Ford Motor Company

Ford Motor Company is one of the leading vehicle producers globally, with large markets and several strategies for their business growth. They are one of the leads in profitability and market ventures overseas. Despite their success, they still focus on increasing their sales by expanding their market scope to new grounds, which gives them more profit. To achieve all these, the company uses several strategies, which are responsible for their current position in the market. These include corporate level, business level, and functional level strategies, all of which are important and effective for the company’s business. The success of these companies is mostly dependent on how the management chooses to use these strategies. It calls for them to be more cautious in their use, ensuring the company is successful in all its sectors globally. The focus remains on the diverse strategy used by the company concerning its current success and entry to new markets.

Corporate-level Strategy

Corporate-level strategies are primarily used by companies with control over their supply chain and sales. This means they are responsible for making most decisions and planning how the market will stand for maximum profitability. For this reason, these strategies are formed by the top management, who then translate the same to medium and low-level managers. This means that the company runs under a single rule from the top in the power hierarchy.

The company has total control of their markets, hence responsible for valuations, which their suppliers use in the sales. Making such decisions is difficult for the company, as some supply chains are far from the focal company, which means they have to dig a lot to come up with the best choices (Betz, 2016). These choices have a high probability of changing the whole organization, making them crucial. Its resources also have a role in corporate-level strategies, as they make decisions depending on what they can control using their finances. To be precise, the organization ensures that they align with their company’s short and long-term goals and objectives, which the company aims to achieve, over a specific period.

Ford Motor Company possesses several strengths, which play critical roles in ensuring the whole organization is successful in all its activities. Firstly, the company has a vast global brand image, which works to their advantage in many cases. It is a well-known motor company, whose brand is in most countries globally. This means that they make most of their sales from the huge brand name that the organization has made. Some customers focus on brands, ensuring that they are well known. Ford motors have already established a big name for itself in most markets overseas and in the United States (Betz, 2016). The organization has a simple logo-engraved the name ‘FORD’. They are also known for the best quality products, which adds to their total sales in many countries. Good production often leads to increased sales, especially with a huge brand name, which is the case in Ford.

Another strength of the firm is its solid global supply chain that they have established. With minimal diversification, the country has positively focused on its global supply and increased the quality of its cars. Over the years, the company has put a lot of intensity on market penetration, making it their long-term goal. This means expanding their global supply chain through venturing into new markets and dominating their already established markets. They intend to increase their sales to their current customer over the year to increase profitability Expansion of their current dealers to have more in their ventured countries is crucial for the company. This strategy’s success depends on the fact that they do not have a lot in their hands (Raghuram, 2016). They have made this their fundamental goal, which promoted their sales. The above shows how the company has invested in increased sales only. The firm takes advantage of their strong brand, which means they should have the ability to give more products to their markets without struggle. This also helps them to compete with other companies, which are also successful in sales. Having a competitive advantage is very crucial in the current global vehicle market.

Minimal diversification is another strategy that allows the company to focus on market penetration and increase productivity, one of its main strengths. Despite venturing into some markets like the sale of luxury cars to keep up with the global competition, that is not Ford’s main focus in their sales. They aim to increase productivity and sales to their customers in the markets. With increased sales in their market, the company is likely to increase their productivity and ensure their products are of the highest quality. This is a crucial strategy that the company may use to succeed in its activities.

One of the problems with diversification is resources. Such a huge company might need significant funds to sustain diverse production and keep up with its global supply chain. For this reason, their focus on market penetration and increasing sales to their current customers is efficient for them. Dealers and customers have credit options from the company’s corporate strategies(Popkin, Bayomy, & Ahmad, 2019). This attracts more people who might have fewer funds to buy their products. They also have a risk management project, which extends to their dealers and customers. This mainly applies when customers need support for damaged vehicles and their current dealerships. Lack of diversification has caused the country to perform efficiently in its primary goal.

Despite the corporate strategies being merit to the company, they also have several weaknesses, which hinder the achievement of company goals over time. Their surplus production strategy effectively increases their sales, hence profitability. However, the company has experienced a few recalls over the past years. With surplus production, recalls remaining very expensive for the company. It means taking back all the sold vehicles to correct specific faults in their products. A company like Ford, which usually has sold most of their cars, has to invest a lot to take back all their vehicles. Their vehicles had a problem with side doors in 2016, which saw the recall of around 830k cars. Having to work on such transport for a second time means losing a lot of resources in the process. This diminishes the initial profit the company earned from their sale, meaning the surplus production strategy may be inefficient when they experience faults. A similar case occurred in 2015, where the airbags were not functional, meaning they had to recall their vehicles for repair. Such demands always hit hard when the company already has a lot of cars in the market. In many cases, such issues see companies lose more customers as the brand name is tarnished.

Ford is well known for its dependence on the production of trucks and SUVs. More than half of their output is trucks. Despite the high quality of these trucks, the company is also required to be more flexible, as they focus on the market trends. With emerging global warming cases, most people opt to drive smaller vehicles with minimal fuel consumption, hence protecting the environment. Despite the competitive advantage that they reap from lack of diversification, it also negatively affects them. The company plans to increase SUVs rather than smaller vehicles (Popkin, Bayomy, & Ahmad, 2019). This has seen their total sales reduce by far, as other companies with variety continue to gain a competitive advantage over Ford.

Diversification should also be in marketing, as the country should consider new markets. Ford chooses to increase sales to their already existing customers in many cases. Other companies have focused on producing vehicles with low consumption to meet the needs of their customers. On the other hand, other companies have focused on emerging markets for maximum sales. These organizations end up having a substantial competitive advantage, seeing Ford drown in their sales.

IFE Matrix

Ford’s IFE matrix represents their internal strengths and weaknesses over the years they have been running. In their internal environment, the mission and vision entail customer satisfaction. This can only be achieved by producing the best quality products for them. For this reason, the company’s primary focus is ensuring that quality comes first. When this is put forward, the customers remain satisfied as the vehicles sold to them efficiently meet their needs. The company also has the focus on progressive improvement of their goods. The final manufactured vehicle consists of all their work in their internal environment.

For this reason, the feedback they get from the customers is a representation of what they worked on. A negative review shows that their work did not reap what was expected, while a positive result shows that the company is moving forward in the best way. The measure of profits showcases their efficiency in the vehicle market (Betz, 2016). Increased yield explains that the company continues to work well. As a result, it represents the work. The organization also has high regard for employees, whose input is heavily considered as they are a single team. The same case applies to dealers and suppliers. They are treated as partners as their combined efforts constitute the success of the whole organization. Ford has these kinds of co-values and structures in its internal environment.

Simultaneously, their internal environment also possesses negative factors, which poorly affect the company. This has seen them reduce their profits as their long-term goals continue to look unachievable. The earning per share for the company remains relatively low. This puts away investors whose primary goal is to see their shares increase over time. Investors are crucial in ensuring that the company maintains high profits as most of its projects are funded. The company also experiences a low quality in their new products owing to their infamous recalls over the past years. This gives a poor representation of how the company focuses on the quality of its products. It means that they have low-quality products, which is a liability, as they lose more of their customers. Having a poor internal environment will see the company drown socially and economically.

The company majors in the production of trucks and SUV’s which are highly consumed in the market. However, the current vehicle markets continue to seek fuel-efficient vehicles, with minimal consumption. This greatly gives other companies like Toyota a competitive advantage. For this reason, they should put their focus on ensuring the company prospers.

Strength and Weakness Matrix in Ford’s Internal environment

Grand Strategy Matrix

The grand strategy matrix in Ford represents where they stand in the global market. Ford has a firm brand name, which means they have a competitive advantage in the market. This also applies to their focus on the production of trucks and SUVs (Woodiga et al., 2020). The company has attracted many customers resulting from their specialization in these productions. However, they remain tight with emerging market trends giving a different perspective. Most customers are opting for low fuel consumption vehicles for several reasons. These include the reduction of environmental pollution and cars, which are cost-effective. For this reason, Ford needs to be innovative in most of its activities to ensure it keeps up with the competition that exists in the vehicle production industry.

Ford’s evolving sense of self: An interview with Hau Thai-Tang. In many situations, they are finding themselves at a week competitive position in the current markets, which makes it difficult (Thai-Tang, 2019). However, they have joint ventures with other companies like Mazda and the Lincoln brand. All these partnerships aim to increase the total sales and ensure that competition remains stiff. They give them the best position to compete with global companies, which have also established a stable ground for their success in overseas markets.

Business-level Strategies

Ford’s product line mainly includes their trucks, which they are more famous for. They have a global supply chain for most of their trucks, with their customers trusting them. They work with automotive and mobility, which they put as their primary focus in production. They also have other vehicles apart from trucks, which have helped them build a firm brand name today. Multinational corporations have a robust supply chain for their products and long-term market dominance (Mensah, Merkuryev, & Longo, 2015). They aim at increasing their total production over the years to bring them a competitive advantage in their markets.

With the production of high-quality products, they are likely to earn more from the loyalty of their customers. Statistics show that Ford’s initial target market was the millennials, young people in the technology field (Raghuram, 2016). Being the most energetic, they have a strong network connection, making them efficient customers for the company’s products. That is why their production consists of high-power vehicles, which will give individuals longevity in terms of service.

Ford has deployed several business-level strategies in the market, which have brought them more efficiency over the years. They aim to increase customer satisfaction by adding value to their products. They have also invested in leadership as a business-level strategy, which they use to promote efficiency (Seifzadeh & Rowe, 2019). Effective leadership translates to the final product in most organizations and ensures the company remains dominant in the market. They have worked on a high production rate at a lower cost, constituting economies of scale. However, sales replicate the high quality of products that the company produces (Marx, 2016). This means that they do not come at the lowest cost in the market. Production at a lower price gives the company an advantage as they can sell them at a relatively low cost, attracting more customers to their products. In some cases, this cost leadership strategy may be effective as other companies find it difficult to copy.

Functional Level Strategies

Ford has a dual matrix structure with both centralized and decentralized forms. They have single corporate management in charge of all its activities (Ali, bin Ahmad, & Johari, 2017). Simultaneously, they also have decentralized distribution strategies, where the delegate parties are in order. Ford has a unique organizational culture, as it works for the good of all stakeholders (Warrick, 2017). For this reason, many people consider it as having a structure like that of a family. It has its focus on shared ideas and beliefs. They believe that every individual has the freedom to pursue their will for the good of the whole society (Morgan, & Liker, 2020). In the marketing production, they ensure that they set prices that replicate the current market trends. This is in consideration of all variables. They have a finance branch known as Ford Motor Credit Company LLC, responsible for their accounts. Being a transparent company, they have presented most of their research and development results on the website for public viewing.

Financial Analysis

Leverage Ratio

Times interest earned ratio = Operating profit / Interest expense

Ford motors EBIT (operating profit) as on March 31, 2020 is -1558 that is operating loss. Interest expense is not there, Interest income in negative is there so negative interest income is considered interest expense.

Times interest earned ratio: -1558 / 250 = -6.232 times

Times interest earned ratio is negative that shows company is not able to repay its debt and interest expenses.

Total assets turnover ratio = Revenue / Total assets

Revenue at the end of march quarter is $34320 and Total assets for the same period is $261344.

Total assets turnover ratio: 34320/261344 = .13 times

Its asset turnover is .13 that is very low and shows that company’s assets are not able to generate revenue.

Financial leverage ratio for General motos as on March 31, 2020:

Financial leverage = Total debt / Total equity

Total debt = Short term debt + Long term debt

Financial leverage = (45061+ 81439) / 40113

Financial leverage = 3.15

It says that General motors is financing its operations and growth by debt (Ford motor, 2020). It shows a decreasing pattern of this ratio.

Liquidity Ratio

The liquidity ratio focuses on its ability to meet its short-term duties. As of 2021, it stood at 1.20, which is an improvement from the previous year, with a deteriorating trend.

Profitability Ratio Over the past year 1

Return on Equity- 45.29%

Return on Assets- 6.83%

Net profit margin- 13.14%

Efficiency Ratio

Asset turnover ratio is 0.52

Conclusion

Ford has several strategies that it uses in its daily company performance. Most of them are advantageous to them as they aim at increasing their sales and total company profitability. It has several strengths that have brought it to its current success in its ventures. This includes a famous brand name, which essentially boosts their sales globally. This brings recognition from their customers, most loyal to the brand, hence increased profitability. However, they also have some disadvantages like low-quality products, which have caused several recalls over the years. However, they remain a leading motor vehicle producer in the world. The company has shown an increasing trend in profitability over the past year, making them more efficient in providing services and manufacturing. However, the external environment offers stiff competition; hence, they should gain a competitive advantage over other organizations.

References

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Betz, F. (2016). Strategic business model. In Strategic Thinking. Emerald Group Publishing Limited.

Ford motor (F) financial ratios. (n.d.). Investing.com. https://www.investing.com/equities/ford-motor-co-ratios

Marx, T. G. (2016). The impacts of business strategy on organizational structure. Journal of management History.

Mensah, P., Merkuryev, Y., & Longo, F. (2015). Using ICT in developing a resilient supply chain strategy. Procedia Computer Science, 43, 101-108.

Morgan, J. M., & Liker, J. K. (2020). The Toyota product development system: integrating people, process, and technology. Productivity press.

Popkin, C. A., Bayomy, A. F., & Ahmad, C. S. (2019). Early sport specialization. JAAOS-Journal of the American Academy of Orthopaedic Surgeons, 27(22), e995-e1000.

Raghuram, J. N. V. (2016). A Conceptual study on value creation-New trends in automotive industry. International Journal in Management & Social Science, 4(9), 197-205.

Seifzadeh, P., & Rowe, W. G. (2019). The role of corporate controls and business-level strategy in business unit performance. Journal of Strategy and Management.

Warrick, D. D. (2017). What leaders need to know about organizational culture. Business Horizons, 60(3), 395-404.