Strategy to Beat Competitors Using Supply Chain and Operations Case of Ford Research Paper

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Ford Motors: Strategy to Beat Competitors Using Operations and Supply Chain

Company Overview

Ford Motor Company is the second largest automobile manufacturer in the United States apart from General Motors. The Ford Company is credited for the production of trucks and cars for mass markets. The company also produces car accessories such as cars' electronic components, vehicles' plastic, and replacement parts. Moreover, Ford Motor owns approximately 8% stakes in Aston Martin, a 2.1% stake in Mazda, and 49% stake in Jiangling. Ford Motor also develops joint ventures with several companies around the world. The company has also diversified their business operations into financial services such as American Road Insurance and Ford Motor Credit. However, Lincoln and Ford's models accounted for the approximately 10.5% of the company sales in the United States. A rise in prosperity of emerging markets has made Ford focusing their business attention in China. At the end 2014 fiscal year, Ford Motor recorded a revenue of $114.07 Billion with net profits of more than $3.1 Billion. By March 2015, the company market values are more than $64.1 Billion. Despite the superior profits recorded, Ford Motor is facing stiff competitions from other automakers that force Ford shifting away from more profitable sports utility vehicle to less profitable smaller utility vehicle. However, many competitors filed for bankruptcy between 2009 and 2010 making Ford regain their market shares.

Competitive Analysis

In recent years, Ford Motor has faced stiff competitions with several automobile makers both in the United States and outside the United States. Apart from automakers from Europe and Japan, Ford is also facing a stiff competition from other auto companies in China. However, General Motor, Honda Motor and Toyota Motor Corp are the top competitors of Ford Motor both in the United States and outside the United States. The strength of General Motor is their market capitalization of $48.5 billion revealing that the company has vast resources to compete successfully with Ford in the United States. However, Ford Motor is facing a stiff competition with Toyota Motor Corp both in the United States and outside the United States. At present, Toyota can boast of the market capitalization of $165.1 billion that is more than three times the market capitalization of Ford Motor. In the last few decades, Toyota brands have dominated the global market making the company enjoy superior growth in the last few years. Honda Motor is also enjoying global presence than Ford with a market capitalization of more than $49.2 billion. Over the years, Toyota has dominated the industry because of their product affordability. Despite the intense competitions that Ford is facing over the years, the company's strength rely on their immense assets.

At the end of 2015 fiscal year, Ford total assets were more than $205.5 billion with revenue of approximately $144.1 billion. The company market capitalization was $53.59 billion at the end of the 2015 fiscal year. Moreover, the company is enjoying superior market advantages from models such as, Lincoln Ford Fusion and F-150.

"The Ford and Lincoln brands are critical to the company's success. Fuel-efficient models, such as the Fiesta, Focus, and Fusion have been very well received. A strong luxury group also allow Ford to sell to all consumer variants while retaining current Ford customers and selling Lincolns for more profit than Ford brand vehicles." (Moirging Star, 2015 p 1).

Despite the strengths of Ford Motor in the industry, the company has recorded low sales compared to its competitors. At the end of the 2014 and 2015 fiscal year, sales of the Ford were down while the sales of its competitors increased making Ford record one percent decline in revenue between 2014 and 2015. The competitive analysis chart in Fig 1 and Table 1 reveals that Ford Motor ranks third in the industry with reference market capitalization. In 2015, Toyota and Motor Honda recorded higher market capitalization than Ford. The core competence of Toyota and Motor Honda Motor is their global presence.

Table 1: Ford Company Compares with Peers 2015

Rank

Company

Market Capitalization ($Billion)

1

Toyota Motor Corp

2

Daimler AG

75.8

3

Ford Motor

54.2

4

Honda Motor Co

51.6

5

General Motors

49.6

6

Volkswagen AG

45.3

7

Nissan Motor Co

40.5

8

Tesla Motors Inc.

34.0

9

Tata Motors Ltd.

18.1

10

Fiat Chrysler Automobiles

10.3

11

Ferrari NV 8.1

12

Brilliance China

5.4

13

Thor Industries Inc.

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3.3

14

Winnebago Industries Inc.

0.58

Source: Charles Schwab (2016).

Fig 1: Ford Company Compares with Peers in 2015

Unlike, Ford Motor that focuses on the U.S. market, Toyota, and Honda Motors have been taping the global markets for several decades, and these companies do not rely on local markets alone rather they have tapped the market opportunities in the developed, and developing countries. Affordability is another strength of both Toyota and Honda Motor. These companies produce cars for all categories of income earners that assist them penetrating the emerging markets successfully. Unlike Ford Motors that focuses on high-income earners and middle-income earners, the Toyota and Honda Motor develop their products for middle and low-income earners. The intense competition that Ford Company is facing in the industry make this paper provide recommendations on the strategy that the company can employ to beat their competitors in the industry.

Recommendations for Ford Achieving Competitive Market Advantages through Supply Chains

This section discusses the strategies that Ford Motor can employ in beating their competitors in the industries. In the motor industry, business leaders have identified supply chain as an effective tool that organizations can employ to achieve competitive market advantages. (Kearney, 2013). Supply chains refer to the movement of goods and services from manufacturers to the end users. More importantly, the supply chains are the overall movement of raw materials from supply to the manufacturers and movement of finished goods from the manufacturers to consumers. (Bozarth, & Handfield,2012).. Since supply chain involves a network of movement of goods and services, effective planning is very critical to assist organizations to source for quality products from suppliers in order to reduce the costs of operations to achieve competitive market advantages. Moreover, organizations are required to manage their supply chains and operations carefully to enjoy higher profitability.

Introduction to the Global Operations and Supply Chain

Different strategies Ford Motor can employ to achieve competitive market advantages through the supply chain. First, the company should plan its manufacturing operations to move their physical goods at low costs. Overview of the operations of the Ford Company reveals that bulk of the company operations are entirely in the United States. Although, the company has recently started its operation in the emerging markets such as China, Brazil, and Argentina, however, Ford Motor need to take advantages of globalization to achieve competitive market advantages. It is essential to realize that manufacturing operations are more costly in the United States than emerging countries. Thus, the Ford Company should shift largest percentages of its manufacturing operations from the United States to the emerging markets to enjoy low costs of labor. Many companies in the United States are taking advantages of low costs of labor in China and India to reduce the cost of operations. By shifting the bulk of their operations to the emerging markets, the company will have access to large pool of cheap labor to develop automobile products for the low income and middle earners, which will make them achieving competitive market advantages. The supply chain strategy will also assist Ford to tap large percentages of markets in emerging markets.

Integrating relationships with Customer and Suppliers

Analysis of the Ford relationships with customer and suppliers reveal that the company has built a strong relationship with customers and suppliers. For example, the company has used the ABF (Aligned Business Framework) to develop a bilateral relationship with suppliers. Despite effective relationships that the company has built with their suppliers, however, largest percentages of the company suppliers are based in the United States and Europe. The study suggests that Ford should rely more on suppliers from the emerging markets than the U.S. and European markets. By sourcing largest percentages of the materials from emerging market, the company will be able to enjoy a low cost of production making them enjoying global competitive market advantages.

Planning supply chain using Innovation and Technology

Ford can take advantages of the latest innovative technology to source for materials using the electronic procurement. The strategy will assist the company to identify low costs materials and suppliers from any part of the world. Additionally, the Ford Motor should improve on its global connectivity to beat its competitors. Essentially, Toyota has built their global footprint for several decades before Ford has implemented their global presence. Thus, Ford should focus their attention on.....

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