Critical activities and combinations of activities
Reduce labor costs, close plant and pay down outstanding debt
Activities are strategically important
Addressing customer demands, quality and helping to maintain a low cost structure
Ford's Profit Margins
The analysis of the value chain shows how Ford is taking steps to increase their profitability, by dealing with a host of issues that could have an impact upon quality. This is important, because this is helping to improve Ford's ability to compete and increase their profit margins
Is the company stronger or weaker than key rivals?
Evaluate the company vs. key competitors on key success factors
When you look at how Ford is comparing with key competitors, they are at an impasse. As the company can be able, to take a significant portion of market share from competitors who are beginning to face considerable challenges. A good example of this can be seen with Toyota, where the company would have a major recall for faulty accelerators in 2009 and early 2010. This is important, because the problems at Toyota would allow Ford to be able to take market share from the company. As the negative press and positive reviews that Ford would receive about its products would help to revitalize the company. ("Toyota Facing Huge Quality Issue," 2010)
That being said, the largest potential threat that Ford will more than likely face is from Hyundai. The reason why is because the Sonata and Focus have similar features, which are designed to go after large segments of the consumers (who are demanding fuel efficient vehicles). The fact that Hyundai was able to see an increase in sales between 2008 and 2009 is evidence of: the company's ability to adapt to the various changes that they are facing in the future. ("Ford Fusion vs. Hyundai Sonata," 2010) the below picture illustrates how the strengths of Ford in comparison with their two rivals Toyota and Hyundai.
Ford vs. Toyota and Hyundai
Reduced labor costs
Improving image for quality
Quality control issues
Good quality / service
Increases profits / market share
Decreasing profits / market share
Increasing profits /
When you put these two elements together, it is clear that Ford has a unique opportunity to regain market share from the large foreign automakers. However, Hyundai is aggressively targeting their key markets. As result, Ford must be able to continue to adapt to changes in demands from consumers, by offering high quality products. If the company can maintain this level of concentration, they can be able to regain a significant amount of market share and prevent other competitors from gaining a foothold.
What issue or issue(s) merit "front-burner" managerial attention?
The two biggest issues that company is facing are: the large amounts of debt (that it is continuing to reduce) and possible quality control issues. If the company can remain profitable and continue with the strategy of cost cutting, they could be able to reduce their cost structure and increase their earnings (as they will reduce the burden of the large debt load). However, management must remain focused on consistently reducing the overall levels of debt. Otherwise it is only a matter of time, until these levels will begin to consistently increase. The different quality control issues could have an impact on sales, as the negative publicity can create the impression of Ford products being inferior to competitors. Recently, the company did have an issue with the brakes on the 2010 Ford Focus. However, they were able to address this issue quickly by establishing the Customer Satisfaction Program. This offered to fix the problem in these models for free. This is significant, because it shows how the company will continue face quality control issues on a regular basis. The big challenge going forward is: addressing them promptly and preventing the situation from spiraling out of control. ("Ford Issue Prompt Fix," 2010)
How comfortable is the company going into another culture or market?
Ford is well positioned going forward to address the challenges that it will face in other markets around the world. This is because the change in focus of the company, has allowed various executives to address the underlying long-term challenges from its business model (legacy costs and the corporate culture of the organization itself). When you examine legacy costs, it is clear that the cost of labor and benefits for various employees would continue to play a major role in the company's long-term success. This is because the unions would force the Big Three to maintain the traditional labor agreements that were often used since the 1950's and the 1960's. A good example of this can be seen with the average hourly wage that Ford is paying employees. Where, they have reduced these costs down to $52.00 per hour, this is slightly above what Toyota and other Japanese automakers are paying their employees. (Bennett, 2009) This is important, because the lower average hourly wage will mean that the company's products are more competitively priced in overseas markets.
The corporate culture of Ford was changed by their shifting of the business model. As managers would focus on ways to adapt to changes that were taking place in the markets. This would help the company be able to create new vehicles that were in demand. In various overseas markets, this strategy would help Ford be able to quickly adapt to the changes in each country. A good example of this can be seen with the company's One Ford strategy. This is a marketing plan involving the company selling the same basic models around the globe. The idea is that by finding those issues that are important to: all consumers, addressing these concerns and then augmenting them with specific markets can increase sales dramatically. Evidence of this can be seen by with the Ford Fiesta. This car has a European design, yet is being marketed in North America and Europe by emphasizing key aspects of the vehicle that are important to specific markets. ("North America to become New Export Base for Ford," 2009) This is significant, because it show how the change in the business model would create, a shift in the culture at Ford itself. When you put these different elements together, this means that the company is well positioned to aggressively compete in overseas markets.
Clearly, the internal environment at Ford is helping the company to avoid the same fate as General Motors and Chrysler. As the change in culture has allowed managers to focus on delivering high quality cars that consumers are demanding. When you put these elements together, this highlights how management was able to redefine the company by addressing these needs. As a result, this strategy would allow Ford to begin posting consistent profits, with demand increasing for some of their most popular vehicles to include: the Focus hybrid and the Escape crossover.
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