Executive Summary
This research shall analyze the Ford Motor Company in the North American Region. The study shall analyze the profitability levels of Ford Company in the North American region and other regions. Ford’s levels of profits have been meager. The report will examine various market segments. “These segments include the North American market, the European market, and the Asian market.”[1] Ford Motor Company can address this challenge in various ways. Ford can reduce the selling prices of its vehicles. Secondly, the company can produce automobiles that conform to the current market trends and economic conditions.
It is imperative for Ford Company to reduce the vehicles’ prices. This would give Ford an upper hand in the competitive environment. As the law of demand states, a price reduction increases sales. As a result, Ford’s competitors like Tesla Motors, General Motors, and Chrysler will have a big challenge catching up with Ford. The reduction in prices is the best solution that addresses the market issues and sales volume.
“Ford Company produces quality automobiles but the market forces do not respond positively to these automobiles.”[2] In order for the plan to be a success, Ford will need to analyze the prices of automobiles in Tesla, Chrysler, and General Motors. It is imperative to analyze the main competitors at all times. When formulating the price of a product, Ford Company has to ascertain the strategies that are applicable by its competitors. Furthermore, Ford Company has to do a thorough analysis of the market segments. Ford has to ascertain the current trends in the market. A successful brand has to cater to both quality and price. Moreover, a successful brand conforms to the current demographical and economic needs.
Problem Statement
Ford aims to attain a specific figure for the profits in an accounting period. Failure to accomplish the appropriate profitability levels is a major problem in very many companies. Motor Company faces the challenge of low profitability levels, and in the recent years, the levels of profit have been low.” In addition, Ford Motor Company faces the challenge of low sales volume.”[3] Although the company designs cars that are unique and spectacular, the market forces do not respond very positively. The potential customers’ response to Ford’s products has been poor in recent years. The European population was also unreceptive to Ford’s cars. The effects of the economic recession are still evident in the European region.
Ford Motor Company goes through many challenges that pertain to demography. The American population is gradually increasing but the company’s sales volumes are still not appropriate. The European and Asian populations are decreasing every day. This has an adverse effect on the market of Ford’s automobiles. Moreover, issues of harsh weather conditions affect the performance of Ford Motor Company. Automobiles that can perform well in harsh weather conditions cost a lot of money. In addition, the incorporation of various features is essential in automobiles destined for regions of harsh weather conditions. These challenges are a menace to the success of Ford Motor Company.
Situation Analysis
Macro-environment. The company’s macro environment incorporates issues that are out of the firm’s control. Ford Motor Company cannot control some of the issues that affect the performance of the company. It can only adapt to the issues but it cannot eliminate them. The external factors affecting Ford Motor Company are several. This section of the research will analyze some of these factors.
Demographic Forces. The changes in population affect the performance of Ford Motor Company. “It is imperative for the North American population to embrace the cars that Ford manufactures.”[4] For any enterprise to be successful, the analysis of demographic aspects is mandatory. In addition, Ford Motor Company has trouble in the Asian and European populations. It has been extremely difficult for the company to be successful in these regions. The demographic aspects of these regions do not favor the activities of Ford Company. Research shows that the Asian and European population is not growing. Although this is not the case in North America Ford Company still faces many demographic challenges in America.
Economic Forces. Ford Motor Company is a giant in the automobile industry. However, recently there has been a decline in the stock market prices of the company. The recent updates from the company indicate that the company is incurring losses. “In addition, the economic recession had an adverse effect on the company’s performance.”[5] Economic recession is like a plague. The moment one country experiences recession a huge geographical area is adversely affected. In Europe, Ford Motor Company has a difficult time. Although financial analysts indicate that the recession is over Ford Motor Company is still in the woods. The economic conditions affect the purchasing power of the target market. An individual will be unable to buy a car if the economy is unfavorable. In turn, this affects the sales volumes of Ford Motor Company.
Technological Forces. The aim of technology is to solve the problems of society in an appropriate way. The automobiles that Ford Motor Company produces have to comply with the set standards. The technological aspects of a car include speed, engine capacity, stability, and fuel consumption. In addition, there have been concerns that technology advancements have to incorporate environmental aspects. The automobile industry is focusing on ways it can ascertain environmental safety. Emissions of harmful gasses into the atmosphere have been a big challenge in the automobile industry. Ford Motor Company has to establish the aspects of gas emissions in the car designs. Furthermore, excessive fuel consumption is another big challenge. Tesla Motors had plans to launch an electric car. This is a very big challenge for Ford because it has to respond to the plans of the competitors. The aspects of technology have a big impact on the performance of Ford Motor Company.
Political/Legal Forces. “The trade policies in different countries are distinct. Some governments impose trade quotas and others restrict excessive import activities.”[6] This in turn affects the Ford Motor Company, because it cannot meet the set target for the sales volume. In addition, the lack of political goodwill in many countries causes the performance of Ford to decline. Ford Motor Company might be compliant with all the laws. However, the aspects of political pressure might adversely affect the performance of the company. In addition, many governments discourage imports from other countries. The governments of many countries might provide incentives to local automobile industries. This makes local automobile industries offer lower prices. This in turn causes multinational companies to lack adequate market. The political and legal aspects affect the performance of Ford Motor Company.
Cultural Forces. Analyzing the North American region, some people apply certain criteria in evaluating a car. The residents of each state have distinct needs. The aspects of culture affect the sales volumes of Ford Motor Company. For example, in a certain region, the residents may have the belief that General Motors cars are the best. Ford cars will have a difficult time selling their vehicles in this area. In addition, Ford Motor Company can never adjust to the prevalent culture in any region. The aspects of culture will affect every enterprise. It is imperative for any organization to adapt to the cultural changes of the target market. Ford Motor Company has to ascertain all cultural aspects to ensure its’ success at all times.
Social Forces. Each society has its’ own behavior and stereotypes. For example, some societies might associate Ford’s automobiles with a negative thing. The sales volume of Ford’s cars in this specific area will be very low. However, if a specific society has a positive impression about Ford’s automobiles. This will be an ascertainment of high sales volume in this particular region. The aspects of society will affect the operations of any enterprise. In addition, Ford Motor Company has a social responsibility. The company has to donate to charity and participate in social activities. “If the company is active in charitable activities, the sales volume will rise drastically. A company that does not participate in social activities will have a bad reputation in the society.”[7] This is because the notion among potential customers might be that the company is stingy. This, in turn, will reduce the sales volumes. Ford Motor Company has to ensure that it participates in many charitable activities. This will increase the sales volumes.
As shown in table 1 the aspects of the macroeconomic environment fall into two categories. These categories include opportunities and threats. The demographic changes may act as both an opportunity and a threat. If the population in a certain area keeps on increasing, this is an opportunity for Ford Motor Company. On the other hand, if there is a decrease in population the aspect of demography becomes a threat. The economic forces are a threat to Ford Motor Company. For example, the economic recession that was in Europe had an adverse effect on Ford’s profitability levels. The technological forces may act as both an opportunity and a threat. If the company formulates car designs that are unique in the market, they have an excellent opportunity to maximize this. However, if Ford’s competitors are more innovative the aspect of technology becomes a threat to the company.
The political/legal environments also act as a threat to Ford Motor Company. Some governments enact laws that do not favor the automobile industry. For example, the government can implement a piece of legislation that bans specific automobiles from Ford. If this happens, the effect on the company will be adverse. The cultural aspects act as both an opportunity and a threat. The cultural belief in an area might be that Ford’s cars are superb. The sales of this specific area will skyrocket. Nevertheless, the cultural aspects in an area might not favor Ford’s cars. This will cause a decline in the sales volumes of Ford Motor Company. The social aspects act as both an opportunity and a threat. If Ford participates in numerous charity events then the social attributes act as an opportunity. However, if the participation of Ford in charity events is questionable the social attributes become a threat.
Microenvironment. “The firm is able to control the aspects of the microenvironment. These are aspects that may affect Ford Motor Company internally or the general automobile industry. The internal bottlenecks can be extinct if the Ford management acts strategically at all times.”[8] This will ensure that the challenge of low profitability levels becomes extinct. This section of the research shall analyze the various aspects of the microenvironment.
Suppliers/ Supply Chain. The supply of raw materials is of utmost importance in any company. Ford Motor Company needs various types of metals and coloring paints. In addition, the assembling components might be unavailable. Ford Motor Company enters into binding agreements with the various suppliers. These binding agreements are of temporary nature. In addition, any adjustments in Ford’s production activities will cause a severe shortage of raw materials. The company has taken measures of controlling its’ number of suppliers. Furthermore, Ford ascertains that the number of suppliers does not exceed a certain limit. Ford Motor Company aims to transact with vendors who are reliable and convenient. In the event of an economic crisis, a stable supply of raw materials is vital. If the vendors are unpredictable the aspects of supply become a major threat to Ford.
Marketing Intermediaries. “The main branches of Ford Motor Company are the finance and automotive departments. Ford’s finance department funds the sales of many automobile units in the United States.”[9] The main market intermediaries of Ford’s cars are the large-scale car dealers. In the European region, Ford is over-dependent on large-scale car distributors. In the North American region, the large-scale distributors play a less significant role. In addition, Ford enters into binding agreements with certain car dealers. These specific dealers have to meet some specific criteria to sell Ford’s vehicles. The market intermediaries of Ford Motor Company operate in various regions. These include North America, Europe, Asia, and Africa. The two main market intermediaries are large-scale car distributors and individual car dealers.
Competitors. Ford’s main competitors are Tesla, Toyota, General Motors, and Chrysler. In the past, General Motors and Chrysler have undergone many financial difficulties. This has given Ford a chance to exploit the market to its’ maximum. The sales volumes of General Motors have been the highest in recent years. Ford and Toyota come in second and third respectively Ford’s competitors offer lower prices and economic automobiles. For example, Toyota’s cars are efficient and they consume less fuel. Ford’s marketing strategies have been unsuccessful. This is because there has been a sharp decrease in the sales of Ford’s cars. Toyota so far is attaining the highest sales figures in the automobile industry.
Public. The notion is that Ford’s vehicles are spectacular but they do not conform to the public’s needs. The majority of the public prefers other automobile brands like Toyota. Although Ford Motor Company has a good reputation, the sales volumes of big cars like SUVs are still low. The public image is of utmost importance at all times. The assurance of Ford’s success is the enhancement of the company’s image to the public is paramount. Ford Motor Company can address the issues pertaining to the members of the public.
Customers. Ford Motor Company has taken several steps to address the customer’s needs. The customers prefer automobiles that conserve fuel. “In addition, the environmental factor has become of much importance. Customers aspire to possess a vehicle that is clean and safe and environmentally friendly.”[10] Moreover, there have been adjustments in Ford’s manufacturing techniques. The aim of these adjustments is to ascertain the customer’s loyalty to the brand. Furthermore, Ford aims to increase customer satisfaction levels at all times.
As shown in table 1 the aspect of Suppliers/supply chain acts as strengths and a weakness to Ford Motor Company. Ford has been successful in increasing the number of suppliers that provide the company with raw materials. However, the company is not flexible. If the production activities change, the company might experience a difficult time in accessing suppliers. The attributes of marketing intermediaries act as Ford’s strengths. The availability of Ford’s cars in several regions of the world establishes this fact. The attributes of the competitive environment act as a weakness to Ford Motor Company. Ford has been unable to exceed the sales volumes of General Motors and Toyota. The public factor functions as both a weakness and a strength. Some people feel that Ford’s cars meet their set criteria. Nevertheless, some individuals believe that Ford’s cars are not the best available. Factors that attribute to customers fall under both strengths’ and weakness’ categories. Ford has been able to increase customer satisfaction levels in some regions but in other places, it has not.
“The problem of low profitability levels links directly to the aspects of SWOT. Ford has to ensure a balance between the strengths and the weaknesses. In addition, Ford has to exploit all the opportunities that are present in the market.”[11] Concerning the threats, Ford Motor Company has to ensure that it is ready to encounter and adapt to all the market threats. Incorporation of all the aspects of SWOT in Ford operations will improve profitability levels.
Segmentation Analysis
The market for automobile units is dynamic in nature. The customer’s tastes and preferences are very dynamic. Ford’s primary market segment is the North American region. The secondary market segment encompasses the European, Asian, and African regions. Ford Motor Company thrives in the United States. However, Ford faces many challenges in Europe, Africa, and Asia. Furthermore, the profit levels in the United States are higher. The North American region acts as the primary segment. The region has advanced programs. Ford Motor Company aims to avoid all weaknesses. Ford has to put more effort into the North American region to ensure its’ success. However, the marketing programs in the secondary levels can be intense up to a certain limit.
“The size of Ford’s market segment is about 5700. The average figure for automobile sales between the years 2010 and 2012 was about 5700. The size of the market segment has to focus on the consumer behaviors and the past trends.”[12] As shown in table 2 the position of Ford Motor Company in the primary market segment is well established. However, Ford experiences many challenges in Europe and Asia. In some regions, Ford has been successful in conducting its activities. Ford performs well in North American countries. The main competitors in the USA are Toyota, Chrysler, Tesla Motors, and General Motors. General Motors and Chrysler have undergone a financial crisis in the previous periods. The state had to salvage the two companies from the financial crisis. Ford’s financial stability is evident. This is the main competitive advantage Ford Motor Company has in the North American Region. The data that incorporates the perceptual map comes from the sales figures of Ford Motor Company. The data illustrates customer satisfaction levels in various years. A higher sales volume establishes that the customer satisfaction levels were high.
Strategic Alternatives
Ford Motor Company can deal with the problem of low profitability levels in two ways. These ways include lowering the selling prices of automobiles and manufacturing products that conform to the market. The strategies will be successful in both the primary and secondary segments. “Toyota manufactures cars that consume less fuel. Fuel consumption is mandatory in the North American market.”[13] Ford has to ensure that the automobiles it produces conform to this market trend. In addition, Ford has to set competitive prices that will attract potential customers. The strategic alternatives will cater to the needs of consumers in North America. A decrease in the product price causes an increase in the product quantity. If Ford reduces its’ prices the profitability levels will drastically rise. Moreover, if Ford conforms to the market trends, the profitability levels will improve.
Lowering the price has its’ own weaknesses and strengths. The strengths include rising profitability levels, a more competitive edge, an increase in sales volumes, and the company’s reputation improves. The weaknesses of lowering the price include operational inefficiencies, deduction of employees’ salaries, and retrenchment of employees. The strengths of adapting to the market will raise the number of profits and the many automobiles will sell. The weaknesses include operational bottlenecks in the company and excessive workload to Ford’s employees. The cost of conforming to the market trends can range between $5 and 10$ billion. Ford will have to revamp its’ manufacturing techniques this will cost a lot of money. The costs that pertain to lowering the price of Ford’s cars are operational costs and human resources. If the company decreases the price there will be minimization of operational costs, and people may lose their jobs
Recommendation
“The ability of any company to regulate its’ prices and conform to the market is of utmost importance. In economics, a lower price goes corresponds with a higher sales figure. Ford Motor Company has a reputation for financial stability.”[14] Lowering the price of its automobiles will maximize this strength as the sales volume will increase. Ford’s weakness is conforming to the current market trend such as fuel consumption. If the strategic alternatives are successful Ford will avoid its’ weakness from affecting it. In addition, Ford will be able to maximize the opportunities and minimize the threats the company faces. Astable three displays price reduction is a viable solution. This is in line with the company’s objective because the sales volumes will increase. The reduction in the prices of automobiles is the best solution as the profit levels will increase quickly. The disadvantage is that the employees might lose their jobs because the company will cut costs.
Implementation
“The product will conform to the market trends and its’ price will reduce. The promotion of the automobiles has to be evident this will ascertain an increase in the sales volumes.”[15] The place is of utmost importance. Ford’s cars have to be available at the right place and at the appropriate time. The cars available at Ford should address environmental needs and the customers’ wants. The physical evidence encompasses a cleaner and safer environment for all individuals. Ford’s cars should be environmentally friendly. Ford has to ensure that the set objectives of the company are successful. The estimates of the times for include 6months to 1 year for price reduction and 3 to 5 years for the process of conforming to the market.
Conclusion
Ford Motor Company has to conform to the market trends and it must offer the right price. This will ensure that Ford Motor Company is successful in the whole world. The weaknesses of Ford Motor Company will be non-existent, and the company will flourish.
Bibliography
Alexander, Natalia. 2009. Automobile industry. Washington, DC: International Business Pub.Cooney, Stephen, and Brent D.
De Lorenzo, Peter M., and Janice J. Putman. 2011. Witchhunt: essays on the U.S. auto industry and the blithering idiots who almost killed it. Tennessee: Octane Press.
Heneric, Oliver, Georg Licht, and Wolfgang Sofka. 2005. Europe’s automotive industry on the move competitiveness in a changing world. Heidelberg: Physica-Verlag. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=304794.
Ingrassia, Paul. 2010. Crash course: the American automobile industry’s road from glory to disaster. New York: Random House.
Mikler, John. 2009. Greening the car industry varieties of capitalism and climate change. Cheltenham, UK: Edward Elgar. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=487388.
Plunkett, Jack W. 2008. Plunkett’s automobile industry almanac 2009: the only comprehensive guide to automotive companies and trends. Houston, Tex: Plunkett Research Ltd.
Yacobucci. 2006. U.S. automotive industry: policy overview and recent history. New York: Nova Science Publishers.
Appendix
| Strengths | Weakness | Opportunities | Threats |
| Suppliers/Supply Chain | Competitors | Demographic Changes | Demographic Changes |
| Marketing Intermediaries | Suppliers/ Supply Chain | Technological Forces | Economic Forces |
| Public | Public | Cultural Aspects | Technological Forces |
| Customers | Customers | Social Aspects | Political/Legal Environment |
| Cultural Aspects | |||
| Social Aspects |
Table 1: SWOT Analysis
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | |
| North America | 15.5 | 14 | 15.4 | 16.3 | 16.6 | 15.1 |
| Europe | 11% | 10.1% | 9% | 8.5% | 8.2% | 8% |
Table 2: Segmentation Gri
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | |
| Sales Figures in Thousands | 6550 | 5405 | 4815 | 5520 | 5695 | 5670 |
Table3: Perceptual Grid
| Strategic Alternative/ Decision Factor | Financial Implications | Time to Full Implementation | Aligns with Firm’s Strategic Objectives |
| Lowering of the price of automobiles | 5 and 1a | 6 months – 1 year | Yes |
| Conforming to the market trends | 2 and 3a | 3-5 years | Yes |
Rating Scale: 1 = low risk, 2 = medium risk, 5 = high risk; 1a = low cost, 2a = medium cost, 3a = high cost.
Table 4: Decision Criteria Grid
[1] Alexander, Natalia. 2009. Automobile industry. (Washington, DC: International Business Pub. Cooney, Stephen, and Brent D), 70.
[2] De Lorenzo, Peter M., and Janice J. Putman. 2011. Witchhunt: essays on the U.S. auto industry and the blithering idiots who almost killed it. (Tennessee: Octane Press), 98.
[3] Heneric, Oliver, Georg Licht, and Wolfgang Sofka. 2005. Europe’s automotive industry on the move competitiveness in a changing world. (Heidelberg: Physica-Verlag),79.
[4] Ingrassia, Paul. 2010. Crash course: the American automobile industry’s road from glory to disaster. (New York: Random House),79.
[5] Ingrassia, Paul. 2010. Crash course: the American automobile industry’s road from glory to disaster. (New York: Random House), 125.
[6] Plunkett, Jack W. 2008. Plunkett’s automobile industry almanac 2009: the only comprehensive guide to automotive companies and trends. (Houston, Tex: Plunkett Research Ltd), 205.
[7] Plunkett, Jack W. 2008. Plunkett’s automobile industry almanac 2009: the only comprehensive guide to automotive companies and trends. (Houston, Tex: Plunkett Research Ltd), 37.
[8] Mikler, John. 2009. Greening the car industry varieties of capitalism and climate change. (Cheltenham, UK: Edward Elgar), 298.
[9] Yacobucci. 2006. U.S. automotive industry: policy overview and recent history. (New York: Nova Science Publishers), 89.
[10] Heneric, Oliver, Georg Licht, and Wolfgang Sofka. 2005. Europe’s automotive industry on the move competitiveness in a changing world. (Heidelberg: Physica-Verlag), 57.
[11] Heneric, Oliver, Georg Licht, and Wolfgang Sofka. 2005. Europe’s automotive industry on the move competitiveness in a changing world. Heidelberg: Physica-Verlag
[12] De Lorenzo, Peter M., and Janice J. Putman. 2011. Witchhunt: essays on the U.S. auto industry and the blithering idiots who almost killed it. (Tennessee: Octane Press), 304..
[13] Alexander, Natalia. 2009. Automobile industry. (Washington, DC: International Business Pub. Cooney, Stephen, and Brent D), 314.
[14] Alexander, Natalia. 2009. Automobile industry. (Washington, DC: International Business Pub. Cooney, Stephen, and Brent D), 79.
[15] Alexander, Natalia. 2009. (Washington, DC: International Business Pub. Cooney, Stephen, and Brent D), 97.