Automobile Industry

Jessica Alford, Sharita Garmon, &

Charlene Singleton
 Introduction
 Cars fulfill many roles in our lives: class status &
transportation
 Cars are expensive and are relatively durable products
 Consumers in America spend billions of dollars every
year
Objectives
 Analyze Mercedes Benz and Ford
 Highlight competencies
 Evaluate current strategies
 Suggest new strategies
 History
 In 1891, William Morrison created an electric carriage in Des Moines, Iowa
 1893: Internal Combustion engine: Frank Duryea motorized a truck
 Duryea singlehandedly made 13 internal combustion vehicles in his first year of
operation
 1896: Production of automobiles for the public market
 William Metzger: first car dealer by way of Detroit
 New England was the first world capital of automobiles
 1905: Michigan, Detroit claimed its throne in 1905 due to its remarkable natural
resources
 Henry Ford has been known to first mass-produce the automobile.
 GM: world’s largest automotive seller
 Countries known for manufacturing: Japan, Germany, and the United States
 Most popular car in America?? (TC-hybrid)
 General Environment
 EconomicForces
Bad economy; lower sales

 Social,
Cultural and Environmental Forces
New fuel efficient cars are expensive; negative effects

 Political,
Legal and Governmental Forces
Trade barriers: Restrict Free market

 TechnologicalForces
Robotics: decreases demand in labor

 Competitive Forces
Fuel the economy
 Industry Analysis
 Degree of rivalry;
 Threat of substitutes
 Barriers to entry
 Buyer power
 Supplier power.
 Threat of Substitutes
 Fairly mild
 Numerous other forms of transportation
 Independence
 Convenience and utility
 Monetarily
 High population densities e.g., walking, mass transit,
bicycles, etc.) can be less costly than automobiles and
thus alternative modes of transportation are often
preferred.
 social and cultural attitudes
 “ The American Dream”
 Barriers to Entry
 Entering the automotive industry are
substantial.
 Startup capital required to establish
manufacturing capacity to achieve minimum
efficient scale is prohibitive.
 Established companies are entering new
markets through strategic partnerships or
through buying out or merging with other
companies
 Buyer and Supplier Power
 Powerful buyers who are generally able to dictate their
terms to their suppliers.
 There is not a grand proliferation of companies
 Automotive parts (e.g., oil filters, mufflers, belts, etc.)
 Backward integration.
 Ultimate consumers are purchasers of finished vehicles
 Consumers exert the greatest power in this relationship
due to the fairly standardized nature of the automotive
commodity
 low switching costs associated with selecting from among
competing brands.
 Mercedes Benz: Internal Competencies
STRENGTHS
 Strong brand recognition
 Upholds quality standards
while maintaining tradition.
 Innovative, futuristic designs.
 Translates to consumers as a
luxury item or symbol of
status.
 Company is extremely
globalized.
WEAKNESSES
 Prices aren't as competitive as
other high-end brands.
 Does not remain current with
popular trends among
consumers.
 High maintenance costs.
 Mercedes-Benz: History
 Gotlieb Daimler and Carl Benz
 Merged in 1925 using symbols from both
companies.
• Daimler-Benz AG
 1980’s Mercedes-Benz became the first to
comply with CO2 regulations.
 The first company to incorporate ABS and
ESP systems into its automobiles.
Organizational Structure: Mercedes- Benz
 Ford: History
 Founded in 1903 by Henry Ford in Dearborn, Michigan
 1908 the Model T was introduced and went on to sell
over 15 million vehicles
 1956 company went public and since then has grown to
be a significant presence in the global automotive market.
 Brands: Ford, Lincoln, Mercury, Mazda, Aston-Martin,
Jaguar, Volvo, and Land Rover.
 Ford has a finance division, a parts and service division,
 Currently own Hertz Corporation, the largest car rental
business in
 Challenges among Ford
 Rising costs of commodities, namely steel and
energy, have increased manufacturing costs
considerably
 Sales are especially lagging in the profitable
SUV and truck markets where demand is
dropping due to escalating gasoline prices.
 Structure
 Need to reestablish their market share,
particularly in the U.S. domestic market.
 Increased its hybrid vehicle production, an
attempt to position itself as the domestic leader
in the rapidly growing hybrid market in the
U.S.
 Ford

STRENGTHS WEAKNESSES
 Stability and Predictability  Saturated Nature of Business
 Brand Recognition and
Loyalty
 Recovering Sales Growth
 Global Presence
 Comparative Analysis

    Ford Motor Company   Mercedes-Benz Volkswagen

Critical Success Factors Weight Rating Score   Rating Score Rating Score
Product Quality 0.3 2 0.6   4 1.2 2 0.6

Aesthetics 0.09 2 0.18   3 0.27 3 0.27

Price Competitiveness 0.1 4 0.4   2 0.2 3 0.3

Market Share 0.1 3 0.3   3 0.3 2 0.2

Customer Loyalty 0.2 4 0.8   4 0.8 3 0.6

Company Environmental Adaptability 0.07 3 0.21   3 0.21 4 0.28

Fuel Effeciency 0.14 4 0.56   2 0.28 4 0.56

Total 1   3.05     3.26   2.81

• Above figure establishes strengths and weaknesses within the automobile

industry and how heavily they weigh between the two companies in the
Competitive Profile Matrix (CPM)
• Overall product quality is the most important success factor .
• Company adaptability is the least important in this matrix.
 Product Positioning Map
High
Class
es
Merced

Conservative Sporty

VW

FORD

Affordable
Class
 Industrial Suggestions
 More adaptability/flexibility within
infrastructures.
 Challenging previous methods
• Going against tradition
 Luxury vehicles with more fuel efficiency
 General consumer brands with higher quality
standards