Ford Motors

Ford Motors and the World Automobile Industry

Executive Summary

Ford Motors is a world's leading automobile industry. However, the recession and the inflation have impacted the profits of the Ford as well. The overpriced acquisition has degenerated shareholder's value. Later in 2002, Bill Ford has announced cost cutting and elimination of every unnecessary person and the product. This was called revitalization strategy. In the beginning of 2004, this strategy started to come up with the results. However, in this report I have focused on:

Using the porter's five-force framework the reasons of the declining profitability of the world automobile industry.

The key sources for the competitive advantage of automobile manufacturers.

The plan which can be used by Ford in maintaining its profitability position in the industry.

Ford Motors and the World Automobile Industry

Introduction

This report tells about the downwards trend of the automobile industry and especially the Ford Motors. It is written to tell you about the reason of this recession. The companies in the automobile sector were facing a huge loss in the late 1990's. By 2004, the industry was in different stages of its life cycle at different parts of the world. Thus, it was flourishing in the early 1990's. As a result, this industry becomes attractive to many of the countries for market opportunities and so they penetrate in this business.

During the early 2000's, the companies listed in the automobile sector were focusing on the future returns, and they were working diligently to get positive outcomes. Ford motors were also future oriented. Most of the companies of the US were vertically oriented; however, Japanese brings in the idea of outsourcing for being cost effective. This was then practiced on the whole. Different cost effective techniques are discussed in the report. The competitive advantage can be a strong point in their survival. The industry should cut down the barriers and the forces which are coming in the way of their success. Suppliers and manufacturers relationship should be strong enough so that the combination of these two can help the automobile business to get back to its position (Christian, pp. 13-16). The firm's average return on equity is a measure of the firm's ability of generating profits from per unit of shareholder's equity. The porter's five factors framework can describe the main forces and the reason of this decline.

Declining Profitability of the World's Automobile Industry

In the last decade, the automobile industry has faced the worst time in the history. The initial and the crucial strategy in an automobile industry are the mass production and affordability. At the same time, company has to be cost effective without compromising the quality and breaching its promise. The inflation and the economy are also a main part of the new strategy.

Supplier Power

In this section, we are concerned about the power the suppliers hold. The supplier power makes the industry unattractive. In automobile industry, suppliers are very powerful. They are given the most attraction and almost all the manufacturers have special ...