This paper presents an organizational analysis of Ford Motor Company of Canada, examining its unique strategic role within Ford's global operations as a supplier, importer, exporter, and employer. The analysis covers the competitive environment of the Canadian automotive industry, including a detailed breakdown of cost structures, key industry drivers, and market share data among major manufacturers. The paper explores how Ford Motor Company of Canada has leveraged R&D investment, supply chain management, and cross-functional organizational design to build sustainable competitive advantages. It concludes with strategic recommendations for maintaining profitability amid rising supply chain costs, industry consolidation, and shifting regulatory pressures.
The paper demonstrates effective use of multi-source triangulation: it synthesizes peer-reviewed journal articles, trade publications, and government statistical data (Industry Canada, SEC filings) to construct a layered competitive analysis. This approach is characteristic of strong business case studies at the graduate level, where no single source is sufficient to capture the complexity of an organizational environment.
The paper follows a classic business analysis structure: an introduction establishing context and scope, a competitive environment section analyzing cost structures and industry drivers, a section on competitive response that integrates organizational design considerations, and a forward-looking recommendations section. The inclusion of labeled figures and tables within each section reinforces the analytical argument at each stage rather than relegating data to an appendix.
In assessing the competitive environment of Ford Motor Company of Canada, its strategic roles as part of Ford Motor Company must also be taken into account, in addition to its critical roles as supplier, importer, exporter, and employer. Ford Motor Company of Canada is often used as a case study to illustrate how a foreign subsidiary can evolve from being a production center to contributing intellectual property in the form of advanced business process improvements that lead to increased long-term profitability for the firm (Anastakis, 2004). Comprised of Volvo Cars of Canada, LR Capital (a finance division dedicated to used car loans), Stevens Lincoln Mercury Sales, and Deslauriers Ford Lincoln, the company is organized into product divisions for the purposes of executing marketing, selling, and service strategies.
What makes Ford Motor Company of Canada unique, however, is its role in ensuring that Ford Motor Company could overcome tariffs imposed by the United Kingdom on non-British Empire countries, thereby improving profitability on a global scale. From this unique competitive position within Ford's global operations, Ford Motor Company of Canada has developed sustainable competitive advantages not easily countered or copied by local and global competitors.
The intent of this paper is to analyze their competitive position relative to industry trends, risks, and opportunities occurring globally, and their implications for the Canadian automotive market. Despite the global economic downturn devastating this industry worldwide, imports from Canada were expected to rise 0.5% in 2009, and Canadian auto manufacturing was forecast to account for 26.7% of total American imports in 2009, with Ford Motor Company of Canada representing the majority (Leggett, 2008). As Ford Motor Company of Canada has established a unique role for itself in Ford's global operations and throughout the industry's value chain, the company has been able to demonstrate greater financial and operational resilience relative to its competitors. This paper analyzes why that is the case from a competitive standpoint, while also assessing the risks the company faces today.
The reduction in credit available for financing production, rising costs of raw materials, consistently high labor costs, and union concessions are all continuing to drive up the cost structure of the global auto industry. These factors are particularly acute in Canada given the strength of unions and supply chain costs that are often adversely affected by exchange rates and tariffs. Figure 1 shows the cost structure of the Canadian auto industry, with 0.5% profit representing the industry average. With 78% of costs derived from purchases through the supply chain, this figure is high by global standards, where purchases typically account for 70% of the total cost structure for a given auto manufacturer (Leggett, 2008). This represents one of the greatest risks to the Canadian auto industry — one not easily managed given the complexity and lack of synchronization throughout the supply chain across the entire industry.
Additionally, R&D spending at 3.5% of total budget for Canadian auto manufacturers is higher than that of comparable subsidiary locations throughout the automotive industry. This further supports Dr. Kasra Fedrows' theories of how manufacturing operations can become "Leader factories" that generate greater levels of innovation than corporate manufacturing centers (Maritan, Brush, & Karnani, 2004). Examples of process-level innovation supported by this 3.5% R&D investment at Ford Motor Company of Canada include supply chain quality efficiencies based on the Deming philosophy of continuous improvement (Baker & Artinian, 1985) and programs designed to reduce employee attrition while meeting cost objectives (Bart, Baetz, & Pancer, 2009). The joint development of hybrid technologies by Ford Motor Company of Canada in partnership with Edison also provides evidence of the return on investment (ROI) the company has been able to achieve through its R&D spending (Haldis & Franco, 2007). Despite these innovations, the most problematic area remains the high relative cost of the supply chain compared to other nations, compounded by relatively high wage levels driven by unionization.
Figure 1: Cost Structure of the Canadian Auto Manufacturing Industry
Source: Leggett (2008)
To analyze the underlying drivers fueling the high level of supply chain risk affecting the global automotive supply chain — and the Canadian supply chain in particular — Table 1 presents key industry drivers and their predicted rates of change. The price of steel has declined sharply, yet so has the supply of the highest-quality materials, forcing manufacturers into trade-offs between cost and production quality. This has presented a unique risk to stakeholders — from shareholders to employees and senior management at Ford Motor Company of Canada — specifically the risk of producing lower-quality vehicles by using inferior-grade steel simply because it is available. The rapidly dropping price of steel has, in fact, forced auto manufacturers to realign their entire new product development processes (Birchall & Green, 2006).
Another key industry driver is the consolidation of distribution channels. The 6.3% reduction in the number of dealers and continued sluggish growth projected through 2013 further illustrate this risk to the industry generally and to Ford Motor Company of Canada specifically. The reduction in consumer confidence is even more acute than the table suggests, with many consumers choosing to delay the purchase of any durable goods.
Table 1: Key Industry Drivers and Predicted Relative Rates of Change
Sources: Analysis of Birchall & Green (2006); Leggett (2008); Ford Motor Company Securities and Exchange Commission filings including 10-Q forms.
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