China and India Markets for Ford - Essay Example

Ford: Car Manufacturer Report Introduction Ford is the United based automotive company. Henry Ford, who is the founder of Ford automotive company, started this company in 1890.1 Since then, this company has evolved and has been manufacturing various cars, trucks, vans and other motor vehicles. More importantly, the company has gone beyond the boundary of the United States and has now presence in Europe, North America, South America, Asia Pacific and Africa as well. 2 At the same time, the company has entered into financial services market, which is mentioned in the figure 01, and has been providing financial services in the market. However, the main market is automotive industry which is globally expanding as demand for all types of vehicles is increasing. Keeping this view in mind, it is highly essential that more cars should be sold through using the support of information technology and information needs of potential cars buyers. Figure 01: Ford Consolidated Income Statement 2013 Source (Ford Annual Report, 2013). The financial performance requires more improvement. For example, the figure 01 clearly highlights that Ford made $20,213m and $5,665m and &7,155m net income in 2011, 2012, and 2013 respectively; this reflects that the company has made the highest income in 2011 and the smallest in 2012 and the average net income in 2013. Based on this information, it can be deduced that the company has potential to earn more income. For this purpose, the company’s strategic management requires additional information for consideration and making effective decisions for improving the financial performance of the company. Also, this can be only done through improving and increasing the sale of cars as this business segment has the highest potential for the company. And there are valid and strong reasons to support this point. First, personal or family cars have become an important part of today life as every middle class family always prefers to have a car for satisfying the family requirements, such as travel, school pick and drop and other emergency services. Keeping this view in mind, it is highly essential that the company should primarily focus on manufacturing and selling cars by considering the family need. Information obtaining methods for improving decision-making quality Ford must focus in Asia. Currently, both China and India are two fastest growing economies where the middle class is increasing along with growing purchasing power. This market should be focused as it has a very attractive market potential for the company. Based on the different requirements of both markets, following information should be obtained which can be further processed for supporting and improving decision-making and quality of decisions as well. Market potential Both India and China have fastly growing middle class. For example, India’s middle class will touch 250 million in 2015 as highlighted by McKinsey and Company.3 And it is expected that this middle class will continue to increase and will touch the level of 267 million in coming 5 years.4 And this means that Ford will only require knowing certain specific requirements for manufacturing cars which have higher demand in India. At the same time, China is also one of the fastest economies where demand for cars is substantially increasing. For example, it has been noted that the middle class in China is 10 times higher than that of India.5 Type of car and demand for cars This information is also important as it will enable to understand purchasing pattern of potential car buyers. For example, this can be ascertained through knowing the family patterns, such as number of family members, economic activity whether both husband and wife go for work or the wife prefers to stay home, are some of this important parameters that can be used for knowing the type of car that will be demanded by the potential buyers in China and India. For example, in China, one child policy is common and the married couples are only allowed to nourish only one child.6 Car features This is the most information need. The middle class families always look for economical and moderate expenditure for vehicles because they plan their monthly budget and determine all those factors which consume costs. Since transportation has become an important expenditure source for them, it is highly essential that the company should only provide those features which will be afforded by them. For example, door locks, mileage, and all those features which are demanded by people earning reasonable level of earning. Purchasing power and car financing Both are highly important feature for assessing purchasing power and deficit that will be covered by through the policy. Normally, car dealers and bank financing are two methods which are used for enabling potential car buyers to purchase vehicles. For this purpose, Ford will be required to understand the current financial and banking system in both countries and their level of understanding among the middle class. Software for supporting information strategy and acquisition basis More importantly, Ford should use technology for increasing demand for cars in both these countries. For example, Ford has already hired 125 software engineers in Silicon Valley who have been assigned to develop the most modern technologies features, including the use of 4G networks and remote-controlled cars as well; within this context, it is expected that new sync 3 system will be and should be used for assessing and including additional technological features in the demand evaluation formula and their hardware part as well.7 More importantly, Ford should develop new software by using the expertise of these hired young software engineers who will be required to merge all market data and relevant inputs for developing the objective-oriented software. Conclusion Both China and India are two big markets for Ford. It is expected that the middle class in India will become 267 million in coming 5 years whereas 10 times larger middle class that that of India is available for Ford. At the same time, Ford should retain other needs, such as number of family members, car financing, mileage, family structure, family trends and other car features that will be expected by the potential buyers. Ford will avail various advantages from the above mentioned suggestions. For example, by entering into these two markets, the firm will be able to add more income to the financial statements. This is the most important benefit for the company as currently Ford is underperforming as reflected by the figure 1 in which the income of 2013 is considerably lesser than the income earned in 2011. Thereby, in order to cover this loss, it is highly essential that the company should enter into both these markets. The provided recommendations also emphasise that Ford should focus on the technological aspect of vehicles in which remote-controlled cars are being manufactured by different car manufacturers. Keeping this view in mind, it is necessary that Ford should develop its own software system in which all indicated data should be collected and it should be used for further processing. More importantly, Ford will become in a position to have its own in-house technological software house in which more software-related work will be carried out. At the same time, the competitors are highly inclined to use the latest technologies for improving their performance and gaining access to new markets. And in order to compete effectively, Ford should avail benefit from these recommendations by applying them immediately. References Davies, A. ‘Ford Finally Discovers Silicon Valley’, 23 January 2015, Wired, http://www.wired.com/2015/01/ford-silicon-valley-research-center/ , (Accessed 25 January 2015). Ford, ‘Our History’, http://corporate.ford.com/company/history.html , 2013, (Accessed 25 January 2015). Ford Annual Report, ‘Annual Report’, http://corporate.ford.com/content/dam/corporate/en/investors/reports-and-filings/Annual%20Reports/2013-annual-report.pdf ,2013, (Accessed 25 January 2015). Moore, M. ‘What is China’s one-child policy?’, The Telegraph, 30 October 2014, http://www.telegraph.co.uk/news/worldnews/asia/china/11197594/What-is-Chinas-one-child-policy.html (Accessed 25 January 2015). Safar, R. ‘The myth of the great Indian Middle class: Roughly 30 per cent of India’s population still lives below the poverty line, Daily Mail, 18 May 2013, http://www.dailymail.co.uk/indiahome/indianews/article-2327182/The-myth-great-Indian-Middle-class-Roughly-30-Indias-population-lives-poverty-line.html , (Accessed 25 January 2015). Sinha, K. ‘China’s middle class 10 times larger than that in India’, The Times of India, 14 October 2014, http://timesofindia.indiatimes.com/world/china/Chinas-middle-class-10-times-larger-than-that-in-India/articleshow/44816063.cms (Accessed 25 January 2015). Wijesinha, A. ‘India’s Middle Class Boom: Sri Lanka Must Cash In’, (Web blog), 18 January 2012 (Accessed 25 January 2015). Read More