External and Internal Environments of Ford Motor Company - Case Study Example

External and Internal Environments Introduction Ford Motor Company is one of the renowned American automotive manufacturing companies in the global market. The company has commenced operations in the US on 1903 and within a short span of time, business operations have extended globally. Ford is the world’s fifth largest automobile manufacturer on a global context and the company holds 2nd largest position in the US market (Schmitt, 2011). Over the years, improvement has been observed in the field of conventional technology. In this respect, Ford with the assistance of innovative technologies has established its goodwill in global market for developing better feature added cars. Subsequently, Ford has captured several markets and maintained its competitive position across the world, through its utmost efficiency and services. Apart from this, the company has introduced economical models and expensive models of cars in order to meet the preferences of customers beyond their expectations. The company has established manufacturing unit in several countries in order to ensure that product and/or services are offered effectively in the global market places (1Ford Motor Company, 2014). The essay emphasizes towards identifying the external and internal factors that influence the performances of Ford. Apart from this, the five forces of completion are conducted with the aim of ascertaining the two relevant factors of the five forces influencing the performance of the company. Along with this, the company should adopt different measures for improving the competitive position of the company in worldwide market segments. Moreover, opportunities and threats of Ford are highlighted, which affected the performance of the company with respect to its strengths as well as weaknesses. Furthermore, the resources, capabilities, and core competencies of the company are evaluated for building an effective value chain. Segments of the General Environment that Affected the Performance of Ford In the present competitive business scenario owing to globalization and advanced technology, Ford has faced different challenges in conducting business effectively. Over the years, it has been observed that internal environment has directly affected the business performance of Ford. It has been observed that the internal environmental factor that influences the operation of the company is the vision and mission margin. The vision and mission of the company plays an imperative role in ensuring that it performs business operations with better sustainability in a future. The vision of the company is to conduct its operations as one of the leading automobile companies. On the other hand, the mission of Ford is to provide quality products and/or services on a global context. Apart from this, internal environmental factors i.e. profitability of Ford plays an important role in the management of financial resources as well as cost structuring. In this regard, the company with the assessment of assets will ascertain the profitability value and investment safety aspects for better sustainable performance in the long run. Subsequently, the company with the assistance of an appropriate strategic financial plan managed cost structure in order to minimize risks and wastage of resources. Internal environment of the company is also influenced by the competency level of employees for effective decision making. In this context, the company has developed an efficient organizational structure comprising management team, research and development, marketing and production, so that business operations are conducted in a systematic manner. . The external environmental factors such as market environment, competitors, intermediaries, social environmental, legal, political and technological environment has also influenced the business performance in a massive manner. The most important external factor i.e. market has influenced the performance of the company largely with respect to the preferences as well as satisfaction level of customers. Market competition has also affected the performance of the company by building challenges to attain a better competitive position. Intermediaries are also identified to affect the performance of the company in relation to procurement of materials and supply of products. The drastic changes in the field of technology and social environment policies have also influenced the performance of the company. In this regard, the company undertaking market analyses is facilitated with opportunity of conducting business operations based on market demand for better sustainable performances (2Ford Motors Company, 2014). Five Forces Analysis of Ford Ford have consider five forces of competition such as competitive rivalry, bargaining power of supplier, bargaining power of customers, threat of new entrance and threat of substitute products in order to expand the business operations with a better competitive position. Figure 1: Five forces analysis of Ford During the last couple of decades, Ford has emphasized on competitive rivalry and bargaining powers with suppliers are the two most significant factors affecting the operations of the company to a large extent. The supply chain of the company has different kind of suppliers for conducting vehicle manufacturing operation in accordance with market demands. For different operations the company relied on different suppliers such as banking system, cooling system, electrical system and fuel supply system among others. Additionally, the company specially relied on steel supplier in order to manufacture its vehicles (Gatton College of Business and Economics, 2014). On the other hand, in order to ensure the company’s sustainability, Ford has emphasized towards providing quality products and/or services with better added features. The company has identified that private consumers and organizations are the main buyers of vehicle products. Apart from this, Ford has also identified that the consumers prefer to buy fuel efficient cars and environment friendly cars. Thus, on realizing the power of buyers, the company concentrating on consumers’ preference is has planned to enhance the efficiency of bargaining power with suppliers (Gatton College of Business and Economics, 2014). In case of competitive rivalry, the company has faced several challenges from Toyota, Honda and General Motors among others. In order to maintain that competitive advantage, the company has developed exclusive car models, which are technologically advanced. Apart from this, the company has introduced fuel efficient vehicles and cars with unique features. In this respect, the company providing unique products and/or services is able to compete effectively in the worldwide market segments (Gatton College of Business and Economics, 2014). On the hand, it can be asserted that threat of new entrance is quite difficult in case of an automotive industry. A company needs large amount of investment to enter a new automotive market. At the same time, the company needs to earn brand loyalty in order to enlarge its customer base. Thus, it can be asserted that Ford has faced minimum challenges in terms of threat of new entrance in the worldwide market places (Gatton College of Business and Economics, 2014). Simultaneously, Ford has emphasized to reduce the threat of substitute products and in order to attain that objective, the company has introduced a new tool of benchmarking developed with Total Quality Management (TQM). Ford also utilized the new benchmarking methodology in order to lead superior performance. Apart from this, the company has also focused on the development of human, financial, capital and other resource processes. Moreover, Ford has concentrated on several tools and techniques for accomplishing the strategic plan (Gatton College of Business and Economics, 2014). Respectively, Ford has addressed competitive rivalry and the threat of substitute products in order to ensure its long run in automotive industry with better competitive position. Suggestions to Improve Bargaining Power with Supplier and Competitive Rivalry Ford should enhance the ability of its own manufacturing unit by ensuring that less threat of substitute products and competitive rivalry exists in the market places. In order to meet this objective, the company has to consider standardization or adaptation process during its business operation in several market places, which can enhance brand loyalty, profitability and growth in terms of market share. At the same time, through emphasizing towards competitive rivalry Ford is able to enhance the quality of its vehicle products and services. Moreover, the company will provide more facility to its consumers and stakeholders and improves the effectiveness of its operation by applying total quality management tool and benchmarking approaches (Oluwatoyin & Oluseun, 2008). In this respect, the company with the assistance of the aforementioned measures and approaches should be able to manage competitive rivalry and bargaining power with supplier. Opportunity and Threats that can affect the Performance of the Company Ford has a positive attitude of introducing green vehicles in the market places owing to the increased demand for eco-friendly vehicles. Apart from this, increasing fuel price has increased the sales of Ford vehicles in global market segments due to the delivery of fuel efficient automobiles. Moreover, new emission standard is identified to increase the opportunity of Ford in global market place. Thus, Ford should focus towards carbon emission programs in order to maintain its sustainability effectively. At the same time, the company should emphasize towards gas engine and reformative braking system along with electric motors in order to make the vehicle more attractive for future (HSSMI, 2014; 3Ford Motor Company, 2014). On the contrary, due to external environmental reasons Ford has faced several threats such as rising raw material prices, fluctuating exchange rate and intense competitions among others. In order to avoid these challenges, Ford should concentrate on quality management system for accomplishing the desire performance excellence (Conti, Kondo & Watson, 2003). Strength and Weaknesses that affected the Performance of the Company It has been revealed that strong position in the US market places has been one of the key strengths of Ford. Apart from this, strong financial performance has been a core competence for the company. Moreover, environmental operating system approach is also an internal environmental strength of the company. In this regard, the company is required to continue practicing the aforementioned approaches in order to ensure better sustainable performance in future (HSSMI, 2014; 3Ford Motor Company, 2014). On the contrary, Ford has also faced several internal challenges due to poor environmental record. Apart from this, the company has faced challenges in European market places due to high cost structure. Thus, in order to avoid such weaknesses, the company should have implement materials requirement planning (MRP) and just- in-time inventory tools in order to maximize operational efficiencies (Conti, Kondo & Watson, 2003). Determine Ford Motor’s Resources, Capabilities and Core Competencies Over the years, Ford has developed new products with unique added features with the assistance of technological innovations. Through the help of excellent differentiation strategies, the company captured different segments of the market and marketed its products tactically. Ford has used workforce as one of the most crucial resources that assisted in conducting business operations with better competitiveness. Ford has effectively conducted business operations in the global market places through brand loyalty, innovative products, service qualities, marketing strategies and efficient management approaches among others. Thus, it can be asserted that Ford with the assistance of the capabilities and core competencies is able to conduct operations as a leading automotive company globally (Conti, Kondo & Watson, 2003). Analyze the Ford Motor’s Value Chain Ford is one of the big multinational enterprises, which has maintained internal and external environmental to minimize social and economic impacts. The value chain of the company comprises different operations that include logistics or transportation, supplier parts manufacturing, raw material extraction, sales, product planning as well as design and Ford manufacturing among others. The company has emphasized towards its value chain in order to ensure effective overall performance of the company in terms of stakeholders’ satisfaction. It has been identified that the company has concentrated on production, marketing and the provision of after-sales service in order to ensure its profitability and long-term sustainability in the value chain (4Ford Motors Company, 2014). Conclusion From the above discussion, it has been revealed that Ford has used several tools and techniques significantly over the years in order to maintain business performances with excellence. Apart from this, it has been observed that the company has analyzed both the internal as well as external environment in order to ensure consistency of the business operations with business objectives. In addition, the company has concentrated on five forces of competition with the aim of maintaining market leadership. Moreover, based on the reviews of strengths and weaknesses, it can be ascertained that the company has developed a customer-focused culture to enhance design of work processes, process control and process improvement. In this respect, the company with the assistance of different measures and tactics has been able to meet customers’ needs efficiently. Moreover, the company has also emphasized towards capabilities, resources and core competencies with value chain in order to enhance profitability and sustainable business performances. Thus, it can be asserted that Ford through the practice of quality management system has been able to perform operations with better management of the challenges of internal and external environment globally. References Conti, T. Kondo, Y. & Watson, G. H. (2003). Quality into the 21st century. American Society for Quality, 1-261. 1Ford Motor Company. (2014). Our company. Retrieved from http://corporate.ford.com/our-company 2Ford Motors Company. (2014). Environmental management. Retrieved from http://corporate.ford.com/microsites/sustainability-report-2011-12/blueprint-governance-management-environmental 3Ford Motor Company. (2014). Fuel-efficiency. Retrieved from http://www.ford.com/green/fuel-efficiency/ 4Ford Motors Company. (2014). Our value chain and its impacts. Retrieved from http://corporate.ford.com/microsites/sustainability-report-2011-12/blueprint-value Gatton College of Business and Economics. (2014). Five forces analysis in auto industry. Retrieved from http://gatton.uky.edu/faculty/scott/mba603-605fall2009/industrystudy3.pdf HSSMI. (2014). Ford Motor Company process improvement at Dunton technical centre. World Class Research, 1. Oluwatoyin, A. & Oluseun, A., (2008). Total quality management: a test of the effect of TQM on performance and stakeholder satisfaction. Blekinge Institute of Technology, 1-65. Schmitt, B. (2011). Hyundai 4th largest automaker, overtakes Ford. Retrieved from http://www.thetruthaboutcars.com/2011/01/hyundai-4th-largest-automaker-overtakes-ford/ Read More