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Ford Motor Company Business Analysis

Essay by   •  July 13, 2011  •  Case Study  •  3,013 Words (13 Pages)  •  5,778 Views

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Ford Motor Company Business Analysis Part Three

This is the final business analysis on the Ford Motor Company before making final recommendations to the stakeholders to purchase and add company stock to the existing portfolio. Ford Motor Company has been listed as a buy with most investment companies. It has been selected for review by this office. The Report has been broken down into three separate reports. The first study was conducted to perform a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis, to determine if the management of Ford has prepared a thorough SWOT analysis for their industry. Also reviewed in this report was to determine how well Ford has identified the stakeholders in their company, and how well the needs of the stakeholders have been addressed. The second report addressed the review of the financial reports to determine if Ford is a financially sound. This report will review the strategic initiatives Ford has taken relative to organizational and operational adaptation to changing markets.

Topics that will be addressed in this report include;

* How recent economic trends are influencing the business

* Ford strategies for adapting to changing market environments

* Tactics Ford has implemented or could implement to achieve their strategic goals

* The role human resources management plays in helping the company achieve its business goals

How recent economic trends are influencing Ford

The latest recession has been one of the longest since the great depression. We are now entering a period of recovery that for the United States has been a less than accelerated one. The definitions of what defines a recession have been tested, and this type of recovery continues to shake consumer confidence. There are months of positive economic indicators, with contradictory data that keeps the recovery from taking off as it probably should. People are very reluctant to make big purchases, as they doubt whether a recovery is happening, as they still see friends and family members that are unemployed, or can't find gainful employment. Banks are willing to lend only to people with the highest credit score. Bank penalties for late payments are incredibly intolerant, and unforgiving.

Studying business cycles and the impact they have on business operations, it is important to note that not every area on the globe is affected the same. In all studies, there are areas that either recover earlier, or are affected very little from down cycles. China led the Asia-Pacific market into a recovery that has brought the entire region into positive GDP growth. Some markets were less affected than others to the degree of how much economic value was lost. It is quite evident that for a company to continue to stay in business and be less affected by the cyclical nature of business, it must maintain itself globally.

The chart below from the U. S. Department of Commerce, Bureau of Economic Analysis, presents vehicle sales versus time and adds recessionary periods. One can derive how vehicle sales have dramatically increased when recessions have ended. This recession has been slightly different as huge government intervention was needed to prevent this down turn from turning into a depression. One of the government interventions was the cash for clunkers program. Under this program the citizens received up to $4500 trade in value for old vehicles with poor fuel economy. These vehicles were then scrapped under the program which reduces the used car inventory. Cash for clunkers shows on the graph as rapid peak in the amount of vehicles sold it came at a time when the economy had already began recovering. When cash for clunkers ended, sales returned where they would have been without the program.

Economists can debate whether these government programs had much to do with the economic recovery, but the program had a lot to do with it. Recession is defined by two consecutive quarterly drops in the GDP. Used car sales do not add to the GDP. It is very possible that without these programs all of the big three United States automakers would have gone into insolvency.

The state of the economy for the largest market for Ford is the United States economy. Despite a trend with the United States market is trend for smaller more fuel efficient vehicles, there is still a market for bigger luxury type vehicles. Luxury vehicles and light truck sales generate more profit for automakers.The importance of the United States market will be presented later in this report.

Ford Motor Company Strategies to adapt to changing market economies

This chart was prepared from raw data presented in the Barnes Reports on new vehicle industry report, and the Barnes report on the used car industry. The Barnes reports have more detailed data available, and allow the reader to come to their own conclusions. The intent of the chart is to identify whether the new car market will be increasing or decreasing. Used cars are a good indicator on where the new car sales will be experiencing growth or decline. Used cars are considered an inferior good, and their sales will experience a decline when the economic conditions improve and consumer confidence is restored. New car sales will experience growth as the used car market experiences a decline. One can see that from 2010 to 2011 new car sales are outpacing used car sales growth. This is important since the majority of Fords' growth comes from new car sales.

More conclusions can be drawn from analyzing the data presented. The data was reviewed by different regions, groups, and by studying emerging markets such as China. Compared to the global market, there is one giant among all of these groups. The United States holds the majority of both new and used car sales when compared to the rest of the world. The United States holds around 43% of the new car market, and about 23% of the used car market. Growth in the United States market is still an important indicator in how well an auto maker is performing globally.

Media organizations have recently focused their headlines on how the emerging economies such as China, India, and Brazil have been increasing when compared to the global market on a year-to-year basis. Although this may be true, the data indicates that this is a gradual shift rather than a rapid one, and efforts to shift strategy to gaining market share in these emerging economies should be gradual as well.

Ford Strategies for adapting to changing markets

The Ford Motor Company strategy is the same as

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