Gasoline Prices Within the United Term Paper

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Ford can also instead chose to improve an existing vehicle to compete with the likes of Honda and Toyota, however, they would have to recast this vehicle in a completely new niche. There are significant risks associated with such a strategy because all of Ford's efforts would be devoted to one vehicle, and the ability so the Exiqusite to out compete other cars within its class is dubious at best.

By re-engineering the current Ford powertrain, Ford creates a long-term success strategy, focusing on increasing their core technology for the entire fleet of vehicles. This move not only makes financial sense, through my calculations but also is a strategically sound decision for long-term success within the industry.

This does not mean however, that there are not significant risks attached with choosing this strategy. The core risk is that creating a new and more efficient powertrain is a pure research and development play. There are no definite garantees that such research and engineering can be completed on time and on budget. Furthermore, the fact that the powertrain must work for numerous cars increases the complexity of the development effort. Choosing this option will place significant amount of pressure on Ford's current research engineers and requires careful project management and no certain amount of luck. Current projections on time and cost are no doubt based upon past research initiatives which could have little application to the current position.

Another key risk is that the time table for such a project is four years, whereas the other two options both have a time table of two years. Transitioning the efficiency of the powertrain requires a "shaky" time table that may or may not reflect the actual time table. While the other two options have solid deliverables that are much easier to both project and manage.

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Having a long development time poses many risks on a strategic and financial level. From a strategic perspective, it would mean that Ford will appear to be doing much less than its competitors in terms of increasing their fuel efficiency. Since this market is very time sensitive, Ford will lose significant brand equity in the two years that it does not present a clear and tangible product offering. In four years moreover, there is a possibility that gasoline prices may decline, which would make fuel efficiency a much less sought after feature. Technology could also change significantly during this period, which could imply that a more efficient powertrain would be a redundant technology. Even more worrisome is the fact that R&D resources will be directed towards this research, which could possibly neglect other important priorities, and at the same time making Ford much less flexible in terms of technology and implementation during this time table.

After a thorough analysis of this problem it is evident that there are no simply solutions for Ford's current dilemma. There are implicit risks involved in all of the options they are currently investigating. In choosing a more efficient powertrain, Ford is not only making a decision based upon financial projections, but making a strategic decision on improving their core technology. Although there are many implicit risks with this decision, as stated earlier, the benefits outweight the costs. In the long-term, consumers will demand much greater fuel efficiency and stability in their vehicles, Ford can either chose to respond to this demand with a short-term solution or a long-term investment. It is my belief that Ford should make a statement that developing their technology and vehicle quality is their number one priority, and this will mean making the significant resource allocation and investment….....

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