Final Case Study - Case 33 Is ONE Ford Really Working?

Final Case Study- Case 33- Is One Ford Really Working?
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FINAL CASE STUDY- CASE 33- IS ONE FORD REALLY WORKING?
Question 1: What are key forces in the general and industrial environments that affect Ford’s choice of strategy? Include an analysis of Porters Five Forces and the general External Environment (PESTC)
Ford is the second largest motor company in the United States. In 2009 the company suffered an automotive industry crisis. During these financial crises, there was a decline in the sales margin, and corporate bonds had declined. In 2006 Mulally was elected as the president of the company. Mulally applied ‘One ford’ to reshape the company. As soon as Ford was elected the president of the company, the majority of high ranked employees left the company. The company closed 14 plants in order to minimize down their costs. The company also lost 30, 000 plus jobs. After this crisis, the company resolved to increase the plant utilization and production levels by focusing on smaller and more fuel-efficient vehicles.
Additionally, Ford concentrated on making vehicles that were fuel efficient, for example, the hybrid. They had also launched the Focus Electric Vehicle in North America. Some of the key forces in the general and industry environment that affected Ford’s choice of strategy are competition, economic forces, political forces, social forces, and technological forces.
PESTC ANALYSIS
Political forces
The role of politics on the international business has intensified. Governments around the globe have increased their levels of control and oversight on businesses. Political environment affects the sales and distribution of products of Ford. Political stability results in higher sales and better supplies and political instability can lead to low supply and chain distribution. The new government policy on new federal gas mileage, new safety standards and new pollution control like Eco-friendly automobiles can affect Ford choice of strategy. The government also discourages fully automating operation like providing more local jobs. Ford Motor Company being an international business cannot remain unaffected political changes across the market.
Economic forces
Economic forces play an important role in shaping the business. During the recession, several brands of cars had to be bailed out through the support of the government. China and India have emerged to be the largest markets for automobiles, and all large companies are focusing on these two markets for faster growth and increased sales. The global downturn and financial crisis in 2006 weakened the economy and resulted in volatile markets. There is also a lack of liquidity in the markets. Competition is also an important factor for the growth of automobile business like Ford.
Social Forces
Social-cultural factors have become more significant in the business world. Change in social trends affects the growth of the company. For example, the rise of the millennial generation and the middle class has led to changes in the demand patterns. Ford marketing strategy is to brand their cars regional culture and taste as well. Social forces like corruption, an increase in the prices of oils can also affect Ford’s choice of strategy. There is a shift in the consumer car purchasing habits like fuel-efficient models. A strong image in the society for Ford means that the company will have high popularity and customer loyalty.
Technological Forces
Further technological forces like the development of the intelligence system, the advancement of fuel-efficient models and the development of the Electrocar can affect Ford's choice of strategy. All brands in the company are using different digital channels and social media to reach out to their customers.
Environmental forces
The environment is the main concern in the context of automotive industries. The government is very cautious about the environmental impacts of the business. Ford has strict laws regarding the environment in which it operates on. The brands of vehicles remain very cautious about the environmental laws, and they are ready to bear fines in case these laws are violated. Therefore Ford is investing more in social responsibility and the protection of the environment. Apart from reducing the emissions produced by cars the Company is also investing more in advancing the materials that are used in manufacturing the cars as well as operating in a manner that is coefficient. In the industrial environment, a company faces threats of new entrants, bargaining power of suppliers, rivalry among the existing competitors, the threat of substitutes and the bargaining power of buyers.
Legal Forces
Legal matters are also very important in the choice of strategy that opts to be adopted by Ford Motor Company. Laws are very strict when it comes to dealing with businesses. Businesses are likely to be fined for non-compliance of laws. Ford is very cautious when it comes to laws that deal with emissions, labor, the safety of customers and the environment, and insurance. Even though laws differ in different Market companies like Ford have their legal team that assists the management to deal with laws and compliances in every market. Therefore, the overall role of legal factors has intensified over the past decades.
Possible Treats
Ford also faces intense competition as one of the central threats. Some of the Key competitors of Ford are Fiat Chrysler Automobiles, Honda Motor Company, Hyundai-Kia Automotive group, Renault-Nissan B.V, Suzuki Motor Corporation, Toyota Motor Corporation, General Motor Company, Groupe PSA, and Volkswagen AG Group. These larger competitors in the market have formidable technology and manufacturing capabilities. These companies have a high level of customer loyalty and a large customer market. Therefore, competition is one of the major threats of Ford Motors.
Additionally, the company also faces regulatory threats. Ford faces labor and passenger safety threats and the quality of products. The number of laws enacted by the government in these areas and the level of security has also increased, and this has given Ford a great threat. Therefore Ford remains very cautious in the legal liabilities and compliance of these laws. Law hassles are very expensive and can result in billions of fines if not adhered to. Lastly, Ford faces rising costs of raw materials and labor. The cost of labor and raw materials has increased as time passes by. This has increased operational costs and Human resource management costs. Increase in operational costs has to lead to in the pressures on the brands of vehicles and the profit Margins.
SWOT ANALYSIS OF FORD MOTOR COMPANY
Some of the strengths of Ford Motor Company are its strong position in the United States market. The company has financial strength, brand strength, more appraisals from customers, employees are affirmed, and it has connections with the leading organizations, online marketing efficiency, actions, and its allocation ability. Additionally, the ECOnective initiative and the strategy of ‘One Ford’ by Mulally is a significant threat. However, the company has various weaknesses also. For instance, Ford has poor environmental records, low abundances, deterioration of sales, weakening actions in North America and high expenses. Despite these weaknesses, the company has various opportunities like an increase in the process of fuel process, new emission standards, development of hybrid vehicles, trade circumstances in India and China markets and green vehicles.
PORTERS FIVE FORCES ANALYSIS
Michael Porter developed the five forces analyses a model for the purpose for analyzing all the external factors in the industrial environment of a firm. It is very important for ford to develop approaches and policies that can respond to significant forces based on the external factors in the global automotive industries. Some of the five force analysis of Ford Motor Company identifies all the important ...