Strategic Management: Toyota vs Ford - Research Paper Example

Issues Ford Toyota Legal, Social and Economic Environments  Legal environment may not be entirely in favor of Ford as due to economic situation, new rules may be imposed on consumer financing as well as other rules and regulations which can effectively put more restrictions on Ford. Economic environment is relatively unfavorable too as consumer confidence is low and banks are becoming relatively tougher on granting consumer loans thus economic factors may not be in favor of Ford. Toyota also almost face the same factors because of the fact that auto-industry is facing economic difficulties because of low consumer demand and higher level of legislations. Management Structure  Management structure of Ford however, is considered as centralized in nature with Board of Directors as the top with regional as well as international managers positioned at different positions. Toyota’s management structure is both centralized as well as decentralized. Controls are decentralized in some markets whereas it is also controlled centrally through Toyota’s headquarters. Operational & Financial Issues Ford’s financial performance has not been satisfactory during the current years. Its performance has deteriorated as it experienced 2nd quarter loss of 57%. It is also experiencing issues in equipment and its suppliers as there have been issues in manufacturing of the cars. Apart from that failed customer image, high levels of debt and high operational cost are some issues faced by Ford. It has also faced issues with its labor and had to reenter into new negotiations with the labor unions in order to reduce labor cost and other overheads. It also acquired debt in order to avert crisis during credit crunch however it has increased its overall debt levels. Toyota is also experiencing serious financial issues as despite flat sales, its income is shrinking. It has also been subject to vehicle recalls due to safety and operational issues. It has been subject to serious design level issues wherein product recalls were traced back to the to the faults in design and manufacturing processes of Toyota. This suggests that its operational weaknesses may be on the rise during the recent past. Social and External Challenges Ford as a part of automobile industry is facing stiff social challenge of improving its image. There is a general perception within the general public that car automakers are thriving on tax payers’ money. Toyota however is not subject to much of external and social challenges because it was not bailed out by Japanese government. Current Manufacturing  Current manufacturing facilities are geographically scattered. Toyota’s current manufacturing also takes place globally. (Samsong Fang & Kleiner, 2003) Facilities & Distribution System  Facilities and distribution system of Ford are scattered across Europe and US market. Its distribution system is traditional dealer network. Toyota however caters to other markets also therefore besides having distribution facilities in US and Europe it also extensively covers Asia. Market Demand & Demographics  Overall market demand is emerging from US market. Ford’s primary demographics is in North American market besides it serves EU market also. Its overall product range serve both high end and low end market. Toyota’s main market is Japan but it also serves to the US and EU market also. Toyota also serves both high end as well as low end market. Alternative Fuels & Propulsion Systems  Ford has been in the development of alternative fuels and propulsion systems to be used with its cars. Its Ford Green has been using these technologies. Toyota is also involved in the development of alternative fuel technologies and propulsion systems to meet growing demand from environmental friendly consumers. SWOT Analysis of FORD Strengths 1. Old and rich history and heritage in Auto Industry. 2. Experienced and one of the leaders in the Auto Industry. 3. Well diversified product range. 4. Presence in various developed markets. 5. Stable and mature Weaknesses 1. Design and operational weaknesses. 2. Strategic focus on non-core businesses. 3. Relatively bureaucratic style of management. 4. Concentration in few markets. 5. Reliance on formal network channels. Opportunities 1. Diversification in emerging markets. 2. Alternative fuel cars with low budget. 3. Opportunity to tap into the low end market especially in developing countries. 4. Opportunity to enter into mass transport market. Threats 1. Low consumer demand. 2. Volatile economic situation. 3. Competition in other markets. 4. Tough regulatory requirements from government. 5. Alternative mass transportation means. Strategy In order to overcome the weakness of low consumer demand, Ford can enter into small car manufacturing. It needs to improve its R&D efforts to produce more cost effective vehicles which can serve the mass market at the global market (Nilsson-Witell, Antoni, & Dahlgaard, 2005). It needs to increase its R&D budget and engage into further improving its fuel efficient cars. SWOT Analysis for Toyota Strengths 1. One of the most efficient manufacturing systems 2. Large and diversified network 3. Better customer image for quality 4. Right mix of products for almost every niche of the market. 5. Strong presence in Japan Weaknesses 1. Problems in design and manufacturing. 2. Not so strong presence in EU market. 3. Concentration in few markets makes it more vulnerable to economic situation in those markets. 4. High capital cost therefore very high barriers to exit once investment is made. 5. Lesser presence in emerging markets. Opportunities 1. Opportunity to further penetrate into Asian market. 2. Opportunity to enter into mass transportation market. 3. Diversification of product range 4. Opportunity to enter into environment friendly car market. 5. Tap into urban youth market. Threats 1. Product recalls creating bad image in the eyes of consumers. 2. Concentration in two markets will make it more vulnerable. 3. Higher level of competition in few markets. 4. Higher level of fuel prices 5. Adverse economic sitaution Strategy In order to overcome it dependence on two markets, Toyota need to establish its manufacturing and distribution facilities in other emerging markets specially in India and other growing markets where demand for low cost fuel efficient cars can be enormous. It can expand into these markets through effective quality management. (Taddese & Osada, 2011) It needs to enter into market development process in a way which can ensure its presence in optimal market locations across the whole globe. Bibliography Nilsson-Witell, L., Antoni, M., & Dahlgaard, J. (2005). Continuous improvement in product development: Improvement programs and quality principles". International Journal of Quality & Reliability Management,, 22(8), 753-768. Samsong Fang, & Kleiner, B. (2003). Excellence at Toyota motor manufacturing in the United States. Management Research News,, 26(2), 116-122. Taddese, F., & Osada, H. (2011). Market development using TQM through system integration and customer service in Asia". Asian Journal on Quality, 12(3), 254-258. Read More