The Ford Motor Companys Environmental Analysis

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Introduction

This report is aimed at examining the functioning of Ford Motor Company. In particular, it is necessary to focus on the external and internal environment of this corporation. One should show how the company can minimize the impact of negative factors and how the organization can make use of the available opportunities. Moreover, one should concentrate on the way in which this corporation can create value by using its resources. Overall, the management should discuss quality management problems and intense competition staged by domestic and foreign car-manufacturers. These are the main risks that a company should manage.

Nevertheless, this organization has the capacity to address these issues by relying on its technological resources. Moreover, much attention should be paid to the expertise of this company and its brand name since these resources are important for increasing the competitive strengths of this corporation. These are the main details that should be examined more closely.

Segments of General Environment

Global factors

It is possible to mention that the changes in the global environment profoundly affect the functioning of Ford Motor Company. In particular, the corporation continues to be influenced by the intense competition which can be explained by the relative openness of the American automotive market and the removal of trade barriers. It should be noted that the governments of different countries strive to minimize import quotas and enable car-manufacturers to start operation in various countries. At present, Ford faces intense completion put up by companies such as Toyota, BMW, Honda, Mazda, Volkswagen, and many other manufacturers.

This particular factor continues to be an important part of the external environment because it minimizes the market share of this organization. In turn, the automotive industry becomes much more competitive. This is the main trend that should be disregarded by the senior management of Ford Motor Company since they need to adjust the changes in external environment.

Nevertheless, it is important to mention that the global environment can also offer many opportunities to Ford Motor Company. It should be noted that there are many emerging markets such China, India, or Russia, and they can be a source of revenue for the company (Ijoui, Emmerick, & Ceyp, 2009, p. 178).

It should be noted that that in these regions, there is a significant increase in the purchasing power of many people who now have more opportunities for buying the products of American, European, or Asian car-manufacturers (Ijoui et al., 2009, p. 178). Therefore, Ford Motor Company can increase its profitability. In turn, this trend contributes to the development and growth of the automotive industry. One can argue that the impact of these factors will not diminish in the future. More likely, it will become even stronger.

Economic factors

One should also speak about the role of the economic factors and their impact on the performance of Ford Motor Company. It should be noted that the economies of advanced countries have recently began to recover from the recession which emerged in 2007. Therefore, the demand for the products of Ford Motor Company tends to increase. Other companies that work in this area can also benefit from this trend. Thus, one can tell that the entire industry can achieve growth. Yet, this goal can be attained if manufacturers can offer innovative products without increasing the price significantly. In particular, they need to pay attention to such a criterion as fuel consumption since this is one of the main concerns for many clients who can be sensitive about the prices of goods and services.

Forces of Competition

It is also important to mention several forces of competition influencing the work of this company. Much attention should be paid to the bargaining power of clients who can be regarded as one of the most influential stakeholders of the Ford Motor Company. At present, they have access to the products manufactured by various companies. For instance, one can mention the vehicles of such manufacturers as Toyota, BMW, Mazda, Chrysler, and many others. Therefore, Ford cannot dictate its terms to the clients. Additionally, customers do not have to pay any switching costs if they do not want buy the products of a certain company. This bargaining power of customer is particularly important at the time, when the reputation of Ford Motor Company is damaged by a great number of product recalls (Bunkley, 2013).

Moreover, nowadays, clients have more opportunities for learning about the offerings of different companies. These are some of the details that can be singled out. In turn, it is possible to say that the management of Ford Motor Company has recognized the importance of these factors. In particular, the marketing strategies of this organization have evolved considerably. For example, this company emphasizes the idea that they strive to involve customers in the design or their vehicles (Yi, 2014, p. 98). For instance, these stakeholders are encouraged to express their expectations for the new models of Ford Motor Company (Yi, 2014, p. 98). This is one of the approaches taken by this corporation in order to respond to possible challenges.

Additionally, it is vital to speak about the intensity of competition. One can argue that Ford cannot easily differentiate its products in terms of price or quality. In particular, the competitors of the company are efficient enough, and they are able to reduce the costs of manufacturing vehicles. Moreover, these organizations are willing and able to adopt innovative technologies. This argument is particularly important to such a company as Toyota, General Motors, Chrysler, Mazda, and many other businesses.

At present, the company adopts the methods that can enable it to reduce the operational expenses. Moreover, this organization implements innovational technologies that are more efficient in terms of fuel consumption. For instance, one can speak about the production of hybrid cars (Ford Motor Company, 2014, p. 3). Thus, it is possible to say that the company has partly addressed these challenges. Nevertheless, this approach has been also adopted by many large corporations representing the automotive industry. Therefore, it cannot give a competitive edge to the company, at least for a long term.

One can argue that these forces will play an important role in the future. Therefore, Ford Motor Company should focus on the reduction of manufacturing costs. At present, Ford cannot differentiate its products in terms pricing, and it is one of the reasons why the market share of the company has been eroded. Moreover, the management should concentrate on the improvement of its internal operations, especially quality management. In this way, they can reduce the number of recalls which tarnish the reputation of the company and lead to considerable losses. Moreover, this approach can strengthen the competitive position of Ford Motor Company. These are the main recommendations that can be offered to the management of this corporation.

External Threat and Opportunities

Overall, there are several threats that the management should consider. For instance, one should focus on currency fluctuations since these fluctuations can influence the revenues that a company can derive from its overseas operations (Securities and Exchange Commission, 2012, p. 76). Moreover, this factor can influence the cost of manufacturing. Furthermore, the management should pay attention to the intense competition because it forces the company to reduce the price of its products.

It should be mentioned that the major rivals of Ford have similar resources and technological expertise. Therefore, these organizations can emulate the strategies adopted by Ford. This is one of the main threats that can be identified.

There are several important opportunities that are available to Ford Motor Company. In particular, one should speak about the recovery of the American automotive industry. To some extent, this phenomenon can be explained by the growing purchasing power of American citizens. Additionally, one should focus on the importance of emerging markets such as India, China, Latin America, or Russia (Ijoui et al., 2009). By exploiting these opportunities, Ford Motor Company can increase its customer base and derive extra revenues. These are some of the main points that can be made.

The most serious threat is related to the price pressure which can be explained the competition of other car-manufacturers. This problem can be addressed by increasing the effectiveness of internal operations. They need to minimize the costs of production in order to minimize the impact of those forces. This strategy is also important for exploiting the opportunities in the emerging markets such as India or China because in these countries, customers are usually more price-sensitive. These are some of the main aspects that should not be overlooked.

Strengths and Weaknesses

There are several strengths that are important for the sustainability of Ford Motor Company. In particular, one should mention that Ford produces a variety of vehicles and this organization occupies leading positions in various segments of the market. Additionally, the company has expertise and opportunities for introducing innovative technologies. These are the main details that can be adopted. In turn, the main weaknesses of this company are related to quality management. In order to exemplify this argument, one can refer to the frequent product recalls (Bunkley, 2013). The failure to address this issue can create significant challenges for the company since it adversely affects its reputation. Moreover, it results considerable losses for the company.

On the whole, the company can adopt several strategies in order to minimize the negative impact of the external environment. This organization should lay stress on the production of energy-efficient vehicles. They need to concentrate on those market segments in which Ford occupies leading positions. This strategy can enable the company to strengthen its position in the market. In turn, the company should focus on the introduction of the quality control programs. In this way, the company can become more resilient. Moreover, it will be able to reduce the risk of lawsuits originating from product defects. Finally, this step is important for strengthening the customers confidence in the new products as well as their loyalty to the company.

Resources, Capabilities, and Core Competencies

There are several important capabilities that Ford Motor Company possesses. First, this organization has necessary financial resources to implement various R&D projects. Therefore, this organization can manufacture innovative products. This issue is particularly important nowadays at the time when more customers place emphasis on such a criterion as energy efficiency. Another capability that should not be overlooked is the brand name of Ford Motor Company. Even despite various the scandals related to product recalls, this organization is still associated with such values as efficiency and quality. This argument is particularly relevant if one speaks about emerging markets. Nevertheless, this competency can be valuable if the company eliminates the risk of product defects; otherwise the brand of Ford may eventually lose its value. This is one of the aspects that should not be disregarded.

Additionally, one can mention that the company can be described as the economy of scale. In other words, this organization can better withstand price competition which can be staged by such corporations as General Motors or Toyota. Furthermore, the company has experience in the introduction of innovative technologies such as hybrid engines. On the whole, it is possible to say that Ford Motor Company has sufficient resources for withstanding the competition. In turn, this organization should offer the vehicles that can meet the needs of clients with various income levels. In this way, the corporation will be able to derive revenues from a variety of sources.

Value chain

The value chain of Ford Motor Company consists of several important parts. One of the most important elements is product planning and design. At this particular, the company introduces the concept of a new vehicle. In turn, the management should pay attention to the production of energy-efficient cars which can appeal to a great number of clients. This approach is important at the time, when more clients become very concerned about the price of fuel (Securities and Exchange Commission, 2012, p. 17). The expertise of this company and its financial resources are critical for introducing innovative products. Nevertheless, this strategy can be successfully provided that a company reduces the cost of manufacturing and improves its quality control methods. In this way, the company can increase the appeal of their products and make clients more loyal to the company. This is one of the first steps that the company should take.

Additionally, this organization can create extra value by stressing its brand name. They need to lay stress on the idea that Ford Motor Company has served consumer market for more than a century. This approach can be important for attracting customers in emerging markets such as China or India. These are main suggestions that can be made.

Conclusion

The examples provided in this report indicate that Ford Motor Company is resilient enough to address the challenges that it currently encounters. Admittedly, this organization faces considerable difficulties related to external competition and the increase of product recalls. Nevertheless, there are important competencies that should be considered. In particular, the company has the capacity to introduce innovative products which can appeal to a great number of clients.

Apart from that, by focusing on the quality control programs, the company can reduces losses and attract new clients. Moreover, the expertise of these company and its financial resources are vital for the introduction of new goods. By relying on these forces, the management can strengthen the competitive position of the company. These are the main details that can be singled out.

Reference List

Bunkley, N. (2013). Ford issues 2 more recalls of 2013 Escape after fires; total now 7. Web.

Ford Motor Company. (2014). Annual Report. Web.

Ijoui, R., Emmerick, H., & Ceyp, M. (2009). Globalization 2.0: A Roadmap to the Future from Leading Minds. New York, NY: Springer Science & Business Media. Web.

Securities and Exchange Commission. (2012). Ford Motor Company.

Yi, Y. (2014). Customer Value Creation Behavior. New York, NY: Routledge. Web.

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