1 BACKGROUND Essay example -- Business and Management Studies

1 BACKGROUND 1.1 Ford Motor Company Ford was the pioneer of the motor vehicle, just over 100 years ago. Today, Ford Motor Company is a family of automotive brands consisting of: Ford, Lincoln, Mercury, Mazda, Jaguar, Land Rover, Aston Martin, and Volvo, employing 350,321 (Yahoo Finance) workers in more than 200 countries. 1.2 Motor Industry The American oligopoly in the motor industry, consisting of Ford, General Motors and Chrysler, has suffered from poor financial results recently. As reported by www.guardian.co.uk (16/06/03), â€Å"the big three US car-makers are wrestling with the combined effects of over-capacity, growing competition from Europe and Japan, huge pension and health care costs, and a damaging increase in incentives to get customers into the showrooms†. A real sign that the car industry is in the midst of major change came when www.reuters.com (25/01/04) reported that Toyota had overtaken Ford as the world’s second-biggest automobile manufacturer. The Japanese firm’s strategy of focusing on quality, efficient manufacturing and targeting new markets paid off with their market capitalisation, at $120bn, totalling more than the â€Å"big three† combined. The main value driver for the motor industry is platforms, or production lines. The Japanese and European firms invested heavily in multi-car platforms and can now base a number of cars on one platform, rather than the traditional method of one car per platform. This has reduced their fixed costs dramatically and allowed these firms to sell their cars at much cheaper rates and gain market share. Developing new platforms requires serious investment not just in financial terms, but also in time. The â€Å"big three† are several years behind the new competition and because of this, American automotive research firm Iceology estimate the market share of the â€Å"big three† could fall from 60.2% in 2003 to 56.5% by 2006 (Business Week, 3867, 76). 2 CURRENT POSITION 2.1 Competitive Position The intense publicity generated by Ford’s recent centenary celebrations diverted attention from the fact the company was suffering from slowing sales and dire financial results, such as losing $5.5bn in 2001 (Strategic Direction, 19(1), 9). CEO Jacques Nasser led Ford away from their core business and despite replacing him in 2001, the combined effects of his reign and the e... ...Can Ford Fix This Flat?’, ‘Business Week’, 2003, 3860, 50 ‘Detroit Tries It the Japanese Way’, Business Week, 2004, 3867, 76 ‘Ford Feels the Pressure’, ‘Strategic Direction’, 2003, 19(1), 9-12 ‘Big Three Car Bosses Fight for Pole Position’, ‘Strategic Direction’, 2003, 19(11), 10-13 ‘Restructuring Ford Europe’, ‘European Business Review’, 2003, 15(2), 77 - 86 ‘Pedal to the Medal - Enough is enough’, ‘Business Week’, 2004, 3865, 30 Financial Resources DataStream (Aston University Library) Internet Resources www.guardian.co.uk, ‘Ford goes in for refit after 100 years’ www.reuters.com, ‘Toyota overtakes Ford as No.2 car maker’ http://finance.yahoo.com/, Yahoo Finance http://www.autointell-news.com/News-2002/January-2002/January-2002-3/January-16-02-p4.htm - Ford Motor Company Announces Revitalisation Plans http://www.forbes.com/reuters/newswire/2004/03/02/rtr1282302.html - Ford's Scheele sees deflationary price environment Truby (2002) - http://www.detnews.com/2002/autosinsider/0209/25/a01-596413.htm Susanto (2003) - http://www.susanto.id.au/papers/JITFORD.asp Lienhert (2004) - http://www.forbes.com/2003/12/15/cx_dl_1215feat.html