FordMotor Company (Ford) is based in America and was originated in June 16th,1903 by Henry Ford and 11 associate investors. In 1919 the company wasreincorporated, with Ford, his wife and his son obtaining complete ownership ofthe business. Henry Ford’s first car was assembled at the Mack Avenue plant inJuly 1903. In the 1911 he established the U.S. branch and opened the firstforeign production plant in England in 1913.
The brand includes Ford, Aston Martin, Jaguar, Lincoln, Mazda, Mercury,Land Rover and Volvo. Ford is a multinational enterprise with approximately 300,000employees and 108 plants worldwide including the United States, China, Mexico,Canada, the United Kingdom, Germany and many other countries. The company designsand manufactures a line of Ford cars, sport utility vehicles, trucks, tractors,as well as service parts and accessories across the world. Ford maincompetitors are General Motors Company, Toyota Motor, Honda Motor Company andTesla Motors. The company sells its dealership for retail sale, car rentalcompanies and government organizations. Ford aim is to develop products thatserves the changing needs of people globally in the automotive industry. EXTERNAL FACTORSAFFECTING FORD MOTOR COMPANY GOVERNMENT INVOLVEMENTIN BUSINESS One of the external factors affecting the auto industry isthe way in which government is involved in business. Their involvement can negativelyimpact the profitability and sustainability of the organization.
In someregions government has increased taxes on luxury vehicles which cansignificantly impact the profits that some of these companies make and as such,can lead to a competitive disadvantage. This can affect customers in an adverseway resulting in prices having to increase. However, there have beenimplications for Ford. Ford makes it more affordable by offering consumers abuild and price model based on their budget. CONSUMERS DEMANDINGMORE VALUE FOR MONEY DURING A RECESSION The economicclimate also affects the decision making of the auto industry. Economic upturn,downturn and recession can affect the purchasing power and spending habits ofconsumers. When the economy is in a recession, consumers are spending less anddemanding more value. Ford has introduced a new line of cars such as the hybridthat can be more affordable for consumers and beneficial for the environment.
The hybrid electrical vehicle saves the customer the expense of purchasing gasresulting in a competitive advantage. Ford and Toyota jointly develop thehybrid vehicle and split the cost of research and development. TOUGH COMPETITION Ford needs tocompete against top players (e.
g. Toyota) that aggressively innovate and markettheir products. Also, the automotive industry has high exit barriers, whichmeans that firms would rather keep competing with Ford than to close theirbusiness, because of the high costs and investments. Such a condition exerts astrong force of competition against Ford. In addition, Ford must competeagainst a moderate number of firms, especially a few large ones like GeneralMotors.
Based on this aspect of the Five Forces analysis, Ford must maximizeits competitive advantage to address the external factors linked tocompetition.
