How Ford UK Can Exploit Its Market Growth in the UK Automotive Industry - Case Study Example

How Ford UK can exploit its market growth in the UK automotive industry FORD UK Word count 597 Introduction Ford of Europe is an owned supplementary of the Ford Motor company which was founded in 1967. The headquarters is in Cologne, Germany. The founder was a man by the name Henry Ford. The company sells many varieties of automobiles and commercial vehicles (Vidler 2002). The company has a well established portfolio of cars, trucks, sport-utility automobile among many others. In the year 2010, the production of motor vehicles contributed to around 6.5 billion Euros of gross value in the financial sector of UK. Later on the number of the vehicles produced fell rapidly due to recession, but it started to pick up remarkably well. In the midst of the Big 5 Western European car markets, UK is the only one positive in the region. This shows that sales in UK is increasing and growing rapidly (McLaughlin and Maloney 1999). The society of motor manufacturers and traders (SMMT) has indicated that, for any further growth or increase in the UK market of automotive vehicles, the market has to be specific, boosted by attractive offers and new, inventive models that offer considerable fuel effectiveness and cost saving (McLaughlin and Maloney 1999). This paper is going to analyze the how Ford UK can exploit its market growth in the UK automotive industry. Strategic Analysis and Evaluation The majority of the UK automotive production is for exporting to outside markets. For example in 2011, 84% of passenger vehicles produced were for export to other countries. The sales of these vehicles were around 2,044 units in 2012 which showed a rise by 5.3%. The market in France declined by 13% in the same period (Great Britain Parliament Trade and Industry Committee 2007). In December 2012, the first position in the highest sales was taken by Vauxhall which sold 16.272 units. This was by 1.0 points higher than the previous month. Its total sale for that year was 232.255 (Vidler 2002). It held 2 models in the top ten with the brand Corsa as the leading in the market. Ford was the one that followed selling 15.656 units in the month of December in 2012. The sales had gone down by 1.5 points from the previous month. The total sales for the year were 281.917, and the best model was fiesta which was at third position and in the fourth position in the top ten. The remaining brands followed in the 3rd to 25th position (Great Britain Parliament Trade and Industry Committee 2007). Throughout the history, Ford has been supporting the free trade principle. This helps in the removal of conventional tariff barriers and non-tariff barriers by trading states. It restates the principle of fair trade in the whole world (Gottschalk and Kalmbach 2007). Ford UK is trying to exploit the markets in all the regions and be on top of the other automotive companies. In order for Ford, to gain the highest position it needs to have the best strategies in dealing with the competition from other industries. This includes the best use of resources, innovative ideas and well planned strategies (Gottschalk and Kalmbach 2007). In addition, it must also survey the market and have a view of the needs of the consumers. The frameworks for the different industries have to be analyzed and business strategy developed. These will make sure that some forces do not affect the ability of Ford Company not to be able to serve its customers and make a large profit (Gottschalk and Kalmbach 2007). In order for the company to change and succeed in the strategies set, it has to reassess the market place and competition from other industries. This will allow Ford to apply unique business models that shall be able to return excess of the profit that it used to make (Hitt,  Ireland and  Hoskisson 2008). In the analysis of the strengths, Ford needs to assess how it influences that market and develop on these factors. On the other hand, it needs to work on the opportunities available and gain an advantage over other companies like the BMW. The threats and weakness within the company have to be eliminated for the consumer to continue trusting the industry (Gottschalk and Kalmbach 2007). SWOT Analysis Strengths Weakness Opportunities Threats Wide range of cars Car quality Increasing growth of UK automotive market Substitutes in public transport Strong brand Engine efficiency Advanced effective innovation Unknown competitors intensions Sponsorship Performance Competitors innovations Customer loyalty Longevity Government policy changes Good brand image Common problems affecting models Social needs changes Ford has to continue increasing the strength of the engineering base in UK. They have the strong capabilities, skills and innovation of a stable automotive company. The wide range of cars like the Cortina, Escort, Sierra, Orion, Scorpio, New Fiesta et cetera have to have a powerful force in the market of UK and the outside world. This is because of the advantage of customer loyalty to the company (Hitt, Ireland and Hoskisson 2008). They trust the brand of the company and the good image it has portrayed to the consumers. Ford has to build up upon these strong holds and furthermore increase the range of consumer cars with their preferences (Nieuwenhuis and Wells 2003). This is only possible after conducting a market analysis and research to determine details of size, color, speed, and efficiency et cetera that the customer need. In 2000 and 2010 the total percentage sale of Ford when the diversity of sizes is considered, was found to be 55% of the small cars sale, 18% of the medium and 27% of the large cars (Vidler 2002). This is a sign of the multiplicity of the needs of the consumers that have to be met. In some occasions also the needs of the consumer keeps changing in terms of the quality and nature of design of the cars. This calls for advanced innovation to meet their changing needs and preferences. Even though in other occasions regardless of the size of automobile those motorists have been purchasing, they mostly concentrated on those that boost greatest efficiency and best perform in diverse terrain. This calls for advanced innovation by Ford to improve on the quality of vehicles that they manufacture in order to reach the required needs of buyers and take hold of the competition in the market (Nieuwenhuis and Wells 2003). The different brands that have been established in various ways by Ford increases the range of cars and the market share that the company holds. Moreover, this helps in fighting some of weakness that is within the company like the common problems among the models and performance. Acquiring new brands helps them to increase on the already existing ideas in their designs. This brings about durability in their products and a good reputation (Nieuwenhuis and Wells 2003). PESTEL Analysis Political factors Some of the political factors have affected the sales of Ford’s automotive. These are; Terrorist attacks in US reduced the sales of Automotives in the country by around 10%, the economic recession in Argentina, Iraqi war et cetera (Law 1991). Economic factors Economic factors that have affected Ford are the rising prices of petrol which has made it expensive for purchasers to drive petrol fuelled vehicles. This affects the market because consumers prefer to drive vehicles using diesel (Law 1991). Moreover, there was a high order for the Japanese vehicles that consume less petrol than the Ford UK vehicles. This has made the industry reduce their prices in order to sell their vehicles (Law 1991). Social factors Cars vary according to a brand choice. A brand influences the way an individual in seen, in the society. This means that Ford has to elevate its brand and make it strong better than the others. There is also a high demand for luxury cars. These are like the Cadillac. The advancement in technology is extremely crucial in achieving these and market research (Law 1991). Porter’s 5 Forces Competition is extremely high in the industry. Different companies are providing different incentives for attracting the buyers. Ford has been successful due to the advantage of having high numbers and scale. Competitors like the BMW, Vauxhall et cetera, have to be defeated, and Ford to remain on top (Law 1991). Also, it is seen that existing companies are joining forces. This is a substantial barrier to the existing companies like Ford. This means that Ford has also to join forces or acquire other companies in order to be on top of these companies (Shioni 1995). Moreover, Ford experienced a tire scandal in 2002 which cost it $2 billion. In order to avoid such scenarios and loses, Ford has to shun the manufacture of poor quality products and also evade the recalling or cars because it cost a lot. They also have to invent the use of other forms of energy that does not affect the environment (Law 1991). Conclusion and Recommendation In 2012, UK was the 2nd largest car market in the world. It produced ten percent more Automotives than 2011. This has made the UK automotive sector have a 55 billion Euros annual turnover. The number of employees in this industry is approximately seven hundred thousand. This indicates how Ford can tap in the poor economic climate of the unemployment rate in the country and increase its market share. The environment that Ford is operating is highly changeable and competitive, but still Ford remains strong. Therefore, it has to ensure that the weaknesses are overcome, and they have prepared themselves for the threats that anticipate facing them in the future. They have to also increase in their skills and innovation. Bibliography: Gottschalk, B. and Kalmbach, R., 2007. Mastering automotive challenges. London; Philadelphia, PA: Kogan Page publishers. Great Britain. Parliament. House of Commons. Trade and Industry Committee., 2007. Success and failure in the UK car manufacturing industry. London: The Stationery Office publishers. Hitt, M.,  Ireland, R. and Hoskisson, R., 2008. Strategic management: competitiveness and globalization. Mason, Ohio: South-Western; London: Cengage Learning [distributor] publishers. Law, C., 1991. Restructuring the Global Automobile Industry: Global, National and Regional Impacts. London: Routledge publishers. McLaughlin, A. and Maloney, W., 1999. The European Automobile Industry: Multi-Level Governance, Policy and Politics Volume 9 of Routledge Research in European Public Policy, 9. London: Routledge publishers. Nieuwenhuis, P. and   Wells, P., 2003. The automotive industry and the environment: a technical, business and social future. Cambridge [u.a.]: Woodhead Publ. [u.a.]. Shioni, H., 1995. Fordism transformed: the development of production: methods in the automobile industry. New York: Oxford Univ. Press. Vidler, C., 2002. Operational management. Oxford: Heinemann Educational publishers. Read More