(MGT2311-6) Strategic assignment analysing the internal and external environments of Ford
Question
Task: Prepare astrategic assignmentanalysing the key factors and issues in the business environment of your assigned company including an evaluation of the rate at which the key factors are changing. Write about the mission, objectives and history of the company along with its market conditions and competitive environment.
Answer
Introduction
In the current business environment, firms face several challenges because of rapid market changes, technological advancements, intensive competition and changing tastes and preferences of consumers. This has made it of utmost importance to analyse both internal and external environments of the organizations for developing suitable strategies to deal with such uncertainties or challenges in the market. The purpose of the strategic assignmentis to undertake an analysis of market conditions and competitive environment of the selected company Ford. Here, the mission, objectives and operations of Ford have been analysed. In addition, PESTLE analysis, Porter’s Five Forces and Ansoff matrix have also been used in the strategic assignmentfor analysing market conditions and competitive environment.
Overview of Ford: Mission, Objectives and Historydiscussed in the strategic assignment
Ford Motor Corporation is an automobile company operating for 117 years by spanning the globe and sharing ideals. The company has always been a pioneer of adapting to and leading change by focusing on its services, experiences, software and vehicles. Ford designs, manufactures, markets and provides services for electrified passenger and commercial vehicles (Reuters, 2022). As per the strategic assignment findings, these include Ford trucks, utility vehicles, cars, vans and luxury vehicles. In addition, the different segments of the company are automotive, Ford credit and mobility.
The mission of Ford Company is to build a better world by ensuring every person can be free to move and pursue their dreams. The company focuses on shortening the distance between where individuals are and the places that they want to go with the help of their vehicles (Ford, 2022a). it is found from the strategic assignment that ford has also been connecting people by discovering possibilities and enabling customers to enjoy the adventure, thrill and pride of moving freely in their vehicles. In this regard, it offers people with the right tools for helping them to move forward and upward. Thus, the company distinguishes itself competitors by moving towards a higher purpose, serving others, improving their lives and making the world a better place.
As per the strategic assignment findings, the mission and purpose of Ford has differentiated it in the global market. The company shows strong commitment of working towards its purpose by including it in every business part, starting from sourcing of materials, manufacturing vehicles, providing services and interactions with employees, customers and communities (Ford, 2022b). This further helps in guiding the vision while undertaking consecutive steps for achieving the same.It is analysed in thestrategic assignmentthat Ford constantly develops new goals and milestones for achieving its purpose of betterment of the ever-changing world. It builds a better world by making planned global investments for meeting its emission targets and accelerating solid-state vehicle battery development (Ford, 2022b). Ford ensures free movement through its electric vehicles and zero-emission cars and vans. It empowers women for building businesses and support causes of poverty and child labour. In addition, it works in collaboration for localizing battery supply chain network.
Market Conditions and Competitive Environment
PESTLE Analysis
Political- Political instability has been at the forefront since 2021 with a mob of pro-Trump demonstrators attacking the US Capitol for stopping the results of presidential election being declared in the country(Santander, 2022a).as per the strategic assignment despite this, majority of the political environment was subjugated by the fight against COVID-19 and recovery from it. In this regard, the US government has undertaken key economic policy responses like fiscal, monetary and macroeconomic policies for limiting the socio-economic impact of the pandemic on the businesses. COVID-19 related trade measures have also been introduced for restricting various exports and imports.
Economic- US is the largest economy of the world with high industrialization, high levels of productivity and use of modern technologies. Automotive companies and their suppliers are the largest manufacturing sector of the US accounting for around 3% of its gross domestic product (GDP) (AAPC, 2021a). as per the strategic assignment data, some of the renowned automobile brands like FCA, Ford and General Motors along with their suppliers employ around 871,000 workers in the US. However, the pandemic outbreak has generated various effects on this economy, thereby resulting in negative GDP growth rate (Santander, 2022a). This has been further characterized by rising inequalities, obsolete infrastructure and increasing inflation, thereby further slowing the economic growth.
Social- US customers generally embrace international brands and companied. The pandemic outbreak has led to 75% consumers displaying new purchasing behaviour because of increased economic pressure, changing priorities and shop closures (Santander, 2022b). Here, Gen Z and high income groups of customers prefer to change brands along with social media making a large impact on their purchase decisions. Furthermore, US customers prefer buying American products. As per the strategic assignment besides, their preference towards responsible consumption is increasing with intention of buying transparent, sustainable and clean products. In addition, around 80% US consumers are willing to change their purchasing habits for reducing environmental impact.
Technological-Various technological trends are being considered by companies to prepare for hardware, software and digital transformations taking place in the automotive sector. Establishing direct, strategic and long-term relationships with companies of hardware sourcing has become essential. Digital giants have been integrating car into a holistic ecosystem in collaboration with automakers (Gartner, 2022). It is found from the strategic assignment that open data and open-source collaboration models have also gained momentum. Automakers are also using over-the-air software market for using it as their digital revenue channels. In addition, autonomous vehicles are increasing in trend alongside commercialization of these cars.
Legal-Automakers ensure to ensure highest level of safety performance and outcomes by adhering to the US Federal Motor Vehicle Safety Standards and other European regulations. Manufacturers can sell their vehicles across the world by abiding by these international standards (AAPC, 2021b). As per the strategic assignment here, the car makers can strongly and swiftly address various regulations present in the automotive market for selling their products in individual countries or regions, thereby reducing any technical barriers in their exports. Along with this, acceptance of globally recognized standards and regulations is also essential for US free trade agreements present within this industry.
Environmental- Automakers in the US are required to abide by environmental regulations provided by EPA. Passenger vehicles for model years from 2023 to 2026 are required to ensure 28.3% reduction in their emissions (Oge, 2022). EPA also develops fleet-wide emissions performance standards that new motor vehicles need to adopt. Here, automakers are required to decide ways of achieving pollutions reductions alongside using cost-effective and appropriate technologies. EPA has further strengthened pollution limits by requiring passenger vehicles to travel 55miles per gasoline gallon on an average by the year 2026 as compared to 38 miles per gallon currently (Davenport, 2021). As per thestrategic assignmentthis is because it would prevent realising 3.1 billion tons of carbon dioxide through 2050 that causes global warming.
Porter’s Five Forces Model discussed in the strategic assignment
Buyers’ power- Customers of Ford face moderate switching costs of shifting from one firm to another. These customers can choose to transfer between automaker brands, while this is done seldom because of vehicles being luxurious or expensive items (Rosenberg Hansenand Ferlie, 2016). Buyers can exert some influence on the prices of Ford’s products, thereby influencing firm’s profitability. However, they are not capable of generating a significant impact on price decisions of the company. As per the strategic assignment this provides Ford with the opportunity of revising its product prices with the moderate bargaining power of buyers. However, it also cannot engage in significant price hike for maintain its vehicle demand in the market.
Suppliers’ power- Suppliers of Ford provide raw materials like aluminium, iron, glass, rubber and other products for manufacturing the vehicles. Here, the moderate number of suppliers alongside their restrained overall supply provides them with limited bargaining power to charge high prices from big firms like Ford.It is found from the strategic assignment that Ford’s suppliers do not have any control over the distribution and sales of their products to the company. The automaker also produces some of its raw materials required for manufacturing cars and related finished products. This further weakens the bargaining power of the suppliers. Thus, they are forced to set a competitive price of raw materials for the company.
Threat of substitution-Ford further experiences a moderate threat of substitution in the automotive market. The substitute products include various other modes of transportation that customers can depend on for commuting. As per the strategic assignment these are public transportation, bicycle, motor bikes, ride sharing services and others. Other manufacturers also offer alternative means to customers for travelling to places. However, these customers cannot always avail these substitute products or services (Kabue and Kilika, 2016). In addition, such substitute products can also have lower standards of performance, safety and convenience for the customers.
Threat of new entrants- Ford faces low threat of new entrants. This is because new companies face various barriers in entering this highly competitive automotive industry. As per the strategic assignment it requires huge capital investment for starting up an automobile company for purchasing raw materials, building infrastructure, purchasing auto-parts and managing production line. Furthermore, new entrants can also find it difficult to match the efficiency of supply chain and distribution network, strong and loyal customer base and global presence that Ford has built over these years. Thus, they would be unable to ensure the smooth production and supply of vehicles for meeting the market demand.
Competitive rivalry- There is high competitive rivalry in the US automotive market with the three major players being General Motors, Ford Motor and Chrysler. GM is the vehicle manufacturer having the highest market share, which is followed by Toyota and Ford (Carlier, 2022). Here, the market share of Tesla has also been increasing because of the rising acceptance of its electric vehicles amongst the customers. It is found from the strategic assignment that profitability has further increased because of Tesla’s success, thereby improving the market attractiveness. Thus, this has attracted other companies like Lucid Motor, Rivian and Canoo.
Ansoff Matrix
Market Penetration- It is the strategy of firms for promoting existing products in its existing markets (Clarissia, 2019). Ford aggressively promotes its vehicles and passenger cars for displaying their features, innovative aspects and designs by using different marketing channels. Here, television, social media platforms, digital platforms and print media are utilized for creating awareness about these existing products in the minds of the target customers. As per the findings from the strategic assignment the company also targets current users for motivating them to buy other models of the cars having varied functions. This helps in enhancing the market share in the US automotive industry.
Market Development- Ford geographically expands and ventures into new markets for offering its existing products to the new customers (Hussain, et al., 2014). Here, it often enters into joint venture or direct investment for establishing production units in the new markets. This makes it easier for the company to offer its existing vehicle models to the new customers. As per the strategic assignment such existing vehicle models are selected based on the preferences and tastes of the target customers. Here, the products are promoted with the help of discounts, offers and instalment payment plans being provided to the customers.
Product Development- Ford makes sure to launch new models of vehicles every year for keeping up with the changing market demand and intense competition. These new models come with innovative functions, features, designs and options for the users. Here, the product shapes also vary every year (Clarissia, 2019). The company also launches completely new variant of vehicles different from the already existing ones. As per the strategic assignment these help in attracting customers from the target market segments by catering to their specific needs with the help of these new models.
Diversification- Ford has already been undertaking a diversification strategy by introducing electric and hybrid vehicles in its product category and entering new markets with them. As per the strategic assignment the company has the capability of further undertaking vertical diversification by producing the spares of its vehicles without having to rely on the suppliers for acquiring them. It can also diversify by expanding the sales outlets beyond US in other nations.
Conclusion
The strategic assignmentaimed at analysing the market conditions and competitive environment of the selected company Ford. For this purpose, it first evaluated the mission, purpose, objectives and strategies undertaken by Ford for operating in the current business environment. Furthermore, the PESTLE analysis focussed on how external factors like political, economic, technological, legal, social and environmental can affect the business operations of Ford. Besides, Porter’s Five Forces model helped in displaying the high intensive competition in the automotive industry. Lastly, the Ansoff matrix was used in the strategic assignmentfor evaluating the different growth strategies of the firm.
References
AAPC, 2021a.US Economic Contributions. [online] Available at:
AAPC, 2021b. International Automotive Safety Standards. [online] Available at:
Clarissia, M.S., 2019. A study on Ansoff Matrix Technique: As a growth strategy and an adaptive learning technique adopted in the leading brand of products. Journal of Composition Theory, 12(9), pp.1494-1506.
Davenport, C., 2021. E.P.A. Announces Tightest-Ever Auto Pollution Rules. [online] NY Times. Available at:
Ford, 2022a. Our Purpose. [online] Available at:
Ford, 2022b. Integrated Sustainability and Financial Report 2022. [pdf] Available at:
Hussain, S., Khattak, J., Rizwan, A. and Latif, M.A., 2014. Interactive effects of Ansoff growth strategies and market environment on firm’s growth. British Journal of Business and Management Research, 1(2), pp.68-78.
Kabue, L.W. and Kilika, J.M., 2016. Firm resources, core competencies and sustainable competitive advantage: An integrative theoretical framework. Journal of management and strategy, 7(1), pp.98-108.
Oge, M., 2022. EPA’s New Clean Car Standards: Good For The Environment, Consumers, And Auto Companies, Bad For Oil Companies. [online] Forbes. Available at:
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Rosenberg Hansen, J. and Ferlie, E., 2016. Applying strategic management theories in public sector organizations: Developing a typology. Public Management Review, 18(1), pp.1-19.
Santander, 2022a. United States: Economic And Political Outline. [online] Available at:
Santander, 2022b. United States: Reaching The Consumer. [online] Available at:
