Analyzing International Management Challenges Faced by Ford Australia

This essay provides an in-depth analysis of the international management challenges encountered by Ford Australia, a subsidiary of Ford Canada. It examines the company's struggles in various international markets, including Europe, China, and South America, highlighting the impact of market liberalization and global competition. The essay explores the complexities of operating in both domestic and international markets, focusing on issues such as competitive rivalry, supplier power, and the evolving demands of price-sensitive and quality-focused customers. It also delves into the strategic responses of Ford Australia, including product localization, market segmentation, and the adoption of electric vehicle technology to address emerging trends and competitive threats. The study uses Porter's Five Forces model to analyze external competition, pricing strategies, and market segmentation, concluding with a discussion of how Ford can leverage technological innovation and address challenges in the international business landscape. The essay also touches upon the importance of effective communication, diversity management, and financial planning in ensuring international business success.

The international manager

Introduction
Globalization accelerates market liberalization, which gives economic freedom to the firms
for trading in foreign countries. As a consequence, international managers divide the market
into two segments – the domestic market and international market. The international
managers make marketing decision based on the market demand or consumers’ demand.
Trading in the domestic market is more convenient as the managers obtain the consumers'
data and comprehend their buying trends in an easier and faster way than formulating the
marketing strategies in the foreign market. The business organization must know the business
laws and entry barriers in a foreign market. International management is more complex than
dealing in the domestic market; it requires huge financial resources. The managers have to
take risks of uncertain situations and be prepared for the changes. The uncertain situations
come with some opportunities and challenges described below:
This essay analyses the international management challenges in the context of a car
manufacturing company, Ford Australia, a subsidiary of Ford Canada. The company comes
recently in the headlines of news due to its massive fall out in the international market like
Europe, China and South American market (Baruch & Reis, 2015). Ford Australia is
committed to meet the consumer needs of both the domestic and international market. This
division of Ford is engaged in the activities of producing, assembling, importing and
distributing. Ford Australia gains the opportunity of accessing new customer base and creates
its portfolio for different segments. Its portfolio contains more than one brands in the
international market like Focus, Ford Kuga SUV, Fiesta, etc. At the same time, the company
is pressurized by the new competition in the domestic market. Competitive rivalry in the
Australian car market led them to enter in price war competition with the international player
Hyundai. The existing customers in the domestic market are prone to switch to newer
technologies as they get Hyundai models in an affordable range. Forbes (2019) points out that
as the Australian buyers are financially stable; they crave for newer products than preferring
durability. The domestic competitors like Holden also take part in the price war as they offer
innovative designs at a cheap price. The increasing competition in the domestic market leads
to the challenge of the growing bargaining power of suppliers. As a result, Ford Australia’s
business sustainability is affected.
Ford Australia faces a declining marginal profit due to the price-sensitive customers' choice.
As the international and domestic market players offer similar kind of features and

functionalities in automobile choices, Ford adopts the strategies of discounts and premium
schemes. The buyers of the international market are divided into two major segments: one
goes for quality and others prefer financial savings. Lee (2016) described the point of view of
buyers of emerging countries like China who feel that buying a car is a one-time investment.
Consequently, they will seek for convenient financial schemes. Ford faces a hard competition
in the Chinese automotive market, which left Ford behind the competition in the largest
automotive market. Borland (2015) found that the dealers’ profitability, lack of inventory
control and lack of refreshing line-ups damage the positioning of Ford in the Chinese
automotive market. International business challenge pushes Ford to revamp its designing and
refreshes its product pipelines. On the other hand, Domestic player, Holden throws a new
challenge to Ford by targeting low-income customers by offering limited technological
features with a lower price range. As a result, the bargaining power of buyer increases and
Ford’s profit margin has been fallen. Asad (2012) says that Ford Australia comes back with
new marketing strategies to combat the situation. It transforms the brand identity in a newer
shape in retail showroom in the Australian market while closes down its manufacturing
divisions. In order to withstand the international players, Ford Australia expands its portfolio
with new offers like warranty period, free car loan, map updates and low pricing with
reduced size. The company is planning to come back in the Chinese market, as its market size
will be increased by twice the size of the US by 2020 (Belyi & Goldthau, 2015). The
international managers focus on lining up of their profitable models like pickup trucks and
sport utility automobiles in the US, introducing Rangers in Europe and Fiesta series in the
overseas countries.
The rising concern of energy conservation for future generation aims to introduce sustainable
transport, which led to the arrival of Electric vehicles in the market. This is an effective
solution for preventing air pollutants and also saving the fuels used in the vehicles. Forbes
(2019) says that 15 nations are enrolled in the mission of Electric car that will bring out 20
million electric cars in the market by 2020. Tesla has pioneered the electric car journey and
soon the traditional carmakers like Volkswagen, Toyota have joined to the electric car family.
The substitution of products gives new challenges to Ford Motors. This unplanned situation
gives them a new opportunity for a breakthrough in the electronic car market. In order to
establish its sales again in the international market, Ford invests $4.5 billion additionally for
manufacturing electronic vehicles by 2020. Forbes (2019) suggests that this emerging trend
will help Fords motor to cover up the huge loss in Lincoln cars and SUV models in North

America. The substation product arranged by Tesla when raises completion in the global car
market, Fords focuses on the features of electric vehicles to compete with Tesla's Model S
(Emmenegger & Norman, 2019). Nguyen (2019) argues that allowing the new trend of an
electric vehicle, Ford can combat the price war battles as the future consumers will be
attracted towards environmental sustainability, especially in the luxury segments. This new
opportunity allows Ford to rebuild its market again in China. China and its neighbouring
countries are raising concern for pollutions and green environment projects which let the
Ford manufacturer to introduce electric vehicles in China. China has sold 250,000 electric
cars and gas-electric hybrid cars to local buyers in 2014 ("About Ford", 2019). Burkhart,
(2011) suggests that accessing the Chinese consumers will enable Ford to improve its
revenue in international business.
Automobile manufacturers like Ford Motors not only sells its products in the local market of
Australia but also import and export their products to the neighboring countries. Exporting to
the neighboring countries can give economic benefit but Ford Australia fails in gaining profit
because the neighbouring countries are economically backward. This challenge is utilized by
Ford Australia by employing cheap labours from the neighbouring countries including Japan,
South Korea and Thailand (Pope, 2019). In my opinion, international managers should have
effective communication skills to obtain optimum utilization from their labour forces by
enhancing productivity. The international managers should have clarification of their goals
and interaction with the workforces to remain them aligned with their common goals. As
Ford Corporation is planning to revamp their old models, the redesigning plans should be
communicated well by the managers (Ferris, 2019); otherwise, it will create chaos among the
staffs. As per my knowledge, the language barrier is the first and foremost challenge in
international management which can be speculated by the company and appoint an expatriate
for coaching the managers and the staffs. According to me, the international management
should focuses also on the diversity management. Though the cultural background of Ford
has a resemblance with Australian culture, it is completely different from Thailand. Diversity
management will help the company to remove the political, cultural, racial borders among
company staffs and the managers. The significant aspect of international management is to
build up collectivism or goals of collectives, than focusing on individualism (Nguyen, 2019).
Differences not only invite conflicts among the team, it gives the management additional
support by diverse insights with alternatives views. It also allows Ford to gain knowledge of
the etiquette, attitude and way of dealing business of a foreign country.

The international transportation increases the making cost of cars. Ford bears $750 million
only in Tariffs in 2018 (Håkansson & Ford, 2016). The blunder of Australia’s Free trade
agreement with Thailand damages the international business of Ford more brutally. Australia
abolishes the tariff from Thai-made vehicles whereas Thailand imposes hidden tariffs on
specific features like higher engines. When Thailand sends a plenty of affordable local brand
vehicles to Australia which create rivalry to the local manufacturers, Australia sends 100
Ford Territory SUV models to Thailand which charges a huge registration fee. This wrong
strategy resulted in Ford’s difficulty in survival both in local and international market. The
aftermath of this situation, lead the company to close its manufacturing of engine plant and
Vehicle assembly plant in Victoria State. Das et al. (2017) say that Ford Australia gives
employment to the labours of neighbouring countries over their capacity. It produces only
37000 in a year when it employs 3000 people, which lead them to face huge financial impact
in planning (Baruch & Reis, 2015). The company has to bear the employment cost of 3000
people including their training cost that does not generate a good return on investment at the
end of the day.
In my personal view, the international managers of Ford should set targets for monitoring the
targets in quarterly and annually based. The management should monitor whether the profit
margins and revenues are on the right track or the company has met its criteria for daily
productivity target. The finance manager should compare the quarterly sale or weekly sales to
the annual sales revenue to avoid uncertainty in the complex business set up of the
international market. The international management should allow their achievement
comparing with their competitors. The marketing managers of Ford should monitor the
market segments in isolation and also compare with the benchmark against the rival’s offers
(de Silva, Sinclair & Angelopoulos, 2016). The marketers of Ford Motors should localize
their products or allowing specific cultural needs in their production.
In response to the surplus tariff costs of importing, Ford decides to localize their sources in
the Chinese automotive market. They planned to localize the raw materials of Lincoln
Vehicles and Ford explorer which consumes high import costs and can generate high-profit
margin. Anglès, (2019) says that the international operations of Forbes are mingled with high
and low results. The wealth gap in Europe threatens Ford's Lincoln vehicle, a luxury product
which primarily has generated huge sales in EU countries. The recession period led Ford to
make a partnership with Volkswagen and as a result, many of its old employees lose their job
due to lack of skills in new automobile technologies. The international managers have to pay

the security money to the old staffs when the company changes its business trends. In order to
refine the skills of the remaining workforce, the company should invest in skill-based
training.
Conclusion
This essay describes a glimpse of international management by describing the international
business environment, its challenges and opportunities in the context of Ford motor Australia.
The essay describes the pressure of managers who trade in the international market and how
they cope with the pressure from local and international rivals. The essay uses the framework
of Porters' five forces model to describe the external competition in the foreign market and
local market. It shows how competitors utilize pricing strategy and segmentation tools to
break through the market share. In contrast, the pressure from the suppliers of the local
market creates a complex situation for the survival of the company. As the international
market is full of uncertain circumstances, the technological innovation can also substitute a
product which will be no longer in use. This essay focuses on how electric vehicle substitute
the diesel vehicle and how Ford can utilize the opportunity of technological innovation to
rebuild them from failure.

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