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This paper delves into the problems Ford Motors is currently experiencing within its primary markets due to competition from foreign brands as well as cathartic sales. Within the U.S., which is the primary market of the company, Ford Motors has been experiencing an influx of competition from foreign brands such as Toyota, Honda, Hyundai, and Subaru which appeal to U.S. consumers due to their affordability and their gas mileage.
It can also be clearly seen that the current markets of Ford within the U.S. and Europe are far from ideal due to a lagging economy in both these regions which has impacted the capacity of consumers to make car purchases. As such, this necessitates expansion into new markets in order for the company to survive and uphold its commitment to shareholders.
It is based on this that what will be examined is how Ford overcomes such challenges through international expansion, the use of new Enterprise Solutions as well as the implementation of social network advertising and promotion.
In order to survive, Ford needs to expand into new markets and develop a new line-up of cars that appeals to present-day consumers. Within the past five decades, the Ford Motor Company has gone from being the most prominent car brand in the world to be the third or even fourth most popular brand. The reason behind this shift is related to the subsequent proliferation of brands such as Toyota, Honda, and Subaru, all of which have car models that are cheaper and more efficient than the current iteration of Ford cards.
It should also be noted that within its primary markets (i.e., the U.S. and Europe), Ford has experienced a drop in sales due to cathartic market expansion which, when combined with lower levels of employment, has significantly affected the company’s profits.
To address the issue of competition from cheaper brands and low product sales, the company has attempted a solution, namely: expansion into new markets as well as the development of new types of vehicles to address new market segments.
In relation to this strategy, the company should attempt to market and promote its products through social media since an examination of its current strategies reveals a lack of sufficient social media promotion which may contribute to its dropping relevancy among young consumers.
To facilitate this expansion into new international markets as well as address the development of its new line-up of cars, the company has launched its P.I.M. initiative wherein it utilizes WebSphere and MQSeries so as to integrate its various enterprise applications into a cohesive whole which, theoretically, should result in improved operations across international and regional borders.
It is based on what has been presented so far that this paper will delve into the competitive environment of Ford Motors and examine the strategies that would aid it in being able to survive in its current market environment.
Founded in 1903 by Henry Ford, the company has expanded its operations into different brands resulting in multiple types of cars being owned by a single company. To better illustrate this point, it is necessary to examine how Ford differs in comparison to other organizations that control multiple brands. For example, Kellogg’s has multiple brands such as Captain Crunch, Frosted Flakes, and Fruit Loops. While each item that is being sold is different in its own way, the management of the product remains under a single tier structure.
What makes Ford different is that each individual car brand it has acquired or created, such as the Land Rover, Jaguar, Volvo, Mercury, etc. has its own independent management tier structure. This particular management structure is further compounded by the various relationships the company has with individual dealerships which also creates another management tier involved in the sale and distribution of cars through sellers on a regional basis based on the expansion of brands into target markets
Competitive Forces and External Market Conditions
Within the U.S., which is the primary market of the company, Ford Motors has been experiencing an influx of competition from foreign brands such as Toyota, Honda, Hyundai, and Subaru which appeal to U.S. consumers due to their affordability and their gas mileage. In fact, based on data from Bonini & Kaas (2010), 1 in every four cars on America’s roads at present is a Toyota which various consumer groups state is one of the most affordable and gas-friendly cars out there.
In comparison, car models from Ford always rank the highest in terms of aesthetics, horsepower, and amenities; however, they rank the lowest in terms of affordability and gas mileage. While this was not an issue during the 1990s when gas was cheap, and the economy was doing well, the subsequent transition of the U.S. economy into the 21st century brought with it a considerable reduction in the economic capacity of individual U.S. households as well as resulted in an increase in the price of gas and basic commodities.
Upon closer examination, it can be seen that the market for motor vehicles within the U.S. at present has issues related to the current state of the economy which is not conducive towards high levels of purchases from consumers. The reason behind this can be correlated to the 7% unemployment rate within the country, which has affected the ability of consumers to purchase new car models. As a result, low sales within the company’s primary markets have impacted its bottom-line resulting in the various factory closures that have been reported in the news as of late.
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When examining the global demand for the products of Ford Motors, what should be taken into consideration is that Europe at present has been impacted by a debt crisis, housing crisis, as well as a considerable slowdown in its economic output due to high taxes and its aging population. As a result, many people within the region are hesitant to take out bank loans for cars due to the general atmosphere of uncertainty, which pervades the European economy.
This has impacted Ford’s international operations to such an extent that nearly 50% of its foreign earnings for the 2008 – 2010 quarter were effectively wiped out in Europe. Taking all the competitive forces and the current economic conditions within its local markets into consideration, it is immediately evident that in order for the company to continue to survive, it is necessary to transition into a new set of strategies so as to continue to remain relevant.
Upon further examination, it can clearly be seen that the current markets of Ford within the U.S. and Europe are far from being ideal and, as such, necessitates expansion into new markets in order for the company to survive and uphold its commitment to shareholders. To address such an issue, the company has begun to focus its attention on expanding into new markets in Asia such as those in the A.S.E.A.N. (Association of Southeast Asian Nations), Japan, and China.
With their growing economies and the subsequent increase in the purchasing power of their citizens, these new markets show considerable potential for growth. It is due to this that the company has begun aggressively expanding into these new regions in order to capitalize on the potential they have for increasing the profits of the company.
Another factor that should also be taken into consideration is the fact that countries such as China and the Philippines act as excellent locations for outsourcing various production facilities for Ford and, as such, act as a means for the company to save considerable amounts of money due to the lower operating costs associated with manufacturing goods through outsourcing.
By implementing such a strategy, it is likely that Ford Motors will capitalize on the growth of Asia as a means of expanding its customer base, which would create more sales for the company in the future.
When taking into consideration the lacklustre growth rate of the U.S. which is estimated to grow 2% by the end of 2013, as well as the current levels of economic uncertainty in Europe, this shows that the strategy of Ford Motors of expanding into different Asian markets is a sound one since focusing on proper market penetration in these growing regions could mean the difference between survival or being relegated into historical obscurity.
Despite this grim economic forecast, the economies of Asia (particularly the Philippines, China, Japan, India, Malaysia, and Singapore, etc.) have actually experienced steady and spectacular economic growth which has translated into increased consumer spending within the region within the past four years. This has actually been good news for the car industry due to the correlation between high economic growth and subsequent increases in the number of cars bought.
Enterprise Business System
The implementation of information systems within an organization can be considered a means by which a company establishes an electronic system to create an interface between people, technology and the organization that they are meant to support in order to carry out a specific action. For example, information systems are often utilized when it comes to supply chain management, organizational emails, technical support, and various internal methods of confirmation and communication.
Basically, it acts as a method of integration for a company which results in a better and more controlled process of operations that is streamlined to ensure maximum efficiency and effectiveness in its desired output. It is within this context that Ford Motors launched its P.I.M. initiative wherein it utilizes WebSphere and MQSeries to integrate its various enterprise applications in order to make sure that its operations are problem-free.
What you have to understand is that as a company expands into multiple markets, new systems are needed in order to enact specific procedures to keep operations going properly. This is especially true in instances when a company’s operations are located in different countries.
Thus, the enterprise systems of Ford Motors advocates strict adherence to a vertical style of dual authority matrix/ global matrix management, which is utilized to ensure proper controls are in place in all levels of operation. Each process flow and the decision is evaluated vertically within the company’s hierarchy, which enables it to monitor and control every facet of its operations down to individual managers and dealers.
Based on the needs of Ford, one way in which it could establish itself is by creating “fan pages” on the various social networking sites that are popular in the countries that it is trying to expand into. By doing so, this helps to connect the company to its possible consumers better and gives it a “human face” so to speak, which would result in better product awareness and possible product patronage.
Through the fan page, the company would be able to tell its consumers about new products and upcoming promos that they might be interested in. It is also interesting to note that through the fan page, the company can also better facilitate particular promotions such as discounts, special contests and other such methods of promotional marketing that are meant to entice greater public interest over a particular product.
Overall, through its expansion into China, use of WebSphere and MQSeries as well as the implementation of fan pages, it can be stated that Ford should be able to address the various issues it has with its competitors within its local markets.
When taking into consideration the lacklustre growth rate of the U.S. as well as the current levels of economic uncertainty in Europe, this shows that the strategy of Ford Motors of expanding into different Asian markets is a sound one since focusing on proper market penetration in these growing regions could mean the difference between survival or death for the company.