Strategic Audit Ford

Topics: Automotive industry, Ford Motor Company, Automobile Pages: 22 (7665 words) Published: September 21, 2011
1.0 Introduction3
2.0 Strategic Issues of Ford4
3.0 The External Environment5
3.1 PESTEL Analysis5
3.1.1 Political Environment5
3.1.2 Economic Environment6
3.1.3 Social Environment7
3.1.4 Technological Environment7
3.1.5 Natural environment8
3.1.6 Legal Environment8
3.2 The Industry Porters’ Five Model9
3.2.1 Buyer’s Power - Moderate9
3.2.2 Suppliers’ Power - Low10
3.2.3 Threat of New Entrants - Low11
3.2.4 Threat of Substitutes – Slightly Moderate11
3.2.5 Industry Rivalry - High12
4.0 The Internal Environment13
4.1 The Value Chain Analysis13
4.1.1 Primary activities13
4.1.2 Secondary activities14
4.2 Analysis of Ford’s Core Competencies16
5.0 Strategy Formulation19
6.0 List of Strategies19
6.1 Financial Restructuring of Ford20
6.2 Resource-based value20
6.3 Retrenchment Strategy21
6.4 Product differentiation21
7.0 Recommendation and Evaluation23
8.0 Conclusion23
9.0 Appendix24
9.1 SWOT Analysis24
9.2 TOWS Matrix25
10.0 Reference List28

1.0 Introduction
Ford Motor Company was incorporated as a company in the year 1906. The founder of the company was Henry Ford. Ford Motor Company was the first company to make use of assembly lines for the production of cars. Currently, Ford is the fourth largest car manufacturer in the world. In the year 2008, its global production of automobiles was approximately five million (World Automobile Industry Challenges and Prospects 2009). However, due to the automotive crisis in the year 2008-2010, Ford has experienced a critical situation. Therefore, in this report we explain the competitive position of Ford in the Australian and International Motor Vehicle Industry. Moreover, we have analysed the costs the company has been incurring. From this analysis, we provide our recommendation where Ford can cut it cost or it should financially restructure itself. Furthermore, we explain the reasons why Ford has been losing its market share and what should be done to reverse the situation. In order to analyse the situation of Ford Motor Company, we have used different analytical tools. For the external analysis, we have used PESTEL Analysis and Industry Porters’ Five Model. To have a more in-depth analysis of Ford’s internal environment, we analysed its core competencies and we make use of the value chain analysis. Other analytical tools that were used are the SWOT Analysis and the TOWS Matrix.

2.0 Strategic Issues of Ford
Ford Motor Company is a global automotive industry, which is based in Dearborn, Michigan. The company manufactures and distributes automobiles in six different continents across the world. It currently employs approximately 180, 000 workers and it has 90 plants in different regions of the world. The company brands include Lincoln, Ford, and Mercury(Ref). Ford Motors Company bought many other car manufacturers in the past for example, Volvo, Aston Martin and Jaguar. In the process Ford was so proud to show off all the prestigious brands it own that it forget to concentrate on Ford itself. In the long wrong due to poor management and bad decision making Ford vehicles demand started to drop. Recently, the company had to lay off 40% of its workforce to cut manufacturing costs. At the same time the costs of materials needed to manufacture cars such as steel have been increasing globally affecting the cost to produce vehicles. Moreover, Ford has been losing its market shares as compared to other automobile companies such as Toyota. The loss of market shares can also be attributed to raising fuel prices. Additionally, another problem that Ford Motor Company is facing is the highly layered organizational structure, which makes decision making bureaucratic and a much longer process. Another strategic issues found is that Ford build to many variant of the same model, for example the Ford Mondeo of America is not the same as that in Australia or England. This further raised the...
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