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Main Ideas of the Article
The article focuses on outlining the recent events on the automotive market of China. It is stated that the sales of cars by the American automaker, Ford Motor, in China dropped significantly, according to a press release from Ford. The rate of decline slowed down compared to 2018, while China was recognized as the largest automobile market globally. At the same time, Ford and General Motors ‘sales in China are falling for the third year in a row, having more than doubled in 2019 from the peak level recorded in 2016. The article also discusses the subsidies, arguing that the tax incentives of the government allowed maintaining car prices. Furthermore, Chinese customer desires are reviewed in the context of the mentioned decline and future perspectives. It is assumed that General Motors and Ford paid little attention to the fact that they value innovation and some new features.
Important Facts That the Author Uses to Support the Main Ideas
The recession on the Chinese car market turned out to be especially painful for American automakers: along with local companies, the sales of Ford and General Motors were most seriously affected. At the same time, German and Japanese manufacturers increased their share in the given market. To support the key ideas, the author refers to the numerical data and presents convincing numbers. For example, it is noted that 570,000 vehicles were sold by Ford in 2019, which is a half of the profit that was obtained in 2016 (Xu Elegant, 2020). More to the point, the author cites the credible references, such as the Wall Street Journal, which shows this article is trustworthy.
It should also be stressed that the opinion of an equity analyst working for Morningstar agency, Ivan Su, adds more value to the article and makes information more comprehensive. As for the customer preferences, the position of the author is clearly described by means of the comparison with Honda Motor and Toyota Motors, both of which reported a 9% growth in sales in 2019. In spite of the current decline that is experienced by General Motors and Ford, there is a more pleasant future since the Chinese market presents the place for growth. In general, the key underlying reason for such positive predictions is related to the under-penetrated nature of this market.
Holes in the Main Ideas and Supporting Arguments
The critical review of the given article reveals that the author lacks an objective presentation of the decline in the Chinese automobile market. Namely, one may suggest that the opinion of the only expert cannot provide a full picture. It would be better if the author also mentioned other peoples’ attitudes towards the target event. Another hole is associated with the supporting arguments that seem to be one-sided and lacking any positive data with regard to Ford or General Motors. Nevertheless, the key arguments provided by the author seem to be strong enough to take them into account while examining the automotive market of China.
Point/Counterargument
The article under discussion claims that the failure to focus on customer needs and expectations is the key factor that led to their decreased revenues. However, some automakers are still betting on the Chinese market, emphasizing its size and growth potential. This applies, first of all, to manufacturers of electric vehicles, which receive support from the Chinese authorities. It is important that Ford sales began to decline earlier than the general fall in the Chinese market – in 2017. According to Yale Zhang, the analyst at Shanghai Automotive Foresight consulting company, quoted by The Wall Street Journal, the main problem for the American company is its outdated lineup (Kubota, 2020). It seems to be rather important to point out that in the past two to three years, they have not launched new products fast enough, and traditional models have not been updated for years.
Related Management Theories
Although none of the management theories are identified in the article with regard to the target event, it is evident that some of them are present. A communication theory implies sharing information between two or more stakeholders: in this case, the companies and customers. The facts that customers play an important role for any company and are its most significant stakeholders cannot be overestimated. However, when the crisis begins, a question arises for the companies, the answer to which is not always clear. Should the crisis be reported, and should customers be consulted to improve the situation? (Certo, & Certo, 2016). These questions give rise to more specific ones, for example: what will we win (or lose) if we do not tell clients about the crisis; how they will react when we tell them about it. Ford and General Motors failed to interact effectively with their customers to learn about their needs, which resulted in a sales decline.
The impact of the environment on organizations requires proper management from a company. An understanding of the importance of assessing the external environment when managing the enterprise is critical as the external environment of the organization is the source of many problems of managers. It can be described as the whole set of factors affecting the organization’s activities, namely: consumers, suppliers, financial organizations, competitors, labor resources, and the state of society. Peter Drucker, a specialist in the field of management, believed that the only true goal of any business is to create a customer (Certo, & Certo, 2016). Meeting the needs of the buyers is useful since the number of consumers determines the necessary production resources, a range of goods and services along with their quality.
Examples of Bias or Faulty Reasoning
Faulty reasoning refers to logical mistakes that are made based on a lack of awareness, the limited evidence, or other factors. Many of them are intrusive and common that they have their own names. To understand logical errors, it is necessary to determine which rules they violate. One of the most common faulty reasoning examples is the desire to draw conclusions based on a rather small number of facts. In case of Ford and General Motors, the companies proceeded from erroneous judgments, and, therefore, their actions were also mistaken. If heir decision-making could be more informed and adjusted to the new trends that are dictated by the environment, it would be much easier to avoid the failure. One may note the case of Tesla, a car that was developed in consistence with the great enthusiasm of people to innovations and ecologic consumption. The sales of Tesla are enormous, and it is expected that the revenues would increase in future years.
References
Certo, S. C., & Certo, S. T. (2016). Modern management: Concepts and skills (14th ed.). New Jersey: Pearson Education.
Kubota, Y. (2020). Ford signals more China trouble on the road ahead.The Wall Street Journal. Web.
Xu Elegant, N. (2020). Ford and GM take a hit in China as German carmakers thrive.Fortune. Web.
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