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A business model refers to a company’s plan in respect of how it projects to profit from its operations currently and in the future. Therefore, a business model entails a unique procedure of determining the fundamental elements necessary for achieving the strategic business goals (Chesbrough, 2007).
In essence, a business model encompasses all the details of a firm’s operations both short-term and long-term perspectives. Ford as a one of the leading automobile manufacturers in the world operates on a strategic business model that enables its performance.
In the view of Ford’s business model, it endeavors to position itself in a competitive business environment that experiences changes (Chesbrough, 2007). A business model consists of various requisite elements, which must be present in order to accomplish a feasible, strategic, and profitable model.
To achieve this objective, Ford has founded a number of participants who would strengthen its presence in the market. Some of the strategic suppliers include Delphi Autoliv, Yazaki, Johnson Controls, Lear, Magna, and Visteon.
Strategic business alliances and partnership
Ford has developed a business strategy that aims at exploring numerous foreign and local markets. To maintain a strategic presence in the market, Ford believes in the power of strategic partnership with formidable supply chains with a wide network across the world. In establishing itself as top most business with a strong image, it has endeavored to maintain its reliability in respect of availability of products within the custom time.
Strategic entry into numerous and unexplored markets require that a firm develops a mechanism capable of beating the market participants who exist within the market. Although Ford exists in a wider market with extensive market coverage, it asserts that to maintain its leadership, it must pursue strategic partnership.
Informed of this imperative, it seeks to enter into new short-term and long-term agreements with specific suppliers of its marketing components on a global basis in order to establish a strong, and sustainable performance (Pateli & Giaglis, 2004).
Since Ford operates in an industry full of technological advancements, the need for a sustainable and hi-tech technology capable of addressing the dynamics of the market. The company ensures that its strategic partnership brings the leading-edge technology that affords to produce the best-of-breed automobile products that meet the changing market needs.
Additionally, the quest for sustainable environment, environmental stakeholders have leveled pressure for companies that contribute to production of green house gases to scale down their pollution.
In the wake of these demands for a habitable ecosystem, Ford has decided to belong among those companies that consider the issue of environmental sustainability (Chesbrough, 2007). Firstly, the company envisages producing automobile that considers the increasing oil costs due to the declining world oil products.
To ascertain this need, the company has invested huge sums of funds in research and development with a belief that it has the capacity to turn around the company’s product image. Therefore, Ford boasts of being a company with the most updated technology brought about because of both customer needs and environmental concerns (Pateli & Giaglis, 2004).
Competitive cost structures
The company has adopted a strategy that minimizes on the production costs and the operational costs that spun from product generation to maturity. Although the partnerships are strategically different modes of achieving the primary objectives, it remains a related element to the aspects of enabling a competitive cost structure with an ability to sustain the evolving product image of the company.
To ensure sustainable pricing of its products, Ford has demonstrated its ability to maintain a low-cost production plan that will enable customer-oriented prices. This strategy aims at establishing Ford as a company that leads in respect of price in relation to other competitors in the automobile industry. As a price leader, Ford will be able to induce other market features that remain advantageous to its operations on the global market.
Ford believes in the strength of growing its product portfolio in order to achieve its objective of maintaining strong market autonomy. Initially, Ford produced heavy automobile as compared to its immediate competitors such as Toyota, Honda, and Hyundai. To ensure that it reaches its target segments, it has formulated a strategic expansion aiming at producing products that address the varied needs of its growing clientele.
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Because of the growing needs for light vehicles, the company has tended to shift from the heavy automobile toward light-vehicles and other automobiles that consider the economies of consumption and costs (Shafer et al., 2005).
This strategy favors the ongoing challenges of the skyrocketing fuel prices and declining availability of oil in the market. To cope with these market realities, Ford Company has ventured into utilizing the automobile technology that embraces these market-driven dynamics (Shafer et al., 2005).
Differentiation entails a strategic plan to eliminate the common aspects of a product that delineates a company’s products from the rest of the competitors. This strategy aims at developing a model product unique in quality and image, yet affordable by average consumers on the market.
In ensuring that it maintains a high-quality product portfolio. Ford has adopted a differentiation plan that gives a unique feel of a quality brand capable of sustaining the historical brand of the company (Chesbrough & Rosenbloom, 2002).
The company aims at increasing its revenue streams through focus marketing and sales strategies. In a bid to achieve the objective of high profitability, the company has established a strategic marketing and distribution plan capable of maximizing the sales in order to achieve its projected plan (Chesbrough & Rosenbloom, 2002).
However, the company recognizes the innate challenges involved in the process of widening its market sales. The primary essence of strategic distribution is useful cushioning it against this vulnerability.
In this discussion, the paper notes the strategic importance of developing a business model. The analysis of the term business model entails all details aimed at designing plans to maximize on a firm’s overall future profitability.
Therefore, a strategic business model remains an essential element of a sustainable business capable of beating the challenges of the ever-growing business world. Ford as one of five leading automobile companies in the world has developed a state-of-art business model, which successfully sustains its position in the automobile industry.
As noted in the analysis, one of the elements adopted by Ford has been strategic partnerships with selected suppliers on the market to ensure its rapid entry into the unexplored markets. This strategy aims at exploring foreign markets that remain un-exploited by most players on the market.
The other components include the design of competitive cost structures, strategic growth, product differentiation, and revenue generation. These strategic alliances endeavors to bring on board the best of edge technology aimed at addressing the advancing technology in the automobile industry. Additionally, the company aims at utilizing the selected suppliers to distribute hi-impact automobile products in the global market.
Chesbrough, H. & Rosenbloom. R.S., 2002. The role of the business model in capturing value from innovation: Evidence from Xerox Corporation’s technology spin-off companies. Industrial and Corporate Change, 11(3), p. 529.
Chesbrough, H., 2007. Business model innovation: it’s not just about technology anymore. Strategy and Leadership, 35 (6), p. 12
Pateli, A.G. & Giaglis, G.M., 2004. A research framework for analysing eBusiness models. European Journal of Information Systems, 13(4), p. 302.
Shafer, S.M., & Smith, H.J. et al., 2005. The power of business models. Business Horizons 48(3), pp. 199-207.