Business Strategies for Ford Motor Company

This study analyzes the business strategies of Ford Motor Company, including the external and internal environment analysis, PESTLE and Porter's five forces, and the VRIO framework. It also discusses the company's strategic capabilities and recommendations for success in the automotive industry.

BUSINESS STRATEGIES

EXECUTIVE SUMMARY
In this present study, it can be stated that Ford Motor companies consider their
development in new areas of other countries. In this regard, internal and external environment
analysis consider in the present study. Furthermore, it demonstrates an understanding of PESTLE
and Porter’s five forces. This model helps to understand effectiveness of the company that assists
to develop significant results at workplace. In addition to this, it considers discussion towards the
VRIO framework that helps to know different element's effectiveness within the organization.
Moreover, SWOT analysis assists to understand strength, weaknesses, opportunities, and threats
that will help to focus on creative results in the business. It assists to lead successfully in Large
Automotive Industry.

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
EXTERNAL ENVIRONMENT......................................................................................................1
1) Macro Environment.................................................................................................................1
2) Micro Environment.................................................................................................................3
INTERNAL ENVIRONMENT.......................................................................................................5
1) Strategic Capabilities...............................................................................................................5
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
The business strategy considers a different set of competitive actions and moves that use by
the organization to attract customers, performances strengthening and accomplish their goals.
This assists the enterprise towards desired ends. In this context, outline business activities
ascertained with positive results (Kompalla, Kopia and Tigu, 2016). The present study based on
Ford Motor Company which is related to the manufacturing companies. The company has the
vision to become the most trusted enterprise in the world. Their strategic goal is to become a
leader of the automotive industry.
In order to focus on the present report, it covers macro and microenvironment analysis.
With this consideration, the macro and the micro environment will be explained PESTLE and
porter strategy respectively. Furthermore, it includes internal environment analysis which
considers strategic capabilities, resources, and recommendations with strategic direction.
MAIN BODY
EXTERNAL ENVIRONMENT
1) Macro Environment
PESTLE analysis
PESTLE analysis is one of the strategic tools that help to analyze macro-environment
within the enterprise. It stands for several elements that impact on Ford Motor Company. These
elements are explained under here:
 Political factors: Political factors play a significant role which impacts on Ford Motor
Company. It consists of long term profitability in several countries. Political stability is
one of the major elements that consider the impact on the company. Furthermore, trade
regulations and tariffs that is related to consumer goods also impact on the organisation
which create negative impact on the company. This is because, company need to pay
more taxes.
 Economic factors: Furthermore, macro-environment factors are also creating an impact
on Ford Motor Company. It includes different elements such as inflation rate, foreign
exchange rate, interest rate, etc. All these aspects demonstrate aggregate demand and
investment in the economy of a particular nation. Along with this, the efficiency of
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financial markets up and down so that Ford Company face issue in identify capital that
needed for the organization (Kompalla, Geldmacher and Lange, 2017).
 Social factors: Moreover, the culture of society also create an impact on the organization
environment. In this aspect, belief and attitude of particular population plays a wide role
in the market where Ford Company operates. This is because the selected business needs
to understand customers and their requirements. Along with this education and income
level also consider power structure within the society that must be required for different
customers (KOMPALLA, GELDMACHER and LANGE, 2017). Leisure interests also
consider an important role within the business.
 Technological factors: Technology is one of the important elements in today’s
environment. In the automotive industry, this element helps to establish players to cope
up with changes. In this context, recent technological developments by Ford Motor
Company helps to deal with creative results in the market. Furthermore, the rate of
technological diffusion is also important to attracting several customers (Rowledge,
Barton and Young, 2017). However, there are several areas in the Indian market where
lack of technological advancement that impact negative on the chosen business.
 Environmental factors: In different areas, distinctive norms and standards that can
impact the organization and its functions. With this consideration, it can be stated that
different laws and liability laws helps to deal with the environment. In this context,
weather, changes in climate, recycling, etc. impact on Ford Motor Company. On the other
hand, the chosen firm face issues in different kinds of environmental aspects which need
to be followed in the country.
 Legal factors: Legal framework is also important that protect the intellectual property
rights of a particular business. In this aspect, the firm must carefully investigate before
entering different markets that lead to a competitive edge. There are different legal
factors consider in this such as discrimination law, employment law, data protection,
consumer protection law, etc. that impact on Ford Company. However, different
countries consist different legal factors which impact negative on the organization.
TOWS analysis
TOWS matric of Ford Motor
Company
Strengths (S)
 Innovation process is
Weaknesses (W)
 Few number of
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effective
 Global supply chain is
also effective
 Product portfolio is
also diverse
 Customer are also
loyal
production facilities
 Poor performances in
luxury division
 Highly dependence on
European auto markets
 Weak position in
several emerging
market.
Opportunities (O)
 Several automotive
businesses partnering
together
 Implement of 5G
technology in
automotive industry
 Increasing in
digitalisation and
advancement of
technology
 Development of new
distribution strategies
SO strategies (High)
 Expansion in
production of
emerging market
 Development of 5G
technology
 Integrated new
facilities with cloud
computing
WO strategies (Low)
 Expansion of
production facilities
 Enhancement in
production facilities
 Utilisation of cloud
computing
 Increasing in number
of operating days
Threats (T)
 Sales of luxury cars
highly depend on fuel
price
 Online shopping trends
more popular
 Exiting corruption in
global trade
 New global
government
ST strategies (High)
 Development of online
strategy
 Development of
reward based program
 Focus on customer
effectiveness
 Using mobile devices
in vehicle
communication
WT strategies (Low)
 Avoidance reliance
with mass sales
 Development of safety
program
 Become independent
Motor Company
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regulations.
2) Micro Environment
Porter’s five element strategy
Porter’s five force strategy is external environment analysis for assesses competitive
rivalry in the automotive industry. There are several elements influencing to the selected
enterprise that is as follows:
 Competitive rivalry (Strong): This factor consist strong impact on the organisation. Ford
Motor Company also face different competition. This consider competing firms which
influence within the industry. It includes high aggressiveness in the firms, existing of
high barriers, and moderate a number of firms. Toyota is one of the main player
competing in the automotive industry. It maximizes competitive advantage that linked to
competition (KOMPALLA, GELDMACHER and LANGE, 2017).
 Bargaining power of customers (Moderate): This factor consider moderate impact on the
organisation because customers are significantly influenced by the organization. Five
forces of this element effects on buyers within the enterprise that contribute moderate
bargaining power is demonstrate in switching costs, individual purchases, availability of
substitutes (Rowledge, Barton and Young, 2017).
 Bargaining powers of suppliers (Moderate): In order to demonstrate the bargaining
power of suppliers that influence moderately on Ford Motor Company. There are
different factors that contribute to the bargaining power of suppliers such as moderate
overall supply, low forward vertical integration, etc. (Ford Motor Company: Five Forces
Analysis (Porter’s Model), 2019).
 The threat of substitution (Moderate): Ford Motor Company consider effects of the
substitute on certain products so that it consist moderate impact on the organisation. With
this consideration, it can be stated that substitution moderate availability of substitute
impact on the organisation. Furthermore, moderate switching costs is related to the threat
of substitutes so that the selected business has low impact.
 The threat of new entrants (Low): Within the organisation, it has been seen that the
effects of new entrants also create an impact on the functions and operations. Therefore,
new entrants impact is low in the business. Due to high capital costs requirements,
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generally, new businesses not easily enter new areas. Therefore, in Ford Company there
is the low impact of new entrants (Kompalla, Geldmacher and Lange, 2017).
INTERNAL ENVIRONMENT
1) Strategic Capabilities
VRIO framework
VRIO framework consider in Ford Motor Company to assess competitive advantages.
With this consideration, this framework offers sustained competitive results. This model includes
the following elements:
Valuable
 Ford The company shows different kinds of financial resources within an organization
that is more valuable and assists in the investment of external opportunities. It also aids in
the chosen business that combating threats (Rowledge, Barton and Young, 2017).
 As per valuable element, local food products are highly differentiated. It considers
perceived value that valued by customers because of differentiation.
 Ford Motor Company shows consider valuable resources within the firm. A significant
portion in the workforce generally highly trained which leads with productive output in
the enterprise.
 VRIO the framework also allows the organization in the firm to sell products with more
competitive interference. It helps to generate revenue which provides more positive
results (Kompalla, Geldmacher and Lange, 2017).
 Distribution of the network is also a valuable resource that helps to attract more
customers. It helps to ensure that greater revenue also ensure that promotional activities
help to increase sales.
 In the chosen company, the cost structure is not valuable. This is because, production
method leads to greater costs than the competition which create affects to gain more
profitability in the organization (Kompalla, Geldmacher and Lange, 2017).
Rare
 Financial resources in the Ford Motor Company are generally found to be rare. Strong
financial resources are generally possessed by the organization within the industry.
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 Local food products are generally found that are not rare and identified by the chosen
company. These are generally competing by other competitors. It means that different
resources assists to gain competitive advantages (KOMPALLA, GELDMACHER, and
LANGE, 2017). Therefore, resources are valuable that make creative results in Ford
Company.
 Employees of the chosen organization are considered rare resources identified in the
selected business. These staff members are highly skilled and trained. With better
compensation and environment of work ensure that employees not leave for other
enterprises.
 With the help of a distribution network in Ford Company is rare that it is identified in a
successful manner. This is because, competitors also require more investment to cope up
with more effective results (Hosseini, Hosseini and Ahmadi, 2016).
Imitable
 Financial resources of Ford Motor Company is also costly that is identified in a
systematic manner. These resources also acquired by the enterprise for prolonged
profitability over the years.
 Local food products are not too much costly that identified in Ford Motor Company.
These can be acquired by several competitors to invest a certain amount in research and
development. Local food products by Ford Company to provide with temporary
competitive advantages to acquire in long run aspects.
 Staff members of the Ford Company are also not costly with VRIO analysis.
Improvement in skills also better compensation package, benefits, work environment,
growth opportunities, etc. (Kompalla, Geldmacher and Lange, 2017). It helps to make
temporary competitive advantages to acquiring the future.
 With the help of a distribution network, Ford Company is also costly in the competition
which is imitated by it. This is generally developed over the many years that helps to
invest a significant amount to imitate a similar distribution system.
Organisation
 Financial resources in Ford Company are generally organized that capture value as
identified by the VRIO model in the chosen organization. These resources generally used
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strategically to invest amount at the right places (Kompalla, Geldmacher and Lange,
2017).
 In Ford The company, not well organized that identified which related to VRIO aspects.
It means that the chosen organization which not using patents to develop full potential.
Unused competitive advantages exist which can be changed into a sustainable
development program.
 The distribution network of the Company is generally organized that is identified for
Ford Motor Company. Using this network helps to reach out to customers that ensure the
availability of outlets. As a result, these kinds of resources prove to attract more
customers (Kompalla, Kopia and Tigu, 2016).
Resources in VRIO framework
V R I O
Cost structure
Distribution network
Financial resources
for more investment
Research and
development
Staff members skills
Sustained competitive
advantages
Distribution network
Value chain analysis
Primary activities
 Inbound logistics: This is first step in which Ford Company start their production. They
are receiving raw material from different suppliers such as US, Japan, China, etc. Hence,
raw material distributed to manufacturing unit.
 Operations: It is second stage where main production considered. It can be divided into
different parts. It is basically process that considered by chosen company to save cost in
regional markets.
 Outbound logistics: It is process of final goods that being moved from manufacturer to
retailers.
 Marketing and sales: This is critical and important part that must be followed for
advertising, distribution, sales and services. Main aim of this department is to increase
profitability of Ford Company.
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 Services: This is final activity of primary to provide ultimate products to their customers.
In this way, Ford company need to make their better brand image to increase customer’s
satisfaction.
Supportive activities
 Infrastructure: In the business infrastructure consider key role in business success. It
considered management, finance, culture and many other resources. It is one of the great
way to enhance profits of Ford Company.
 HRM: HR management is important for organization to focus all the different areas of
vehicle brand. On the basis of well management human capital, employees are motivated
to gain key success.
 Technology: Nowadays, technology play very important role in the organization. It is the
best way to enhance sales with marketing. Hence, it is important to maintain passenger
safety, emission, etc.
 Procurement: It is more important for Ford Company which includes procurement of raw
material from suppliers. For example, the chosen company purchasing their raw material
from different businesses such as plastic, iron, etc.
2) Resources
SWOT analysis
In order to consider different resources, SWOT analysis consider following strength,
weakness, opportunities and threats:
Strength
 Global recognition: Form Motor Company is well known company that is recognised in
global market. It helps go gain more success with marketing and advertising. Brand value
of the organisation successfully lead in success (Chen, Hsieh and Wee, 2016). Political
stability is also important aspect for strength of the chosen business.
 Research and development: The chosen company consider their success with its key
strength that is research and development. In this consideration, they are continuously
improve their performances towards vehicle.
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 Diverse offerings: The selected company also caters in all kinds of demographic groups
that can be diversified in brands and models. They are generally take care of customer’s
requirements and needs through commercial vehicle (Ianniello and Piccarozzi, 2018).
 Adaptability: Ford has also wide range of products and services portfolio that helps to
deal with strong leverage that consider less dependency in different product range. This
kind of working helps to develop competitive automotive market (Neumann, Hintzen and
Dismon, 2019).
Weakness
 Product recall: The chosen company face huge loss to maintain brand image because of
product recalls. It also recalled vehicles from 2015 to maintain safety in systematic
manner.
 Weak foothold: Ford Motor Company diversified in many geographical areas. They are
lack focus in their productivity and performances. They have not strong holding in
emerging market (Drahokoupil, 2017).
 Dependence on other markets: Ford Company is highly dependent on US and European
market. It limits on revenue and profits.
 Poor reputation: Ford Company has poor reputation which is one of the major weakness
of the organisation.
Opportunities
 Eco-friendly vehicle: Ford Company continuously trying to deal with opportunity that
produce fuel efficient for cars and commercial vehicle. Hence, they have opportunity to
make eco-friendly vehicles (Rowledge, Barton and Young, 2017).
 Increase customer base: Ford Motor Company is also working for increase customer
base with using penetrating automobile market in China and India that is excellent
opportunity for the enterprise.
 Digital marketing: Digital marketing prevailing with more effective results (Neumann,
Hintzen and Dismon, 2019). Ford has opportunity to work on marketing skills to grow
customers and engagement of suppliers.
Threats
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 High competition: Ford Motor Company has threat of high competition due to rival
companies of Tata, Tesla, Toyota, etc. Furthermore, distribution network is also low that
is threat for company.
 Increasing price of raw material: Rising of raw material prices is also threat that create
direct impact on the enterprise (Kessler and Buck, 2017).
 Regulations and policies: Changes in regulations and policies also threat in front of the
organisation. In this context, Ford Company face serious challenge with new rules and
regulations.
Strategic planning process
 Objectives of the plan: To mass consumption of products with more productions with
development of productivity. In addition to this, doing right things for several customers
who lives in society, environment and people.
Objectives of the company
1. To increase their profitability by 30% till December month.
2. To accomplish each and every customer attention with providing after sales services.
3. To enhance efficiency to deal with different kinds of customer’s needs and requirements.
 Strategic directions: With respect to develop effectiveness and accomplish business foals,
Ford is focusing on gaining and maintaining competitive advantages. In this way, they
can easily handle economic environment. Ford Motor Company adopted there
competitive strategies that helps to accomplish desired in systematic manner. With this
consideration, it is essential to focus on global perspective market (What is strategic
planning? 2020).
Competitive strategies
(a) Cost leadership:
Cost leadership is the strategy that helps to Ford Motor Company that enable to provide
different products and services at less cost than the other competitors. As innovative company,
they persuading competitive pricing strategies for several aspects (KOMPALLA,
GELDMACHER and LANGE, 2017). Comparing with major competitors such as Hyundai,
Toyota Ford using different pricing strategies with reference to new technologies that
incorporates.
(b) Differentiation:
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Differentiation is one of the important tool that offers products and services that are
uniquely different from other competitors. Ford Motor Company define new range in several
products with quality of technology, efficiency and aesthetics. The company continuing to
introduce eco-boost for maintain safety in environment, saving fuel technology across different
range of vehicle. The chosen company continuously introduce advance form of battery
technology with vehicle electrification programs (Hosseini, Hosseini and Ahmadi, 2016). This
strategy is the best for the chosen business to make different from other competitors.
Focus strategy
It is the important strategy which helps to Ford Motor Company to targets products and
services in automotive industry. This organisation establish global marketing sales and services
that integrate several customers in whole world. Marketing vision of the organisation is
expanding licensed merchandise in whole world. It enhance brand image of the company so that
the selected business focusing new global cars and utilities helps to accomplish more balanced
global portfolio (Huang, 2016). Therefore, following Ansoff matrix helps to accomplish positive
results:
Ansoff matrix
In order to employed successful results, marketing decisions accomplished in positive
consideration. Main purpose of this model is to implement perfect marketing strategy that is
being pursued and revels to ascertained opportunity. It consider following elements:
Market penetration: Ford Motor Company consider wide range of product portfolio to look
penetrating current market with its existing products. There are different strategies that are used
to build “Global Marketing” vision with high quality communication for products and services. It
can also further develop cost efficiency to penetrate market in whole world (Kompalla, Kopia
and Tigu, 2016). Due to low risk involvement in the strategy, Ford enterprise look forward to
enhance their substantial market portfolio to introduce new features in Ford’s products features.
Product development: This strategy consider for development of new products to make it
more suitable in the market. With this regard, Ford generally investing fuel efficiency in vehicle
to accomplish more global product market. With the help of” One Ford” strategy high level of
communication assists to expand licensing merchandise in all around the world. It helps to
capture new markets (Winkelhake, 2019). As a result, enhance brand image to gain competitive
success integrate marketing team members, suppliers and global agencies.
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Market development: This strategy generally emphasis on expansion of markets to sold
current products. In order to increase market development, Ford need to understand requirements
and culture of particular market. Effective cost evaluation is main element that need to
implement perfect pricing strategy that is necessary for competitors. As a result, primary focus is
need to give quality at minimum cost (Neumann, Hintzen and Dismon, 2019). As compare to
other competitors, there are several areas in which Ford consider their capturing in different
market such as India, China. Hong Kong, etc. Entry risk is high so that it is essential to
understand behaviour of market.
Diversification: With the help of diversification strategy for new products, it can be stated
that Ford Company need to introduce several products within the market. With consider global
vision of Global Marketing and One Ford, battery powered vehicle with smart technologies,
environmental friendly and economical. As a result, reliability, cost efficiency and competitors
activities is most important aspects for Ford Motor Company. Due to high risks, it can be stated
that the chosen business need to perform great deal of market research that is needed that must
be carried before investing new markets (Dehdar, Azizi and Aghabeigi, 2018).
 Recommend strategic direction: As above strategic direction available that helps to
turned as sustainable strategic option. In this consideration, Ford compare with other rival
organisation. The company not adopted perfect pricing strategies that despite quality and
technology. Therefore, Market development strategy is the best which can be recommend
for the organisation. In this way, they can develop their products and services in different
areas of the market. In this current economic downturn, customers lacking confidence so
that Ford need to take certain steps to move forward with smart technologies,
affordability and style (El-Khalil and Darwish, 2019).
CONCLUSION
The present report based on Ford Motor Company that is most growing automotive industry.
This report helps to streamline and globalise operations that helps to introduce several products
that require by customers. In this report, it has been summarised that external environment
analysis assists to know economic condition of the particular nation. Furthermore, PESTLE and
porter’s five forces model strategies explained which shows that political stability is one of the
important aspect which create impact on the organisation. Furthermore, it concluded about
internal analysis which includes VRIO and SWOT analysis that show internal capabilities of the
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organisation. Aggressively restructured their operations match with production to demand that
offers highest quality, value, safety, etc.
Furthermore, report articulated about Ford Motor Company’s Ansoff strategy that show
product development, market development, and diversification and market penetration. They
pursue for survive current position to make more effective results in the organisation.
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