Strategic Analysis
Industry Profile
The American automotive industry has received a significant boost recently, with the increase in the options for the sustainable production process and the impact of the Internet of Things on the design of cars and other vehicles. Therefore, the maturing U.S. car industry has experienced quite a rise recently, with customers’ needs changing and the levels of car sales increasing by 0.3% in 2018 (American Automotive Policy Council 2018).
Companies such as Ford, General Motors, and Fiat can be seen as key competitors in the U.S. market, which is a case worthy of analyzing. Specifically, Ford has been performing quite well in the automotive industry setting, its recent revenue being $41.793B, which exceeds the previous one by 1.13% (American Automotive Policy Council 2018). With 199,000 employees, Ford has retained their position as a leader in the target domain despite the challenges linked to the necessity to process larger data and the need to produce environmentally friendly cars (American Automotive Policy Council 2018). By introducing an innovation-driven strategy into its environment and enhancing communication, Ford will maintain its position as a leader in the U.S. automotive industry.
Organizational Purpose
Ford’s current mission embraces the idea of cooperation as the platform for future improvement and particularly the advancement of the automotive industry. Ford has been following its mission and vision closely, with its ethical code of conduct being rooted in honesty and integrity. Creating a strategic initiative that will allow the firm to remain relevant is critical for a company that has been in the public eye for decades and whose product has slightly lost its novelty (Agarwal & Brem 2015). Both the company and its competitors have been experiencing a significant rise in the target market, with the revenue streak rising for Ford, GM, and Fiat ($41.793B, $38.399B, and $32.084B correspondingly) (American Automotive Policy Council 2018).
The balance sheets of each company have also been very strong in 2018 (American Automotive Policy Council 2018). Nonetheless, introducing the innovation that will define the further development of the industry would make it possible for Ford to keep its popularity rates high. Ford has an unbroken record of success, and it has pursued mostly the goals of providing innovative solutions and high-quality products based on the company’s records.
Internal and External Environment
Ford has been quite successful in all possible environments of its functioning recently. The company owes this success to not only the favorable environment in which it operates but also the strategy that allows it to use these opportunities fully. For example, the international trade agreements and the active support of the U.S. government help Ford to pursue its goals (Agarwal & Brem 2015).
Besides, the recent positive change of the U.S. automotive industry is an important opportunity for Ford. Regarding social changes, the demand for smart, eco-friendly vehicles, and the increase in the wealth gap present several important opportunities for Ford and its recent project (Agarwal & Brem 2015). The organization meets the expectations of stakeholders, with Ford’s key success factors including the integration of innovations and stakeholders’ satisfaction.
Table 1. Ford: PESTLE.
Table 2. Ford: SWOT.
The internal resources of the company are quite vast. The key strengths of Ford include the recent success of its pick-up truck line, its profitability, and its brand reputation (Ford 2018). At the same time, there are certain weaknesses in Ford’s design, such as quality control (given the recent recalls) and poor representation of the brand in developing markets (Ford 2018). Ford can exploit the resources linked to digital technology and innovations, whereas the financial constraints such as changes in the currency fluctuations represent a certain threat. So far, the company’s innovation-driven philosophy is what defines its competitive advantage.
Competition and Success Factors
The competitive environment in which Ford has been operating is quite rigid. The automotive industry in the U.S currently represents an oligopoly, with several organizations controlling it and defining trends within it. Therefore, the threat of new entrants and substitutes is quite low, as well as the bargaining power of suppliers (see Fig. 1). The bargaining power of buyers, however, is moderate since most revenues received by Ford come from individual consumers who buy vehicles for personal use (Nicholas 2018). The combination of the described factors makes the competition rates within the industry very strong. Therefore, the extent to which Ford is ready to provide comfort to its buyers and reciprocate their feedback will determine the organization’s success in the future.
Strategic Development
Existing Strategy
The company’s current strategy can be viewed as both people- and technology-oriented since Ford seeks to meet the increasing demand with the help of technological tools. IT devices are used to enhance the communication between Ford and its partners, receive feedback from buyers, and ensure that it introduces innovative solutions to the car industry. Thus, the current strategic objectives of the company seem to revolve around the promotion of innovations at all levels of its functioning, from the production-related to the organizational one. The specified approach seems considerably reasonable given the current trend in environmentalism.
The business streams within the organization are quite compatible since they are linked to the development and application of innovative technology in the automotive industry. Car sales are the most obvious ones, yet they are far from delivering the highest returns to Ford at present. The revenue stream of the highest value is presently the loans that the company gives to car dealers and individual customers (Nicholas 2018). Therefore, the organization has been experimenting with the revenue sources that are seemingly outside its comfort zone. The focus on the introduction of smart technologies into the range of services that Ford has to offer can be interpreted as the attempt to introduce another revenue stream of the framework of the already existing ones.
Strategic Options
Presently, there are several ways for Ford to add new strategic options to its revenue stream. Because of the need to focus on the creation of smart infrastructure, the firm will need to design the corporate philosophy that will enable employees to build the required infrastructure and increase the quality control processes. The proposed strategy will allow Ford to establish a well-designed smart infrastructure that will make it possible to meet new demands. Specifically, the responsiveness of the services provided by Ford will rise systematically, which is particularly important given the source of the current highest revenue stream for the organization.
At the corporate level, Ford seems to be aware of the strengths and weaknesses of its strategy. For instance, the organization has been promoting an innovation-based culture in its setting for a while with the focus on the development of smart technologies. Similarly, Ford has been placing a strong emphasis on the enhancement of the company-customer dialogue as the method of improving the quality of the firm’s services (Nicholas 2018). The resulting outcomes show that while needing major improvements in its communication strategy, Ford has been following the principles defined by its corporate philosophy quite closely.
Evaluation of Options
The company currently has several options regarding its further development. For instance, given the current position of the organization, the next strategy that it could use may include enhancing the current approach toward quality management by implementing the Total Quality Management (TQM) principles. The proposed tool will encourage the organization to reduce the costs by cutting waste levels and developing rigid supervision standards (Ahmad et al. 2016).
The use of the TQM approach will lead to focusing on the specific needs of customers, thus defining the further development of the organization. Also, the identified technique will help Ford to resolve the quality issue by connecting the idea of an impeccable workplace performance of the existing corporate philosophy and values. Furthermore, the adoption of the TQM principles will help Ford to champion the idea of continuous professional growth among its staff members. As a result, Ford will invest in the development of its organization and improve its relationships with customers.
Choice of Strategies
The selection of the strategies with the help of which the key objective will be attained is based on corporate values and philosophy. Specifically, due to the focus on customer satisfaction and the necessity to meet new demands, the organization will need to adopt the strategies that will allow for the fast processing of data and the immediate integration of innovative tools. For this purpose, developing an exploring strategy model seems to be the most legitimate solution since it will give Ford a chance to study the possible implications of applying innovations to the corporate environment (Ahmad et al. 2016).
Besides, the proposed tool will enable Ford to make the most efficient use of its strengths and resources, improving its weakest areas. Furthermore, the organization will have a chance to focus on the opportunities that it will encounter in the target setting (Nicholas 2018). The identified framework may need to be coupled with a resource-based view given the need to reduce the levels of waste and increase the utility of the company’s choices.
Furthermore, the company will have to institutionalize the newly adopted standards which will be faster and more effective with the enhancement of its value chain. Particularly, Ford will need to focus on the R&D aspect thereof due to the significance of innovative thinking and the recent project involving the development of smart infrastructure. The application of an R&D-focused approach and the use of the company’s financial resources to improve the communication process and build a coherent infrastructure system for its smart services should be deemed as the key strategies. Thus, Ford will need to adopt the approach that will enable it to develop an easily distinguishable competitive advantage in the realm of the U. S. car industry.
Implementation
The process of putting the selected strategy into action will have to start with the integration of new communication and data management techniques into the organizational framework. As a result, the platform for improvements will be created. Shaping the corporate values toward a customer-focused and innovation-driven performance will be the next step followed by setting rigid and distinctive quality guidelines and standards for employees to follow. The specified change will be supervised with the help of the TQM approach and the integration of the value system based on taking care of the needs of all stakeholders involved. Besides, the principles of continuous positive change will have to be incorporated into the organizational value system.
It is expected that the selected strategy and the proposed change will meet rather vocal reluctance among staff members. Indeed, due to the need to build a new skill system and acquire the knowledge required for effective information management, staff members may experience excessive pressure. To counteract the identified hindrance, Ford will have to provide employees with additional benefits such as free training opportunities and career development options. Thus, the employees will receive the impetus for increasing their performance levels.
Promoting a positive change within the context of the Ford company will mean enhancing its competitive advantage through an innovation-driven philosophy. The identified framework will help Ford to multiply its advantages and address some of the controversial issues such as the environmental footprint that it currently leaves. Moreover, chances for improving company-customer communication and receiving more detailed feedback that will inform Ford’s further choices will be possible. Thus, the organization will have to integrate the suggested strategy into its corporate environment.
Reference List
Agarwal, N & Brem, A 2015, ‘Strategic business transformation through technology convergence: implications from General Electric’s industrial internet initiative’, International Journal of Technology Management, vol. 67, no. 2-4, pp. 196-214.
Ahmad, MA, Asaad, MN, Saad, R, Iteng, R, Irwan, MK & Rahim, A 2016, ‘Quality management practices and organizational performance: impact of sustainable product development’, International Journal of Supply Chain Management, vol. 5, no. 4, pp. 104-107.
American Automotive Policy Council 2018, State of the U.S. automotive industry. Web.
Ford, H 2018, Today and tomorrow: commemorative edition of Ford’s 1926 Classic, Routledge, New York, NY.
Nicholas, J 2018, Lean production for competitive advantage: a comprehensive guide to lean methodologies and management practices, 2nd edn, Taylor & Francis, New York, NY.