Understand the Concepts of Porter’s Model

Marketing

MARKETING 1
The main objective of this paper is to understand the concepts of porter’s model that has
been designed by Michael Porter. Michael Porter frames the two frameworks such as porter’s
five forces and porter’s generic strategies (Viltard, 2017). In this paper, porters five forces
framework and porters generic strategies will be discussed. Ford Motors have been taken into
consideration to examine the environment of the market and its strategies.
Task A
Company Introduction
Ford Motor is a multinational automaker firm that manufactures automobiles and
commercial vehicles under the Ford brand. It also manufactures the luxury cars at the
international level. The firm was established in the year 1925 by the Henry Ford. It operates in
automotive industry which is specific in terms of operation (Ford, 2020a).
The product and services provided by the company are automobiles, current marques,
trucks, buses, tractors, former marques and luxurious cars. Ford provides the automobile product
under Ford Marque worldwide and also the range of luxury automobiles under the Lincoln
marque. In Automobile, the company provides current and former marques. In Current marques,
Ford, Lincoln and Troller are the models and in former marques, edsel, jaguar, continental,
mercury, Volvo, merkur, Land Rover, Aston martin, FPV, and Mazda are the models. Apart
from it, trucks, buses, tractors are also provided by the company as product. It also starts
providing the sports cars such as motorsports with the various models (Ford, 2020a).
It has been found that the goods provided by the company satisfy the demand of
consumers in terms of transport services. The main aim of the company is to make the travelling

MARKETING 2
easy for the people. The key function of product that provided by Ford Motors is to satisfy the
demand of transportation so that they can transfer from one place to another place (Ford, 2020b).
Functionality of the product defines its purpose, strong or hard the product,
manufacturing process and the others. The purpose of product that offers by the company is to
delivers the transportation services. It uses the different parts of automobile product from the
different companies. The key components of the company are its four wheelers as these are
popular in the market and the function of these components is to deliver the needs and wants of
consumers (Ford, 2020b).
Task B
Market Analysis
It has been seen that Ford Motors Company adding 13 new organizations to its Aligned
Business Framework (ABF) (Reliable Plant, 2019). These companies bring 90 key components
and service suppliers those are selected for long term relationship and closer collaboration. ABF
is the main supplier of the company as this group supplies the services.
The other suppliers of the company are Autoliv, while Warn Industries supplies axle
assemblies and Ontario supplies door hinges, Flex-N-Gate Seeburn and arms. Indirect suppliers
of the companies are FedEx, Union Pacific, and Rous. The services provided by the suppliers are
rubbers, glasses, aluminum and many others. These raw materials have high value of goods due
to which the threat of suppliers has been decreases. The company has good relation with their
suppliers as the company provides the various facilities (Ford, 2020d).

MARKETING 3
Toyota, General Motors, Volkswagen and Daimler are the top main competitors of the
company that delivers the similar services to customers in order to satisfy their needs and wants.
These competitors also offer the three or four wheelers to consumers which are provided by the
company (Craft, 2019). The brand images of the companies are also high due to which the
competition among the companies has been increases. Toyota delivers the car to consumers
which is also similar services as the Ford motors also provide Cars as product.
Train, Buses and ships are the vehicles that offer the similar services to consumers. These
vehicles satisfy the need s and wants of consumers. Ford Motors offers the transportation
services to consumers such as three or four wheeler vehicles (Thrope, 2015). The consumers
those are not able to afford the products of the company can shift with these transportation
companies in order to travel from one place to another. But these transportation vehicles does not
buy by the consumers, the consumers pays the rent in order to travel with these transportation
services.
It has been found that the consumers of Ford Motors have the opportunity to purchase the
goods from any automobile companies. The consumers can buy the goods from the competitors
as they offers the goods with the different features and different price sets. Buying the product
from the company or buying the product from the competitors satisfies the demand of consumers
with the different features and different price sets (Cleverism, 2019).
The government relation team at Ford Motors firm that works to shape policy and
legislation at all levels of government. The government assists the firm’s auto and mobility
business. The government always supports the automobile industry by financing the domestic
financial producers and also international producers that helps to promote the services of

MARKETING 4
automobile. The main motive of the government to finance the automobile industry is to enhance
the economy (Ford, 2020c).
Task C
Porters Five Forces Framework
Porter’s Five Forces Framework is the strategic framework that has been designed to
examine the competitive environment of the industry. It also helps to evaluate the industry
attractiveness and like profitability. This framework also examines the actions of competitors
and the factors that affect the business environment. It helps the company to examine the
business factors which is essential while operating the business (Mind Tools, 2019). There are
five factors in which the porters five forces has been classified such as the threat of competitors,
the threat of new entrants, the threat of substitute, negotiating power of buyers and bartering
power of suppliers and these are given below:
The threat of new entrants:
It is observed that the threat of new entrants is moderate. It has been seen that there are
many companies that enter the automobile industry as this industry is attractive in order to earn
the profit. Apart from it, it is also observed that the government also supports the automobile
industry and it is also easy for the new entrants to enter the automobile industry in terms of
licenses. It has been seen that it is very difficult for the company to enter the automobile industry
because it requires the high amount of capital to invest for the operation. There are high amount
of expenses of automobile industry due to which the high amount of investment is required for
smooth operation. The automobile industry needs to update the models as per the demand and
wants of consumers which is difficult for the every company to maintain this up-gradation. As

MARKETING 5
per the above discussion, it can be said that the company has moderate degree of threat of new
entrants (Ansoff, Kipley, Lewis, Helm-Stevens, & Ansoff, 2018).
Bargaining power of buyers
Bargaining power of buyers is also moderate as there are many organizations operate the
business in this industry with the high brand image. As there are numerous firms in the market
that have high brand image due to which the consumers have many options to purchase the
goods from the different companies. The large number of firms states the high negotiating power
of buyers. Apart from it, it has been seen that prices of the company’s product that’s why; the
consumer purchase the product with the high loyalty of the company and the purchasing of these
products are less. The prices set by the company of the products are the finalized prices because
the products are already highly luxurious that is why; it is difficult for the consumers to negotiate
with the consumers. Both the aspects of the industry state that moderate degree of bargaining
power of buyers.
Bargaining power of suppliers
Bargaining power of suppliers is also less as the raw material provided by the suppliers
has high amount such as iron, glass, rubber, aluminum and many others. It is observed that the
company of automobile industry has to buy the product from the suppliers because the services
offers by the suppliers already has high amount. It is difficult for the company to negotiate the
prices from the suppliers due to which the negotiating power of suppliers is high (Ford, 2020d).
The threat of competitors

MARKETING 6
The threat degree of competitors is high as there are many firms in the automobile
industry that provide the similar services to consumers. The consumers have the opportunity to
purchase the products from the competitors as they offers the similar services with the different
brand name. There are several companies of automobile industry those have high brand image in
the market due to which the consumers purchase the products from those with the high volume.
General Motors, Toyota, Volkswagen and Daimler are the main competitors of the company as
they operate the business in the automotive industry (Bhasin, 2018). It is very difficult for the
firm to beat the competitors as these all have high value of goodwill in the market.
The threat of substitute
The threat degree of substitute is also high as there many substitute ways from which the
consumers can travel from one place to another. Train, Bus, ships and the other vehicle are the
main substitute of the company’s products as these provided the same services to consumers.
Ford Motors offers the transportation services to consumers by providing them four wheelers but
train, busses and ships also perform these services. These also help the consumers to transfer the
goods from one place to another or also help to travelling from one location to another.
According to the analysis, it has been found that the firm has the high level of threat of
competitors as there are various firms operate the business in automobile industry with high
goodwill. But it is tough for new entrants to enter the market just because of high amount of
investment due to which the degree of threat of new entrants is moderate. Apart from it,
negotiation power of suppliers are low as the services provided by the suppliers are also high
prices that is why; it is difficult to negotiate with the prices and the negotiation power of buyers

MARKETING 7
are moderate as the prices set by the company is high as it already provided the luxurious
products. At the end, the substitute threat for the company is high as the consumers can shift
towards the other vehicles such as train, buses and the others which increase the threat.
Porters Generic Strategies
Porter’s generic strategies are used by the companies to evaluate the direction (strategy)
of the company. In this framework, there are three strategies has been classified such as cost
leadership strategy, differentiation strategy, and focus strategies (Tools Hero, 2018). These
strategies help the company to attain the competitive advantage and these strategies are given
below:
Cost leadership Strategies
According to the cost leadership strategies, the company has to sets the prices to beat the
competitors and gain the competitive advantage in the market. From the above analysis, it is
observed that the firm has to set the prices as it has high level of threat of competitors. Cost
leadership strategy is the best strategy for the firm to set the prices in order to attain the
competitive advantage.
As per this strategy, the company has to set the low prices at the early stage to attract the
customers towards the services of the firm. It helps the firm to develop the trust among the
consumers related to buying the services. But after creating the high brand loyalty, it has been
seen that the organization has to set the premium pricing strategy in order to become the leader
in the market. This pricing strategy helps the firm to gain the advantage in the competitive
market by earning revenue (Lasserre, 2017).
Differentiation Strategies

MARKETING 8
Differentiation strategy states that the firm has to offers the different goods and services
to consumers. The firm has to add some new models according to the demand and wants of
consumers. It also has to add some new features in the existing companies so that it can develop
product differ from the others. This differentiation makes the product from the others that helps
the company to attain the competitive advantage (David, & David, 2016).
Focus Strategies
Focus strategy defines that the company has to focus on the existing products. This
strategy is the mixture of both the strategies such as differentiation and cost leadership strategy.
According to this strategy, it has been found that the company has to focus on delivering the
services such as guarantee services, marketing services and many others. Focuses on the
particular products helps to makes the brand image high in the market so that the company can
grabs the competitive advantage (Sminia, 2017).
According to the above porter’s generic strategy and the company analysis, it is noticed
that the firm implements the cost leadership strategy in order to become the cost leader in the
market. Cost leadership strategy is one of the best porter’s generic strategies for the company and
it is also relevant. Cost leadership strategy helps the firm to beat the competitors to gain the
advantage. This is highly relevant strategy from the company (Rothaermel, 2016).
Conclusion
At the end of the paper, it is concluded that Ford Motors operates the business smoothly
and effectively. In this paper, the discussion is made on the porters models for the ford motors
have been examined. In this paper, the porters five forces framework and porters generic
strategies are discussed. As per the porters five forces framework of Ford Motors, the company

MARKETING 9
has high threat level of competitors, substitute and new entrants but apart from it, negotiating
power of suppliers is low and negotiating power of buyers are moderate. According to the
porter’s generic strategies, the company achieves the competitive advantage in the competitive
market by implementing the strategies such as differentiation, cost leadership and focus strategy.

MARKETING 10
References
Ansoff, H. I., Kipley, D., Lewis, A. O., Helm-Stevens, R., & Ansoff, R. (2018). Implanting
strategic management. Springer.
Bhasin, H. (2018). Ford Competitors. Retrieved From: https://www.marketing91.com/ford-
competitors/
Cleverism. (2019). Ford Motor Company. Retrieved From:
https://www.cleverism.com/company/ford-motor-company/
Craft. (2019). Ford Motor competitors. Retrieved From:
https://craft.co/ford-motor-company/competitors
David, F., & David, F. R. (2016). Strategic management: A competitive advantage approach,
concepts and cases. Pearson–Prentice Hall.
Ford. (2020a). About Us. Retrieved From: https://corporate.ford.com/company.html
Ford. (2020b). Driving human progress through freedom of movement. Retrieved From:
https://corporate.ford.com/homepage.html
Ford. (2020c). Ford Government Relations. Retrieved From:
https://corporate.ford.com/company/government-relations.html
Ford. (2020d). 2018 Ford ABF Suppliers. Retrieved From:
https://corporate.ford.com/microsites/sustainability-report-2018-19/assets/files/sr18-abf-
suppliers-factsheet.pdf
Lasserre, P. (2017). Global strategic management. Macmillan International Higher Education.

MARKETING 11
Mind Tools. (2019). Porter's Five Forces. Retrieved From:
https://www.mindtools.com/pages/article/newTMC_08.htm
Reliable Plant. (2019). Ford recognizes top global suppliers. Retrieved From:
https://www.reliableplant.com/Read/24233/Ford-recognizes-top-suppliers
Rothaermel, F. T. (2016). Strategic management: concepts (Vol. 2). McGraw-Hill Education.
Sminia, H. (2017). The strategic manager. Routledge.
Thrope, D. (2015). The 12 Alternatives To Owning A Car That Convinced Me To Sell Mine.
Retrieved From: https://www.forbes.com/sites/devinthorpe/2014/11/01/the-12-
alternatives-to-owning-a-car-that-convinced-me-to-sell-mine/#22793cbc674a
Tools Hero. (2018). Porter’s Generic Strategies. Retrieved From:
https://www.toolshero.com/strategy/porters-generic-strategies/
Viltard, L. A. (2017). Strategic mistakes (AVOIDABLE): the topicality of Michel Porter’s
generic strategies. Independent Journal of Management & Production, 8(2), 474-497

MARKETING 12
Appendix-1
(Source: Mind Tools, 2019).
Porters Five Forces Framework
The threat of new entrants Moderate Level
Bargaining power of buyer High Level
Bargaining power of suppliers Low Level
The threat of competitors High Level
The threat of substitute High Level
Appendix-2
Porter generic strategy

MARKETING 13
(Source: Tools Hero, 2018).