The Effect of Rhetoric on Competitive Advantage - Case Study Example

Business Strategy Module My Registration Number Contents Introduction 3 Discussion 4 Current strategic position 4 Critical evaluation8 Conclusion 11 Reference 12 Introduction Strategic value of a firm contributes a lot in its management and business process. Effective knowledge creates many opportunities for enhancing products and services by sharing different information. Strategic values of knowledge are described in this case. Various theories and models are discussed in details to highlight competitive position of a company. Knowledge is one of the important things to design rhetoric. It helps the company to implement various innovative functions and techniques for growth and development of the company. Rhetoric elements improve different business elements which helps the company to build its advantageous position in market. Disruptors also play a major role for gaining competitive advantages. Disruptors break old boundaries of business and implements new things into business. This case study describe about the rhetoric structure and disruptors of Ford Company. By managing knowledge effectively the Ford implemented a disruptor which created a competitive advantage for the company. The company’s different rhetoric structure contributed a lot to enhance its products and business process. Ford invented a very innovative technology which helped the company to design its one of best selling truck. The company used aluminium in a high quantity to make the body of truck. It became an important feature for the company for saving its cost. The competitor of Ford does not have such features in its product. It helped the company in many ways to gain its market. Discussion Current strategic position The case study chosen revolves around best-selling pick-up truck of Ford. Ford F-150 contributed majorly towards global profit margins of the company. The company gained competitive advantage through designing a vehicle of aluminium. This was a rare concept and helped in reducing fuel consumption rate to desirable extent. Automobile industry is a part of oligopoly market structure. This industry is dominated by big five players such as General Motors, Ford, Honda, Toyota and Chrysler. There are certain key objectives of Ford’s competitors which can be stated as acquiring maximum profit share, technological leadership, growth of market share and service leadership. Ford comprises of 8 brands – Ford, Volvo, Land Rover, Jaguar, Lincoln, Mazda, Mercury and Aston Martin. Differentiation techniques have been adopted by the organization in order to stay competitive in the market place. Safety, advanced technology and innovative designs are the basis of their competency set. Porter’s five forces model can be applied on Ford in order to determine their position in the industry. The model has been outlined in figure1. Figure 1: Porters Five Forces Model There are five forces prevalent in external environment like threat of new entrants, buyer bargaining power, threat of substitutes, competitive rivalry and supplier bargaining power. Threat of new entrants for automobile industry is low. Manufacturers are involved in mass production in order to make them affordable for target group. There are high entry barriers for entering into this market and it is mainly because of lump sum investment required in automobile manufacturing. Supplier bargaining power is relatively low since wide number of suppliers is needed to manufacture different automobile parts. Presence of large number of suppliers tends to reduce overall bargaining power. On the other hand, buyer bargaining power is fairly high. Customers are likely to shift to any other automobile manufacturer if customer expectations are not properly addressed. It can be stated that maximum percentage of revenue usually comes from the buyer and hence there power is high. Threat of substitutes is considerably high for automobile industry. There are other forms of transportation like public transportation, riding a bike, walking, etc. Customer loyalty is a critical factor and cannot be accomplished easily by car manufacturers. The intensity of competitive rivalry is basically high for automobile industry. Competitors of Ford usually possess common objectives and this makes competitive rivalry intense. Durability, price and quality are major elements which forms the basis of competition. This framework helps to analyze certain competencies possessed by Ford and provides a brief about its competitive environment. Porter’s five forces model clearly outlines certain key features present within the automobile industry. These elements can be regarded as market opportunities for the company or a probable threat that needs to be eradicated efficiently. SWOT analysis is another strategic framework that is utilized to analyze external and internal business environment. Capabilities of a company can be well determined with the support of this analytical framework. Market opportunities for Ford are raising demand towards fuel efficient cars. The company has even invested lump sum amount in solar power industry. This has given the company strength in the form of retaining large base of customers. Chinese and European markets can be explored by the company in future years. On the contrary, there are some threats present in the market place that tends to disrupt competitive position of Ford. For instance, new material price is increasing that is decreasing revenue margins of the company. Competition is also increasing in the current scenario, making it difficult for Ford to retain its market share. World economy and market is facing major challenges in terms of increasing trends of terrorism. Rising oil prices is also considered to be a threat for Ford and other automobile manufacturers. In earlier years the company was inclined towards manufacturing large volumes of vehicles but its strategy has now shifted towards manufacturing hybrid vehicles. The company now incorporates renewable and recyclable materials to manufacture cars. Ford encompasses certain key strengths such as brand recognition, a range of hybrid vehicles, business operations expanded to almost 30 countries and different products for various consumer market segments. Weaknesses of the company are in context of increasing employee turnover, declining percentage of truck sales and increasing recalls. In overall context, Ford’s possesses major competencies in the form of product range, desirable base of satisfied customers, adoption of advanced technology and being strongly aligned with stakeholder’s interests. BCG matrix is a well known strategic tool that is used to identify competitive positions of different products manufactured by a company. There are four quadrants of this matrix known as dogs, cash cows, stars and question marks. Dog quadrant mainly highlights those aspects of an organization which is not performing well. Question mark quadrant usually outlines those parts which are growing but have low market share. Cash cows are regarded as the desirable market segment. In this segment there is low market growth witnessed and has a high relative market share. Stars are another essential component of the BCG matrix which possesses high market growth rate and relatively high market share. BCG matrix for Ford has been elaborated in figure2. Figure 2: BCG Matrix As per figure 2, cars being manufactured by the company fall in the star category. This can be considered as a competency of Ford. However in order to stay competitive, the company should focus on designing efficient trucks, SUVs, etc. Electric cars fall in the middle of the matrix and have a scope for future growth and development. Critical evaluation Organizational members have the capability to implement different strategies by using their knowledge. Ford has implemented its disruption concept by utilizing its resources and developing its technology. Disruption involves the concept of adapting innovative strategies or technologies for improving process or product. It helps the company to develop its competitive advantage in the market. Ford has redesigned its best selling truck and have used high amount of aluminium in its body. It became a revolutionary step for the company. This disruption strategy is used by the company with the help of some important factors. They are as follows: Ford has different types of resources including its employees, assets etc. All of these resources are very valuable to the company. The valuable resources of Ford helped the company to gain competitive advantages. One of its valuable resources is its knowledge of its employees. Knowledge helps to enhance different values of Ford. It helped Ford to innovate the process of using aluminium in its truck. As a result the demand of this truck raised a lot for its many advantages and unique features (Sillince, 2006). Efficient marketing management contributed the company to produce a high value product. Analyzing and evaluating different types of knowledge by the company help to implement different quality knowledge by Ford. Technological quality used by Ford in redesigning that truck is very unique. No other competitor of Ford has used this strategy. Customers of Ford are highly influenced by this. This disruption concept helped the company to become more successful. For efficient use of knowledge and other resources the company acquired a huge amount of market share. Ford had implemented rarity of knowledge in its disruption process. Rarity of knowledge is present in reality as resources like finance, employees and different physical elements are limited. The body of F150 was majorly made up of aluminium. At that time no other competitor of Ford had used aluminium in such a high volume. Ford was the first company to use this strategy. The company got many advantages for this disruption strategy. Rare knowledge of this company contributed a lot in reducing the weight of that vehicle by 13%. Utilizing its valuable resources Ford had been able to reduce the fuel consumption of this vehicle. Earlier F150 used to consume a good amount of fuel. But after implementing that strategy fuel consumption was reduced by 5 to 22 per cent. By establishing this rarity knowledge Ford established its own unique identity in the market. The company gets competitive advantages for it’s by implementing its rare knowledge. This disruption process helps Ford to show its self-suffiency in the competitive market. It persuades to its customers to depend more on the company. This disruption strategy of Ford cannot be easily imitated by its competitors. Ford has implemented its disruption process in such a way that it became a competitive strategy for company. Unique features of that strategy made a use of available resources of Ford. The strategy of using aluminium in car body was very unique. The company did not disclose the process of implementing the strategy in market. Knowledge of Ford regarding innovating and implementing this disruption strategy was made protected by the company. As a result the competitors of Ford can’t copy that strategy. There were many legal obligations and rules associated with the strategy. If any of its competitors wanted to use that knowledge then the company had to take permission from Ford. The knowledge of Ford in manufacturing aluminium body had a huge advantage. So it was required by the company to protect its entire knowledge of disruption strategy. For developing and implementing business disruption strategy Ford made a proper planning for implementing the strategy effectively. The company had understood the requirements of its customers and according to that it had innovated effective business strategies for making the product suitable for the customers. Ford had redesigned F150 for offering the customers unique services. Ford controlled its knowledge of disruption in implementing its business strategy in such a way that it improved competitive advantage of the company. The organization has the capability to utilize its resources at a maximum level in an efficient way for getting high quality of knowledge. It helped the company to use high amount of aluminium in F 150 Truck. This process also influenced the company to control its different resources and employees. By focusing on individual employees and resources Ford was able to control its employees. It helped the company to get different views and opinions of its employees for redesigning the structure of F150. Through this process redesigning of F150 became more effective. The rhetorical perspective states that competitive advantage should be analyzed in context of internal and external environment. As per the case study, Ford was trying to sustain its competitive advantage through designing fuel efficient trucks. An organization is able to create value through organizational expertise and capability. On the other hand, rhetoric which is externally linked helps to utilize resources so as to develop competitive advantage. Ford was focused on creating a competitive position in the market place. It had utilized its resources optimally in the form of human resources, financial, marketing and operating resources. The company basically possesses expertise in the form of automobile design and manufacturing. These have been incorporated as the major strengths of the company. Ford has utilized its resources appropriately by allocating them to specific units. Rhetorical perspective also takes into consideration stakeholder commitment in the process design. Ford aligns it business operations with stakeholder interests and believes in collaborative work approach. Disruptive process of the company is enhanced through developing a new design for mass market. Conclusion As per the study, innovation and competitive advantage can be strongly correlated with one another. Ford has been chosen as an organization which has undertaken innovative approaches so as to accomplish long term objectives. Disruptive companies are located across the globe. High level of imaginative capacity is required to develop such disruptive companies. It can be stated that disruption is all about outlining some features which provide competitive advantage to an organization. There are three analytical tools used in this study so as to determine competitive advantage. These tools are Porter’s five forces model, BCG matrix and SWOT analysis. All of these tools are applied on Ford to analyze their internal capabilities and strengths. The company over the years has explored its capabilities in order to design wide range of products. Rhetorical perspective has been included in this study to critically evaluate disruption process in business context. Value, resources and wide base of knowledge are the key factors which drive success and growth of the company. Reference Sillince, J., 2006. The effect of rhetoric on competitive advantage: knowledge, rhetoric and resource-based theory. London: Sage. Read More