Ford Motor Company Essay

track Motor Company is the third largest political machine producer in the world ground on motor cable cars sold. hybridisationisation manufactures and distributes gos in two hundred grocerys across six continents (Datamonitor 4). cut acrosss brands accept ford, Jaguar, Lincoln, Mercury, Volvo, Land Rover, Aston Martin, and Mazda. intersections key outputs include passenger cars, trucks, busses and vans, sport utility vehicles, vehicle accessories, after- gross sales vehicle split and convergences and extended repair service products. fit to incident Magazine in 2007 intersection was the seventh ranked Ameri gage-based caller listed on the fortune 500 list, which was based on covers intendetary revenues in 2006 of 160.1 billion. The companys success comes from its ability to focus on customer satisfaction and loyalty, anticipating and meeting changing customer needs, and delivering innovative products that pass on quality standards and ar price amiable an d as well environmentally affable.The pecuniary stability of intersection and the long-term stability of our world argon met by crossways strategy to lead with its products. Several key strategies ar used by crossbreeding that help to develop products that argon of advanced quality, affordable to consumers and that be in noble demand. These strategies include continuous avail of quality standards and customer satisfaction, adjusting to consumer demands by develop state-of-the-art applied science that is tidy and much fuel efficient, and delivering customer-focused insane asylums faster. If these strategies argon implemented correctly cover can overcome many or the driving pushs that control competition in the railway car diligence.Driving ForcesDriving forces in an industry atomic number 18 the major causes that change the industry and the competitive condition of that industry. The main driving forces that significantly manipulate the auto industry includ e competition and orbicularization, new engineering and innovations, changes in cost and expertness, regulatory influences and government insurance policy changes, and changes in societal concerns, attitudes, and lifestyles. orbicularization is when railway car manufacturers offer their products internationally. One movement manufacturers do this is to subjoin sales in faster growing markets. Also production cost can be cut out-of-pocket to natural de wardrobei sensationr parturiency cost in markets around the world. crossway Motor Company is a unshakable believer in globalization it manufactures vehicles in six continents across the world. crossbreeding focuses on lead primary types of emerging markets. The humbled market is developing countries such as China, India, and Brazil.The economies of these markets argon growing and so is the need for products same(p) cars. crossroad realizes the amount of money consumers give birth for in these developing countries and adjusts products to make them accessible to these consumers. In 2006, production capacity in China increase to 200,000 units (For a More sustainable Future 7.) Also in 2006 cut across ranked second for customer satisfaction in India by J.D. great author Asia Pacific.The second emerging market Ford is foc development on is improve economies such as Russia that are experiencing periods of growth after long periods of economic stagnation.The third emerging market Ford focuses on is high-growth niche market across the U.S. and Europe. Ford has developed and will appease to develop hybrid vehicles, advanced clean technology, and smaller more fuel-efficient vehicles that suit customers in a certain region or customers with different driving conditions.New technology and innovations is overly a major driving force in the automobile industry. The ongoing change in technology alters the pattern of competition by attracting more buyers. Innovations in production techniques allow manuf acturers to produce products faster, more efficiently and cleaner. Ford focuses its innovation on design, technology, safety, and the environment. Fords innovations are based on customer demands. Today more customers want environmentally friendly automobiles and better fuel-efficient cars.Ford has and is also developing more advanced technologies that are environmentally friendly. Examples include biofueled vehicles, hydrogen internal-combustion engines and hydrogen fuel cellvehicles. Ford also has an innovative manufacturing process, which is cleaner for the environment and also saves money for the company. Ford uses fluids blended from ve pull back hold ofable inunct during engine production rather than using mineral embrocate. The associated waste in engine building is the most environmentally damaging part of the process. Ford also has improved its efficiency by enforcing strict energy intensive trading operations, such as the generation of close air for handheld tools on the production line.Changes in cost and efficiency also drive change in the automobile industry. In the old few historic period material be, labor costs, employee benefit costs and anoint prices bugger off all been increasing. One way that Ford is combating high fossil oil prices is its use of a soy-derived foam. The average vehicle made today contains 30 pounds of foam made from petroleum products. Ford is making an effort to change 40% of the petroleum-based foam with a soy-based foam. To fight against decreasing realize, rising labor costs and employee benefit costs Ford has been implementing elements of its Way Forward Plan. This plan was developed in 2006. The plan calls for reducing the number of Fords sexual union American manufacturing employees by 25,000-30,000 and also plans to idle 16 North American manufacturing facilities (For a More sustainable Future 34.)Also in 2006 health cover expenses for U.S. Ford employees, retirees and their dependents were $3.1 billi on (For a More Sustainable Future 35.) Even though Ford values its past and puzzle employees, the company cannot keep up with the rising prices of health care. In 2006 Ford had required retired employees to support a higher portion of their health care benefits, and active employees were asked to increase their health care contributions. Also in 2006 Ford employees were offered to leave the company. To make it appealing to employees Ford offered eight different bonus packages. A couple of these packages included early retirement and an educational prospect package where employees with at least one year of service were bailable for up to $15,000 in tuition reimbursement per year up to four years (For a More Sustainable Future 34.) other driving force that alters the competitiveness in the automobile industry is regulatory influences and government policy changes. One example of a regulatory influence would be the governments integrated Average FuelEconomy (CAF) requirement, which measures carbon dioxide emissions. Ford has met the requirement e genuinely year since the course of instruction was initial introduced.Altering societal concerns, attitude, and lifestyles are major instigators of industry change. Growing consumer concerns towards environmental safety is a major number one wood of change in the automobile industry. Ford recognizes that manufacturing and operating automobiles have a significant impact on the environment. Ford has several endeavours to protect the environment.The start-off initiative includes developing advanced environmentally friendly vehicles. Ford was the first U.S. automaker to offer a full hybrid vehicle, which was also the first hybrid from any automaker in the SUV segment. The second initiative for Ford is to meet and exceed new clean air standards established by the Environmental Protection Agency. Reducing the environmental impact of our environment is Fords third initiative to protect the environment.Ford also aims to reuse and reuse materials by contracting with suppliers to attain environmental friendly parts and components. An example is Fords Fumes-to-Fuel technology. A plants icon operations are its largest source of air emissions. Ford has developed a process that uses paint fumes to generate electricity for its plant.The last initiative for Ford is conserving natural resources by taking part in global environmental programs to conserver energy and water. Fords developed a software package program called WET that creates a facility-wide water balance to quantify soulfulness uses of water and identify areas of opportunity. prophylactic is other concern that drives changes in automobile designs. Not only does Ford develop innovative safety technology the company also educates drivers. In 2003 Ford teamed up with the Highway Safety Association and a panel of safety experts to create a program called Driving Skills for Life. This program teaches teenagers develop the skills necessary for s afe driving, beyond what they nail in standard driver education programs (For a More Sustainable Future 30.)Five Force AnalysisIntensity of Rivalry Among CompetitorsThe automobile industry is one of the most competitive industries in the world. The top competitors globally and domestically account for most of the industrys market share. In the United States on that point are three top competitors known as the Detroit tether, formerly known as the Big Three. General Motors Corp., Ford Motor Co., and the Chrysler collection are the three companies that makeup the Detroit Three. According to Wards Automotive Reports in 2006 the Detroit Three brands accounted for 41.5% of passenger car sales in the United States of this 41.5% market share, General Motors controlled 20.8%, Ford 14.1% and the Chrysler Group 6.6%. The Detroit Three market share is slowly dwindling due to globalization, which is another reason that leads to stronger contest among competitors (Autos & Auto split pains stick with 9.)In the United States, according to Wards Automotive Reports, the top three conflicting competitors that are trying to take over the U.S. market include Toyota Motor Corp., Honda Motor Co. Ltd., and the Nissan Motor Co. Ltd. In 2006 Toyota, Honda, and Nissan accounted for 36.6% market share in the U.S. Individually Toyota controlled 18.7%, Honda 10.8% and Nissan 7.1% of the U.S. market share in the truck category the Detroit Three brands account for 67% of Truck Sales in the U.S. Toyota, Honda, and Nissan are the foreign companies trying to compete with the Detroit Three (Autos & Auto Parts Industry Survey 9.) Lack of product differentiation is another factor that adds to the intense rivalry between competitors. elevator car manufactures products include cars, trucks and SUVs.Even though there is a lack of product differentiation within the automobile industry there are many things that a manufacturer can do to alter design and production that make a product standou t from its competitors. The innovation of technology and production causes intense rivalry between competitors because if automakers want to sell make the most profit they need to develop innovative technology that is a step ahead of its competitors and meets the needs of consumers or they need to develop innovative production techniques that are moreefficient and cheaper compared to its competitors. Ford is known for its innovation throughout the years one example would be the moving crowd line. This manufacturing technique allowed individual be giveners to stay put stationary and perform the same task repeatedly on multiple vehicles that passed them, this technique allowed Ford to be more efficient by producing many more vehicles than its competitors.Threat of New EntrantsAlthough the automobile industry has very strong rivalries among competitors the industry will not watch over many new entrants in the future. at that place are several reasons wherefore there is a low ba ne of new entrants in the automobile industry. The automobile industry has reached economies of scale and to be successful in the industry new entrants must reach economies of scale. Manufacturers must mass-produce automobiles so that they are affordable to consumers. Another reason why there are very few new entrants in the automobile industry is the very high capital requirement. Manufacturing costs, research and development costs, start-up costs, and advertising and promotional material costs are a few costs that require huge amounts of costs in order to be successful in the automobile industry.With rising oil prices, increase in employee benefit costs, higher healthcare costs and also rising steel prices the threat of new entrants will remain to stay very low in the automobile industry. The current situation of the Automobile industry and the U.S economy is another factor that will keep the threat of new entrants low. lift gas prices, low consumer confidence and shrinking fel lowship values are all factors that are causing minifys in automobile sales. Strong brand preferences and high degrees of customer loyalty is another reason there are few new entrants in the automobile industry. It is surd for a new manufacturer to attract customers that have brand preferences and are loyal customers, unless the manufacturer has a huge advertising and sales promotion budget or offer price discounts, these two things decrease profit margin.Threat of Substitute ProductsThe threat of interchange products is very weak in the automobile industry. Automobile transportation for people makes it easy and fast to get from browse to place depending on the length of their trip. Walking, biking, and riding trains, planes or subways are all substitutes to automobiles. These substitutes depend on the location of the person. People that live and work in the city will probably either walk, bike, or take a subway to work in order to avoid art or to protect the environment. The t hreat of these substitutes will always be low because it is convenient to have a car and new innovations toward environmentally friendly automobiles.Bargaining Power of Suppliers and BuyersIn the automobile industry the bargaining author of the supplier is weak. There are so many part manufactures in the industry to choose from it is easy for a company to switch from one to another giving supplier no leverage. The automobile part orbit is so big that it is divided into four business units original equipment manufacturers, successor parts manufacturing, replacement parts distribution, and rubber fabricating. According to a press release by Ford, the company spends around $90 billion on parts from more than 2,500 suppliers. Compare to the bargaining power of suppliers the bargaining power of buyers is a lot higher.Automobile manufacturers make profit from the sales of its automobiles. This federal agency that manufactures have to produce automobiles that meet consumer needs and st andout from its competitors. This is why consumers have such a high bargaining power because if they do not handle a certain automobile they can choose another automobile from a different manufacturer at a relatively low switching cost. Analyzing the bargaining power of supplier and buyers, identifying the threat of new entrants and substitute products, and also analyzing the intensity of rivalry among competitors will allow a company to assess the competitiveness of a certain industry.SWOT AnalysisFord is the worlds third largest automobile manufacturer, and their brands are sold domestically and internationally, which include Ford, Land Rover,Lincoln, Mazda, Mercury, and Volvo. In 2006 Ford received 30th place in the BusinessWeek-Interbrand ranking of the top 100 global brands in 2006. Another one of Fords biggest strengths is its industry leading innovative technology which is shown through product design, safety and production. Fords large network base is a strength to the comp any. Ford manufactures and distributes automobiles in 200 markets across six continents. Ford is also a very ethical company. For years, Ford has supported families in need. Ford encourages its employees to take two workdays per year to volunteer at an ratified nonprofit organization.Although Ford is very successful it does have impuissancees. One weakness would be the decline in its market share. According to DataMonitor, Fords overall market share in the US has declined from 21.1 % in 2002 to 17.1% in 2006. Competition, globalization, low consumer confidence, and high gas prices are all factors that contribute to Fords declining market share. Another weakness of Fords is its declining profitability. At the end of 2006 Ford recorded revenues of $160,123,000 million which was a 9.5 % decrease from 2005. The operating divergence of the company during 2006 was $16,950,000 million compared to a operating harm of $1,550,000 million in 2005. This means Ford had a net loss of $12,613,0 00 million in 2006, compared to a net profit of $1,440,000 million in 2005 (Datamonitor 4.)The automobile industry is full of opportunities. High gas prices and environmental issues have caused manufacturers to develop innovative technology. Ford is developing several technologies that are environmentally friendly and fuel-efficient. These vehicles include biofueled vehicles, hydrogen internal-combustion engines and hydrogen fuel cell vehicles. Global demand is also an opportunity for Ford. Ford has developed strategies to bring its product to emerging markets like India, China and Brazil. The economies of these markets are continuing to grow along with its demand for automobiles.A major threat to Ford is its competition, which includes General Motors, the Chrysler group, Toyota, and Honda. cost increase costs are also a major threat to Ford. Rising labor and employee benefit costs have forced Ford to make out itsworkforce and to close some of its vehicle assembly plants. The U.S. economy is also a threat to Ford. Consumer confidence is down due to rising oil prices and declining home values. The future of Ford and the automobile industry will continue to be worse in the near future if these threats continue.With rising costs and increased competition the U.S automobile industry does not look good. Industry sales are expected to decline in the future due to low consumer confidence, rising interest rates, and high gas prices. SUV and truck sales will decline the most due to the rising gas prices. There will be a higher demand for smaller cars that are fuel-efficient. The Detroit Three along with other U.S. manufacturers will increasingly focus its operations internationally to markets in Eastern-Europe, Latin America and the Asia-Pacific where production costs are cheaper. Environmental friendly technology and manufacturing will also continue to summon because of the growing consumer interest in protecting our world.Works CitedAutos & Auto Parts Industry Sur vey. Standard & Poors June 2007 2818 April. 2008. For a More Sustainable Future. Ford Motor Company June 2007. 19 April. 2008Ford Motor Company. Datamonitor Business Information Center Nov 2007.Campbell University Electronic Library., Buies Creek, NC. 18 April. 2008Ford Motor Company. 2008. Ford Motor Company. 18 April 2008Ford.com/.Gamble, John E., Strickland, A.J. III and Thompson, Arthur A. junior Crafting and Executing Strategy. McGraw-Hill/Irwin, 2007.The North America Automotive Sectors. Mergent Oct 2007. Campbell UniversityElectronic Library., Buies Creek, NC. 18 April. 2008