Ford's Business-Level Strategy - Assignment Example

Ford Motor Company Table of Contents Introduction 3 Question 3 Question-2 4 Question-3 5 Question-4 6 Question-5 7 Question-6 8 References 9 Introduction Ford Motor Company is one of the most prominent players in the global automobile industry. It is an American multinational corporation. Ford is already operating in the global market and has major market shares in Europe, Asia Pacific, South America and Africa & Middle East. At present the Ford Motor Company has acquired a decent market share in the global arena. This report is going to deal with Ford’s present scenario keeping certain factors like its business-level strategy, its value chain activities, its competitive forces analysis and competitor’s moves into account. Question-1 Define and Discuss Fords Business-Level Strategy: It has been more than a century that the Ford is operating in the auto industry. From its inception till today, the company has seen many ups and downs and had to change its strategies accordingly. Till 1980s, there wasn’t much competition but after the entry of Japanese car makers it became quite tough to sustain in the market without strong and effective strategies possessing the flexibility to suit itself to the changing demands of the market. The present scenario is becoming tougher with increased number of rivals entering the market. To sustain in the market, Ford has taken many steps. The most important decision was to implement the system of mass production and likewise Ford has done many rectifications in its operational and its manufacturing strategies. It has acquired the high economies of scale at plant firm and production level. They have replaced the skilled-worker with the large-scale, highly accurate and automated machines thereby reducing the labor cost and other disruptions. Next they have identified and separated the skilled and unskilled task and divided it among proper management personals. The skilled workers were given more responsibility with high wages. Then they coordinated the different stages of production process that takes places within and outside the firm. Besides they also included heavy capital investment, vertical integration, multiple resourcing and competitive bidding among the suppliers. All these applied strategies helped Ford to acquire a stable position in the competitive market. However there were certain periods of change where the company had to go through a transition phase. The market changes as the taste and the preferences of customer changes. Every car maker has gone through this phase but in the case of Ford, initially it failed to make a smooth transition (Studer-Noguez, 2002 p.14-98). Question-2 Explain how the Companys Value-Chain Activities can be Better Linked to Create Value for the Company: Ford is a multinational enterprise and its activities have far reaching impact on economic, environmental, social system. The value-chain activities of consumer durable goods like Ford’s car have more number of chains involved in it. Each stage of Ford’s value –chain has issues related to the stakeholders, environment, economic condition and social concern. The diagram below shows the different stages of value chain of Ford Motor Company. Figure 1: Value Chain of Ford (Source: Ford, n.d.) There are various issues at each stage and all of them are interconnected. Impact of these issues on the value of the company is very vital for sustaining itself in the long run. If these issues are not taken care off then the company may be trapped in sustainability concerns. The efficient handling of these four issues is very important since they include all the internal and external sub-issues like manufacturing efficiency, improving the relationships throughout the value chain, capacity to adapt and respond to variety of challenges present at every stage, meeting the customers needs as well as the stakeholders expectations and so on. Question-3 Explain how Ford can successfully Position itself in Terms of the Five Forces of Competition: Initially, the automobile industry of the US was dominated by the big three (GM, Ford, and Daimler Chrysler) but after the entry of the Asian car makers, the degree of rivalry has become very intense. ‘The great diversity of rivals in terms of cultures and associated philosophies has intensified rivalry in the industry’ (Bradley et al., 2005 p.-3). The threat of suppliers in the automobile industry is not intense and sufficient numbers of suppliers are available. The automotive industry requires a huge amount of capital investment and technical expertise which act as an entry barrier. However, the car makers from other market can enter the new market very easily. The threats of substitutes hardly exist as there is no alternative to private automotive cars. This industry remains marginally powerful as the product to consumer ratio is large (Bradley et al., 2005 p.4). In such a market, Ford can gain competitive position by putting itself where the force is the weakest. The consumer relationship and the service after sales can help Ford to gain faith in the mind of the consumers. Ford should also try to predict the industry situation and exploit the unexplored avenues before any rival recognizes it. For example, consumer are becoming more eco-conscious hence it should try to develop cars which emit less pollution. Question-4 Outline a Rough Competitor Analysis: Competitor Analysis is an important part of the strategic planning process. Before planning a strategy, an analysis of the competitor provides a clear picture of the company’s and the industry’s current scenario. It includes the scanning of the internal and external factors of the company. In this analysis strength, weakness, opportunity and the threat are taken into consideration. Ford’s competitors’ analysis is shown in a diagram below. Figure 2: SWOT Analysis of Ford As evident, the Ford has tight hold in different parts of the leading markets with profitable financial services division but it is losing its power in North American market. The opportunity is in the form of technical expertise to produce hybrid vehicles and the avenues present in Southern Asia. The threats that have emerged are due to increasing competition and high expenditure (Datamoniter, 2006, p.24). Question-5 Describe what can be learned about Expected Competitor Behavior by using the Model of Competitive Rivalry to Understand Fords Situation: The competitive rivalry describes the intensity of competition between the existing companies. In the present scenario Ford’s major rivals are DaimlerChrysler, General Motors, Honda Motor, Hyundai, Fiat etc. All of them are very strong competitors of Ford. After the poor performance in 2005, Ford’s competitors are on a rise, posing a great threat to Ford in its existing market. Ford has a vast market share in Asia and Africa but the rivals have already detected the opportunities present therein and are following Ford’s strategies to capture the tremendous potential. According to Eric Flamholtz & Yvonne Randle, General Motors has been competing with Ford not only in product and technology but also in management philosophy and organizational structure. Hence the competitors are too eager to take over the large market share of Ford (Flamholtz et al., 2001, p.29). Question-6 Explain what Role Strategic Leadership will play in helping Allan Mulally and the Organization Meet their Strategic Objectives: Ford is one of the largest car makers that have numerous divisions all over the world. Due to severe competition in Asia and Europe it is looking for other avenues to expand its market share. Thus it has become exceedingly important to restructure the organization according to the market criteria. In the domestic market US, it is losing its image for it has failed to realize the needs and reestablished itself accordingly. For this, Alan Mulally, the CEO of Ford needs to follow the strategy that will be multi functional at different layers of management and in the different divisions of its operation. It should focus and develop its core competencies in the technical sphere that will help it to introduce new types of vehicles. It also needs to identify the changes taking place in the market and in the consumers’ demand so that it can serve its consumer in a unique way much before the rivals do so. References Bradley, D., Bruns, M., Fleming, A., Ling, J. Margolin, L. & Roman, F. (2005) Automotive Industry Analysis. Retrieved May 5, 2010 from: http://www.srl.gatech.edu/Members/bbradley/me6753.industryanalysis.teamA.pdf. Datamoniter. (November 2006). SWOT Analysis Ford Motor Company. Retrieved May 5, 2010 from: http://www.brainmass.com/homework-help/business/business-analysis/119586. Flamholtz, E., Randle, Y., (2001) Changing the game: organizational transformations of the first, second, and third kind. Oxford University Press US. Ford. (No date). Our Value Chain and Its Impacts. Retrieved May 5, 2010 from: http://www.ford.com/microsites/sustainability-report-2008-09/operations-value . Grant, R.M. (2002). Contemporary strategy analysis: concepts, techniques, applications. 4th ed. Wiley-Blackwell. Studer-Noguez, I. (2002). Ford and the global strategies of multinationals: the North American auto industry. Routledge. Read More