Competitive Position of Ford Mustang in the Industry - Assignment Example

Company Analysis: Mustang Ford Mustang Ford is a creation of Ford Motor Company (Bowling, . Currently, Ford is strategically placed in the automobile industry. It is categorized as a major firm in the industry that competes with other firms that produce similar products. It faces both international and domestic competition, and this has huge impacts on the industry’s motor operational planning. Domestic competitions that Ford faces are from General motors and Toyota, while China and Japan are its main international competitors. Its competitors have appropriate development strategies that enable them to retain and also attract more customers, for instance, by lowering their costs, improving quality of their products, and producing vehicles with attractive features. Ford is forced to adopt the same strategies to compete with these industries and stay competitive in the ever changing market. Define the strategic groups in the industry A strategic group in the automobile industry consists of industries which face the same factors of competition and carry out the same strategies in similar strategic dimensions. According to Mahoney (2005), strategic groups in the automobile industry usually begin with the choice of dimensions of strategies. Different dimensions will be employed in defining strategic groups: quality of products, cost position, identification of brand, services, financial leverage, and specialization. According to DMCA (2011), strategic groups in the automobile industry are classified as follows: Group 1: global broad-line producers like Toyota, Nissan, Honda, Daimler Chrysler, GM, and VW. Group 2: luxury car manufacturers – for example, Jaguar, Rolls Royce, and BMW Group 3: global suppliers of narrow model range – for example, Volvo, Subaru, Isuzu, Suzuki, and Hyundai Identify threats and opportunities facing different strategic groups within the automobile industry According to Direkci (2009), threats that different strategic groups in the automobile industry face are: Increased gasoline prices. This has resulted in consumers’ preferences diverting back to larger cars that do not consume much fuel. Global economic recession. The economic recession in the world has led to the decrease in sales of new cars. Reluctance of banks to give car loans. Unavailability of credits from banks puts much strain on Ford’s capital. Ford has to ensure that its sales are stabilized, or it may be forced to seek monetary assistance from the government. Opportunities in the automobile industry are: More customers now have the desire to own more modern and hybrid vehicles. Ford has greatly considered its consumers needs and is making active transitions into this market (Thorpe et. al, 2009). More customers are now opting for environmentally friendly vehicles. Ford has taken advantage of this opportunity by developing an ‘Eco Boost’ technology, which the industry is using to manufacture cars that have 20% greater efficiency in fuel use and also have reduced carbon dioxide emissions (Hitt et. al, 2012). Due to the increased environmental awareness, manufactures make environmentally friendly vehicles that are more marketable because of the need to conserve one’s environment. There are few manufacturing automobile industries compared to the number of consumers. New technology is available in this industry, and this has made it possible to manufacture cars according to what consumers prefer. Mobility barriers Mobility barriers will prevent the industry from moving to a different strategic group. These mobility barriers will ensure that the industry does not face increased rivalry and that it still is able to make sufficient economic profits (Mahoney, 2005). The mobility barriers the firms face when they want to change their competitive positions in the industry are government policies, capital requirements, economies of scale, differentiation in products, learning by doing, and the expected retaliation. Discuss any other competitive dynamics not addressed in the above analysis Political factor is also considered as a competitive dynamic that has great influence in an industry’s strategic planning, especially due to laws, policies, and regulations that are set by the government (Mahon and McGowan, 1996). These laws and regulations advocate for production of automobiles that are more environmentally friendly. Concerns have been raised by various groups regarding environmental safety. Ford, therefore, has complied by producing automobiles that will ensure pollution levels are reduced. These government policies force Ford to comply with the environmental laws by manufacturing vehicles that are environmentally friendly and fuel efficient. If Ford fails to conform to the set rules, it will have to pay a heavy fine that will be costly to the industry (John, 1999). Technological changes can also be considered to be competitive dynamics in the automobile industry. As technology continues to change, manufacturing strategies of the automotive industry also have to change. Change also has to occur in the assembly of motor vehicles and marketing methods. This industry has to adapt for it to keep up with the stiff competition in the automotive industry (Parry & Graves, 2008). Evaluate the firm’s competitive position in the industry before and after the strategic move Ford has continued to be highly vertically integrated, and this has made it possible for the firm to improve its efficiency through specialization and the economies of scale. Ford is also known to manufacture a wide variety of cars, thus giving its customers a wide range to choose from. Firms within the same strategy group followed similar strategies and also faced the same opportunities and threats. This fact made it possible for the firms to avoid price competition and attain high sales that generated above average profits. Following the need of the government and consumers to have a clean environment, Ford ventured into a new field of manufacturing automobiles that are environmentally friendly (Haig, 2011). This has made it possible for Ford to maintain and attract more customers, and, therefore, the company is still able to effectively compete in the automotive industry. Success of the strategies applied by Ford has provided the firm with a high performance level in the automobile industry. This strategic move will give a competitive advantage to the company over the other automobile manufactures and make the company’s vehicles more attractive to consumers. Emerging threats and opportunities in automobile industry that are not covered in the 6 forces or macro-environmental analyses Suppliers’ power is a threat in the automobile industry. This can be seen in terms of supply of intermediate parts. Changes in production in the automobile industry will have huge impacts on supplies, since many suppliers of parts rely on contracts with maybe one or two automobile firms. The firms, therefore, have to solidify supplier viability by reducing the number of suppliers it contracts with, so that it may still maintain its production processes during difficult economic times (Thorpe, et. al, 2009). References Bowling, B. (2010). Ford Mustang. CA: Motor Books International. Direkci, K. M. (2009). Strategic Management. Retrieved from http://www.belgeler.com/blg/280k/ford-motor-company-analysis DMCA. (2011). Intra-industry analysis. Retrieved from http://freedownload.is/ppt/intra-industry-analysis-81107.html Haig, M. (2011). Brand Success: How the Worlds Top 100 Brands Thrive and Survive. Philadelphia, PA: Kogan Page Publishers. Hitt, M. A., Hoskisson, R. E., & Ireland, D. R. (2012). Strategic Management: Concepts and Cases: Competitiveness and Globalization. Mason, OH: Cengage Learning. John, S. (1999). Factors That Influence Ford Motors Operational Planning. Retrieved from http://www.ehow.com/info_7757855_factors-ford-motors-operational-planning.html Mahon, J. F., & McGowan, R. (1996). Industry as a Player in the Political and Social Arena: Defining the Competitive. Westport, CT: Greenwood Publishing Group. Mahoney, J. T. (2005). Dimensions to Consider for Structural Analysis (Strategic Groups) within Industries. Retrieved from http://business.illinois.edu/josephm/BA444_EMBA_Fall_2003/emba444_08.html Parry, G., & Graves. A. (2008). Build to Order: The Road to the 5-Day. London: Springer. Thorpe, J., Slade, B., & Bender, R. D. (2009). Strategic Report for Ford Motor Company. Retrieved from http://economics-files.pomona.edu/jlikens/SeniorSeminars/oasis/reports/F.pdf Read More