Ford Motor Company Porter’s Five Forces Analysis
Ford is a well-established American organization that faces many competitors from around the world, such as Toyota, Hyundai, Mazda, and Chevrolet, among other competitors. In the Forbes “The Largest Companies in the World” (2016), Ford is in the seventh position. The information given in Forbes confirms that Ford is a strong competitor in the car industry, since it applies strategies that allow itself to be competitive and profitable. Being a profitable company not only implies to gain a lot of money in revenue; it also implies to analyze the competitive forces a company must face in the industry. Ford is a profitable company because it has well defined and analyzed the business professor Porter’s
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Competition is a strong force for the company. Ford has maximized its competitive advantage to addresses Toyota (this one is constantly innovating its cars), General Motors, and other car companies, that do not want to lose their money in closing their business (Ferguson, 2015). Ford has worked on product innovation and technology, producing green products, at low prices, to emit less carbon dioxide, and market penetration and development. Also, Ford has strengthened its products by doing advertising campaigns focused on its innovative scope, such as gasoline consumption and provisions to facilitate the acquisition of products.
Power of Negotiation With Customers
The second force that has made Ford to become profitable is the power of negotiation with customers. Clients exert significantly influence over Ford. In fact, there are moderate substitutes in the car industry where customers can choose from, so Ford has strengthened clients’ satisfaction to addresses the external factors (Ferguson, 2015). Ford has also taken strategic actions to deal with changes in clients’ preferences and needs to prevent terrible consequences for the company. Also, the company is always offering cheaper cars and finance plans to its clients through Ford Credit.
Power of Negotiation with
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The threat of substitutes is a low force for the company. The substitutes of Ford are public transportation and bicycles; however, people do not use public transportation and bicycles daily because customers take into consideration the loans they pay for their Ford cars, so they prefer to use their cars frequently (Ferguson, 2015). Even though these substitutes are the cheapest options for customers, customers know that those are neither fast nor comfortable and nor safe. There are other car brands in the market; however, customers tend to remain loyal to
Until recently, the Ford Motor Company has been one of the most dynastic of American enterprises, a factor which has both benefited the company and has brought it to the brink of disaster. Today Ford is the second largest manufacturer of automobiles and trucks in the world, and it’s operations are well diversified, both operationally and geographically. The company operates the worlds second largest finance company in the world, and is a major producer of tractors, glass and steel. It is most prominent in the US, but also has plants in Canada, Britain and Germany, and facilities in over 100 countries.
The Man’s Truck In the last thirty-eight years, Ford has known how to target the audience they have for the F- series of trucks. After the new advertisement that Ford produced, it can be implied that they replicated their success again. With the first commercial being aired on television and online during the 2014 college football playoffs, Ford had a marketing strategy. It is apparent in almost all of the advertisements, including this one that Ford produced, is to showcase the newest and the best of the best F-Series of trucks and that they aim to get all the hard working American man.
The Ford Motor Company (FMC) was founded in Detroit in 1903 and began shortly thereafter exporting cars to European branches. Cross-border assembly started in Canada in 1904 and was later implemented in the European markets. The first European plant was established in 1911 in England, and this was followed with other lower volume assembly plants across the European continent. All the plants and branches assembled and sold the Model T, using American methods and practices. This proved to be a success in the beginning, but in the long run, “(…) this proved a costly and unsuccessful strategy in Europe’s diverse markets” (Bonin et al., p. 15). By the late 1920s most of its European subsidiaries were struggling and Ford had to change his approach to the European market.
The 1920’s was a time of great social, political, and economic change. The early automobile industry was no exclusion. It appears that throughout history, the figures that stand out the most are either worshipped or despised, and there is very rarely an in-between. Henry Ford, an icon of the 1920’s and the early automobile industry is no exemption. Many people love Ford for his innovative and entrepreneurial skills, while on the other hand, Ford is disliked by many due to his association with Anti-Semitism. Regardless of how Ford is viewed, many decisions he made significantly impacted the automobile industry. These decisions included installing the moving assembly line in his plant, and introducing the Five-Dollar Day. Through the implementation of the Five-Dollar Day, Ford was able to drastically change how the Ford Motor Company company operated, and how business would operate for years to come.
Ford competes with other automobile industries on many factors such as price, quality, reliability, appearance, available features, and fuel economy just to name a few. Such intense competition within the automobile industry tends to put downwards pressure on prices, making it harder for Ford to put a price on vehicles that are similar to other cars produced by competitors. The challenging price environment puts pressure on Ford to increase value to customers while trying to dramatically reduce costs to achieve the similar pricing of competitors. Ford must be able to reasonably price vehicles so that customers still feel as if they are getting the best car for their money. Competitive pricing is a threat to Ford because it must increasingly rely on customer perceived value to differentiate its car quality from its competitors. Ford must be able to justify its pricing in an industry where resembling cars have similar pricing and nearly identical features. Ford’s pricing objectives must somehow be achieved as other competitors are cutting costs and improving their vehicles. Negative pricing pressure threatens Ford’s ability to provide outstanding value to its customers for smaller or comparable pricing within the competitive automobile
The Threat of the Substitute There are several substitute products in the car rental industry such as personal cars and public transport that the customers use to meet their leisure and business demands. Technological advancements such as video conferencing may completely discourage the need to travel. It means that Enterprise Rent-A-Car faces a high threat of substitutes in the market (Kotler & Armstrong, 2014). The Bargaining Power of
So the discussion on internal and external analysis clearly defines that where the competitive advantage of Ford Motors is and where it is lacking. People who have durability as their first priority will go for Ford but they lack in some of their strategies which the management should consider and work on it. We also came to know that Ford is an innovative company from the very first and also serves local demands with the help of related and supporting industry. But in some points they have taken wrong decisions which compel them to sell some of their brands to others. The good news is they are doing hard job to maintain their performance regarding their star and cash cow products to remain in the competition.
Many economic factors exist that impact the development of Ford Motor Company's strategic plan and it’s no small task to project how some of these factors might change as the strategy is being realized. Consider the prospect of expansion into a new market like China or Mexico. Economic changes like currency devaluation will make Ford’s product more expensive to their target market potentially reducing overall sales revenue. Oil prices as we’ve seen in the U.S. economy can also play a big factor as large vehicles become less desirable and more fuel efficient compact cars gain market share.
Ford Motor Company current mission statement is “committed to provide personal mobility for people around the world”. With that in mind their vision is to become the world’s leading Consumer Company for automotive products and services. By improving everything they do, the company provide superior returns to their shareholders (Vision, Mission, Values).
During the year 2005, Ford Motor Company brought in Alan Mulally, once a leader at the company Boeing. Mulally decided to implement a strategy called ‘One Ford’; this plan would ultimately lead to the employees becoming one team, using one plan, and looking towards one goal. Because this plan was going to execute a complete overhaul on the company, an aggressive training program needed to be put into place for the company to implement the plan correctly. By following this plan, the company would eventually meet their “One Goal”, which was profitable growth for all. By creating a strong product and producing customer loyalty, Alan Mulally knew the company would begin to see positive results and profitable growth. According to Alex Ta...
Since the first car was developed in 1885, car makers have been striving to create the car that will outshine over the others. There has never been a car to do it better than the Model T. Practical, reliable, and affordable are adjectives that describe the Model T since it came out in 1908. With little over 20 horsepower and a top speed of 45 miles an hour, this simple car propelled the Ford Motor Company to a level of success that had never been seen before(History, “Model T”). Henry Ford and the Model T revolutionized the car industry, as well as people's lives in the 1920s. The influences from the Model T can be found everywhere from the assembly line, to road development, to the middle class even in today’s world.
This paper takes a look at the ways in which the ideas of Fordism and Taylorism helped the success of the U.S motor vehicle industry. The motor vehicle industry has changed the fundamental ideas on the process of manufacturing and probably more expressively on how humans work together to create value.
Ford- focused differentiation, medium pricing, breadth of product line is high. A strength is their pick-up truck market share, a weakness is perceived reliability and styling on some of the lines.
The Ford family still controls the company through multiple voting shares, even though it owns a much lower proportion of the equity. Ford’s business strategy is the integrated cost leadership/ differentiation strategy; this involves engaging in primary and support activities that allow the company to simultaneously pursue low cost and differentiation. This strategy is flexible and enables Ford to use technology to control the production of a variety of products in moderate, flexible qualities and with a minimum manual interaction, whose goal is to eliminate cost verse product variety. Cost leadership is a strong strategy, but it can be undermined by the frequent changes in technology, the imitation of cost advantage and the loss of focus on consumers. Ford’s differentiation strategy focuses on developing a unique product that consumers are willing to pay for, and the combination of these two strategies enables Ford to stay on its core competencies.
With about 187,000 employees and 62 plants worldwide, the company’s automotive brands include Ford and