International Business Strategy for Ford Case Study Table of Contents Question 1 4 PEST Analysis of Ford 4 Political forces 4 Economic forces 4 Social Factors 6 Technological Forces 7 Opportunities of Ford Company 8 Threat of Ford Company 8 Barriers to Entry 9 Question 2 9 Strengths 9 Weaknesses 10 Ford’s Strategies to Address Internal Weaknesses 10 Key Strategic Resources and Core Competencies 11 Question 3 15 SAF Framework 15 Question 4 20 References 23 Question 1 PEST Analysis of Ford Political forces The political forces influence the strategic decisions of Ford Motor…
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Ford also started to build electric cars. The political forces facing this industry are getting more and more severe. There are many groups in the society which are demanding stricter environmental norms for the automobile industry (Hoffman, 2012, p. 211). Ford has so far done a good job in maintaining the image as a worker’s truck. Ford has attracted the attention of other social and economic groups which have high-class luxury vehicles. Ford operates in many international countries such as Australia, Japan, UK and America where the business operations are conducive. In 1975, the Corporate Average Fuel Economy took effect, and Ford was able to abide by the regulations. Non-compliance with these laws caused heavy fines, which would prove costly to the company. This made Ford manufacturer one of the most fuel efficient and environmentally friendly cars. The Government also discourages Ford to fully automate its operation which would otherwise result in increase of the unemployment rate. Economic forces The leading manufacturers of the vehicles were mainly companies from United States, Western European and Japanese companies. Ford used to produce more vehicles outside their home country than within their own country. The auto industry remained fragmented. In 2010, there were a total of 18 manufacturers with their annual output being more than 1 million vehicles. 3-firm concentration ratio which is measured by the units of production was around 31.5 percent. There were many mergers and acquisitions in the auto industry; still they faced new competition from other countries especially India and China. Figure 1: Mergers & Acquisitions among the major automobile manufacturers. (Source: Ledderhos, 2003, p.68) (Source: Ledderhos, 2003, p.67) Strong competition from the companies forced Ford to go for cost reduction through economies of scope, economies of scale, worldwide outsourcing, off-shoring, just-in-time scheduling and collaboration. In spite of the many cost reduction techniques, the major automakers were still unable to rival the low cost automakers from India, China and elsewhere. The euro zone crisis further exasperated the problem of Ford (Ireland, Hoskisson and Hitt, 2010, p. 75). Social Factors The social factors which affect Ford are the changes in the social classes in the world market. With increasing globalisation the car market is witnessing increase in spending from the middle and upper middle income families all across the world. The lines between the social strata are diminishing. Hence companies all around the world are now targeting the middle income group to increase their volume sales. This helps the motor company in expanding their market across the world. This results in more manufacturers coming out with products which cater to the middle income people and results in rise in competition (Stead, Stead and Starik, 2004, p. 89). The consumers are now demanding better quality, safer vehicles at lower prices which have forced Ford Company to produce cars at cheaper ways like outsourcing the parts of their production in outside countries. Hence the company needs to adopt new processes and methods of creating attractive, unique automobiles
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