Ford’s business-level strategy
Every company needs strategy in order to able to succeed in the contemporary business environment marked with stiff competition. Business level strategy is the economic logic behind a forms strategy in particular product as postulated by Hitt et al (2008). Ford Company (Ford) has over the years, strived to remain a cost leader in the automobile industry. By providing products that are affordable to the average consumer, Ford has maintained high levels of revenues.
Ford instituted outsourcing of its production functions to cheaper locations in a bid to achieve cost reduction (Wood & Wood, 2003). However, the company has maintained the quality of its products at attractive levels by coordinating the production exercise in all its facilities. Ford has also ensured that its production is geared towards satisfying the needs of the average customer. As a result, the company has enjoyed the economies of scale and customer loyalty. Most customers are likely to buy consecutive cars from the same maker if satisfied with the first one. The company is also ventured into innovation of flexible models that reduce costs by a significant margin.
Improvement of company’s value-chain activities
The value-chain is composed of inbound logistics, operations, outbound logistics, marketing and sales as well as service (Leontiades, 1987). Each of these components plays a vital role in the overall performance of the organization and its products in the market. Owing to the geographical dispersion of the company’s functional parts, it is necessary to coordinate the actions of each component to achieve uniformity in quality and quantity of service.
Ford has to institute clear guidelines relating to the procedures involved in each of the components of the value chain. The global presence calls for increased investment in research regarding implicit characteristics of each production facility. By understanding the environmental factors, the management of Ford will be able to schedule functions and avail the required resources in order to achieve targets as outlined by Wood & Wood (2003).
Service, marketing and sales should be coordinated from the main office on recommendation from the out-stations. By so doing, each branch will be able to cater for the specific needs of its customer base. Since the needs of customers vary from location to the other, marketing and sales is better done at the remote level. In bound and outbound logistics should be coordinated from the main office to achieve optimal scheduling.
By centralizing these functions, the management will be able to reduce duplication of functions. Operations should be handled at the main office in coordination with the remote locations owing to the intricacy of needs of consumers as well as the organizations strategy. Variations in the operations of the remote locations necessitate substantial input from the branches in addition to maintaining universality of the product.
Ford and the Five Forces of Competition
Porter’s five forces of competition are outlined as supplier power, barriers to entry, threats of substitutes, buying power and degree of rivalry (Leontiades, 1987). Ford is in an industry where the production is characterized by huge capital investments. As a result, competition is a major factor regarding profitability. As a result, the management should limit the effects of the competition in order to achieve projected results.
By maintaining quality coupled with affordability emanating from attractive pricing, Ford will be able to ward-off substitutes present in the market. Over the years, the company has engaged in production for the average consumer. Thus, the management should improve quality while retaining the cost leadership strategy (Hitt et al, 2008). Regarding new competitors, the company should keep abreast with new technology in order to avoid becoming technologically obsolete. Any investment in production should cater for the dynamic nature of technology to avoid replacement costs. Its flexible production units cater for this need.
The company enjoys long-term supplier relations since it has been in operation for over a century. As a result, it is better placed to achieve favorable bargains from the suppliers. However, through bulk buying, the company is able to achieve an upper hand in prices offered by the suppliers. The global presence has enabled the company to face up to rivals since its advertising campaigns are customized to the different locations.
Ford is aware of buyers’ power since it has instituted measure to counter increase in costs (Wood & Wood, 2003). By so doing, the company is able to create a market for each new product based on the quality of the previous model. However, the management should strategize on how to differentiate is products in order to complement the low cost characteristics.
Rough competitor analysis
Toyota manufacturing company is one of the competitors with similar characteristics to Ford. Similarly, General Motors and Chrysler Group have their sights towards the same market as Ford. Chrysler has recently entered into an alliance with Fiat aiming to assert its roots in the small car market and later the global scene. Although it went through bankruptcy proceedings, the company is determined to rise above financial woes. GM on the ether hand has established a niche in the car and trucks market. Its performance was most like Ford among all the competitors. Toyota outperformed Ford in revenues for the year 2009.
Role of strategic leadership
As posited by Hitt et al (2008), strategic leadership is concerned with deciphering the best way to do what an organization is supposed to do. As a result, strategic leaders are aware of what an organization is supposed to do and are thus involved in looking for the best way to perform those functions. Strategic leadership is bound to help Ford regain its gleam as the best performing automobile manufacturer. Over the years, its strategic moves have faced sharp competition from other manufactures. Thus, the new management has to find ways to create value from its strategies.
Strategic management is also geared towards steering the company towards matching environmental changes with the organizational goals. As a result, changes in customer preferences and other factors are bound to be part of the considerations made by the strategic manager.