Overview 

In the automobile industry, the financial performance of Ford Motors is moderate due to German and Japanese vehicle makers. The performance of company is not growing rapidly due to some reasons. In terms of finance, the company is generating billions of revenues each year (Gamble & Thompson, 2014). In the year 2016, the revenue of Ford Motors is US$151.8 billion and net income of company is US$4.596 billion. The company possesses the total assets of US$ 237 billion at the end of 2016.

                                                 

Figure 2: Global Revenues of Ford Motors (2016)

Source: (Parker, 2016)

During last few years, the company has generated higher revenue and net income before tax except the recession period. The profitability of the company has been pointed out many times due to financial parameters. The company is facing some challenges because of government policies, environment, oil prices and international prices (Guajardo, Cohen & Netessine, 2015). Global crisis is also another reason that has left marks on the automobile industry worldwide.

                                                 

Figure 3: America's bestselling Vehicles in Previous year

Source: (McCarthy, 2015)

Currently, the company is operating its business in different countries, like; Canada, United States, China, Mexico, United Kingdom, Brazil, Germany, Australia etc. This financial crisis financially took a major change in automobile industry (Hashmi & Biesebroeck, 2016). Ford Motors faced a loss of $14.7 billion and company has planned a breakeven in the year 2011. By looking at the below diagram, it can be analyzed that company has a better position than General Motors (Payne & Frow, 2014).

                                                                              

Figure 4: Financial Strength of Ford and other competitors

Source: (Li, 2017)

Annual report of Ford for 2016 indicates that the company is attributing its revenues from sales between its services and automotive sectors (Reich et al, 2016). Automotive sector includes the sales of parts, vehicles and accessories. Profitability of company is highest out of all its major competitors in the industry with 819.9% Return on Equity (ROE). Market share of Ford Motors is not better than its leading competitors, i.e. Toyota, Hyundai, Honda etc. Below-diagram indicates the market share of different players in the industry (Heizer, 2016). It can be seen that Hyundai Motors covers the largest market share in automobile industry. In the year 2016, the market share of Ford Motors was 15.3%.

                                                        

Figure 5: Market Share of Automobile Players

Source: (Cain, 2017)

Technology 

At Ford Motor Company, technology is playing a significant role in increasing its sales and revenues. New technologies and convenience features are its best in Ford’s products. Advancement in technology is inevitable for automotive industry to compete with its competitors and innovators by developing new and innovative technologies in the cars and other vehicles. Ford Motors is adopting new technologies, like; MyFord Touch System, updating User Interface, updating its software etc. It also manufactures middle sized cars and provides safety cars for ladies. Apart from it, Ford is gaining competitive advantage by attracting women segment for the cars, which is specifically and technically designed for them by female designers by considering stereotypical views (Hollensen, 2015).

 Yes, it is very important to use technology innovation for getting success in automobile industry. Ford can use the technology force to improve the quality of products with virtual technology in their cars and trucks. It is necessary to offer the actual benefits, like; reduction in injuries, enhancing the quality etc. The technology may help the Ford Motors to become pioneers (Kim, Shin & Min, 2016). Adopting new and innovative technologies in the vehicles will enhance the strategic position of the company and its quality and safety issues.

Ethics 

Yes, Ford Motors employs the use of ethics in its decisions or products. The company has its strong code of conduct that is intended to emphasize on the ethical risk and offer guidance on how the employees can identify the ethical issues and offer methods and policies to report unethical behavior (Law, 2017). As Ford Motors Company is a Multi-National Company, so it is very important for Ford to maintain the strong sight on its international operations. Furthermore, the organization is emphasizing on environmental issues. Its website has a big section that is devoted to their environmental efforts. It is mainly focusing on reducing plant and vehicle emissions, recycling, conserving energy, reducing the consumption of water, fuel economy and avoiding the use of toxic and hazardous elements. Ford is encouraging its employees to behave ethically in the working environment (Moon, 2010). It is developing its products by considering all the rules and regulations and ethical factors, like; safety of people and environment.

Limitations 

However, Ford Motors Company has a better strategic position in the competitive automobile industry, but still company has some limitations. The product differentiation for the company is very low, as they can only produce cars and trucks with new and innovative specifications. It needs a huge investment to develop a new product line. Ford is facing the issues related to the quality of its products, so it is limiting its growth against its competitors. The products of company are very expensive, which can be purchased by high income people only. The design of cars is not attractive in comparative to other car companies.

Conclusion  

Ford Motor Company has a good position in automobile industry. Mainly, it is targeting high income people and women segment. The above report includes different strategic aspects regarding Ford Motors. Company is facing issue regarding quality of products. Many customers complained about issues in the products. It is making efforts to resolve these issues. Financial position of the company is enhancing very slowly. So, the company should try to implement some effective methods and strategies. Ford can manufacture the cars, which is affordable and suitable for average and low income people. It can try to create new and innovative design for new cars and trucks and make efforts to post in on internet to give the chance to customer to vote. Company should focus on providing best quality in the products and use quality automotive parts in the cars. It should expand its target market by offering lower priced products. The company is using effective technologies in its products, but it should focus on quality of that used technology. There are so many people, who have raised the issues related to techniques. Thus, the company can enhance its financial performance and overall position in the industry.

References

Anderson, J. C., Narus, J. A., & Narayandas, D. (2009). Business market management: Understanding, creating, and delivering value. Pearson Prentice Hall.

Andersen, T. J., & Andersson, U. (2017). Multinational Corporate Strategy-Making: Integrating International Business and Strategic Management. In The Responsive Global Organization: New Insights from Global Strategy and International Business (pp. 13-34). Emerald Publishing Limited.

Cain, T. (2017).U.S. Auto Sales Brand Rankings – 2016 Year End. Retrieved from http://www.goodcarbadcar.net/2017/01/usa-2016-auto-brand-sales-results-rankings/.

Ford Motor Company. (2007). Ford Motor Company 2006 Annual Report. Retrieved from http://corporate.ford.com/doc/2006_AR.pdf.

Gabor, A. (2017). Management: Ford Embraces Six Sigma. New York Times.

Galliers, R. D., & Leidner, D. E. (Eds.). (2014). Strategic information management: challenges and strategies in managing information systems. Routledge.

Gamble, J. E., & Thompson Jr, A. A. (2014). Essentials of strategic management. Irwin Mcgraw-Hill.

Guajardo, J. A., Cohen, M. A., & Netessine, S. (2015). Service competition and product quality in the US automobile industry. Management Science, 62(7), 1860-1877.

Hashmi, A. R., & Biesebroeck, J. V. (2016). The relationship between market structure and innovation in industry equilibrium: a case study of the global automobile industry. Review of Economics and Statistics, 98(1), 192-208.

Heizer, J. (2016). Operations Management. Pearson Education.

Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.

Kim, N., Shin, S., & Min, S. (2016). Strategic marketing capability: Mobilizing technological resources for new product advantage. Journal of Business Research, 69(12), 5644-5652.

Law, C. M. (2017). Restructuring the global automobile industry. Taylor & Francis.

Li, J. (2017). Modest Outlook for Ford. Retrieved from http://www.nasdaq.com/article/modest-outlook-for-ford-cm739320.

Martinez, M. (2017). Quality Takes toll on Ford exec Bonuses. Retrieved from http://www.autonews.com/article/20170402/OEM02/304039926/quality-takes-toll-on-ford-exec-bonuses.

McCarthy, N. (2015). America's Best-Selling Vehicles In 2014. Retrieved from https://www.statista.com/chart/3109/americas-best-selling-vehicles-in-2014/.

 

Moon, H.C. (2010). Global Business Strategy: Asian Perspective, World Scientific Publishing Co Inc.

Parker, J. (2016). Analyzing Ford’s Falling Revenues in Recent Quarters, Retrieved from http://marketrealist.com/2016/12/looking-fords-falling-revenues-recent-quarters/.

 

Payne, A., & Frow, P. (2014). Developing superior value propositions: a strategic marketing imperative. Journal of Service Management, 25(2), 213-227.

Rosevear, J. (2013). 2 Big Challenges Facing Ford. Retrieved from https://www.fool.com/investing/general/2013/07/07/2-big-challenges-facing-ford.aspx.

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.

Reich, D., Shi, Y., Epelman, M., Cohn, A., Barnes, E., Arthurs, K., & Klampfl, E. (2016). Scheduling Crash Tests at Ford Motor Company. Interfaces, 46(5), 409-423.

West, D. C., Ford, J., & Ibrahim, E. (2015). Strategic marketing: creating competitive advantage. Oxford University Press, USA.

Yang, Y. (2014). Employees management analysis at Ford motor company. International Journal of Business and Social Science, 5(10).

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