Republic of the Philippines

BATANGAS STATE UNIVERSITY

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
Pablo Borbon Main I, Rizal Avenue, Batangas City

Ford's Competitive Strategies upon its Rival Firms in the Global Market
CASE STUDY

In Partial Fulfillment of the Requirements for the Course

MGT 406-STRATEGIC MANAGEMENT

Submitted by:
Apuntar, Cyteia Theryz C. (18-58969)
Bustamante, Ma. Crissandra L. (20-55740)
Datinguinoo, Hechel L. (20-50291)
Gualter, Kimberly G. (18-50389)
Morilla, Kristine Camille S. (20-56469)
Ramos, Glaiza A. (20-50844)
Rosaros, Niña Anjeline O. (18-52157)
Tan, Shiela Raven C. (20-51969)

Submitted to:
MR. JOSEPH D. MENDOZA
Lecturer

BSA 1210
May 17, 2021
I. Executive Summary

Ford Motor Company has long been and continues to be renowned as one of the top

companies with automotive innovation. Ford Motor Company has over a hundred manufacturing

units throughout the world, as well as a vast distribution network that guarantees that its vehicles

are available in over two hundred markets. Since its inception, it has been able to make a

significant contribution to the car industry’s innovation. Their research and development

department, as well as their invention of interchangeable components in moving assembly lines,

have resulted in a remarkable global expansion. Despite these good things, Ford Motor faced a

lot of issues that challenged their company as well as the management to have changes in their

perspective and strategies. Such issues include weak positioning, restructuring costs (planning

and changes), and shifting of social economic condition, technological changes and

environmental challenges as well as brand value and consumer confidence. Following a thorough

examination of Ford’s performance and the market as a whole, various concerns have been

identified that must be addressed. Dependence on the US market, competition, and the adaptation

of fuel-efficient automobiles are the three strategic problems. Furthermore, Ford’s innovation

procedures are slower to adapt to new or emerging trends than those of competitors like Toyota,

despite the fact that the company’s innovation effectiveness has grown. Thus, it is necessary for

Ford Motor Company to understand what type of product would be able to suit today’s consumer

demands, what their consumers genuinely desire, and how to grab their attention. Ford must

maximize its potential and eliminate negative factors that affect their performance and

competitiveness.

With regards to the problems that Ford Motor Company encounters, there are

recommended plans of actions that need to be considered to be on top in the industry. In order to

1
have a strong position in the market, the company needs to have a faster innovation of the

automobile, give attention and respond to the customer needs and wants, and continuously

upgrade its products. Through this recommended plan, the company can gain a competitive edge

over its competitors, attract and connect to more customers and consequently establish a good

relationship with them, improve productivity, and obtain a better quality of products. In terms of

Ford’s problem with its restructuring costs, plans such as abolishing of unnecessary work and

cash outflows, and also making time for reverse engineering are suggested to help the company

reduce its operational expense, remove productivity barriers while improving communication

within the workplace, and produce more efficient products yet less expensive. When it comes to

shifting social-economic conditions, the company must reconfigure its business model, focus on

core competencies, and reassess growth opportunities. These strategies will help the company to

take advantage of changing conditions socially and economically, minimize the risk of loss,

generate returns, and identify which market trends need to follow to have a stronger position. In

connection with its brand value and the consumer preference, the company needs to take into

consideration the rebranding, as well as understanding and valuing their customers. These plans

will help Ford Motor Company to increase engagement levels with the customer, and build

loyalty. Lastly, regarding the technological changes and environmental challenges, investing

more for the innovation of electric and autonomous vehicle, and making of strategic alliances

with companies like Tesla, Google, and Uber are recommended so as to improve sales and

customer relationship, stay ahead of the competition, drive innovation, expands the customer

base, and help companies reach their goals faster. By innovating their automotive business,

improving execution, growth in various areas, building their strengths, exploring new

opportunities and valuing its customers, Ford will continue to be the most trusted automobile

2
company and strongly compete with the new era of transportation while finding more solutions

to drive human progress and become the most inclusive and diverse enterprise globally.

3
I. STATEMENT OF THE PROBLEM

The Ford Motor Company is an American multinational automaker established in

Michigan in 1903. The company has since been growing in its respective industry and has

developed a well-known brand name identified around the world. Ford Motors has over a

hundred plants all around the world and a wide distribution network that ensures that their

automobiles are distributed in over two hundred markets. It has been able to contribute

immensely towards the innovation of automobile industry ever since its establishment.

There are some factors that add up to Ford Motor’s competitive advantage and make it

stand out regardless of the competition and grow each year. The automotive industry has been

producing new models and introducing new car styles year after year. As one of the leading

manufacturers in the industry, Ford Motor Company has had to confront such issues:

• Weak Positioning

Despite the fact that the number of competitors in the automotive industry has remained

relatively constant over the years, Ford faces stiff competition. Next to Toyota, GM, and Tesla,

the company is struggling to retain its status as an innovator in the industry. The more Ford relies

on its heritage and less on keeping up with market trends, the wider the gap between it and its

competitors grows. This includes Tesla, which has embraced a direct partnership with end

customers by eliminating much of the middleman, and Toyota, which has proven its reliability,

safety, and cost-effectiveness year after year.

How will Ford forge its place in the future as the competition finds new ways to be more

malleable?

• Restructuring Costs (Planning and Changes)

4
 Ford's revenues have been steadily declining in recent years. Ford sold 5.9 million

vehicles in the last year, a decrease of around 8% in the fourth quarter compared to the previous

year. Even though Ford makes more money every year than many businesses do in their lifetime,

this isn't enough to keep the company afloat or keep it going for very long. With a billion-dollar

overhead from factories, supplies, workers, recalls, and R&D, declining sales are a red flag that

Ford will need to become even more competitive in order to react to a market that is evolving

even faster.

In relation to the first problem, is it really necessary to terminate workforce just to lessen

the cause or expenses?

• Shifting of Social Economic Condition

How Ford’s create a plan with changing trade agreements and shutdown threats caused

by unpredictable event in their rival firms?

• Brand Value and Consumer Confidence

In a Deloitte poll of US locals, over 59 percent of respondents said they would choose a

gas or diesel-powered vehicle for their next purchase. This demonstrates customer interest in

alternative powertrain technologies, but many aren’t ready to completely commit to the latest

technology. Will Ford be the automotive company that will usher every year as they continue

innovating against their competitors?

• Technological Changes and Environmental Challenges

Ford faces a far greater risk than car safety and recalls. It’s the next wave of automotive

advancement, with EVs and self-driving cars on the rise. Aside from the financial investment,

5
both placed their main product lineup of internal combustion engines in jeopardy. How the

innovations of the product help Ford on their daily drive?

Ford’s position all over the place is not strong enough to reduce its dependence on the US

market still. As such, Ford Company considered this particular issue as their short term

obligation. This is why they pertains it to the weakening position of Ford Motors in China as

their important concern for the brand. Given that China has become the leading automotive

market of the world. However, over the past three years, the position of Ford Motors in the

Chinese market has continued to weaken as sales have continued to fall in this market. But

through the strong position of Ford in US market, this problem can easily be resolved.

In order to gain more consumers and enhance their brand values against their rivals, Ford

restructured their costs and lessens their workforce to be more focus on their consumer

preferences. Both terms are considered to be solved in a short term run. Given that increasing

price competition and declining demand could arise as a result of rapid evolution of customers’

preferences and unique wants. Also knowing that price competition could arise from currency

fluctuations and the industry’s increasing capacity. When consumers’ preference shift such as

preferring small light cars instead of trucks and SUVs, the company may suffer reduced sales

and revenue as a result.

The capricious nature of the U.S. automotive industry is evident throughout its history.

Dedicated persons from different business backgrounds and economic perspectives handle the

many economic and financial complexities inherent where the company handled on. From the

problem being arise in shifting of social economic condition, tightly held business convictions,

evident from the earliest days of the operations, have only intensified over in a short period

6
obligation as the company attempt to secure even larger business footholds within the ever-

expanding world market.

As for technology changes, Ford Motor Company has a goal in its future to provide the

most trusted vehicles that will improve people’s everyday lives by reducing congestion, avoiding

accidents and reducing emissions and serve it as their long term obligation. To achieve this goal,

Ford is investing heavily in the technology to transform the company for the future. Ford is

partnering with major delivery companies such as Walmart, Domino’s Lyft and Postdates to

develop pilot projects using self-driving vehicles. Ford also recently announced a joint venture

with Zloty, the Chinese automobile manufacturer to develop and manufacture all-electric

vehicles. This will expand the electric vehicle lineup by 40 vehicles globally: these will include

16 full battery vehicles by 2022. Due to this investment plan, Ford will increase its planned

investments in electrification. According to the company’s quarterly earnings call, CEO Jim

Hackett said that Ford is reducing the passenger car lineup to just two models to save money and

make the company more competitive in the industry. Ford will only continue their production of

the Mustang sports car and Focus Active crossover for the U.S market.

Ford Motor Company is providing a strategic decision to the problems arise with

detailing plans to leverage its unique product strengths, trusted brand and global scale to refocus

and thrive in an evolving and disruptive period for the auto industry. Reiterating its long-term

goal of a large percent automotive operating margin, Ford says it will embrace the profound

technological changes and new competition buffeting the industry. To deliver, the company is

expanding its scope to include vehicles and services all designed around human-centered

experiences. The company will tap its strengths integrating hardware and software in complex

7
devices, its proven ability to deliver scale and the trust tied to the Ford brand. Specifically, Ford

is:

1. Accelerating the introduction of connected, smart vehicles and services customers want

and value

2. Rapidly improving fitness to lower costs, release capital and finance growth

3. Allocating capital where Ford can win the future

4. Technology advancements and embracing partnerships

5. Expanding electric vehicle revenue opportunities

II. CAUSES OF THE PROBLEM

More after a thorough analysis of Ford performance and market overall, it is founded

several issues that need to be addressed. These three strategic issues are: dependence on the US

market, competition, and adaption of fuel efficient cars. Ford is a well-known US company that

is mostly popular in the US. Way back 2012, Ford gains a million in North America and South

America. The total pre-tax results were inevitably high because of the decline in sales in other

part of the countries. Based on these results it is clear that Ford has the biggest market share in

the US and that is causing dependency. Ford is not as profitable abroad as it intended to be.

Small market share, high competition, and unpopularity are some of the causes.

From the first problem being stated, Ford’s competition is also doing a great job at brand

positioning but somehow lack in addressing their product in place. Each manufacturer, like

Toyota and Tesla, is actively seeking a specific niche in which they can build a trench to take

their stand. Be it safety, sportiness, reliability, luxury, or the best EV battery. Moving ahead, the

8
company that can react the fastest and hold its position without relying on expensive paid

advertising and instead focuses on actual public opinion is the one that will likely come up as the

winner. This, of course, is difficult for large corporations like Ford that have layers of

management and red tape for every decision.

In technology changes and shifting of economic condition capacity utilization occurred. It

is when production exceeds the number of products than can be sold in a given market. To

further exacerbate the problem, a new automotive manufacturer enters the market every few

years. Following recent economic problems, consumers worldwide have been tightening their

spending habits. This has become even worse in economies viewed as unstable.

In line with financial sector, Ford’s newest competitor may be the U.S. government

because GM and Chrysler LLC are in line to get $62 billion in investments from the U.S.

Treasury. GM and Chrysler have cut their debt and closed hundreds of dealers with that money,

while Ford still has $33 billion in debt including its obligations to retirees. Since CEO Alan

Mulally’s arrival at Ford in 2006, the company has cut 40,000 jobs and closed 17 plants,

reducing costs by more than $5 billion. Ford has a $10 billion note that comes due in 2011. So,

Ford Motor Company is in financial trouble. During the time of waning global auto sales, Ford is

not only aggressively looking to increase market share but also simultaneously consolidate their

distribution & retail networks. The following are few tips and hints regarding Ford Motor

Company problem statement are as follow:

• Financial weak balance sheet poses a huge financial problem to Ford as it brushes with

near insolvency which could have seen the company file for bankruptcy.

• Emerging markets account for larger share of world economy competition to capture

those markets provides opportunities for both product and market development.

9
 Referring to the brand value and consumer confidence, the business constantly improving

strategies and bringing innovation in the industry. For instance, the introduction of smart cars

that function in terms of fuel efficiency which helps it to provide its consumers with the products

those are not harmful to the environment in any way. Ford Motors play their part in saving the

environment through production of such cars. In terms of internal strategies, it implemented

centralized decision making strategy that worked for them really well and paid the company off

in terms of improvement in all aspects of the company and helped it to provide better products to

its customers. This also serves the current high demand of fuel economic price and low

maintenance cost, so it serves the buyers who are looking for cars that are easier to buy and

maintain.

Ford Motor Company’s market position as the fifth biggest automobile manufacturer in

the world is supported through the firm’s intensive growth strategies aligned to its generic

strategy for competitive advantage. Intensive strategies are used to support organizational

growth. In this case, Ford’s business growth is dependent on the varying emphases on market

penetration, product development, and market development. On the other hand, a generic

strategy defines the general approach used for business competitiveness. Ford’s generic strategy

changes over time, although its original generic strategy of cost leadership remains a significant

force. Ford’s generic strategy and intensive growth strategies determine the company’s

approaches to grow its business. In the analysis, we applied a sample model which further

emphasized the arise problems;

Hence, industry rivalry or competition has been the most crucial concern for Ford Motor

Company as per the Five Forces analysis. The company has been able to maintain its leading

position in the global automobile industry by modifying and improving its business strategies so

10
that it is able to resolve the identified issues of Five Forces analysis. Based on the identified

external situation and issues in the global automobile industry, Ford needs to establish its

policies and approaches. Thus, competition or competitive rivalry is the most decisive external

force for a company within the automobile industry. The following sections indicate the intensity

of Porter’s Five Forces analysis in the global automobile industry.

11
 Bargaining Power of Ford’s
Customers/Buyers
(Moderate Force)

• Moderate switching costs

• Moderate size of individual
purchases
• Moderate availability of
substitutes

Threat of New
Entrants or New
Entry (Weak Force)
• High capital costs
• High cost of doing
business
• High cost of brand
development
Bargaining Power
of Ford’s Suppliers
Competitive Rivalry (Moderate Force)
or Competition with
Ford (Strong Force)
• Moderate overall
supply
• High aggressiveness
of firms • Moderate
population of
• High exit barriers suppliers
• Moderate number of • Low forward
firms vertical integration

Threat of Substitutes or
Substitution (Moderate
Force)

• Moderate availability of
substitutes (moderate force)
• Moderate switching costs
(moderate force)
• Low performance of
substitutes (weak force)

Porter's Five Forces Analysis of Ford's Motors Company

12
1. Rivalry or Competition with Ford (Strong Force)

Ford Motor Company faces tough competition. This aspect of the Five Forces analysis

refers to competing firms that influence the industry environment. The following are the external

factors that contribute to the strong force of competitive rivalry against Ford:

• High aggressiveness of firms

• High exit barriers

• Moderate number of firms

Ford needs to compete against top players (e.g. Toyota) that aggressively innovate and

market their products. Also, the automotive industry has high exit barriers, which means that

firms would rather keep competing with Ford than to close their business, because of the high

costs and investments. Such a condition exerts a strong force of competition against Ford. In

addition, Ford must compete against a moderate number of firms, especially a few large ones

like General Motors. Based on this aspect of the Five Forces analysis, Ford must maximize its

competitive advantage to address the external factors linked to competition.

2. Bargaining Power of Ford’s Customers/Buyers (Moderate Force)

Ford’s customers significantly influence the business. This aspect of the Five Forces

analysis pertains to the effects of buyers on businesses and the industry environment. The

external factors that contribute to the moderate bargaining power of Ford’s customers are as

follows:

• Moderate switching costs

• Moderate size of individual purchases

• Moderate availability of substitutes

13
Ford Motor Company’s customers face moderate switching costs, which are the consequences of

moving from one firm to another. In this case, customers can easily transfer to other firms,

although infrequently because automobiles are big-ticket items. Also, each purchase of Ford’s

products is moderate in terms of its price and contribution to the company’s revenues. Thus,

even a small change in customer’s demand can have significant consequences on Ford. In

addition, the moderate availability of substitutes gives customers the option to move away from

Ford. Thus, Ford Motor Company must maximize customer satisfaction to address the external

factors in this aspect of the Five Forces analysis.

3. Bargaining Power of Ford’s Suppliers (Moderate Force)

Suppliers exert moderate influence on Ford Motor Company. The impact of suppliers and their

demands on firms are considered in this aspect of the Five Forces analysis. In Ford’s case, the

following external factors contribute to the moderate bargaining power of suppliers:

• Moderate overall supply

• Moderate population of suppliers

• Low forward vertical integration

The moderate overall supply and moderate population of suppliers give suppliers

significant but limited bargaining power on firms like Ford. Also, most of these suppliers have

low forward vertical integration, which means that they do not own or control the distribution

and sale of their products to Ford. The suppliers’ bargaining power is further weakened because

of Ford’s backward vertical integration through the Ford River Rouge Complex. Through the

Complex, Ford produces some of the materials it uses to manufacture cars and related finished

14
products. Thus, this aspect of the Five Forces analysis shows that Ford must consider the

significant but limited external factors linked to suppliers’ effect on the business.

4. Threat of Substitutes or Substitution (Moderate Force)

Ford Motor Company experiences the effects of the substitutes to its products. This

aspect of the Five Forces analysis refers to the extent substitution threatens firms and the

industry environment. The following external factors contribute to the moderate threat of

substitution against Ford:

• Moderate availability of substitutes (moderate force)

• Moderate switching costs (moderate force)

• Low performance of substitutes (weak force)

There are considerable substitutes to Ford’s products, including public transportation and

bicycles. However, these substitutes are not always available or appropriate in certain areas or

situations. In addition, the switching costs are moderate because, even though Ford’s customers

can shift to using these substitutes, they cannot easily do so when they are still paying for their

car loans. Also, in many instances, these substitutes have lower performance than Ford’s

products in terms of convenience and safety. Based on this aspect of the Five Forces analysis,

Ford needs to address suppliers as a second-priority external threat.

5. Threat of New Entrants or New Entry (Weak Force)

Ford Motor Company feels the effects of new entrants on its industry environment. The

impact of new firms is considered in this aspect of the Five Forces analysis. The external factors

that contribute to the weak threat of new entrants against Ford are as follows:

15
 • High capital costs

• High cost of doing business

• High cost of brand development

Companies like Ford commit to huge spending to set up and maintain their businesses

and facilities. These costs are a barrier to entry that weakens the threat of new entrants. In

addition, it is costly to develop a strong brand comparable to Ford’s, thereby making it difficult

for new entrants to effectively compete against industry giants. Based on this aspect of the Five

Forces analysis, external factors present only a weak threat against Ford.

Therefore, the results of the Five Forces analysis of Ford Motor Company show that

competition or competitive rivalry is the most significant issue for the business. For long-term

viability in the automotive industry environment, Ford must prioritize strategic solutions to

develop competitive advantage. For example, innovative products can boost the company’s sales

performance. As such, Ford must prioritize R&D investment to maximize innovation processes.

With the Five Forces analysis of Ford we have also been able to do some analysis of the

automotive industry. If Ford wants to aim for long-term viability in the automotive industry

environment, it will have to prioritize the making of strategic solutions to develop competitive

advantage. Positioning and environment is everything outside an organization’s boundaries. It

can be general or specific. Ford has dynamic interaction with its environment which comprises

of political, economic, social, technological, ecological and legal factors. Governmental policies

play a key role for members of the automotive industry as environmental issues are paid a lot of

attention when companies design new automotive. In today’s era the demand of hybrid vehicles

is high and consequentially they receive more support from government bodies. Also, companies

which emit higher levels of CO2 are taxed more. Ford also depends on the incentives the

16
government provides and the trade agreements in enters into. Ford needs to develop policies and

approaches that respond to the most significant forces based on the external factors in the global

automotive industry. This Five Forces analysis of Ford Motor Company identifies the most

important external factors and how they impact the business, thereby providing input for

managerial decision-making.

IV. DECISION CRITERIA AND ALTERNATIVE SOLUTION

Compared to competitors like Toyota, Ford’s innovation processes are relatively slower

to respond to new or emerging trends even though the company has increased its innovation

effectiveness. Thus, this part of Ford’s company indicates that the company is relatively weak

compared to other top players, especially Toyota. Because positioning has a significant impact

on the company’s strategic strategy, Ford Company should recognize what type of product

would be able to meet consumer needs today, what their customers actually want and also

consider a strategy to get the attention of the customer.

Alternative Solution 1. Faster Innovation of Automobile in the Market

As an automobile company, there is no point in focusing on innovation if Ford aren’t able

to get the product into the hands of customers quickly and efficiently. Companies that are built

for speed often realize first-mover advantages; they are able to react more quickly to

competitors’ moves or market shifts with their own product innovations. Fords costs and prices

are relatively higher, and its innovation processes are relatively slower to respond to new or

emerging trends even though the company has increased its innovation effectiveness .Fords

17
slower innovation processes had made as a competitive advantage for the competitors Ford needs

to get to market early to less likely face initial competition.

Advantage:

• Competitive Advantage

Different set strategy of the company to its competitors that helps to set apart from

similar businesses within the same industry with quick release of its brand to the market

than its competitors in order to gain the customers attention and purchasing in its new and

improve brand of automobile.

Disadvantage:

• Employees work pressure

With pressure employees mean that they must finish the tasks which is improving and

innovating the ford in a certain timeframe to be ahead in the competitors.

Alternative Solution 2. Response to the Customer Needs and Wants

Ford associates their brand with a favorable function for customers as they use product

attributes or advantages as a positioning strategy. Customers are constantly informed about the

product’s most distinguishing feature or value. Brands stress a key differentiation their

product/service offers in their ads to appear advantageous and exclusive in contrast to other

alternatives. In order to appear favorable and exclusive in comparison to other alternatives in the

marketplace, the automobile emphasize a crucial distinction their product/service provides in

their marketing. The item or service becomes unique.

18
Advantages:

 Competitive Advantage

If the Ford establish its products as uniquely valuable, competitors will find it difficult to

make a compelling case for buying substitutes.

 Connect to Consumer Needs

Ford Company have an opportunity to communicate to critical benefits that their

product/service offers. It not only helps to energize the product but also connects it to the

specific customer that needs it.

Disadvantages:

 Inevitable Change

It’s never easy to maintain a competitive position in the market. Requiring the

organization to improve its reputation by creating new goods or greatly enhancing

existing ones. This is particularly difficult if the organization has cultivated a brand

image that is diametrically opposed to the new identity it wishes to embrace.

 High Competition

Every company wants to position its products favorably in the minds of consumers, so

there is usually a high level of competition of Ford Company.

Alternative Solution 3. Upgrade the Product

19
 Can take many forms, from new technology and changes in the supply chain to product

and process improvements. To remain competitive, Ford Company must continually innovate to

improve their automobile, processes and services.

Advantages:

 Improved productivity & reduced unit costs

A lot of process innovation is about reducing unit costs. This might be achieved by

improving the production capacity and/or flexibility of the business to enable it to exploit

economies of scale.

 Better quality

Product and services are more likely to meet customer needs. Assuming that they are

effectively marketed, that should result in higher sales and profits

Disadvantage:

 Very costly and time consuming

Ford can run out of money if they invest too much and don't get products to market

quickly enough.

The company is currently undergoing a massive restructuring program worth $11 billion.

The plan, which was announced in July 2018, aims to trim the firm's fat and eliminate work

redundancies. Loose wiring harnesses, unresponsive gear displays, faulty seats, and an improper

shifter cover are among the issues that needs restructuring. Ford Motor Company's net income

fell nearly 60% in the third quarter, owing to $1.5 billion in restructuring charges and lower sales

in China and the United States were reported a year after the announcement of the massive

restructuring program. Ford also announces global reorganization eliminating at least 1,400 jobs

20
in the United States by the end of 2020. Employees who were targeted had 30 years of service,

were 55 years old or older with 10 years of service, or were 65 years old with five years of

service. Thus, it needs to the changes that will take place in the management of the

company when it comes to the problem restructuring costs (planning and changes) in order to

increase the productivity. Also, they should be able to come up a solution that will increase their

net income.

Alternative Solution No. 1 - Abolish unnecessary work and cash outflows

First, the organization should eliminate tasks that doesn’t add value to what the business

is producing. Restructuring doesn’t necessarily means reducing the number of individual

employees, in fact diminishing the number of administrative levels will lessen the administrative

costs. It's one thing to lose extra workers after a restructuring, it's another to lose highly skilled

workers who are difficult to replace.

Advantages:

 Reduction in operational expenses

As tasks that does not add value to the firm’s product were eliminated, previous cost will

become additional budget that can be use to improve the company’s production.

 Increased productivity and improved communication

Non-essential layers in the management chain are frequently eliminated during

restructuring. This increases efficiency and removes productivity barriers by opening up

lines of communication. Employees can work better and faster, which allows for

innovation and transparency.

21
Disadvantages:

 Time-consuming for research

Identifying such menial tasks can also costs the company its time that can be used in

research and development to maintain its competitive advantage.

 More difficult to implement change

As employee retention is most likely to happen, everyone is used to the processes, the

organization is more likely to keep the same processes as they are without looking for

ways to improve efficiency and lack of outside ideas may cause innovation to stagnate as

well.

Alternative Solution No. 2-Make time for Reverse Engineering

The firm can use this tactic again just like what they did to its highly successful Taurus

model. It examines competitor’s automobiles while searching for best components and discover

product improvements.

Advantage:

 Less expensive yet more efficient products

Discovering any product’s vulnerabilities then reconstructing them to create a new

product saves more money, time in idea generation and costs of research and

development.

Disadvantage:

 Legal risks and limited component availability for reverse engineering.

22
 Not following intellectual property rights like patent laws could put the firm in a

litigation risks and take note also that reverse engineering isn't suitable for every product

or component.

The social and economic environment is in a state of constant change. All the world’s

nations have had to learn how to cope with economic dynamics in order to maintain or raise

standards of living. In terms of competition within the global market, changing social and

economic conditions have greatly influenced the competitive positions of companies of Ford.

The social environment consists of the sum total of a society's beliefs, customs, practices

and behaviors. A business must utilize and adapt to its social and economic environment, or it

will not survive. A business must be keenly aware of the society's social preferences regarding its

needs and wants as well as the present economic shifts and trends. If a business refuses to adapt

to changing social preferences as well as economic changing-conditions, its sales may drop, and

it will fail.

Alternative Solution 1: Reconfigure Business Model

A business’ model will be shaped by the social and economic shifts relevant to its

industry. Company like Ford will be profoundly affected by the structural and likely permanent

shocks to uncertainty or sudden shift of social and economic conditions. For Ford, with big

markets such as in China and the United States raising trade barriers, it may reshore critical

components in their supply chains—from R&D down to assembly.

In some cases, Ford may reshore its entire operation and supply chain, from raw material

to finished product. But more often due to labor costs, reshoring means bringing final assembly

23
and perhaps the tier-one supplier to the U.S., but tier two, three and beyond may still be foreign.

A portion of production and suppliers may remain in Asia, while another part of production and

are in Mexico and others in the U.S. In this case, the combination will give the company the

flexibility to balance production based on customer needs.

Advantage:

 Gain competitive advantage

Business model innovation allows a business to take advantage of changing conditions

socially and economically.

Disadvantage:

 It may be time-consuming and costly.

Creating a business model is time consuming as lot of factors needs to be considered.

In some cases, there might be a chance that business model may turn out to be inaccurate.

Alternative Solution 2: Focus on Core Competencies

Another tactic in response to environmental uncertainty is to reduce risk through

diversification. To cover its bases, the Ford Motor Company may diversify its approach by

expanding into new areas, perhaps by offering new products or by pursuing new consumer

segments. That way, if one area of the business fails, success in other areas might allow for

profitability on the whole. Of course, diversifying itself can be risky. Splitting a company’s focus

among various strategic avenues might dilute effectiveness and there’s always a chance that all

its strategies will fail.

24
 Ford may continue expanding their customer/client base in order to prosper even in tough

times. Developing innovative practices may help adapt to changing market conditions and stay

ahead of their competitors. Ford’s core competency which should be emphasized is their

production techniques to achieve economies of scale to better their profit and their core

efficiency to react to the effects of changing social and economic environment. Their core

competencies then must be changed to suit the needs of their changing environment.

Advantages:

 Minimize risk of loss

If one investment performs poorly over a certain period, other investments may perform

better over that same period, reducing the potential losses of the company’s investment

portfolio from concentrating all your capital under one type of investment.

 Generate returns

Sometimes investments don’t always perform as expected, by focusing on core

competencies like diversifying the company will not merely rely upon one source for

income.

Disadvantage:

 Demand new skill sets

Entering and diversifying into a new market segment will demand new skill sets. Lack of

expertise in the new field can prove to be a setback for the entity

25
Alternative Solution 3: Reassess Growth Opportunities

Companies seeking to emerge from the crisis in a stronger position must develop a

systematic understanding of their changing economic and social environment. Ford may require

a new process for detecting and assessing shifts before they become obvious to all. The first step

is to map the potential ramifications of social and economic trends to identify specific products

or business opportunities that will most likely grow or contract as a result. This way can

therefore be used to highlight which trends to follow and which to shape more aggressively.

Any analysis of growth opportunities must go well beyond a categorization of what the

company already know. It must be aware within what’s going on within their business domains

by taking a fresh, careful look at the data regarding shifts in economic and social trends. This

requires that the company actively seek out anomalies and surprises.

One major reason for the ford company to lose it market is that it has very poor planning

structure as compared with automobile companies. This has created a huge debt on the sheets of

Ford Company. The consumer feels less confident in buying the ford product due to the decline

the company has faced. They are not willing to purchase its products as long as there is market

gain in the economy. The ford company has gone behind the major automobile giants such as the

Toyota. Even if the company has improved sales domestically, its overall contribution in the

world economy is very low. Customers of today’s generation demand high-quality, fuel-efficient

vehicles, but Ford does not offer a wide range of such vehicles. Ford’s rivals have developed

energy-efficient and fuel-efficient cars, which has piqued the attention of potential customers.

26
 The particular decision criteria for arriving for a suitable solution for the brand value and

consumer confidence of the ford company should be Ford’s data-driven content strategy to stand

out from competitors and build consumer trust and loyalty.

Alternative Solution 1.Rebranding

Ford has become acronyms to many negative comments. After all the above work is done

last thing should be to do rebranding and create positive perception in user’s mind.

Advantage:

 Increase engagement levels with the customer

There is an opportunity to create a significant splash of interest in what the company

offer. A way to show customers how the changes will benefit them in the future..

Disadvantage:

 It will cost money

Going through rebranding process is never cheap. Business must prepared to spend

money on every element that requires an update.

Alternative Solution 2- Understand and Value their Consumers

Ford, while producing a high-quality and efficient product, must consider its customers in

order to increase demand. Buyers have a lot of bargaining power, and this is where Ford can

make a step to gain a competitive advantage by building a broad customer base. Knowing that

the company's primary customers are private individuals and rental agencies would minimize

27
buyers' bargaining power and allow it to streamline its sales and production processes. Pressure

that customers/consumers can put on Ford to get them to provide higher quality products, better

customer service, and/or lower prices.

Advantages:

 Build Loyalty

Ford can create a loyal customer base by running a customer-focused business.

Customers are more likely to buy from companies that they believe take their interests

into account when developing goods and services. Customers are also loyal to companies

that prioritize customer service training for their employees.

 Celebrated for Customer Service

When Ford run a customer-focused company, customer service becomes a part of your

brand. When consumers hear the company’s name, they immediately think of

knowledgeable and polite salespeople and a company committed to ensuring that

customers’ needs are met.

Disadvantage:

 Ever-Changing Customer Needs

Customers’ expectations are continually evolving, so customer-focused businesses must

have the tools, such as funding, staffing, and time, to keep up with them.

General environment is made up of a number of factors that have an influence on the

industry as a whole. Economic, political, and social factors are some of the factors that have a

significant impact on the business’s progress, and they are all essential to the car industry as a

whole. Numerous environmental factors impact the car industry, especially Ford Motors, one of

28
which is the increasing dominance of Japanese automakers in the U.S. market, hence affecting

American market share holdings. The company’s sales are hampered by the challenging

economic condition due to a shift in consumer behavior toward less costly but more reliable cars.

Consumer preference is also influenced by credit availability and fuel prices, thus Ford Motors

must adapt to these changes in order to remain competitive.

Alternative Solution 1: Invest more in innovating electric and autonomous vehicle

Massive innovations and discovery of future transportation will be vital for the company

to grow and flourish in the twenty-first century. Highly technological and comprehensive

research into innovative vehicles and alternative transportation methodologies will be necessary

to stay ahead of the curve. Ford Motor Company must increase its investment in electric and

autonomous vehicles that are more fuel efficient and release less pollution without harming the

environment, as part of a strategy to remain competitive in this rapidly increasing market

segment. Thus, advanced fuel-saving technologies should be used in hybrid and electric vehicles,

whereas, these vehicles have the added benefit of being environmentally friendly cars that are

able to run in electric, gas, or a combination of both modes, maximizing performance and

versatility.

Advantages:

 Improve sales and customer relationships

Since the government of the United States and other countries has placed a greater focus

on the production of environmentally friendly cars and other vehicles, consumer

preferences also tend to consider this factor when deciding what cars would be the best to

29
 purchase. Thus, investing time and resources for innovation would be beneficial to satisfy

consumers’ needs and wants. If Ford were able to innovate more environmentally

friendly cars and have better quality than the others, and if they were effectively

marketed, it could make consumers appreciate the extra value that the company brings to

them. Hence, Ford could make its sales to increase, and strengthen its customer

relationships.

 Competitive advantage

One of the most compelling factors for companies to innovate is to stay ahead of the

competition. Successful, innovative businesses are capable of adapting their operations,

services, and products to changes in market conditions and consumer needs. According to

Deloitte, only 12% of Fortune 500 companies from 1955 are still in operation, and half of

the S&P 500 will be substituted in the next ten years, emphasizing the importance of

being able to adapt rapidly to external challenges.

Ford could have a higher probability of responding to changes and discovering new

opportunities if it innovates. Innovation can also aid in the development of competitive

advantage by allowing the company to build better products and services for their

customers.

Disadvantages:

• Competition

An innovation could only grant a competitive advantage of competitors wouldn’t be

able to duplicate the innovation of Ford Company in their own businesses. Although

patents offer such legal security, several innovative products and processes are

30
 difficult to safeguard. One risk is that one research-driven, innovative company uses

the initial investment and bears all of the risk, only to discover itself competing with a

slew of imitators riding on the coat-tails of the innovation.

• Uncertain commercial returns

Much research is uncertain and future sales and income cannot be guaranteed. The

longer the production time frame, the more likely it is that competitors will catch up

to the company’s research.

Alternative Solution 2: Make strategic alliances with companies like Tesla, Google, and

Uber

In order to remain competitive, and adapt to the market changes, Ford Motor Company

needs to make strategic alliances with companies such as Tesla, Google, and Uber. Tesla and

Google are really the trusted manufacturers capable of helping the company to launch

environmentally friendly cars that are fuel efficient and release less pollution to the environment.

As one of its rivals, Tesla has the manufacturing assets and competencies to produce this type of

vehicle, while Google has the resources and navigation systems capacity to enter this market.

Uber has significant cash flow concerns, resource issues, and no large-scale production capacity.

Nevertheless, there are legal and technological problems with autonomous vehicles, as well as

liability concerns.

Advantages:

31
 • Drive innovation

Having the right alliance can help partners outmatch the competition with innovative

ideas that are a total package for their consumers. These alliances could be

groundbreaking, progressive and could change the competitive landscape

substantially.

• It expands the customer base.

People stick to the brands they believe in. When the company makes a strategic

alliance, the allegiance extends to the other companies within the alliance.

Simultaneously, Ford might also gain loyalty of the consumers from its other alliance

members. As a result, the company might be able to widen its demographic base even

more.

• It allows all parties to reach their goals faster.

When the resources of two or more companies function together whilst one company

going it alone, it becomes much better to fulfill the objectives or achieve your goals.

You can broaden your presence within your potential consumers, just the same as

your alliance partners can, extending each brand’s scope. It is one of the quickest

means for a company to break into a market or gain attention.

Disadvantage:

• Poor Communication

There is a probability that the communication of companies within the alliances

could be poor since there’s a lack of bonding between the two. This can lead to bad

decisions and loss of both company’s credibility and profitability.

32
V. Recommended Solution, Implementation and Justification

Ford should continue to emerge in foreign markets and make strategic alliances and joint

ventures that would help solidify them as the leader in the automobile industry. With the

emphasis and emergence of small, premium cars, Ford should innovate and upgrade its small

cars such as Ford Focus because of the potential environmental concerns, regulations, and

depleting oil reserves. Moreover, improve their ability to innovate and produce hybrid/fuel-cell

batteries and have cars averaging 55.8 MPG by 2025. The company should minimize cash burn

and bring costs down as quickly as possible to stay afloat in this difficult economy. Losses must

be brought under control.

Moreover, Ford should continue its aggressive push to close and idle factories, with an

emphasis on those factories within the United States and the Euro Zone. We strongly believe that

Ford must restructure its supply chain more quickly than previously anticipated. Current

instability within the market, particularly the potential bankruptcy of a competitor, heightens the

importance of this reduction and leads to recommend deeper cuts in the number of suppliers Ford

contracts with.

Ford must examine all of its suppliers and identify those which are critical to the supply

chain. These companies should be prioritized above all others in the distribution of contracts. In

addition, the bailout of General Motors and Chrysler has placed Ford in a strategically difficult

position. In this case, Ford should prepare extensive plans for how to deal with the bankruptcy of

these major competitors. Until a decision regarding GM’s future is reached, Ford should

continue extensively marketing its vehicles to exploit the competitive advantage which has been

created by GM’s dubious future. We specifically recommend taking advantage of the unease

33
among consumers regarding the legitimacy of competitors’ warrantees. The bankruptcy or

liquidation of either of these competitors would reverberate throughout Ford’s supply chain.

The chosen solution is said to be an effective solution because if there is fierce

competition among existing players in an industry, prices will fall and the industry's overall

profitability will suffer. Ford Motor Company competes in the Auto Manufacturers - Major

industry, which is highly competitive. This poses an adverse threat to the organization’s overall

long-term profitability. Rather than competing for a small market, collaboration with competitors

to expand the market is a good strategy.

In addition, we believe that there is no reason for Ford to continue producing the majority

of its vehicles within regions with extremely high labor costs. Ford should attempt in the long

run to shift much of this production to Mexico and Eastern Europe, which offer the necessary

geographic proximity while having far lower labor and production costs.

Since the Chinese automobile market has experienced consistent growth in the past ten

years, Ford must continue to expand their market share in China. Ford currently holds

agreements with Chang’an Automotive of China; through their joint venture Chang’an Ford the

companies manufacture the Ford Focus, Fiesta, and Mondeo lines. Forming alliances or joint

ventures within international companies will continue to increase their market share and

dominate the Chinese market. Given the economic incentives provided by the Chinese

government, is the opportune time for Ford to make a full push to steal market share in China

and establish itself as the dominant American brand.

Ford must continue preparing and executing longer-term growth strategies. Ford’s

viability hinges on its ability to successfully differentiate itself from its competitors, both through

34
price and quality. Ford must continuously execute the ‘One Ford’ vision and continue to

differentiate itself from its competitors even as the economic crisis unfolds. In recent years, Ford

has redeveloped a coherent corporate strategy. Ford has avoided the need for government

funding because of its timely financing and strategic proactiveness. It is critical, however, to

continue these positive trends with the end goal being global profitability and recapturing market

share. Ford should not lose sight of the bigger picture while attempting to capitalize on GM and

Chrysler’s current weakness.

In addition, the potential threat of new entrants is relatively low for Ford as there are

large upfront capital costs needed to successfully establish a new entrant in the industry as well

as lack of brand equity and distribution networks needed to sell the vehicles will make it fail.

With Tesla Motors as its new competitor which focuses on Premium Electric Vehicles, high

barriers set up by government policies and legislation prevents them from entering the auto

industry.

Since the advent of the motor vehicle, Ford Motor Company has been a revolutionary

company that has led the way in the automotive and manufacturing industry. Although becoming

economically and environmentally responsible is a commendable achievement in marketing and

for humanity as a whole, the industry must progress through innovative and creative

manufacturing processes and other vehicle types to offer. For the company to make progress and

prosper in the 21st century, huge developments and exploration in future transportation would be

crucial. Highly technical and advanced research into innovative vehicles and secondary

transportation methodologies will need to be explored to be at the forefront of the changing

market, while at the same time traditional business and manufacturing practices that made Ford

35
Motors Company survive over a century will be needed to keep the Ford identity intact and

advancing throughout the 21st Century.

Because of this, the chosen solution is said to be an effective solution as industry

profitability tends to suffer when a new product or service meets similar customer needs in

several ways. For Ford, the threat of substitutes is low as people are more likely to use public

transportation as gas prices rise in major cities. Automobiles are still the most common mode of

transportation and the average age of cars on the road has risen to 11.4 years, up from 10.9 years

the year before, posing a threat. Ford should also focus on being a service-oriented firm rather

than just a product-oriented through understanding the customer’s need than what they are

buying as well as increasing the switching cost for them.

In line with this, Ford Motor Company must invest more in electric and autonomous

vehicles as a strategy to strongly compete in the growing market segment. Hybrid and electric

vehicles should feature advanced fuel-saving technology. As an advantage, these vehicles can

operate whether in electric mode, gas mode, and combination of both with the benefit of

optimizing efficiency and simplicity. Although the production and adoption of electric vehicles

grow, the company must grow the electric-vehicle manufacturing and focus on investing in auto

segments to be the dominant player among its competitors such as Tesla and General Motors.

While pushing to launch autonomous vehicles in the future, most resources will be allocated,

especially in capital investments. There is also a need to make alliances with companies like

Tesla, Google, and Uber wherein Tesla and Google are the only true viable manufacturers that

could achieve this with long-term goals. Tesla, as one of its competitors, has the manufacturing

capabilities and resources to achieve this type of vehicle, whereas Google has the resources and

navigational infrastructure to move on this market. Uber, has serious cash flow issues, resource

36
problems, and no manufacturing capability on large scale. However, there are issues involved in

the laws and technologies with autonomous cars, along with liability issues. The biggest risk for

autonomous vehicles is in the technology and state or national laws. With this, the company

should assess the risk for them to move into the foreign market. Expanding its supply chain to

achieve better economies of scale and reduce production costs is crucial. Ford Motors Company

should respond with its innovation and manufacturing processes by having a critical analysis on

the risks and strategies to make opportunities for growth through operational expansion and

innovation.

Keeping up with and innovating new technology is critical for Ford to remain

competitive in the auto industry. Many of these benefits are only temporary, but they are critical

to differentiate one year's model from the next.  Technology development is concerned with

R&D and improving the car's technology and design. Ford has spent a significant amount of

money developing/acquiring technology to improve its procurement, production, and distribution

efficiency. Firms must optimize efficiency and minimize overhead as the demand for high-value

cars at low prices grows.

Even with competitive rivalries such as Tesla and General Motors, Ford Motors

Company must engage in aggressive marketing and innovation to penetrate the market. Foreign

expansion is beneficial for them to expand their ranges of vehicles in foreign markets as well as

to attain a dominant role in the automobile industry. Strong ties and deals with operations in

various regions and individual nations could have key advantages in competing with foreign

markets. Risk assessment, therefore, would be to work with officials in these organizations and

countries to have sound deals agreed upon, while at the same time understanding the risk of

government and cultural changes. With the increasing competition, Ford Motors Company

37
should make strategic plans on its relatively high prices while competing with others. Even

though they are creating a high-quality and efficient product, they must understand and value

their consumers to increase demand.

The bargaining power of buyers is high, and this is where Ford should make a move and

gain a competitive edge by establishing a large customer base. Knowing that the primary

purchasers are private individuals and rental agencies, will reduce buyers' bargaining power and

allow the company to streamline its sales and production processes.

Moreover, Ford Motors Company should also weigh its suppliers for manufacturing and

its supply chains. Risk on suppliers often leads to the loss of the company. Thus, it is necessary

to identify suppliers that are viable when it comes to providing the supplies and materials needed

for manufacturing. They must identify the supply and materials and reduce costs to protect

against changeable economic conditions. In case that the suppliers were unable to do their

responsibility and caused a loss to the company (e.g. shortage of supply materials), the company

may at least cut the production of less profitable vehicles and raise the prices of the most

profitable vehicles. In that way, it can be an alternative solution so that the company will not

experience more loss on its profit. As demand surges, it offsets the production loss. In terms of

its supply chain, the company should maintain to provide its support to greater sustainability,

increased efficiency, and pave the way for automotive supply chain optimization. Ford must rely

on the diversity of its supplier base across the globe to reduce disruptions in its supply chain and

has contingency plans in place when key suppliers are impacted by fire, cyberattacks, or other

disasters. The company should assess risks associated with its strategic suppliers and the parts

they produce to ensure business continuity.

38
 Supplier bargaining power is relatively low for Ford, as the company's supply chain

management makes it possible for strong negotiations with suppliers and firms to compete for

business with Ford, reducing their bargaining power. Because the inputs have been standardized,

experimenting with various product designs and materials is easier so that if one raw material's

price rises, the company can switch to another.

VI. External Sourcing

Stankiewicz, Kevin.2021. “Ford CEO Confident in Electric-Vehicle Strategy, says Automaker

won’t ‘Cede the Future to Anyone”.https://www.cnbc.com/2021/02/05/ford-wont-cede-the-

future-to-anyone-on-electric-vehicles-ceo-farley.html

39
Martinez, Michael.2018. “Ford ‘Evolving’ Mulally’s One Ford Plan with Move to 5 Modular

Platforms”.https://www.autonews.com/article/20180808/OEM04/180809771/ford-evolving-

mulally-s-one-ford-plan-with-move-to-5-modular-platforms

Grzelewski, Jordyn.2020. “Explores Making Its Own Electric Vehicle Battery Cells”.

https://www.govtech.com/transportation/ford-explores-making-its-own-electric-vehicle-battery-

cells.html

Boillat,Conner,Griego,Thomas,Jamesly,Richard,Spagnola,Maddie and Tomassetti,Tony.

Strategic Management: Ford. https://sites.google.com/site/buad467ford/home/module-questions

Ford Motor Company.2020.“Our Future is in Motion: Ford Motor Company Reflects on 20 years

in Sustainability with New Goals Ahead”.

https://media.ford.com/content/fordmedia/fna/us/en/news/2019/06/06/ford-motor-company-20-

years-sustainability.html

40