Strategic Management Analysis: Ford Motor Company Report and Insights

This report provides a comprehensive analysis of the strategic management of Ford Motor Company. It begins with an executive summary, followed by an introduction that outlines the importance of strategic management and the focus on Ford. The report then provides an overview of the company ...Read More

Running Head: STRATEGIC MANAGEMENT 1
Strategic Management at Ford Motor
Company

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Executive Summary
Strategic management is a process in which people make efforts to manage its business
operations and processes. This process is helpful in developing more beliefs and value systems
for a company. This report examines different aspects of Ford Motor Company. Ford Motor
Company is a leading player in the automobile industry. It is engaged in manufacturing the cars
and trucks. The company has positioned on first rank in manufacturing the trucks. This report
analyzes an issue that is faced by organization in this competitive business environment. It is
facing the issues related to the quality of its products and services.
The customers are facing some quality and safety related issues in Ford’s cars and trucks. The
company was knocked in the quality surveys, which are conducted in the country’s automobile
industry. Due to these issues, the company has introduced new products in the industry. The
company has faced the safety and quality problems due to fault of suppliers of Ford as they have
supplied faulty parts for the products, i.e. the Escape SUV and the Ford Fusion. It analyzes the
strategic position of the organization by stating its mission, vision and related strategy.
Furthermore, it includes its competitive analysis and financial analysis of the organization. At the
end, report includes some other factors, like; technology and ethics in context of Ford Motor
Company. The organization is very good at complying with all the regulations. Technology plays
an important role in business operations of the organization. Thus, this report will help in
understanding strategic management of Ford Motor Company.

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Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Company/Industry Overview...........................................................................................................4
Issue Statement................................................................................................................................5
Strategic Direction...........................................................................................................................5
Vision, Mission and Strategy.......................................................................................................5
Cost Leadership............................................................................................................................6
Focus Strategy..............................................................................................................................6
SWOT Matrix..................................................................................................................................6
Summary of Operational Performance............................................................................................7
Financial Overview......................................................................................................................7
Technology....................................................................................................................................10
Ethics.............................................................................................................................................11
Limitations.....................................................................................................................................11
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

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Introduction
Strategic management is an important aspect for each and every organization. It is the process for
evaluating current strategies of an organization and finding out the position and efficiency of that
organization in perspective industry. In this paper, the report examines an issue, which is faced
by Ford Motor Company. After mentioning the issue statement, it includes different strategic
aspects regarding the same organization. Ford Motor Company is one of the largest
manufacturers of automobiles and largest truck producer in the world. The organization is
implementing different methods for mass production and made the vehicles more affordable for
middle-class people.
This report examines the strategic direction of Ford Motors by incorporating its vision, mission
and marketing strategy. After that, it examines the strengths, weaknesses, opportunities and
threats of company. It includes different tools to analyze the strategic position of the company.
Furthermore, it includes the summary of financial and operational performance of the
organization. At the end, it includes the organizational issues and solutions related to technology
and ethics. This report can help in understanding different aspects regarding Ford Motor
Company.
Company/Industry Overview
Automobile industry is a well-established industry that includes companies, which produce
automotive vehicles that consist of range from street performance to truck to off road. The
industry has various leading players, like; General Motors, Ford Motors, Toyota, Honda, Renault
etc. The industry is growing with a considerable growth rate. Now, the industry is dominated by
many firms, so it has become more competitive. In automobile industry, Ford Motor Company is
a well-known name that covers a significant market share in the same industry. Ford Motor
Company is a one of the largest organizations in automobile manufacturing industry and largest
manufacturer of trucks. The organization was established by Henry Ford in the year 1903. In
1919, it has become second largest manufacturer of cars all over the world (Ford Motor
Company, 2007).

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This corporation includes Ford South America, Ford North America, Ford Europe, Ford Asia
Pacific, Lincoln Motors etc. It also owns Troller, Brazilian SUV manufacturer and Australian
Performance Car. Previously, the organization also manufactured tractors and automotive parts.
Ford Motors Company owns 8% stake in Aston Martin of UK and 49% stake in Jiangling of
China (Yang, 2014). Currently, Ford has 246,000 employees and 95 manufacturing plants
worldwide. It is adopting new and innovative methods of production and implementing effective
strategies to enhance its strategic position. The company has different product lines, like; Ford
Fiesta, Ford Escape, Ford Focus, Ford Ranger and other products or Ford. The target market of
the company is high class people for luxury products and young people and ladies for other
products (Rosevear, 2013).
Issue Statement
Ford Motors Company is facing some issues, which are affecting its strategic position in
automobile industry. To deal with these issues, company is making so many improvements in its
new cars and trucks over its old models, but company is getting knocked in the quality
management survey. The organization has faced the troubles in launching its new products. To
some level, it was the mistake of suppliers of Ford more than company itself (Anderson, Narus &
Narayandas, 2009). Quality perception of Ford has become a big concern one year ago. Some
year ago, the company was ordered by court to recall its 7.9 million cars and trucks because of its
faulty ignition module. The location of module on top of the distributor will cause it to fail and
overheat, that can cause the vehicles to stop and lose the control of braking and steering. Quality
issues of Ford are definitely well-known and it has faced the issues so many times. The people
are facing other quality issues, like; problem in MyFord Touch System, user interface, safety
issues etc. The issues are already addressed and company has used effective ways to resolve the
issue (Martinez, 2017). It has quickly updated the software, so it has become so much better. But
it was not so much good, as it should be.
Strategic Direction
Vision, Mission and Strategy
The vision of Ford Motors is “to become a leader in Automobile industry in terms of being fuel
efficient and offering the fueled cars and trucks at an affordable cost with higher quality to

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customers”. The company is making efforts to be the one that when the people talk and think
about Ford, they will think about innovation and quality (Andersen & Andersson, 2017).
The new mission statement of company will be “Ford Motors will become a quality vehicle
provider to cover its market share that was lost in global competition. By this mission, the
company is expecting to recover its sales, profits, market share, when enhancing its brand image
worldwide (Rothaermel, 2015).
Cost Leadership
In order to deal with the issues, Ford is implementing cost leadership, in which the organization
enables it to offer the products at lower costs in comparison to its competitors. As an innovative
organization, Ford is urging pricing strategies to its vehicles. To improve the quality of services,
the organization is incorporating some innovations in its products and providing them on
accessible prices (Gabor, 2007). As compared to its major competitors, i.e. Hyundai and Toyota,
the pricing strategies of company is competitive with position to new technologies, which it
integrates. Thus, the organization is shifting to the virtual link on level of pricing with great
style, high quality and interior and fuel economy techniques (West, Ford & Ibrahim, 2015).
Focus Strategy
Focus strategy is the strategy, in which the organization aims its products and services at market
with accuracy, knowledge, capabilities to assist its strategic position in the perspective industry.
For dealing with the issue, the company is implementing “One Ford” vision to improve the
effective quality and cost saving communication (Galliers & Leidner, 2014). It is making
expansion in licensed merchandizing worldwide to improve its brand image.
SWOT Matrix

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Strengths S
• Global Supply Chain
• Effective practices and processes
• Good Brand Image
• Strong relationships with high
profiled companies, i.e. Suzuki,
Isuzu etc.
Weaknesses W
 Slow innovation process
 Safety and quality issues
 Higher costs of products
 Less concentration on design
phase
Opportunities O
 Global expansion
 Growth using product
development strategy
 Production of fuel efficient cars
and commercial vehicles
 Strategic supply chain
management
Threats T
 Entry of new firms with higher
technology
 Oil price fluctuations
 Major competitors, like; General
Motors, Ford Motors, Hyundai,
Toyota, Honda, Renault etc.
 Quality and safety issues in the
products
Figure 1: SWOT Matrix of Ford Motor Company
Source: (Rosevear, 2013)
Summary of Operational Performance
Financial Overview
In the automobile industry, the financial performance of Ford Motors is moderate due to German
and Japanese vehicle makers. The performance of company is not growing rapidly due to some
reasons. In terms of finance, the company is generating billions of revenues each year (Gamble
& Thompson, 2014). In the year 2016, the revenue of Ford Motors is US$151.8 billion and net
income of company is US$4.596 billion. The company possesses the total assets of US$ 237
billion at the end of 2016.
External
Factors

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Figure 2: Global Revenues of Ford Motors (2016)
Source: (Parker, 2016)
During last few years, the company has generated higher revenue and net income before tax
except the recession period. The profitability of the company has been pointed out many times
due to financial parameters. The company is facing some challenges because of government
policies, environment, oil prices and international prices (Guajardo, Cohen & Netessine, 2015).
Global crisis is also another reason that has left marks on the automobile industry worldwide.

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Figure 3: America's bestselling Vehicles in Previous year
Source: (McCarthy, 2015)
Currently, the company is operating its business in different countries, like; Canada, United
States, China, Mexico, United Kingdom, Brazil, Germany, Australia etc. This financial crisis
financially took a major change in automobile industry (Hashmi & Biesebroeck, 2016). Ford
Motors faced a loss of $14.7 billion and company has planned a breakeven in the year 2011. By
looking at the below diagram, it can be analyzed that company has a better position than General
Motors (Payne & Frow, 2014).

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Figure 4: Financial Strength of Ford and other competitors
Source: (Li, 2017)
Annual report of Ford for 2016 indicates that the company is attributing its revenues from sales
between its services and automotive sectors (Reich et al, 2016). Automotive sector includes the
sales of parts, vehicles and accessories. Profitability of company is highest out of all its major
competitors in the industry with 819.9% Return on Equity (ROE). Market share of Ford Motors
is not better than its leading competitors, i.e. Toyota, Hyundai, Honda etc. Below-diagram
indicates the market share of different players in the industry (Heizer, 2016). It can be seen that
Hyundai Motors covers the largest market share in automobile industry. In the year 2016, the
market share of Ford Motors was 15.3%.

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Figure 5: Market Share of Automobile Players
Source: (Cain, 2017)
Technology
At Ford Motor Company, technology is playing a significant role in increasing its sales and
revenues. New technologies and convenience features are its best in Ford’s products.
Advancement in technology is inevitable for automotive industry to compete with its competitors
and innovators by developing new and innovative technologies in the cars and other vehicles.
Ford Motors is adopting new technologies, like; MyFord Touch System, updating User Interface,
updating its software etc. It also manufactures middle sized cars and provides safety cars for
ladies. Apart from it, Ford is gaining competitive advantage by attracting women segment for the
cars, which is specifically and technically designed for them by female designers by considering
stereotypical views (Hollensen, 2015).
Yes, it is very important to use technology innovation for getting success in automobile
industry. Ford can use the technology force to improve the quality of products with virtual
technology in their cars and trucks. It is necessary to offer the actual benefits, like; reduction in
injuries, enhancing the quality etc. The technology may help the Ford Motors to become pioneers
(Kim, Shin & Min, 2016). Adopting new and innovative technologies in the vehicles will
enhance the strategic position of the company and its quality and safety issues.

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Ethics
Yes, Ford Motors employs the use of ethics in its decisions or products. The company has its
strong code of conduct that is intended to emphasize on the ethical risk and offer guidance on
how the employees can identify the ethical issues and offer methods and policies to report
unethical behavior (Law, 2017). As Ford Motors Company is a Multi-National Company, so it is
very important for Ford to maintain the strong sight on its international operations. Furthermore,
the organization is emphasizing on environmental issues. Its website has a big section that is
devoted to their environmental efforts. It is mainly focusing on reducing plant and vehicle
emissions, recycling, conserving energy, reducing the consumption of water, fuel economy and
avoiding the use of toxic and hazardous elements. Ford is encouraging its employees to behave
ethically in the working environment (Moon, 2010). It is developing its products by considering
all the rules and regulations and ethical factors, like; safety of people and environment.
Limitations
However, Ford Motors Company has a better strategic position in the competitive automobile
industry, but still company has some limitations. The product differentiation for the company is
very low, as they can only produce cars and trucks with new and innovative specifications. It
needs a huge investment to develop a new product line. Ford is facing the issues related to the
quality of its products, so it is limiting its growth against its competitors. The products of
company are very expensive, which can be purchased by high income people only. The design of
cars is not attractive in comparative to other car companies.
Conclusion
Ford Motor Company has a good position in automobile industry. Mainly, it is targeting high
income people and women segment. The above report includes different strategic aspects
regarding Ford Motors. Company is facing issue regarding quality of products. Many customers
complained about issues in the products. It is making efforts to resolve these issues. Financial
position of the company is enhancing very slowly. So, the company should try to implement
some effective methods and strategies. Ford can manufacture the cars, which is affordable and
suitable for average and low income people. It can try to create new and innovative design for
new cars and trucks and make efforts to post in on internet to give the chance to customer to

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vote. Company should focus on providing best quality in the products and use quality automotive
parts in the cars. It should expand its target market by offering lower priced products. The
company is using effective technologies in its products, but it should focus on quality of that
used technology. There are so many people, who have raised the issues related to techniques.
Thus, the company can enhance its financial performance and overall position in the industry.
References
Anderson, J. C., Narus, J. A., & Narayandas, D. (2009). Business market management:
Understanding, creating, and delivering value. Pearson Prentice Hall.
Andersen, T. J., & Andersson, U. (2017). Multinational Corporate Strategy-Making: Integrating
International Business and Strategic Management. In The Responsive Global Organization:
New Insights from Global Strategy and International Business (pp. 13-34). Emerald Publishing
Limited.

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Cain, T. (2017).U.S. Auto Sales Brand Rankings – 2016 Year End. Retrieved from
http://www.goodcarbadcar.net/2017/01/usa-2016-auto-brand-sales-results-rankings/.
Ford Motor Company. (2007). Ford Motor Company 2006 Annual Report. Retrieved from
http://corporate.ford.com/doc/2006_AR.pdf.
Gabor, A. (2017). Management: Ford Embraces Six Sigma. New York Times.
Galliers, R. D., & Leidner, D. E. (Eds.). (2014). Strategic information management: challenges and
strategies in managing information systems. Routledge.
Gamble, J. E., & Thompson Jr, A. A. (2014). Essentials of strategic management. Irwin Mcgraw-
Hill.
Guajardo, J. A., Cohen, M. A., & Netessine, S. (2015). Service competition and product quality in
the US automobile industry. Management Science, 62(7), 1860-1877.
Hashmi, A. R., & Biesebroeck, J. V. (2016). The relationship between market structure and
innovation in industry equilibrium: a case study of the global automobile industry. Review of
Economics and Statistics, 98(1), 192-208.
Heizer, J. (2016). Operations Management. Pearson Education.
Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.
Kim, N., Shin, S., & Min, S. (2016). Strategic marketing capability: Mobilizing technological
resources for new product advantage. Journal of Business Research, 69(12), 5644-5652.
Law, C. M. (2017). Restructuring the global automobile industry. Taylor & Francis.
Li, J. (2017). Modest Outlook for Ford. Retrieved from http://www.nasdaq.com/article/modest-
outlook-for-ford-cm739320.
Martinez, M. (2017). Quality Takes toll on Ford exec Bonuses. Retrieved from
http://www.autonews.com/article/20170402/OEM02/304039926/quality-takes-toll-on-ford-
exec-bonuses.

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McCarthy, N. (2015). America's Best-Selling Vehicles In 2014. Retrieved from
https://www.statista.com/chart/3109/americas-best-selling-vehicles-in-2014/.
Moon, H.C. (2010). Global Business Strategy: Asian Perspective, World Scientific Publishing Co
Inc.
Parker, J. (2016). Analyzing Ford’s Falling Revenues in Recent Quarters, Retrieved from
http://marketrealist.com/2016/12/looking-fords-falling-revenues-recent-quarters/.
Payne, A., & Frow, P. (2014). Developing superior value propositions: a strategic marketing
imperative. Journal of Service Management, 25(2), 213-227.
Rosevear, J. (2013). 2 Big Challenges Facing Ford. Retrieved from
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Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Reich, D., Shi, Y., Epelman, M., Cohn, A., Barnes, E., Arthurs, K., & Klampfl, E. (2016).
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