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Compare and contrast a differentiation strategy and cost-leadership strategy in terms of main characteristics of each strategy
Cost, leadership, and differentiation
Competitive advantage through cost leadership
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1. Define and discuss Ford’s business- level strategy. Henry Ford began a family automobile business in 1903; this was during the industrial revolution. This business has become the most famous automobile brand in the world. Over the years the business structure had adapted to changes in leadership, markets trends and the economic conditions. 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 level 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 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 lost of focus on consumers. Ford’s differentiation strategy focuses on developing a unique product that consumers are willing to pay and the combination of these two strategies enables Ford to stay on its core competencies. 2. Explain how the company’s value-chain activities can be better linked to create value for the company. A chain value is a diagram that a company uses to decide its activities up into component parts such as its functions or management from top to bottom or vice versa. Example Research and development Supplies and inventory Management Production Marketing and Customer support management. ... ... middle of paper ... ...(Boudette, and Dolan, 2010). Ford is about to launch its smaller vehicles; less than two years ago Ford motor’s plant in Mexico was building big pick-up trucks. But it has retooled to produce Ford’s small Fiesta car, due to go on sale in America for the first time in June. (Simon, 2010).Mulally is the architect of Ford’s remarkable recovery in its fortunes. Works Cited Boudette, N.and Dolan, M (2010, May 4).Car sales climbed 20% in April. The Wall Street Journal, p.B1. Dyer, G. (2010, May 12).A Change in Gear. Financial Times, p.7 Hitt, M., Ireland, and Hoskisson, R. (2009).Strategic management: Competitive and Globalization, Concepts and Cases. In M.Staudt & Stranz (Ed). Reed, J. (2010, May 4).Carmakers pump up production after severe downturn.Finanacial Times, p.15. Simon, B. (2010, May 5). Smaller Vehicle takes giant Strides.Finanacial Times, p.16.
Fordism changed American industrial and consumer in many ways such as Henry Ford developed new techniques of car manufacturing and marketing that made it easier for ordinary American citizens to try themselves. After three years of establishing his company “Ford Motor Company” in 1905, Ford introduced to the American people “Model T” for which was a light-weight vehicle that can handle to cruise the country’s poorly maintained roads. In Europe for which the car that is mostly used over there is the “Mercedes” for which was targeted for high-class people of society over there and were superior in craftsmanship in the car manufacturing; however, Ford focused on mass production
Value Proposition is defined as "A business or marketing statement that summarizes why a consumer should buy a product or use a service”. This statement should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings." To structure a proper value proposition for a company, you must view the business model and three identifying features of the business. These three features are the Goals, Core Activities, and the Product Market Focus. The goal of a company is what it aims to accomplish. In regards to Imperial Oil ltd., their main end goal would be to create profits for their shareholders and to increase the overall value of the company. With creating more value to the company, the business can use funds to access and develop more research and advance their technology in growing the corporation. The core activities of the business are what value creating tasks will help the business run properly and how t...
At the time that he started Ford Motors Company, most people did not drive cars, and hadn't even considered purchasing a car. Henry Ford is famously quoted saying, “If I had asked people what they wanted, they would have said ‘faster horses’”. His extremely successful Model T, nicknamed the Tin Lizzie, fundamentally changed the automotive industry. Ford understood that most of the American population was in the working class and could not afford to buy a car, so he decided to create a standardized vehicle for the masses. The Model T was durable, reliable, and most importantly, affordable. However, marketing strategies were crucial, since previously people hadn't even thought of buying a car. When Ford first introduced the Model T, he ensured that there was a great amount of publicity surrounding it in every newspaper possible to get the word out. Publicity is just as critical today if not more, and Ford understood that from very early
Ford had many struggles and challenges come his way before he became the maker of an efficient, non costly car that shaped our world into a technological nation. One challenge he faced was the inability to sell cars when The Association of Licensed Automobile Manufacturers did not allow him to sell cars, (“Henry Ford”). This was a huge obstacle for him because when he created the Ford Model T he needed an audience to buy his product or he was going to be bankrupt. Luckily, since Ford was persistent and always fought for what he wanted he went to court against them and won his case. Moreover, Ford was sued by his own stockholders for putting their money into his company and he lost the case. When he lost the case he didn’t just give up, he worked harder to earn back the money he lost and eventually he bought them out and was able to continue building his stocks up, (“Father of the Modern Assembly Line”). Due to his perseverance and persistenceness he was able to continue with his company and thrive instead of seeing it crumble into nothing. His attitude towards his work is how he was able to create a multi-million dollar company and not let his obstacles bring him down, but let them shape him into a better, industrious
• Analyzing the value chain of the McDonald’s Corporation to determine where they can create using resources, capabilities, and core competencies, which have been discussed above.
In a high competitive world market and with the increasing rational buyers a company can only win by creating and delivering the best customer value than the others competitors do. To succeed, a company needs to use the concepts of value chain.
Over time, Ford business strategy has responded to the challenges of the motor industry. The corporate culture of Ford management is establishing strategic business units that complement the company's global scale and structure.
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.
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.
The aim of the value chain structure is to maximize the value creation while minimizing costs. Value Chain Analysis is a useful tool for working out how you can create the greatest possible value for your customers. Value chain analysis relies on the rudimentary economic principle of competitive advantage -companies are best served by operating in divisions where they have a relative prolific benefit compared to their competitors. Concomitantly, companies should ask themselves where they can deliver the paramount value to their customer. To conduct a value chain analysis, the company begins by identifying each part of its production process and recognizing where steps can be purged or enhancements can be made. These improvements can result
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.
1. Hitt, Ireland and Hoskisson (2005), Strategic Management : Competitiveness and Globalisation, 6th Edition, Thompson & South-Western.
Hitt, M., Ireland, R. & Hoskisson, R. (2010).Strategic Management: Competitive and Globalization, Concept and Cases. Mason, Ohio: Cengage Learning
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.
Value chain analyses a firm 's internal activities such as planning, production, and development, packaging and distribution so as to create value for clients. The function of the value chain is to identify the sources for cost reduction along with quality improvement. It means value chain is used to identify the strong and weak points, positive and negative points, the scope of improvement; in a nutshell, the advantages and disadvantages of the activities taking place in the system. The value chain is also called as a strategic analysis tool and it is a well-known concept in business management industry.