Describe about the Business Model Innovation Replace Strategic Analysis.
This study has aimed to the concept of SWOT analysis of a selected organisation. In this context, this study has chosen a USA car manufacturing company namely Ford. The SWOT analysis has been performed by four weeks. After the observation, this study tried to establish the background of the mentioned company, which would be beneficial to identify and understand the mission statement of the company. In addition, this study is also helpful to understand how the mission statements of the organisation reflect the strategic direction. On the other hand, this study has developed the external environmental assessment, which could affect the performance of Ford. Furthermore, this study is also helpful to discuss the strategic actions in order to mitigate the probable threats of the company
I. Background of the organisation
The founder of Ford Motor Company was Henry Ford. The headquarter of this company is in Dearborn, Michigan. Ford motor manufacturing company was launched in the year of 1903. It is one of the world’s number one car manufacturing companies. The number of workers in this company is 199000. The manufacturing products produced by the company are such as luxury vehicles as well as commercial vehicles. On the other hand, the net income earned by this company in 2015 was US$ 7.373 billion, which was quite appreciable.
Strategic direction refers the core valuation such as the mission, vision and the business strategies of a company. In the words of Abraham (2013), Ford Motor aimed to manufacture greater quality of products available in small, large as well as in medium size. The fuel efficiency, safety of the cars and the design of them is highly attractive. Moreover, it can be stated that there are three strategic directions such as accelerate the pace of the improvement of Ford, delivered the car with excellent passion and include the driving innovation in the business. On the other hand, the vision of this company is to acquire the global leadership. In addition, they also focused to the lean business strategy and tried to enhance the relationship with the stakeholders.
As per the statement of Chen and Kodono (2012), the mission statement of Ford Motor is Single team, Single goal and the Single planning. As per the concept of single team, it can be stated that workers of this company are working here as the international organisation in order to lead in the market. Single plan suggest to financing the plan to improve the balance sheet and perform together as a team. Moreover, Ford motor aims to develop the company that they can earn higher profit.
I. External Environment Assessment
According to Chen, Kim and Yamaguchi (2014), the automobile industry has been suffering from the massive financial crisis as well as the consequent recession. The key factors, which affect the manufacturing process of Ford Motors, are the price of the oil, rate of unemployment, inflationary rate and the rate of interest.
It can be observed that within the automobile industry, there has been an important push in order to reduce the demographic impact. Ford was supposed as one of the organisations, which is able to pursue the type of the technology along with the fusion and the focus models. As per the present scenario, Ford aimed to the green techniques relative to the greater gas mileage.
The automobile manufacturing organisations are experiencing the several socio cultural traditions in order to develop the fuel-efficient or the electric cars in the global market. The fuel price as well as the environmental sensitive consumers can drive this.
In the points of Cinicioglu, Onsel and Ulengin (2012), the automobile organisations are continuously trying to compete to enhance the largest technologies within the USA car industry. In case of Ford motor, it tried to implement into their production the car play interface in order to connect the mobile with the higher level of function compared to the Bluetooth connectivity.
The political environment of the automobile industry in USA is liberal due to the Ford motor as well as the other competitors. Zhang and Chen (2013) mentioned that Ford obtained the political position relative to the other organisations. Nonetheless, there were some effective political pressures from the side of USA government to convert into the eco friendly vehicles.
The global external factors such as the emission of green house gas make an influential affect to purchase the manufacturing cars. Green house gas is harmful for environment.
I. The SWOT chart
|
Strengths |
1. Stronger position in the automobile market of USA, greater manufacturing and development in the automobile market. 2. Stronger financial position and the free cash flow of US$ 3.477 billion (BBC News. 2016). |
|
Weakness |
1. Lower manufacturing capacities and the sales volume compared to top ranking five car manufacturing companies. 2. Poor reputation of USA automakers relative to Europe and Japan opponents. |
|
Opportunity |
1. Adapt new automobile technologies 2. Increasing of automobile market specifically in order to develop the market of China, Mexico and in India. |
|
Threats |
1. The presence of the competitors such as German and the Japanese manufacturing companies specifically in case of Volkswagen and Toyota, reduce the overall sale. 2. Lower price of fuel could make a barrier the demand for the expensive fuel vehicles. |
As per the first strength, Zhang and Chen (2013) opined that Ford motor is able to increase the production of the cars. As a result, the company can deliver their products to the consumers within the proposed time. Therefore, the buyers are looking for to purchase the cars from this company. On the other hand, this will increase the total financial performance of the company. From the above table it can be observed that the cash inflow of this organisation is highly attractive and thus, the company can invest more in the next year to develop the business more.
It can be observed that lower manufacturing capacity within the shorter period reduces the utility capacity and it is compared relative to the Toyota, Renault Nissan, Hyundai Kia, Volkswagen and the general motors. It sometimes reduces the sale of the manufacturing goods. This in turn reduces the market position in USA compared to the Japanese and the European competitors. These in turn decreases the competitive advantage of the company.
I. Strategic actions
Based on the above mentioned strengths, Abraham (2013) opined that greater cash flow management is helpful to enhance the business further. The business can grow significantly. In addition, it can be stated that investors also show their interest to invest in the business as they expect that they can easily can easily get back their investment from the business at the end of the business. Moreover, higher amount of cash flow expand to hold greater amount f liquid money in the business account, which will be helpful to invest more significantly in the business. A deposit in the bank account or in the stock market can be easily sold in terms of liquid. As a result, these liquid assets can be easily converted into cash.
In order to mitigate the lowering manufacturing capacity, Ford motors can recruit more labours for increasing the manufacturing process; this will in turn increase the production. In addition, this will increase the sale of the products. On the other hand, this will effectively increase the reputation in the USA market.
As it can be already observed that in case of the demographic external environment, by the adaption of the Green technology, the Ford motors can enhance the productivity. Higher rate of productivity help to increase the consumption rate. Higher consumption, increase the greater revenue earning from the business. Moreover, sometimes, political pressure is sometime assumed to be beneficial in order to manufacture eco friendly cars, which cannot pollute the environment (Chen and Kodono 2012)
It can be observed that due to poor financial performance, the car manufacturing industry in USA cannot be developed up to that optimum level. In this order, it can be suggested that company needs to inform the buyers about the usefulness of the using of cars, which can enhance the financial position of the industry.
Conclusion
The overall study discussed the SWOT analysis of Ford manufacturing company. In this regard, this study is beneficial to identify the strength, weakness, opportunities and the weakness within the industry. Moreover, this study is also helpful to understand how the strengths and the opportunities of this particular company has been utilised. On the other hand, how the weakness and the threats can be neutralised has also been mentioned.
References
Abraham, S., 2013. Will business model innovation replace strategic analysis?. Strategy & Leadership, 41(2), pp.31-38.
Chen, F. and Kodono, Y., 2012, November. SWOT analysis and five competitive forces of Chery automobile company. In Soft Computing and Intelligent Systems (SCIS) and 13th International Symposium on Advanced Intelligent Systems (ISIS), 2012 Joint 6th International Conference on (pp. 1959-1962). IEEE.
Chen, W.M., Kim, H. and Yamaguchi, H., 2014. Renewable energy in eastern Asia: Renewable energy policy review and comparative SWOT analysis for promoting renewable energy in Japan, South Korea, and Taiwan. Energy Policy, 74, pp.319-329.
Cinicioglu, E.N., Onsel, Åž. and Ulengin, F., 2012. Competitiveness analysis of automotive industry in Turkey using Bayesian networks. Expert Systems with Applications, 39(12), pp.10923-10932.
Ford profits fall as it warns on US economic risks – BBC News. (2016). BBC News. Retrieved 3 September 2016, from https://www.bbc.com/news/business-36916315
Zhang, H. and Chen, M., 2013. Research on the recycling industry development model for typical exterior plastic components of end-of-life passenger vehicle based on the SWOT method. Waste management, 33(11), pp.2341-2353
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