The report is about the analysis of the environment of automobile industry and the marketing strategy for Ford Motor Company. It initiates with examining of external environment of automobile industry by using PEST analysis and Porter’s five forces analysis. After the internal analyses that focus on the resource audit on brand, products, markets, technology, people and son on, the value chain analysis of the company will be conduct. Then the generic competitive strategies would be discussed through SWOT analysis, Ansoff Matrix and BCG Matrix in order to identify the general business strategy taken by the Ford Company. After specifying the company strategy by those analysis tools, the strategic evaluations would be drawn together with the strategy control methods. Finally, a suggested recommendation for the company future development will be mentioned at the end of the report.
1.1 Aim of The Report
This report aim to identify the external environmental of the global automobile industry, measure and evaluate viable and sustainable marketing strategies using by the Ford Motor Company. Through appropriate theoretical concepts and models, together with appropriate methodologies, the organization within its contextual setting will be carefully examined, and justify recommendation will be mentioned. Though the report, how a successful corporation is operated and how its business strategy is implemented and controlled will be understood.
1.2 Company Background
Ford Motor Company is an American multinational corporation and one of the world’s largest automaker based on worldwide vehicle sales. It has manufactures and distributes automobiles in 200 markets across six continents and has about 300,000 employees and 108 plants worldwide. Ford now encompasses many global brands, including Lincoln and Mercury of the US, Jaguar and Land Rover of the UK, and Volvo of Sweden and one-third controlling interest in Mazda as well. Ford introduced methods for large-scale manufacturing of cars under different brands and large-scale management of an industrial workforce and its combination of highly efficient factories and low prices revolutionized manufacturing had made the company successfully become a world leading auto manufacture.
1.3 Rational of Company Selection
Automobile industry is a consistant developing industry in the global in the 21st century. Ford Company is a world leading automobile manufacture, which has its business all over the world. To analysis the global automobile industry environment and the development strategy for such a world famous company would be a greate help to understand how business strategies are generated, implementated and controlled and meanwhile to see how would the company do to keep its business perform well when facing a complicated environment and a decline market.
1.4 Company Vision, Mission and Value
The company’s vision is ‘to become the world’s leading company for automotive products and services.’ And the company’s mission is to become a ‘global, diverse family with a proud heritage, passionately committed to providing outstanding products and services.’ And together with a company value that ‘do the right thing for our people, our environment and our society, but above all for our customers.
Based on its vision, mission and company value, the Ford Company is endeavor to keep its leading position in the global, and make effort to provide excellent products and services that satisfied its customers. Approaches that be taken to fulfill it goals and objectives with considering the harmony of business environment and modern society.
2.1.1 Industry Background
The world automobile industry has well developed for many decades and stable progress was made during recent years. Now the automotive manufacturing sector produce over 60 million vehicles every year and contribute about 2.45 trillion Euro annual revenues. There are numerous world famous carmakers all round the global, and although the competition in automobile industry becomes more and more fierce, it is still one of the biggest markets in global industry.
2.1.2 PEST Analysis
Finlay point out that remote environment affect businesses by an indirect way and would cause changes in a company’s operation. The automobile industry touches on a wide range of aspects, such as manufacture, supply chain, retailing and so on. As a result, many factors such as government policies, local regulations, and social culture differences would influence this industry. By modeling the remote environment with PEST analysis (see appendix I), factors that would affect the global automobile industry would be examined.
22.214.171.124 Political and Legal
Anti-monopoly policies such as the EU competition policy tack several barriers to competition to make sure firms operate under a certain legal framework. This policy has force a perfect competition in automobile industry and will absolutely affect auto manufactures’ marketing strategy to some extend through preventing firms from colluding by price-fixing and as well controlling the size of firms.
. Environment Legislations
Nowadays, much attention has been devoted to the environmental issues. Organization such as European Environmental Liability Directive has formulated many laws and regulations for environment protection. Those legislations force manufactures to think over the environmental damage their operations may bring along, so that manufactures have to take action to protect the environment.
. Automobile Industry Legislations and Policies
First, regulations in many regions have introduced different emission limits for diesel and gasoline vehicles. Since 2005, all automobiles have to reach the Euro 4 emission standard in European countries. And in America, stricter emission standard is set since 2005.
Besides, some governments are encouraging automakers to produce environmental friendly vehicles. For example, UK government had asked automobile manufactures to design new ultra low carbon family car in 2003, which says can be the step stone of the new generation fuel efficiency cars.
With the imposition of a fuel tax, consumers will have to think more carefully about their purchasing decisions. In the global, many countries has very high fuel tax, such as in the UK, it has took tax higher up to 81.5% of the total price of fuel. And in Europe, EU has imposed a minimum taxation of 0.287 Euro per liter on gasoline. As a result of such a high fuel tax, the usage of cars would be reduced to a great extent for many people.
.Economic Growth and Inflation
For these years, the global economy is growing steady. Predictors say that the average world growth rate of 4.9 percent in the period 2003-2006 will continue at least for the next two years.
In terms of inflation, there is a survey shows that an increasing global inflation with the annual rate of consumer price inflation in the U.S. went up to 4.2 percent in May,2007; 2.2 percent in Great Britain and 2.5 percent in the Euro zone. As a result of the increasing inflation, people may prefer to spend their money right now instead of saving money in the bank and it would encourage people to consume products such as automobiles.
Globalisation has removed many barriers to cross-border activities and international trade can create great opportunities for local businesses to expanding their business into new areas overseas to meet a whole new set of potential customers.
The ever-closer international business relationship would provide the manufacture more cost-effective resources and meanwhile provide customers the opportunities of wider choices.
The unemployment number in the global is increasing every year. It is said that no matter in the developed countries like United States and the United Kingdom or in the developing countries in China, and India, they are generating less employment than it has in the past even though economic growth is strong. So, in many places all around the world, the speed of job creation cannot catch up with the pace of population growth. This large number of unemployment indicates that many people may have not have steady income to afford a car.
.Personal Income and Distribution of Wealth
Despite a high and growing global average income, global distribution of wealth, consumption, and opportunity still remain severely unbalanced. The wealthiest 20 percent of the population consumes 80 percent of the resources. As a result, people who could afford an upper class product only account for a small proportion of the total population and most people only has the average income.
Although recent long-term demographic projections suggest a fast deceleration of global population growth, evidence shows that the number of elderly people is growing fast. As a result, manufactures should consider product that oriented to the elderly.
Some experts claim that there was a decline in the average size of household in the 21st century.
Due to the increasing number of elder people and the smaller size of household, I think the small car may become the main stream for its practicality.
.Private and Public Transportation
Though the public transportation may not be the first choice of some people, it is still the best substitute of private transportation such as private cars. This is especially true when increasing automobile usage generates some negative impacts such as congestion, traffic accidents and additional vehicle emissions. So some government is tending to shift people away from private transportation to public transportation with the effort that improving the performance.
Environmental problems that touch us all has now has drawn the attention of public. People become more awareness about environment issues such as air pollution and greenhouse gas emission. For example, Public are informed by many channels about the impacts of transport can bring, such as the climate change, human health affections and loss of biodiversity . As a result, consumers may become more cautious when purchasing cars. Meanwhile it is obviously the usage of environmental friendly products would turn up an increasing trend.
.Other Social Concerns
Parking can be a big problem for many drivers. It is always hard to find a place for parking and the price charged for parking is sometimes goes very high . As a result, some people would rather to use public transportation instead of using their private cars.
Road accident is always a big issue for drivers. Take UK for example, according to the 2005 annual report of UK department of transportation, there is a total number of casualties in 2005 were 271,017 with a number of 3,201 people killed and 28,954 injured. The high risk of driving would influence consumers’ decision on purchasing.
Recent years some diseases such as SARS had challenged social stability. This had effect people’s customs and their behavior to some extend. For example, there is a sharp decrease of public transportation usage rate during the period of SARS in 2003. These public health issues more or less have influenced the global automobile market.