Strategic Information Management: Ford Motor Company - Assignment Example

Strategic Information Management: Ford Motor Company Executive summary This report deals with ‘strategic management’ in the context of Ford motor company, one of the most respected and largest companies in the world. The report provides a brief but well structured overview of Ford Company, its goals, objectives and mission statements. A proper description of the remote environment which cannot be properly controlled by the company is also provided in the report. Furthermore the industry in which the company operates is properly analyzed in this report. In addition to it, the report includes all the major strengths, weaknesses, threats, opportunities and competitive advantages of Ford. The possible strategic alternatives that can be developed based on the SWOT analysis are described in this report. Finally a conclusion is drawn on the basis of the above mentioned analysis. Background The automobile giant Ford started its journey almost 150 years ago. Today it is one of the most dominating players in the industry. The company produces and distributes cars in six continents. There are almost 201,000 people who are working in the company. Cars are manufactured in 90 plants that are spread throughout world. In 2009 Ford’s total revenue amounted to almost 118.3 billion dollars which is much more than its previous year’s performance. Discussion of the mission statement, goals and objectives Keeping oneself at par with the changing global automobile industry, Ford has changed its mission statement, objectives and goals. In early 1900, the company’s mission statement was "Ford will democratize the automobile" (Northern Arizona University, n.d.). During the period of 2004-05 the company’s mission was to improve its products and services in order to meet the customers’ needs and demands and provide reasonable return on investment to the shareholders (Dobson, Starkey, Richards, 2004) As far as its current mission statement is concerned it emphasises on building ‘One Ford’. The mission of ‘One Ford’ includes building one team, one goal and one plan. Principle objective of building one team is to form a global organisation for becoming the leader in the automobile industry. Furthermore the company works according to ‘one plan’ which includes aggressive restructuring with the objective of operating profitably, accelerating the new products development, financing all the plans, improving balance sheet and working as a team. The ‘One Goal’ is thus aimed at delivering profitable growth (Ford, n.d.). Remote environment The remote environment of an organisation includes political environment, economic environment, social environment, technological environment, legal environment and general environment. Generally organisations have very little control over the above mentioned factors which explains it being called as remote environment. Political Ford is a global company. It has its operation in almost all the major markets. As a result the company is influenced by the political environments of all the countries. If UK is considered, the country’s political environment is dominated by several political parties which include Conservative Party, Democratic Unionist Party, and Liberal Democrats (Central Intelligence Agency, n.d.). Moreover the trade unions in the company influence the company’s decisions regarding salaries, working conditions, recruitment, job cuts etc. Amicus is the largest union formed by the people who are involved in technical and manufacturing related works. In addition to Amicus there exists another union called union of Transport and General Workers (T&G) (Euro Found, n.d.). Economic Present economic environment in UK is heavily influenced by the recent financial turmoil. In 2009 the country’s GDP growth rate was -4.8%. Such a negative GDP growth rate is further aggravated by the fact that the purchasing power of the common people of the country has declined. As a result demand of almost all the products and services have gone down. This has affected the total sales of Ford. Social In UK most of the people (67.1%) belong to the age group of 15-64 and almost 90% of the total population lives in the urban area. The country’s literacy rate is found to be 99% (Central Intelligence Agency, n.d.). Technological In UK advanced technology is readily accepted. Both individuals and organisations are found to be very familiar with modern technologies. As a result it is quite expected that any car which is powered by advanced automobile technologies will be appreciated by the people in UK. Environment Environment is a major concern in the country. As a result automobile companies like Ford should try to build more environment friendly cars like hybrid cars. Industry environment (Porter) Porter’s five forces can be analyzed in the context of automobile industry to understand the industry more closely. The five forces are buyers’ bargaining power, suppliers’ bargaining power, competition among rivals, threat of new entrants and threat of substituent. Buyers’ bargaining power Individual automobile buyer hardly has any bargaining power that they can be imposed on the manufacturer. However a group of buyers can influence the decision of any local dealer. The local dealers together can certainly influence the decision of the manufacturer like Ford. Suppliers’ bargaining power Suppliers are always found to be very powerful in the process of negotiation. Any automobile company heavily depends on the raw materials, parts and labor. Companies like Ford require each of these items within the specific time without compromising the quality in order to have sustainable competitive advantage. As a result it is very important to maintain an effective relationship with the suppliers. Competition among rivals Automobile industry is highly competitive in nature. There are giants like Toyota, General Motors, and Honda along with several other medium and small sized global as well as local players. Threat of new entrants Threat of new entrants is not a matter of concern for the existing automobile players. It is very important to have sufficient amount of resources in terms of capital and labor to get into the automobile industry and for a new company it is very difficult to accumulate the required amount. Moreover every automobile company must have its own strong network of supplier and dealers. Thus for a new company it is difficult to form these networks. Threat of substituent It is very much possible that the technology that is being presently used in cars can be replaced by a new technology. This is the main reason behind the fact that threat of substituent is high in the automobile industry. Strengths and weaknesses Ford is a more than 100 year old automobile company. As a result it has huge experience in the industry and this is the main strength of the company. In addition to its experience the company has high market share in all the important markets in the world. In UK, Ford had almost 15.9% market share in 2009. In 2008 the figure was 15.1% (Buck, 2010). Such a huge market share is definitely a major strength of the company. Excellent brand image is found to be a major strength of the company. Popular brands of Ford include Ford, Mazda, Lincoln, Volvo and Mercury (India Ford, n.d.). These are globally renowned brands. Brand image of each of these brands help Ford to improve its performance year after year. Ford has total debt of 31.5 billion dollar. However according to a recent report published by United Press International the company will pay almost 6 billion dollar by the month of April, 2010 to reduce the huge pressure of debt (United Press International, 2010). Even if the company pay 6 billion dollar there will still be almost 25 billion dollar debt which need to be cleared by the company. This is a major weakness of the company. In the last financial year the company made huge loss. According to a report of Guardian, Ford’s loss is found to be $14.6 billion which is the biggest annual loss in the history of the company. The company is still recovering from such a huge amount of loss, thus the present financial health is certainly a major weakness of the company. Opportunities and threats Being one of the largest automobile manufacturers in the world, Ford has the opportunity to improve its current position by focusing more on the emerging markets like China, India, Brazil and South Africa. China has already beaten USA in the competition of number of automobile sales. Other countries are also emerging as huge automobile markets. In addition to focusing these markets Ford can give more attention in innovating and implementing new technologies. As far as threat is concerned the company should be conscious of its competitors and global economic scenario. Competitors like Toyota, General Motors and Honda will continue to throw tough challenges. They are always trying to come up with new advanced technologies, innovative models and designs to attract more and more customers. As far as economic scenario is concerned recent recession has already made the business environment challenging for almost all the automobile companies including Ford. Ford needs to rethink over its strategies to succeed in this economic scenario. Alternate strategic approaches Alternative strategies can be developed on the basis of the above SWOT analysis and its findings. It is found that huge experience is a major strength of the company. Ford needs to use such huge experience and develop some effective strategic partnerships in order to improve its market share. This strategy should be more effective in the developing markets as compared to the already developed markets. There are several small local players in these developing markets. These players have excellent knowledge about the markets where they operate. If Ford make strategic partnerships with some of these players depending on the market situation and properly manage these partnerships with its huge experience, it should be able to improve its market presence in the emerging markets. With the excellent brand image that the company has, it can develop new models focusing on the demand of the consumers in the developing market. In markets like India, companies are mainly focusing on building small cars which are energy efficient. Ford with its excellent brand image, technical expertise and huge experience can come up with innovative models of small cars which will be technologically much advanced than that of the local companies’ cars. Safety is a major issue in case of these small cars. Ford can give more importance on this aspect if it decides to come up with small cars. The company’s brand image will help it to gain consumer confidence regarding this issue. Competitive advantages / CSF’s Ford’s global manufacturing strategy has helped the company in the process of gaining competitive advantage. It is found that Ford is the only automobile company that truly executes the global Powertrain strategy. The company is in the process of building of a global network of transmission plants and flexible engine. These plants are capable of responding very fast to the changing needs of market as well as enhancing the manufacturing efficiency and quality. Under this global powertrain strategy a medium sized production model will be used in the company’s next generation plants. Almost 325,000 units will be produced annually. Furthermore, plant floor layout and manufacturing equipment will be similar throughout the world. This will reduce the capital investment costs. Under the powertrain strategy it is possible to cross-ship the components between the two plants. This is expected to ease the process of a new operation and also increase the speed of that operation (Ford-a, n.d.). Conclusion Ford is one of the largest and most prestigious automobile manufacturing companies in terms of number of car sales in the world. It is a century old organization that has dominated the global car market for a long time. The industry in which the company operates is highly competitive in nature. However the company will be able to survive in the competition by focusing more on its strengths, converting its weaknesses into strengths, capitalizing on opportunities and being conscious of threats. Ford’s major strength is its experience, strong brand image and high market share. On the other hand the company has also incurred a huge amount of debt which has weakened its financial health. However, Ford can improve its position by utilizing the opportunities it enjoys in the global market especially in the emerging markets. Any strategy adopted by the company should be based on these findings. Forming strategic alliances and introducing new products in the developing car markets like India and Brazil should be Ford’s two major strategies. Proper Execution of powertrain strategy is the main competitive advantage that Ford enjoys. Such strategy will help the company to enhance its quality as well as its efficiency. References Buck, J. January, 2010. Ford's Fiesta, Focus Top U.K. Car Sales, The Wall Street journal, [Online] Available at: http://online.wsj.com/article/SB10001424052748704130904574644122850140840.html [Accessed on April 13, 2010] Central Intelligence Agency, No Date, United Kingdom, World Fact Book, [Online] Available at: https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html [Accessed on April 13, 2010] Dobson, P. Starkey, K. Richards, J. 2004, Strategic management: issues and cases, Wiley-Blackwell Euro Found, No Date, Organisational background, Ford, UK: Business creation and entrepreneurship, [Online] Available at: http://www.eurofound.europa.eu/areas/qualityofwork/betterjobs/cases/uk06ford.htm [Accessed on April 13, 2010] Ford, No Date, One Ford Mission, About Ford, [Online] Available at: http://www.ford.com/about-ford/company-information/one-ford [Accessed on April 13, 2010] Ford-a, No Date, Global Manufacturing Strategy Gives Ford Competitive Advantage, [Online] Available at: http://media.ford.com/article_display.cfm?article_id=13633 [Accessed on April 13, 2010] India Ford, No Date, Ford Global, [Online] Available at: http://www.india.ford.com/servlet/ContentServer?cid=1178851242762&pagename=FIPL%2FDFYPage%2FFord-Default&c=DFYPage&site=FIPL [Accessed on April 13, 2010] Northern Arizona University, No Date, Mission Statements, [Online] Available at: http://www.prm.nau.edu/prm383/mission-statements.htm [Accessed on April 13, 2010] United Press International, March 29, 2010. Ford to make $3 billion debt payment, Business news, [Online] Available at: http://www.upi.com/Business_News/2010/03/29/Ford-to-make-3-billion-debt-payment/UPI-39601269889484/ [Accessed on April 13, 2010] Read More