Toyota and Ford Became Leadership in Management - Assignment Example

Strategic Management Unit 4 [The of the will appear here] [The of the will appear here] Comparison of Ford Company and Toyota Issues Ford Toyota Legal, Social and Economic Environments Families are becoming smaller; Internet has reduced the need for travelling; Laws regarding product recall are becoming stricter Recession has a negative impact on consumer buying power Families are becoming smaller; Internet has reduced the need for travelling; Laws regarding product recall are becoming stricter Recession has a negative impact on consumer buying power Management Structure Power in the hands of the upper management The management structure is more flexible to allow the company to be more adaptive towards change (Snavely, 2013). Operational & Financial Issues The company enjoys a strong financial position The company suffered heavy losses in the recent economic downturn Analysis of Strategic Intent Develop a strong position in the worldwide automobile industry by expanding geographic reach; Innovate its range of products (Ford, 2013) Become an innovative company through strong focus on R&D; Improve leadership and management practices Social and External Challenges People want company to be environmentally conscious; Demand for fuel efficient cars is increasing; Fuel prices are increasing which has led to decrease in demand for cars. People want company to be environmentally conscious; Demand for fuel efficient cars is increasing; Fuel prices are increasing which has led to decrease in demand for cars. Current Manufacturing Production Facilities in various parts of the world The company introduced the concept of assembly line production Production Facilities only in USA and Japan; New concepts of manufacturing such as Just in Time and Total Quality Management Facilities & Distribution System Strong distribution network Distribution in limited parts of the world; Mainly concentrated in Japan and USA Market Demand & Demographics High Market Demand especially in China High Market Demand Alternative Fuels & Propulsion Systems Hybrid Cars developed; Fuel efficient cars developed Superior cars in terms of fuel efficiency; Hybrid Cars are also superior in performance when compared to the rest of the industry. Ford Company Strengths 1. Ford has developed a strong brand image. It is considered to be one of the best car manufactures internationally. In an industry were brand image is important, Ford’s brand image is a big strength. 2. Ford has been able to develop economies of scale. It is one of the oldest car companies in the world. It is the company that developed the concept of assembly lines. It produces more than 6 million cars annually. 3. Ford also enjoys a strong financial position. When GM faced bankruptcy in 2008, Ford was able to sustain itself. It is currently ranked as the 44th most valuable brand. It ranks as the 27th most revenue generated company in the Forbes 500 List (Forbes, 2013). 4. Ford has also been able to develop an image of an environmentally responsive company. It does this through initiatives such as developing energy efficient cars and hybrid cars. The company has a wide range of products to offer to its customers. These include Ford Focus, Lincoln, Volvo, Land Rover etc. 5. Ford is also the only American car manufacturer to win FIA World Championship titles. 6. Ford has a worldwide presence that has been developed through subsidiaries and alliances. 7. This allows the company to benefit from extended geographical reach. Ford has become especially popular in China where it is considered to be the no. 1 selling car (LeBeau, 2014). Weaknesses 1. The company, however, has suffered from some bad publicity. The company has suffered from high product recall. Recently, the company has to recall 435,000 cars to repair rusty frames, faulty seats and other small issues (AP, 2014). This is starting to develop a bad perception of the company. 2. This is occurring at a time when the market has become saturated. The industry is led by giants. This has resulted in decline in market share for Ford given its faulty cars. 3. The company has also been struck by the recent economic crisis and is still recovering. 4. Ford Company has been unable to develop a strong USP in the market where the industry is controlled by few giant companies. 5. Consumer preference is shifting from big cars to small energy efficient cars given the change in family structures and lifestyles. This means that trucks and bigger cars are suffering from a decline in demand. Opportunities 1. The biggest opportunity offered to every car manufacturing company in today’s world is the possibility of developing energy efficient cars. 2. Fuel prices continue to increase which means the demand for traditional cars is going down. Consumers demand cars that consume less fuel and are more efficient. 3. Globalization has also allowed company to expand their consumer base globally. This is challenging for the company initially but once a company develops a strong position in foreign markets, it can reap substantial benefits. 4. Ford’s strong financial position also allows the company to acquire foreign company as an entry strategy. This would allow the company to benefit from a running production line and at the same time would kill the local competition. Ford’s position also allows it to develop cars designed for different cultures. Each culture is different and their requirement for a perfect car is different. If Ford is flexible enough to cater to local demand, it could develop a strong international presence. 5. Furthermore, the demand for cars is increasing. People are buying cars more easily as banks have decreased interest rates and buying cars on loans has become easier and more common. Threats 1. The biggest threat for the company is the presence of international giants. Competition in the automobile industry has become very intense. This means Ford has to work harder to develop and maintain its competitive edge. 2. Also as fuel costs are increasing, people are shifting towards using public transport. This could potentially impact the company if the company is unable to release a fuel efficient car. 3. The company also faces threat for its traditional cars that are not fuel efficient. Their demand is likely to go down which could mean closely entire assembly lines. 4. As fuel prices are increasing, the prices of raw materials are also increasing. This means increased cost price of the cars which translates as higher price for the consumers at a time when competition is stiff and Japanese companies are offering similar products at low prices. 5. Family size and demand of consumers is changing which means Ford has to remain adaptive to change. Proposed Strategy Ford needs to develop an internal focus right now. Its strong financial position gives it the advantage of investing in research and development. The research and development focus is important to allow the company to improve its product lines to prevent the problem of product recall. The aim should be bringing down product recall by 50 percent initially. For this, the company needs to evaluate its production facilities. The R&D focus is also important to develop innovative cars that are fuel efficient. If the company wants to survive in the industry, it needs to develop a perception of an innovative company. It should focus on becoming the Apple of the automobile industry. Toyota Strengths 1. Toyota, like Ford, has a strong brand identity in the automobile industry. This has improved in the recent times as Toyota has invested strongly in research and development. 2. The company enjoys the best research and development team in the industry. 3. This has resulted in the company releasing a wide range of products along with highly innovative products such as Kanban and Kaizen which are a break-through in the green vehicle category. 4. Toyota also benefits from the best production facilities and techniques. It was Toyota who introduced concepts such as Just in Time manufacturing and Total Quality Management (Magee, 2007). 5. Toyota is also focused on developing environmentally friendly cars. 6. The company has a flexible management structure where each region is given autonomy of its own. Weaknesses 1. When the global economic recession hit most companies hardly, it also impacted the financial position of the giant automobile money. The company suffered heavy losses as a result of the recession and was forced to take out loan from Japan Bank. The company’s losses amounted to be 7 billion dollars (Wilacy, 2009). 2. Also recently the company incurred losses amounting to 1.2 billion dollars for misleading its customers regarding the safety measures for its products (Muller, 2014). The company also had to recall around 3.5 million vehicles including some of its best sellers (Buss, 2014). 3. The company has not been able to effectively tap the emerging markets. It has mostly targeted the US and the Japanese market. 4. The company has not been particularly adaptive to the changing social culture where demand for cars is changing. 5. The company does not have a very strong distribution network. Opportunities 1. As prices of fuels are increasing and consumers are becoming more environmentally conscious, the demand for green vehicles is increasing. 2. Toyota has been able to release green vehicles that are superior in performance as compared to the rest of the industry. 3. The company can tap into emerging markets to benefit from extended geographic reach. 4. The company can benefit from marketing its hybrid cars and its strong focus on R&D. 5. The demand for cars is increasing as car loans are becoming easier to acquire. Automobile companies can develop partnerships with local banks to push the Toyota car forward. 6. The company can also use its flexible management structure to develop cars specific to a certain culture or country. Threats 1. Competition in the automobile industry is getting stiffer as the market is nearing its maturity stage. 2. It is also expected that demand for traditional cars such as Toyota’s Corolla will decrease drastically as customers will want to buy more fuel efficient cars and hybrid cards. 3. With the recent depression, consumers are less likely to invest in buying a new car as they do not have the purchasing power. 4. The demand for bigger cars is likely to go down as family size is shrinking. The demand for small and compact cars is one the increase. 5. The prices of raw materials are increasing at a time when automobile companies need to focus on experimenting with new materials and forms. Proposed Strategy The company needs to develop a strong position in the emerging market where the industry is still in its growth stage. The company should therefore expand its production facilities outside Japan and USA. The company also needs to invest strongly into marketing. It should develop a perception of an innovative company. This perception would be easy to develop given the fact that the company has a strong R&D focus. This would also allow the company to develop a positive brand image and shift the minds of the customers from its product recall. The company should at this time try to sell off its traditional cars at cut off prices. In the recession ridden economy, this will encourage customers to buy cars. Also the company would be able to improve its weakening financial position in this manner. References AP (2014) Ford recalls nearly 435,000 vehicles, CNBC, Retrieved from http://www.cnbc.com/id/101561424 Buss, D. (2014) Toyota Launches Massive New Safety Recalls in Shadow of GMs Woes, Forbes, Retrieved from http://www.forbes.com/sites/dalebuss/2014/04/09/toyota-launches-massive-new-safety-recalls-in-shadow-of-gms-woes/ Forbes, 2013, Ford Company, Retrieved from http://www.forbes.com/companies/ford-motor/ Ford, (2013) Strategy, Retrieved from http://corporate.ford.com/microsites/sustainability-report-2012-13/blueprint-strategy LeBeau, P. (2014) Ford retains worlds top selling car with Focus, CNBC Retrieved from http://www.cnbc.com/id/101566962 Magee, D. (2007) How Toyota Became #1: Leadership Lessons from the Worlds Greatest Car Company, New York: Penguin Group Muller, J. (2014) Toyota Admits Misleading Customers; Agrees To $1.2 Billion Criminal Fine, Forbes, Retrieved from http://www.forbes.com/sites/joannmuller/2014/03/19/toyota-admits-misleading-customers-agrees-to-1-2-billion-criminal-fine/ Snavely, B. (2013) Management changes huge turning point for Toyota, USA Today, Retrieved from http://www.usatoday.com/story/money/cars/2013/03/26/toyota-management-changes-bob-carter/2021639/ Wilacy, M. (2009) Japan asked to bail out Toyota, ABC News, Retrieved from http://www.abc.net.au/news/2009-03-03/japan-asked-to-bail-out-toyota/1607850 Read More