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Auto industry and climate change
Environmental Issues Case Study, AUTO industry
Competition in the auto industry
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Recommended: Auto industry and climate change
In a present day of global warming, environmental issues, labor unions, and other impacts, the automobile industry is in an era of instability and change. Ford Motor Company has been traditionally considered one of the "Big Three" in the auto industry, but they are not adapting as well as hoped to the changing industry, and will have to strategize to survive in a struggling industry.
There are many different risk factors for Ford and its competitors. In this paper we will look at two competitors for Ford that are also considered to be members of the "Big Three" and coincidently, are not adapting to changes in the auto industry as quickly as other competitors. These other companies are General Motors (GM) and Daimler Chrysler. We will also look at the general group of foreign car manufacturers who are steadily acquiring market share from the Big Three.
The first major risk for the auto industry in general is that of global warming and a growing concern for environmental issues among consumers. This is a risk that is spread among the entire auto industry, not just Ford Motor Co. Consumers are becoming more aware of the impact the auto industry has on the environment, and making their purchasing decisions with that on the criteria.
Another factor involved with the auto industry, is a pressure on the companies ability to increase prices. Due to excess capacity and the ability of Japanese and Korean auto manufactures to mass produce and thus lower cost prices, many companies in the auto industry are producing vehicles at little to no profit due to the inability to raise prices.
A major risk or concern for North American auto makers is the employee's health care expenses. For Ford, in 2006 their health care expens...
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... understand the process, and the in's and out's of what is needed and wanted for a car, who also have good business sense.
So what does this say about the future of Ford and the auto industry? If Ford wants to survive past the next 10 years, restructuring is crucial. The risk factors outlined are proven to be risks, but they are factors that can be overcome. The companies that have overcome the greatest amount of these factors (the foreign companies) are showing higher profits, and are overtaking the traditional auto manufacturers. If Ford can move quickly, strategize, and eliminate these factors, they will possibly be able to regain their position at the top, but they need to not rely on their brand name, and pay more attention to what the consumer wants and needs
Until recently, the Ford Motor Company has been one of the most dynastic of American enterprises, a factor which has both benefited the company and has brought it to the brink of disaster. Today Ford is the second largest manufacturer of automobiles and trucks in the world, and it’s operations are well diversified, both operationally and geographically. The company operates the worlds second largest finance company in the world, and is a major producer of tractors, glass and steel. It is most prominent in the US, but also has plants in Canada, Britain and Germany, and facilities in over 100 countries.
This paper will focus on the future of the U.S. Automobile industry as the United States recovers from the worst recession we have experienced in the past 75 years. I will provide information on the following topics pertaining to the U.S. automobile industry:
Ford has had some failures in the past. They have recently had to cut jobs in Russia, due to a declining automotive industry in Russia and tension caused by the Ukrainian conflict. (Reiter, 2014) The decline of the ruble, Russia’s currency, is also a contributing factor to Ford’s lack of success in the Russian market. When announcing the relocation of their main operating plant, which will cut close to one thousand jobs, Ford also stated that the Russian market had shifted towards SUVs rather than the compact cars that Ford was producing and marketing for the Russians. (Rosevear, 2014) Hopefully, this lack of success in Russia will provide Ford with feedback that will be necessary when operating in the Middle East.
Though the company had continuous success for many years, last year started a downfall for the company. In October of last year the CEO of Ford, Bill Ford Jr., announced that the company would need a dramatic change in order to stay alive. The company reported a $1.3 billion pretax loss in 2005 compared to a $609 million loss in 2004 (Hoffman). Recently the company reported a $5.8 billion third-quarter loss, which has been the biggest in the past 14 years (Bush). Due to these enormous losses the company plans to largely reduce its company’s employment, in hopes of strengthening the company as a whole and increasing profitability (Hoffman).
Ford has survived for many years and will continue to do so. The threat of new entrants into the automobile industry continues to be ever present regardless of the substantial cost and very competitive environment. Ford is at a crossroads. Continue to monitor the existing competitors or monitor for those new entrants (Investopedia.com, 2014). New automobile manufacturers are a continuing threat for Ford such as if China decided to enter the automobile industry, a very powerful and flush with cash threat. Ford has significant leverage over its suppliers because of the limited customer base for their materials and the innovation of replacement materials as the technology develops (Investopedia.com, 2014). The power
Putting a complete automobile together is no easy task raising the demand for a large number of suppliers that produce parts. Kallstrom explains the rising demand for suppliers is the result
The automotive industry is one of the most important sectors of the economy for every country in the world. It involves a large number of corporations and institutions engaged in the manufacturing process of motor vehicles including designing, developing, manufacturing, marketing, and selling. It contributes to the global economic growth by generating a significant return and creating a ripple effect on supporting the supply chain as well as providing job opportunities for the skilled workers (ACEA, 2016).
So the discussion on internal and external analysis clearly defines that where the competitive advantage of Ford Motors is and where it is lacking. People who have durability as their first priority will go for Ford but they lack in some of their strategies which the management should consider and work on it. We also came to know that Ford is an innovative company from the very first and also serves local demands with the help of related and supporting industry. But in some points they have taken wrong decisions which compel them to sell some of their brands to others. The good news is they are doing hard job to maintain their performance regarding their star and cash cow products to remain in the competition.
Many economic factors exist that impact the development of Ford Motor Company's strategic plan and it’s no small task to project how some of these factors might change as the strategy is being realized. Consider the prospect of expansion into a new market like China or Mexico. Economic changes like currency devaluation will make Ford’s product more expensive to their target market potentially reducing overall sales revenue. Oil prices as we’ve seen in the U.S. economy can also play a big factor as large vehicles become less desirable and more fuel efficient compact cars gain market share.
Every successful company needs a competitive advantage. As part of our companies future they current successor team has researched various goals and strategies that will move Ford forward and allow them to be competitive in the changing market. “Ford must solve its nagging overseas problems and then "p...
Ford Motor Company current mission statement is “committed to provide personal mobility for people around the world”. With that in mind their vision is to become the world’s leading Consumer Company for automotive products and services. By improving everything they do, the company provide superior returns to their shareholders (Vision, Mission, Values).
Kilkenny, S.. (2010). The Future of the U.S. Auto Industry. Network Journal, 17(8), 10-11. Retrieved August 1, 2011, from Entrepreneurship. (Document ID: 2193431391).
Ford- focused differentiation, medium pricing, breadth of product line is high. A strength is their pick-up truck market share, a weakness is perceived reliability and styling on some of the lines.
Ford is forecasting that 2010 sales in industry will rise to between 11.5 million and 12.5 million vehicles, up considerably from last year’s 8.4 million. Boudette, and Dolan, 2010). Ford is about to launch its smaller vehicles; less than two years ago Ford Motor’s plant in Mexico was building big pick-up trucks. But Ford has retooled to produce Ford’s small Fiesta car, due to go on sale in America for the first time in June. Simon, 2010).Mulally is the architect of Ford’s remarkable recovery in its fortunes.
Ford is enjoying an increase in customer satisfaction, sees huge revenue opportunities for developing and retaining loyal product advocates, and has taken both complexity and cost out of the supply chain.