Table of Contents
1.0. Executive summary. 2
1.1.1History. 2
1.1.2 Vision, mission statement and core values. 2
1.1.3 Ford Motor Company – Strategic Business models. 3
1.1.4 Market share, profitability and competitors. 3
1.1.5 Organization’s macro-environment 4
1.1.6 Ford’s competitive position. 5
1.1.7 SWOT table for Ford Motor Company. 5
References. 5
1.0. Executive summary
1.1.1 History
Ford Motor Company is a multinational corporation in the automobile industry with its base in America- Michigan, USA. The founder member is Henry Ford, and its history dates back in the year 1906, the firm is a successful family business that has experienced great success in its marketing due to its strong succession leadership.
The bestselling brands for the brand include Ford F series, including cars and trucks, namely; Fusion, Fiesta, F-150, Fairmont, Falcon, among many others. The firm assembles and sells vehicles under four major models: – Lincoln, Ford, Volvo and Mercury.
1.1.2 Vision, mission statement and core values
Ford motor company operates to improve automobile efficiency in the global market. The enshrining vision for the firm is “to be the world’s most trusted company, designing smart vehicles for a smart world.’
The enduring mission statement for the firm is “to make people’s lives better by making mobility accessible and affordable.” Ford has been enhancing the transportation of goods and people for the last century by offering quality and affordable automobiles globally.
The core values for Ford entail; People, Products and Profits. The firm aims to continuously improve its products to satisfy the growing markets with unique trucks, cars, aeroplanes and spare parts that deliver higher profit margins each accounting period. The successful brands have been evolving and advancing with the different generations of leadership from the founder Henry Ford to the current generation.
A symbolic representation of the philosophies by Ford is represented below.
The overriding principle for the success of the family firm includes Integrity, continuous improvement, quality, strategic alliances and harmonious employee involvement. The automobile company focuses on truth in offering the best and reliable quality vehicles, from the never-ending staff inclusion in the decision making and innovations from all stakeholders.
1.1.3 Strategic models for business
The firm is listed on the New York Stock Exchange (NYSE: F). Apart from manufacturing and assembling cars, the firm operates other business units like Ford Motor Credit Company (LLC), Changan Ford Automobile Corporation, Ltd, AutoAlliance (Thailand) Co., Ltd, Getrag Ford Transmissions GmbH, and Ford Motor Land Development Corporation. At the end of the year 2018, the firm closed with 199000 numbers of employees and annual revenue of $ 160.33 billion, whereby the $ 3.67 billion was the net profit (Enkhbayar, 2018).
1.1.4 Market share, profitability and competitors
The cash cow for Ford brands in the automotive sector which accounts for 43.7% market share in the automotive industry. The other business units include credit section, which accrues 7.48%, Ford North America segment has 45.99%, Ford South America Segment 47.65%, Ford Asia Pacific segment 23.57% and Ford Europe is 67.91%. The overall revenue growth rate was 9.12% for the year 2019.
Ford Motor Company faces stiff competition from General Motor Company, Hyundai Motor Company, Toyota Motors Company, Nissan Motors, Suzuki Motors, Tesla and Volkswagen Motors.
1.1.5 Organization’s macro environment
The leading automotive brand company has applied Porter’s five forces model to maintain its competitive position in differentiated markets. The forces include; threat to entry, new and upcoming companies pose a challenge to enter the automobile market and divide the market share to part from the large Ford’s market share.
The bargaining power of buyers is the other force. Buyers for the FORD brand are few, and they have low switching costs. Maintaining loyal customers is a significant challenge since buyers have a variety of options from diverse brands and affordable prices from competing for automobile firms.
Few supplier firms characterize the bargaining power of suppliers with no or few substitutes. The suppliers have the authority to withdraw supplies to competitors, which poses a risk to the profits of the firm. One of the suppliers is Apple Inc., which delivers technical expertise in the design and operational functionality of cars developed by Ford. The firm can easily bargain for better terms or even switch supplying the services to competing brands.
FORD faces the competitiveness of threats of substitutes. Other industry players like TOYOTA, NISSAN and HONDA have more unique brand models that are relatively affordable than Ford. The firm has a task to develop better models at affordable rates than it offers.
The last force is rivalry amongst existing firms. The Ford brand competes with strong brands in the same market to include Toyota, Mercedes Benz, Honda and Range rover. Ford has a task to develop more differentiated brands to attract and maintain loyal clients.
1.1.6 Ford’s competitive position
The five forces that affect Ford’s macro-environment are; rivalry amongst existing firms, threats of substitutes, bargaining power of buyers, bargaining power of suppliers and threat of entrants. The forces are overcome by the firm’s vision and mission to offer quality and trustworthy brands at affordable rates in differentiated markets. However, the firm still experiences losses and continues to lose part of its market share and revenues.
Development of more eco-friendly car models and trucks, collaboration with Uber apps to gain a more substantial market base and customer feedback. Furthermore, maintaining a strong relationship with employees to reduce the turnover and counter the adverse effects on the brand image and reputation on the face of the potential clients. The firm has an opportunity to penetrate the untapped market in different continents to increase its marketing activities, which will help grow the market share and consequent share profits.
1.1.7 SWOT table for Ford Motor Company
From the above table, the distinctive competence for Ford includes its huge network base, adept research and development capability and the diverse markets that it satisfies with the differentiated models and brands for all exchanges. The opportunities include environmentally-friendly vehicles that leave no dirty gases, expanding the customer portfolio by reaching out to the virgin markets. Ford can also engage a rigorous marketing plan like the use of transit apps and collaboration with technological firms and transport companies to adopt the firms’ products.
The downside of the firms’ weaknesses and threats require to be reduced by its effect on the declining revenue rates, poor reputation and strive in competition. Ford can work out on the product’s effectiveness in satisfying the needs and desires of customers through its vision and mission, which will help to retain its market position and overall profitability.
2.0 Portfolio
2.1.1 Corporate, business and operational strategies
Ford has applied a corporate policy of continuous innovation for growth and expansion in the smart world. The company is actively assembling and marketing three brands, namely Ford, Lincoln and Troller. The strategy ensures that the firm applies the most recent technology and trends to satisfy different market segments. For instance, the firm has managed to develop and market the Lincoln-Ford brand to cater to an affluent clientele. Other brands include Jaguar and Landrover, which are of high preference to the senior class clientele and customers with a taste for heavy machines cars, which off due to poor sales performance. The firm also applies the low-cost strategy to maintain the affordable feature of its overall brands. The expenses made are highly minimized by utilizing cheap quality products in developing the brand car models.
The corporate strategy also encompasses the growth strategy adopted by Ford. The firm recently collaborated with Apple Inc. as a growth strategy, Apple aids in the innovation and designing to technologically adept cars and trucks suitable for the evolving smart market. Some of the expected projects include the development of fuel-efficient vehicles, self-driven vehicles and more flexible cars with air-balloons in-case of accidents. The firm also collaborated with an electricity supply company to design electric driven cars under the brand name hybrid electric vehicle.
Ford has applied the acquisition concept as a growth plan. It has a total of 6.8 million as common stock by the year 2018 under the leadership of William Clay Ford Jr., which enabled the firm to acquire the Volvo brand. Ford has also received several other assembly points to delocalize its manufacturing process and increase the market base in several local countries and globally.
Business strategies are essential for firms to bring out their distinctive competencies and identify their competitive advantage to excel in the industry. Ford has continually incorporated plans which include strategic market penetration, market expansion and development. Initially, Ford operated in the American market to supply commercial vehicles. However, in the recent past, the firm has expanded its base to Asian markets, Europe, Pacific and down to have headquarters in Africa in South Africa, Nigeria and Egypt. The business strategy has enabled the firm to increase the employee’s creativity and innovativeness since the diverse markets require customized models for the varied needs and preferences.
Product expansion is a core business strategy to cover a more extensive market share and profit ratios. Ford is expansive in offering not only trucks, luxurious cars, SUVs and commercial models but also the Volvo brand, which entails some feminine aspects. Its design and functionality derived from the excellent female engineers who partner with Ford, thereby satisfying the market trend. On the other hand, Ford has an ample supply of racing cars, sports cars, police cars and heavy trucks for commercial operations. The product expansion strategy has also enabled the firm to diversify the business unit to credit facilities.
Ford credit alliance provides financial aid to people and firms to procure the vehicles. The product assures clients of continued partnership and service delivery before, during and after the purchase of the various brands. The expansion has enabled the firm to tap into developed and developing countries and grow the sales limits to higher levels. Ford has managed to penetrate the Chinese and Korean markets using these business strategies, which help the business to continue thriving.
Business strategies equally entail product diversification and acquisition of other firms. One of the major setbacks that Ford previously experienced was inferior quality products and a lack of trust from buyers. The disadvantage has been curbed by the strategy to offer improved quality brands with a longer lifespan and availability of original spare parts from Ford. On the other hand, Ford acquired the Jaquar brand and Volvo to provide a more extensive choice of variety to the clients, which helps boost the customer base and increase confidence to the stakeholders. It also helps to curb threats of substitutes and new entrants, which act as a challenge to the already established market share.
2.1.2 Strategic tools and recommendations
Resource-based theory suggests that all a firm’s resources help to forecast the competitiveness and profitability of a company. The human resources for Ford have worked tirelessly to design, develop and market the different brands that the firm prides itself on. Ford’s development of fuel-saving car models and higher supply electric driven vehicles for the smart markets has enabled it to gain a better competitive advantage. The evolving technological advancement and increase in global warming call for the human resources to capitalize on renewable resources, especially fuel. A recommendation to increase the e-commerce business and feedback channels to know the market niche for human resources and other ideas on upcoming trends or customer preferences will prevail.
Source:
Balanced scorecard for Ford Motor Company
The above figure represents a balanced scorecard used by Ford to maximize its resources and get optimum results for all products. The growth perspective combines the attrition rate, whereby the firm resolved to recruit trained personnel and reward them accordingly to reduce the turnovers. Therefore, the skills and education rates are high enough to keep up with the market demands and global trends. The firm should also engage more consultancies from expert consulting firms to help develop specific training models and coaching techniques to not only attract qualified personnel but also retain the best generational leadership. For instance, McKinsey is an ancient and successful consulting firm with over 80 years’ experience in strategic management and marketing. Ford should work with McKinsey Consulting firm to generate excellent staff training.
The financial perspective has seen an increase in cash flow from $ 7.23billion in 2018 to $ 10.007billion in 2019. The previous years saw a marginal decrease in cash flow and an increase in the expenses, which reflect on the brand popularity and market share percentage. The overall profits decreased substantially last year to $0.047billion compared to previous years, $3.677billion, and a significant decline from 2017’s $7.731 billion net income. Ford should apply the strategic process management theory, which seeks to improve the overall organizational structure, systems and operational efforts to increase its marketing and selling techniques to grow the profits.
The internal process perspective and customer perspective
References
Aaker, D.A. and Joachimsthaler, E., 2012. Brand leadership. Simon and Schuster.
Chang, J.F., 2016. Business process management systems: strategy and implementation. CRC Press.
Dyrud, M.A., 2016. The case of ford motor company. Journal of Engineering Technology, 33(1), p.10.
Enkhbayar, Azbayar, “Ford Motor Company’s Financial Analysis” (2018). Dissertations, Theses, and Projects. 150. Doi: https://red.mnstate.edu/thesis/150
Pereira, P.J.G., 2017. Valuation of Ford Motor Company and a study of its industry
McMillan, C. and Overall, J., 2016. Wicked problems: Turning strategic management upside down. Journal of Business Strategy.
Stocker, A. and Shaheen, S., 2017. Shared automated vehicles: Review of business models. International Transport Forum Discussion Paper.