Assignment

1. Introduction

According to Michael Porter, ‘A strategy delineates a territory in which a company seeks to be

unique’ (brain.com). For this companies adapt some directions and scope over the long term,

which achieves advantage for organization through better usage of resources and competences

with in a changing environment and aimed at fulfilling stake holder’s expectation. Simply

strategy is about taking a holistic view of organization and map out what type of benefits to give

where you want to be in future and how to put a ceiling to imitate strategies of company

(Jhonson & Scholes).

This assignment describes a comprehensive analysis the Global market of Ford Motor Company,

includes an overview of the company, analysis of external environment, swot analysis , analyze the

strategic clock the strategy adopted by company and then moves on to the conclusion of the assignment .

2. Ford motor company

2.1 Company Profile

There are few companies as strongly recognized with the history and development of industry and society

more then hundred years as Ford Motor Company. Ford Motor Company entered the automobile industry

on June 16, 1903, founded by Henry Ford with 11 associates the capital of $28,000 in cash. The company

went to public on 17 Jan 1956 common stock goes on sales with 10.2 million shares on the first day

(ivythesis.typepad.com).

2.1.2 Globalization of Ford Motor Company

In 1980s entrance of Japanese’s Automakers into US market ford losses its market share, to

compete in automobile industry ford moved from multi-domestic strategy in which North

America and European automotive operation that develop products to serve their own markets

were merged on 1january 1995, to a global market strategy in which company had one operation

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that develops products for worldwide markets (Allan Afuah). This strategic change from multi

domestic to presented several benefits;

• Cost reduction

• Quality improvement

• Larger scale of R&D

• Uses standard parts and enjoying Economies of scale

• More bargaining power over suppliers

Today company is a global automotive industry leader based in Dearborn, Michigan, manufactures or

distributes automobiles across six continents with about 198,000 employees and about 90 plants world

wide, the company’s automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln,

Mazda, Mercury and Volvo. The company provides financial services through Ford Motor Credit

Company had about 350,000 new stockholders (annual report ford co, 2009). Its automotive-related

services include Ford Motor Credit Company. They are currently headquartered at Dearborn, Michigan

(US), and distribute automobiles, including cars and trucks, in 200 markets across six continents

(ivythesis.typepad.com). It operates 57 distribution centers and warehouses, 41 engineering,

research and development facilities, over 104 sales offices and 88 manufacturing facilities

worldwide (companiesandmarkets.com).The Company competes with General Motors Company,

Chrysler Group, Toyota Motor Corporation, Honda Motor Company, and Nissan Motor

Company (reuters.com).

2.2 Vision Statement

The vision statement of ford motor company,

“To become the world's leading Consumer Company for automotive products and
services” (ford.com).

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2.3 Mission Statement

We are a global family with a proud heritage passionately committed to providing

personal mobility for people around the world (ford.com)."

The core of this assignment is concerned with Strategic analysis that embodies of there major

parts:

• Macro analysis

• Industry analysis

• Internal analysis

(whatmakesagoodleader.com).

3. Environment Analysis

Macro Environment Analysis is the first step of a strategic analysis, sometimes referred to as an

external analysis, a pest analysis or a pestle analysis. Macro Environment Analysis is done to

identify possible opportunities and threats to your industry as a whole that are outside the control

of your industry. PESTEL framework is used to analyze the macro environmental factors

(whatmakesagoodleader.com). P.E.S.T.E.L analysis is the same as the macro environment

analysis but used the acronym

• Political ( Government stability, taxation policies, foreign trade regulation etc)

• Economic (Business cycle, GNP trend, interest rates, inflation, employment )

• Socio-cultural (population, demography ,lifestyle changes , level of education)

• Technological ( new discoveries, speed of technology transfer etc)

• Environmental (Environmental issues, global warming, pollution etcetera)

• Legal ( employment law , health and safety , product and safety )

(Johnson & Scholes pp140)

The core of this assignment is concerned with embodies of there major parts:

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• Macro analysis

• Industry analysis

• Internal analysis

(whatmakesagoodleader.com).

3.1 Environmental factors affecting ford co Pestel Framework:

Political Economic factors

• Taxation policy • Inflation

• Foreign ownership regulation • Economic trends

• Consumer Demand

• Global recession

Socio-cultural factors Technological Factors

• Life style change • Operations Capability

• Green vehicles • Supply chain collaboration

• Geographical Changes • Technological Improvements in

distribution

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Environmental Factors Legal Factors

• Climate change • Federal fuel standard

• Global Warming

• Energy security

3.1.1 Political Factors:

• Taxation policy

Government of UK has taxed roads users heavily to reduce CO2 emission.

• Foreign ownership regulations

Foreign ownership regulations and technological cooperation’s between countries helping the

ford in raising the funds and building the advanced models which can cope with the current

scenario (Dhanekula, 2009, pp10).

3.1.2 Economic Factors

• Inflation

Increase in fuel prices since 2008 in the sales in trucks and SUVs have drastically decreased,

customer behavior has changed very quickly and now they mostly demand the smallest, most

fuel-efficient vehicles (bignerds.com). Day to day increase in inflation rate significantly

affect ford.

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• Consumer demand

Consumer demand for better vehicle at low price and high quality cut the profit of ford badly

affected ford. The need to cut cost impacted their decision making and company went to

reduce cost by cutting vehicle development time (bignerds.com).

• Economic trends

1. Increase in cost of raw material like steel and oil

2. Increases in prices change the consumer behavior and willingness to buy ford

products.

• Global Recession

Global recession affected ford in 2007 but in 2010 ford cope with recession and increase it

sale in global market.

• Growth potential of target market

The growth potential of target market will determine the purchasing power of the buyer. That

is the major reason ford is operating in the countries like America, India and Brazil where the

growth potential is high when compared to the other markets (Dhanekula, 2009, pp10).

3.1.3 Socio-cultural factors

• Life style change

• Green vehicles

• Geographical Changes

3.1.4 Technological Factors

• Operations Capability

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• Supply chain collaboration

• Technological Improvements in distribution

• Product Development

3.1.5 Environmental Factors

• Global Warming

SUV’s was affected by global warming and produce more smog as compare to cars had

attributes half of profit of the company so to become environmental friendly ford has

changed policy and introduce electric –gasoline powered SUV. The change in their plan

caused costly to the ford.

3.1.6 Legal Factors

• Federal fuel standard

In 1997 global warming conference held and an emission regulation was imposed on

automobile manufacturers like ford violation of the regulation charged to the manufacturer.

As ford break regulation imposing fines on the company (bignerds.com).

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3.2 Competitive Analysis of Ford

Porter’s five Low Medium High

forces
• High cost of

switching company

• Government

Entry regulations

Barrier • Major brand

names

(Bradley ,etal,2005)

• Ford’s provision

of best services and

low prices

(Dhanekhula, 2009)

• Large product line

large number of

suppliers

(Bradley ,etal,2005)
Power of

Supplied

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• Price sensitive

customers

• Prevalence of

alternatives
Power of
• Small number of
Buyers
buyers

(Bradley ,etal,2005)

• Cars running on

electricity

(Dhanekula, 2009)

Threat of

Substitute

• Little

differentiation

Between competitors

• Presence of many
Competitive
player
Rivalry
(Bradley ,etal,2005)

3.3 Market Share of ford

3.4 Internal Analysis of Ford Motor Company

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Strengths Weaknesses

• Vast array of brand names • Sales decline as compare to

• More consumer choices competitors

 Cars • Huge unfunded pensions and other

Commercial vehicles(jeep ,vans ,truck) obligation(health& safety, working

 Heavy Vehicles environment)

(Dhankula,2009)
• Online marketing capabilities
• Barrier to adjust dynamics of global
(Dhankula,2009)
market caused low productivity
• Hierarchical functional structure
• Financial constraints preventing for
1. Project structure for project
investing in new models
development
(Bradley, etal ,2005)
2. Matrix structure for

manufacturing (Afuah,1997)

• Huge size of business (Afuah,1997)

• Global market (Afuah,1997)

• Biggest Distribution network

 45 distribution centers

 9500 dealer

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Opportunities Threats

• Opening up Asian markets • Quality products of Japanese

• Big size extend global reach automakers (Bradley, etal ,2005)

(Afuah,1997) • Price rise in raw material

• Production of the fuel efficient cars • Rapid growth of competitors

• Production of hybrid vehicles • Less capital spending

(Dhankula,2009) (Dhankula,2009)

3.4.2 Core competencies

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