1. Introduction Henry Ford was the founder of Ford Motor automaker started on 1903. Ford Motor Company is an international automotive industry leader established in Dearbon, Michigan. The company consists of eight automotive brands which include Ford, Lincoln, Mercury, Mazda, Volvo, Jaguar, Land Rover and Aston Martin. Alan Mulally has been appointed as Ford Motor Company’s CEO. Mulally is already faced with a devastatingly complex circumstance. He has challenging the task of enhancing Ford’s brand image and returning the company to probability due to diverse global dynamics brazen out the company and competitive pressures to build.
I have been invited by Mulally to provide advice to his management team on improving the company’s reputation and capability. I have been assigned to the project and asked to assess Ford’s circumstance to present my suggested course of action for Ford. 2. 1 Ford business level strategy is cost leadership as the company strategy is to manufacture, develop, design and service cars and trucks globally that meets customers’ satisfaction. A cost leader is producing at lowest cost but not necessarily lower prices (Gallagher,2004). This strategy is building a “fairly standardized product and under pricing everybody else” (Kiechel,1981).
Sequentially to maintain competitive advantage, the strategy must be uncommon and costly to imitate(Berbard,2003). Mulally wants to decrease in operation cost, he mentioned that need to work smarter instead of using fewer resources than competitors use for future success (Hitt, Ireland, & Hoskisson, 2009). Ford also focuses on constant innovation to meet customer needs. Ford provides reasonable price and committed in fuel saving which lead to low carbon emission. The Ford is capable with start or stop technology that releases only 99 g/km of Co2 (Blue Oval,2010).
Ford protects environment with the Carbon Disclosure Project Water Disclosure program by setting a goal reduce carbon emission by 30% and less water usage about 16%. Ford gathered the information from consumers to improve their goods and services and gain competitive advantage because customers are segmented based upon their needs. Thus, they have reinvented Ford Explorer. Explorer offers an optional 2. 0-liter EcoBoost™ I-4 engine delivering V6 power with four-cylinder fuel efficiency (2011 Ford Explorer, 2010) according to customers’ want top SUVfuel economy.
Therefore, Ford’s vision is to deliver products that value customers, safe, fuel saving quality. On the Ford’s value chain is design and planning which involves three parties such as Government,Ford,and Consumers. Ford is aware in social, economical and environmental accountability in mind when developing innovative product. They are environmentally reducing the carbon emissions of vehicle and conduct more recycling activities in use of materials. Ford also expands the connections and builds relationship with the communities.
The company putting effort to adapt to diversity challenges and seek for opportunities to meet stakeholders and customers’ need economically (Our Value Chain,2010). Under logistics stage, it involves Ford and Government. They take the environmental issues into deliberation such as greenhouse gas emissions with the concerning of the quality product and healthcare. Ford has successfully in modern technologies that create value to consumers in design phase. They have started tailoring design models subsequent to public demand and this evident that Ford doing well in recent financial periods.
Marketing is important to make value in the company. In order to increase sales, Ford has been working with dealers in creating better market strategies. Ford has teamed-up with SAP to enhance warehousing by using information technology to develop its value chain. Nevertheless, it has teamed-up with Daily Parts Advantage network for receiving spare parts to dealers. Their purpose in partnering was to obtain market recognition and lock partner with proficiency in the automotive supply chain (Bowman,2004). Ford had reduced its supply chain cycle through implementation of information technologies.
For instance, about 85% decline in consumers back orders lines. 2. 2 Ford has successfully position itself in terms of the five forces of competition. The threat of entrants is low in Ford automobile industry. Ford manufacture is able to accomplish economies of scale in order to compete in automobile industry. Ford always has the strategy to react against the threat of new entrants by taking an inconceivable amount of capital to produce automobiles and research and development for creating more innovation products.
Ford Motor is innovative in engineering fuel efficient automobiles, its company even listed as the top three Favorite Most Fuel Efficient Cars when Ford Hybrid is recognized. “Ford Fusion Hybrid feels roomier and better to drive, plus it gets better fuel economy” (Gold,A,2010). Ford’s bargaining power of suppliers is very low because there are many suppliers to produce an automobile which it is consists many parts to produce. Suppliers do not have bargaining power since they are many suppliers in this automobile industry.
Nevertheless, Ford manufacturer can easily change to another supplier if they offer better prices and this devastating the previous supplier. Suppliers are tremendously at risk to the demands and necessities of the automobile manufacturer in Ford; the possibility of suppliers bargaining power is very little. The bargaining power of buyers in Ford is moderately high because manufacturer needs to depend on them for successful business and consumers are significant segment in creating the company’s revenue. Ford needs to fulfill customer satisfaction to avoid risk of losing them switch to other competitors.
Consumers might have low switching cost if it does not satisfy them. Ford Motor does exceed and meet customer expectations by putting effort or attention on the market trends. For instance, Ford introduced Hybrid car that save cost on fuel and protect the environment. Ford also meets customer requirement and its priced is reasonable to young buyers (Fallah,2009). Consumers are not able to integrate backwards in Ford, they will just have to consume car from a dealership if they want it which the bargaining power is rated moderately high.
There are not many substitute products but there are some as public transportations, walking or riding. The substitutes are moderately high because it is depends on the location, for example city such as New York not necessary need car. Consumers might consider public transportation with the effectiveness to get to the destination and it save money compared to the fuel price. Nowadays, automobile is needed for most of the places sequentially to get around and it is not time consuming.
Consumers are being conservative in making decision on the substitute products due to their preference and convenience. Ford has created a car that is comfortable and save cost especially the Hybrid car has larger space provided. High competitive industries will generally get low returns; there are many automobiles company such as TOYOTA, CHRYSLER, and so on. The competitive rivalry is high in automobile industry. The company has to take competitors as a reference in order to gain market share and improve (Highfill, Baki, Copus, Green, Smith, & Whineland, 2004).
Ford has strengthened its return and came up preferred financing and long term warranties to help attract in consumers after the company realises increases marketplace size does not necessarily need price based competition. 2. 3 After sales service of the company is very important. Customers spend more time interacting with the dealer and manufacturer after they purchase a car. Every time the dealer changed the engine oil or services, this can builds good reputation of the business and brand loyalty.
Customers seeking information about problems, for example warranties, maintenance schedules and other information have to contact the company. Therefore, the company should take steps to streamline and improve customer case by using web-base tools and other high technology devices. Company’s telephone lines should be 24 hrs everyday to enable customers to find up information quickly. The company also need to deal with customer’s complaints. Staffs need to solve the problems effectively and efficiently in order to position its business to collect the benefits of good customer service.
Besides that, the company should always listen to customers by knowing what they want and paying attention on their needs in order to meet customer demand. The company has to make appropriate responses to show that you are listening to them and solve the problem. The company needs to implement more training programs for employees to be well-mannered, helpful and knowledgeable to consumers. Most importantly, every member needs more information about the customer details so that they know how to communicate with consumers effectively.
The company has to provide the sufficient information on the product, to get more than what consumers expected. Thus, it can get attraction from the consumers when the company is making effort to give detail information. Through these few methods, the company can effectively manage customer relationship to increase strategic competitiveness. 2. 4 Ford can produce differentiated product at low-cost through negotiation and build close relationship with suppliers to reduce cost on high quality raw material. Ford only increase production of vehicle models which consumers demand.
Ford should focus on single model with reasonable price of raw materials such as Ford Focus or the hybrid cars which need low cost material since it is fuel efficiency car. GM, Toyota and Chrysler are Ford Motor Company’s competitors, their objectives are similar as profit maximization, be the leader in automobile industry and lastly enlarge in market share. These companies have set up diversified brands such as GM has 13 brands. Besides that, GM obtained the most market share and its core competency is service and innovation (Nasr, M. 2010) as GM also attempt to produce fuel saving cars which same as Ford.
GM looks ahead to produce 12 different hybrid automobiles by doing research and development on hydrogen fuel cell. This company has strong brand name and portfolio. Chrysler has 4 brands and the reason they can be competitive because they have found alternatives to gasoline. They produce and sale SUV’s and compact car. In 2000, Toyota gained sale volume and market recognition. This company has innovation so it stays competitive which they are known in produce quality product and safety features.
Ford should concern of its market structure and resource similarity that affects the drives of competitive behaviours. Ford needs to conscious about how their competitors respond plus how they communally interdependent. This may Ford company challenging in excessive manner if its do not conscious the competitor’s actions and response. In order to have encouragement on improving the marketplace, Ford should focus on how to react towards competitor and they must have proper resources as the need to administer the company effectively.
Companies that lack of resources are often not successful and not competitive in this industry. Thus, Ford should focus on making the best quality automobiles and innovation to meet customer’s demand. 2. 5 New leadership program will be designed as Ford realising the significance of human capital development involvement in strengthening the organization as a whole in order to inspire the mind-set and vocabulary of an innovatory leader as well as to teach the tools necessary to become a leadership and manufacturing revolution.
(Andress, Horton, Kleven, McCullar, Stevens & Chapman,2010) This innovative approach is to seek a balance between decentralized implementation and centralized strategic leadership. Ford Company can think about the broadest range of market opportunities and then increase the most proficient use of the product development dollar by producing products to satisfy the consumer needs through centralized decision making. As for the decentralized implementation, Ford allows to take benefit of the corporation’s centralized strengths and rapid responsiveness of minor companies.
Empowerment represents an important element to the new structure since there is no longer time for managers to micro-manage. This is anticipated to tolerate top management flexibility in managing the company strategically and turn its course into 21st century. This will also help Mulally and the company achieve its strategic objectives. Ford also planned for the employees to get involved in “business leadership and communications with substantive team projects” to meet Mulally requirement in its goals.
As a result, based on the evaluation of Ford Motor Company, it can consider the company is competitive. Ford does meet the customers’ requirement and this is important for market recognition. Ford has also successfully position itself in five forces and use the value chain appropriately in create value for company. The training program that provided has implemented successfully as a strategic leadership to meet company’s objectives.
References * Andress, J. , Horton, D. , Kleven, C. , McCullar, M. , Stevens, H. , & Chapman, R., Case 10, Ford Motor Company, Strategic Management, 2010 Custom Edition, 123-138. * Bernard, J. (2003). “Cost leadership strategy”, Ecole Hoteliere de Lausanne, Switzerland. * Blue Oval on a Green Streak: Ford Details Progress on Eco-Initiatives in Latest suatainability Report, Ford Motor Company 2010. * Bowman,R. ,(2004), “Aftermarket Is No Longer an Afterthought”, Supply Chain Brain. * Fallah,A. ,(2009), “Ford Fiesta Econetic – Australia Most Fuel Efficient Car”, Car Advice.
* Gold, A. (2010),” Our Ten Favorite Fuel-Efficient Cars” About. com Guide. * Highfill, M. , Baki, M. , Copus, S. , Green, M. , Smith, J. , & Whineland, M. ,(2004), “Automotive Industry Analysis – GM, DiamlerChrysler, Toyota, Ford, Honda”, Academic Mind. * Hitt, M, Ireland, R, & Hoskisson, R. (2009). ” Strategic management: competitiveness and globalization, concepts and cases”, Mason, Oh: Cengage Learning. * Kiechel,W. ,(1981), “The Decline of The Experience Curve”, Fortune, pg. 139-146. * Nasr, M. (2010). “Strategic Management Case Analysis”, MMU University. * Our Value Chain and Its Impacts,” Sustainability Report” , Ford Motor Company 2010.