Ford Motor and Credit Company is the second largest manufacturer and second largest finance company in the world where its facilities, plants, productions and operations are spread in over 100 countries across the world. The company was founded by Henry Ford and started by establishing Detroit Automobile Company in 1899 which later came to be known as Ford Motor Company after some expansions. The core and affiliated automotive brands include Ford, Lincoln, Mercury, Volvo and Mazda.
It has also established a financing business for automotive financing and is called Ford Motor Credit Company. The four key priorities of the company include operating the business profitably, developing new products according to customer needs and wants, improving the balance sheet through proper financing and finally working as a global team in order to improve the efficiency of the business (Ford Motor Company, 2002).
ORGANIZATIONAL CORE COMPETENCIES
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Before talking about the core competencies of the Ford Motor Company, it is important to know what core competency essentially means.
Core competencies are basically the prominent skills, functions, characteristics and assets possessed by a company which makes it prominent in the market place. Examples include excellent customer service, product development, information networking etc. The core competencies seen in the Ford Motor Company include their manufacturing and distribution network since it extends to over 100 countries across the globe which is excellent. Moreover, the automotive brands and lavish designs also add to their strengths and core competency.
In addition to this, the company’s quality assurance and customer service plus their excellent marketing campaign is a part of their core competency. In the financing segment of the business, diversity is a part of the company’s core competency since they finance their automotive operations through diverse sources of funding. Due to these core competencies, the company is able to attain a competitive edge from its competitors in the industry and has a positive effect on the overall industry (Banham and Newman, 2002).
According to me, core competencies are essential things on which a company should work on as soon as it establishes itself. Ford also needs to focus on its strong core competencies and work on its weaknesses in order to be more profitable and successful.
MARKETING STRATEGY AND TACTICS
While analyzing the marketing strategy of the Ford Motor Company it is seen that their marketing practices are based on maintaining close and long-term relationships with the customers in order to become profitable.
Products and marketing campaigns are designed in a way to influence the customers into making the purchase. In the recent years, Ford’s marketing strategy is based on the increased use of internet marketing for advertising its newly introduced vehicles. There are online advertisements and direct mails plus ads on television, billboards, posters and newspapers are common to the industry. In the online campaign, there were advertisements on high traffic portals so that maximum number of audience can be reached by posting ads on most frequently viewed web pages.
The results of the online campaign were very positive due to which the company adopted the strategy for long-term. Such advertising campaigns directly target the end users therefore, they are a part of the ‘pull strategy’. Moreover, as a part of its marketing campaign, Ford also sponsors television and environmental programs thereby, increasing its purchase. The company pays television programs and movie producers to use its vehicles and such marketing is called sponsored marketing. Besides this, Ford Motor Company also spends on social marketing which is called in corporate social responsibility.
The company works with employees, their families and the society on the whole to improve the lives of the people and the environment in which they are living. Since motor vehicles are contributing to the environment degradation and global warming therefore, the company has to work substantially on environmental concerns in order to strengthen its reputation as an automotive company (Cooney & Yacobucci, 2006). According to me, the marketing strategy and tactics adopted by the Ford Motor Company add to the competitive advantage of the company therefore, should be strengthened at every step.
Ford Motor Company specializes in large-scale manufacturing of cars assisted by a huge workforce and moving assembly line. The strategy is built on supporting the vision and mission of the company which is to become a leading company and supply outstanding products and services. The company is constantly involved in the search of ideas and innovative ideas so as to satisfy the needs and wishes of the customers in a maximum manner. The overall strategy is to provide excellent products and services which provide the maximum value to leading to exceptional customer satisfaction.
The vehicles should be fuel-efficient but at the same time outstanding in performance and style. The company’s strategies are also based on environmental sustainability. Ford has different product, promotion, price and place strategies but the overall strategy is to make the company profitable by ensuring efficient customer service and delivery of outstanding products and services. There is also a Green Global Strategy pursued by Ford which is based on ensuring that the environment is green and secured from harmful emissions.
All these strategies are focused to enhance the reputation, success and profitability of the company (Johnson, Scholes and Whittington, 2008). According to me, this overall strategy of the company is important since profits are not the only thing that matters but excellent customer service and sustaining the environment goes hand in hand. The overall strategy also helps in competition since the growing concern in the automotive industry is fuel efficiency and Ford is seen to be working on it continuously.
Moreover, its commitment to product excellence and design purity also adds to its competitive advantage.
ANALYSIS OF EXTERNAL ENVIRONMENT
While analyzing the external environment of Ford Motor Company, it is important to pay separate emphasis to both task and general environment making up a firm’s external environment. Task environment This consists of the competitors, customers, suppliers, strategic alliances, regulators, unions and owners. Looking at the competition, the company faces fierce competition from its top competitors namely General Motors, Toyota, Honda and Daimler Chrysler.
Ford stays in the second place after GM though they strive continuously to reach the top position but the actions taken by their rival does not allows the company to reach there. This nature of competition impacts the company in taking strategic actions so that it excels over its competitors. As a car manufacturing company, various auto parts are supplied from different suppliers across the world. However, recently there has been a trend of reducing suppliers and obtaining all the materials from few ones in order to minimize costs.
Due to a number of suppliers available, there is a competition among them due to which they offer reduced prices. All the efforts of the Ford Motor Company are based on satisfying the customers with new and innovative products therefore, customers are an important influence for the company in its external environment. Other factors like alliances, regulators, unions etc do have an impact on the company’s progress but to a lesser extent since they are considered less important. Employees work in teams due to which there is coordination between them.
There are trade unions in US which do not allow such companies to reduce their employees because of advancement in technology so such factors reduce the profits of the company (Williamson and Cooke, 2003). General environment This environment consists of the political, technological, socio-cultural, legal and economic factors affecting the firm. Since the company’s operations are spread across the world, political disturbances reduce the sales of the Ford Motor Company as happened after Sept 11 attack.
Economic recessions, rising fuel prices, increasing demand for Japanese cars also reduced the profits of the company since they were forced to reduce their prices. Socio-cultural factors add to the advantage of the company because possessing a car is seen as a status symbol in majority cultures. There are some societies which prefer luxury cars which are catered by the luxury segment of the company. Moreover, there are women designers to design the car for women according to their needs.
At the technological front, such advances create a positive impression about the company and boost the sales since the latest technology is used in the car model. On the legal side, there are no strict regulations to restrict the distribution of Ford Motor Company’s vehicles. The other environmental factors affecting the sales of the company include global warming and carbon-di-oxide gas emissions from the vehicles which affect the environment (Anonymous, 2004). While analyzing personally, the negative factors from the environment should be paid attention to seriously in order to minimize their consequences on sales and profitability.
The current situation of the US automotive industry is very disappointing because the year 2008 showed the dramatic drop in the car and light truck market. In the month of August 14. 1mn units were sold which is 2mn less than that sold in year 2007. While comparing the year 2007 with 2006, the new-car dealerships were 20,700 and manufacturing employees went down to 996,800mn from 1. 07mn in 2006. The year 2008 can be called a dismal year on the whole for automotive industry because the retail gasoline price of more than $4.
00 per gallon lowered the demand for cars thereby, causing the sales to decline. The car industry sales declined by 11. 2% in the first eight months of 2008 while trucks, minivans and SUVs sales declined by 19. 3%. The trend that was seen in the first eight months of 2008 was the increasing production and sales of hybrids in the American market. Another important trend that is to be seen is the rapid growth in the plug-in hybrids (PHEVs) and electric vehicles. This trend will be enhanced by tremendous improvements in battery technology.
Sales of heavy SUVs declined drastically due to which Ford had to cancel the production of its Excursion SUV and GM cancelled the production of massive Hummer H1. US automakers have also been threatened by the Chinese auto products due to their low labor costs and increasing product quality. Coming to the Big Three (US automakers GM, Ford and Chrysler), they are facing very difficult times due to the intense competition prevailing the market from foreign-based firms. The high labor costs endured adds to their difficulty and worsens the situation.
They are faced with the task of cutting costs for which they are reengineering all parts of their operations like design, manufacturing, marketing etc so that they regain their market share. In 2008, the Big Three were also struggling for long-term loans from the US government but due to the prevailing financial crisis, the government could not lend them. They are facing liquidity problems and Toyota taking advantage of this situation is increasing its production in order to gain the market share (Plunkett Research Ltd, 2008).
The parts manufacturing business in US is also going through a gloomy scenario faced with difficult challenges of high costs, government regulations, labor laws, disappointing models etc while the Asian car manufacturers are growing rapidly by supplying parts to Toyota and Honda. SIC code For analyzing the automotive industry using the SIC code it is important to know what does the SIC code actually means and does. SIC stands for Standard Industrial Classification and is used to classify industries according to their groups.
The first two digits identify the major industry group, the next digit tells about industry group within the major group and the next digit finally identifies the industry within the group. Similarly, for the automotive industry the major industry group is transportation equipment and the corresponding code is 37. It becomes 371 for identifying motor vehicles and motor vehicle equipment and one more 1 is added so that it becomes 3711 and is classified as Motor Vehicles and Passenger car bodies. The following table will make it clear further.
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