Automobile firm FORD - Essay Example

The rise in taxes in recent years has meant that petrol cars pay more VED. Companies have to take into account other laws such as new car warranties and the laws under the EU treaty such as those regarding location and block exemption. The market is oligopolistic. Ford has a high market share in 3 categories of cars. However, international competition, especially from BRIC countries, is a threat. The Ford brand has lost its appeal to the masses and is now termed as an old brand. In the market, there are high barriers to entry from financial constraints and regulatory requirements.

There is threat of substitutes from environment-friendly cars. Backward integration diminishes the power of suppliers. Customers have high bargaining power in this durable goods industry. The future strategies of Ford Motors should be focused on slashing prices, improving brand image and technological innovation. The automobile industry is perhaps an industry that has suffered the most in the current global economic crisis situation. Burdened by the lack of consumer credit and cutbacks in household expenditures, this durable goods industry has had to endure setback in sales growth.

Furthermore, the credit crunch has meant that the companies have found hard to draw capital from the pockets of investors. Oil price hikes and increase in credit costs pulled up the costs of manufacturing and put the giant manufacturers in the same league as small manufacturers with regard to problems faced. Companies like Chrysler have had to cut back on production in order to trim their inventories and reduce cost. Revill (2008) reports that Ford will reduce production at its Southampton factory in southern England in 2011 to 35,000 units, less than half of the 75,000 the factory built in 2007.

Despite this, the automotive industry has done quite well. According to Auto Industry (2007), in 2006, 1.4 million cars and 208,000 commercial vehicles were produced in the UK. SMMT (2009) reports