Introduction:
Ford consists of five brands and is generally perceived as
being an affordable brand name catering to a variety of consumer needs and wants. The vehicles
span cars, trucks, and super utility vehicles (SUVs). Ford also produces the
Mondeo found in Europe and the EcoSport in South America and some parts in
Asia. Ford’s Lincoln vehicles are perceived as a luxury line and include five
models such as popular Navigator and Town Car. Ford’s Mercuty line offers five
different models such as Mountianeer and Milan. Mazda , a Japanese line named
after the ancient God of Wisdom representing a three wheeled truck combining a
motorcycle and automobile, Volvo, a brand name which was acquired in 1999 that
built a strong brand recognition as a safe vehicle, Genuine part and service offers
the know how about parts, repairs, and maintenance to owners of Ford, Lincoln
and Mercury vehicles. First introduced in 1991 in Bahrain the concept was to
help provide better owner satisfaction, which has provided better vehicle brand
success for Ford.
Executive Summary:
The auto manufacturing industry has been crushed of late by
the global economic recession as consumer demand for new autos has plummeted.
Consumer confidence is the lowest in 40 years and unemployment rates as at 10
percent. Unavailability of credit and unemployment has pushed FMB to rethink
methods of producing selling cars. The few consumers purchasing vehicles are
doing so for practical reasons, with the focus on fuel efficiency, durability,
and sustainability. Many banks are just not making car loans. This situation
has been detrimental to FMB. The company has shifted from trucks and SUV to
small fuel efficient vehicles. Key competitors of FMB are the General Motors,
Toyota Motors and Chrysler LL, Aspinal , L. (1998) .
In terms of Ford
Motor Bahrain structure, the strategy consists of three major detailed
diagnostic steps. These involve a review of:
The organization’s environment
Its strategic management systems
Its strategic
management activities
The first of these is designed to establish the various
dimensions of the environment, the ways in which it is likely to change and the
probable impact of these changes upon Ford Motors Bahrain. The second stage is
concerned with an assessment of the extent to which the organization’s strategic
systems are capable of dealing with the demands of the environment. The final
stage involves a review of the individual components of the activities.
Ford Motor Bahrain is concerned with two types of variable.
First, there are the environmental of market variables, over which the
strategist has a little or no direct control. Second, there are operational
variables which can be controlled to a greater or lesser extent. This
distinction can also be expressed in terms of macro-environmental forces (political/legal,
economic, demographic, social/cultural and technological ) that affect the
business, and micro-environmental factors (customers, competitors, distributors
and suppliers) who subsequently influence the organization’s ability to operate
profitably in the marketplace. It begins with the macro-environmental forces
referred to the markets and competitors that are of particular interest to the
company. The micro-environmental factor builds upon this by assessing the extent
to which the organization, its structure and resources relate to the
environment and have the capability of operating effectively within the
constraints that the environment imposes, Anthony, R. N. (1968).
Management decisions are typically affected in a variety
ways by development in the political and legal environments. This part of the
environment is composed of laws, pressure groups and government agencies all of
which exert some sort of influence and constraints on organizations and
individuals in the society, Jacobson, R and Aaker, D.A. (1995), . With regards to the legislative framework,
the Ford Motor Bahrain starting points involves recognizing that the amount of
legislation affecting business has increased steadily over the past two
decades. Bahrain’s consumer legislation has been designed to achieve a number
or purposes that includes: protecting companies from each other so that the
size and power of one organization to damage another is limited; protecting
consumers from unfair business practice by ensuring that certain safe standards
are met, that advertising is honest and that generally companies are not able
to take advantage of the possible ignorance , naivety and gullibility of
consumers and protecting society at large from irresponsible business behavior.
Ford Motor Bahrain is able to view the economic environment
in a rather different way, since they are often able to shift investment and
marketing patterns from one market to another and from the world to another in
order to capitalize most fully on the global opportunities that exist.
Bahrain’s economy is volatile because of political
instability. According to Bahrain’s Economic Board, gross domestic product will
grow at 4.5 percent in 2014 to outperform the same (GDP) which record a 3.5
percent previous years of 2013. Though inflation rate is constant at 2.5
percent for the last two years consumer spending slightly increases to 20
percent in the year 2013 and expected to rise in the year 2014 to 35 percent
.Employment rate among Bahrainis increased by 30% bringing the 57,890 employed
in 2013 to 75,257.
The significance of changes such as these should not be
looked at in isolation; but should be viewed instead against the background in
the political/economic balances of power. It should be apparent from what has
been said so far that a broad perspective needs to be adopted in looking at the
economic environment. Ford Motor Bahrain believes that size, structure and
trends of a population that ultimately exert the greatest influence on demand,
thus there is a strong relationship between the population and economic growth
and that it is the absolute size of the population that acts as the boundary
condition determining potential or primary demand. These changes have a led to
shift from a small number of mass markets to an infinitely larger number of
micro-markets differentiated by age, sex, lifestyle and education.
Seen by many people as the single most advances being made
is a force shaping our lives,
technological advance needs to be seen as a force for creative destruction in
that the development of new products or concepts has an often fatal knockouts
effect on an existing product. Ford Motors Bahrain pays attention to the
accelerating pace of technological change ; unlimited innovational
opportunities with major advances in the
areas of solid state electronics, robotics, material sciences and
biotechnology; higher research and developmental budget; a concentration of
effort on product improvements that are essentially defensive , rather than on
the riskier and more offensive major advances and a greater emphasis upon the
regulation of technological change in order to minimize the undesirable effect
of some new products upon society.
Underlying all of these points is, of course, recognition of
the product life cycle (PLC concept). Ford Bahrain has the following underlying
strategies:
Stages of Industry Development (Ford Motor Bahrain)
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Growth
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Maturity
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Decline
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Strategic position of the firm
Challenger
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Keep ahead of the field
Discourage other possible entrants
Develop a strong selling proposition and competitive advantage
Enter early
Price aggressively
Develop a strong alternative selling proposition
Search for the leader’s weaknesses
Constantly challenge the leader
Identify possible new segments
Harass the leader and follower
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Search for new uses
Develop new markets
Develop new products and product variation
Exploit the weaknesses of leaders and followers
Challenge the leader
Leapfrog technologically
Maintain high levels of advertising
Price aggressively
Use short term promotions
Develop alternative distributors
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Redefine scope
Manage costs aggressively
If the challenging strategy has not been successful, manage the
withdrawal in the least costly way to you but in the most costly way to
others.
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Although a considerable amount has been written on product
life cycle and market life cycles and how strategies need to reflect life cycle
strategies, relatively little has been said about the appropriateness of
managerial style. There is, however, a strong argument for the style of
management to be tailored to the particular demands of different stage, Atkinson,
P.E. and Naden, J (1998) .
By pursuing a strategy of cost leadership, Ford Motors
Bahrain concentrates upon achieving the lowest cost of production and
distribution so that it has the capability of setting its prices at a lower
level than its competitors. The organization chooses to do this depends on its
objectives and its perception of the market. The company uses the lowest cost
base to reduce prices and in this way build market share.
Although cost reduction has always been an important element
of competitive strategy, Porter (1980, p 35) has commented that it became
increasingly popular in the 1970’s largely because of greater awareness of the experience
of the concept. For it to succeed, he suggests that: “Cost leadership requires
aggressive construction of efficient scale facilities, vigorous pursuit of cost
reduction from experience , tight cost and overhead control, avoidance of
marginal customer accounts, and cost minimization in areas like R&D , service,
sales force and advertising of being low cost producer are quite obviously
significant since Ford Motors (Bahrain) is then far stronger position to resist
all five competitive forces, outperform its rivals and erect barriers to entry
that will protect the organization’s long term position. Ford Motors based much
of their success in the 1960’s on aggressive cost management but then found
that, because of combination of rising domestic costs and new and even lower
cost competitors such as Japan , the position was not tenable in the long term.
By pursuing the product differentiation, Ford Motors
Bahrain, gives emphasis to a particular element of the marketing mix that is
seen by customers to be important and as a result provides a meaningful basis
for competitive competition. TMB might therefore attempt to be a quality
leader.
Involve in concentrating its efforts upon one or more narrow
market segments, rather than pursuing a broader based strategy. By doing this
the firm is able to build a greater in depth knowledge of each of the segments,
as well as creating barriers to entry by virtue of its specialist reputation, Bancroft,
A.L. and Wilson , R.M.S. (19987).
Although value analysis has its origin in accounting and was
designed to identify the profit of each stage in a manufacturing process, a
considerable amount of work has been done in recent years in developing the
concept of applying it to measure of competitive advantage. Much of this work
has been conducted by Michael Porter , who suggests that an organization’s
activities can be categorized in terms of whether they are primary activities
or support activities.
Ford Motors Bahrain uses value chain analysis activities and
to highlight some of the issues associated with competitive advantage
,McDonald, M.H.B. and Wilson, H. (1999),:
1.
Inbound logistics, which are the activities that
are concerned with the reception, storing and internal distribution of the raw
materials or components for assembly.
2.
Operations, which turn these into the final
project
3.
Outbound logistics, which distribute the product
or service to customers. In the case of a manufacturing operation, this would
include warehousing, material handling and transportation. For a service, this
would involve the way in which customers are brought to a location in which the
service is to be delivered.
4.
Marketing sales, which make sure the customers
are aware of the product or service and are able to buy.
5.
Service activities, which include installation
and training.
Ford Motor Bahrain linked these support activities and
grouped under four headings:
1.
The
procurement of the various inputs
2.
Technology
development, including research and development, process improvements and raw
material improvements,
3.
Human
resource management, including the recruitment, training, development, and
rewarding staff.
4.
The
firm’s infrastructure and the approach to organization, including the systems,
structures, management cultures and ways of doing business.
Porter suggests that competitive advantage is determined
to a very large extent by how each of these elements is managed and the nature
of the interactions between them. In the case of inbound logistics, for
example, many organizations have developed just in time systems in order to
avoid or minimize their stockholding costs. In this way, the value of the
activity is increased and the firm’s competitive advantage improved. Equally,
in the case of operations, manufacturers are paying increasing attention to
lean manufacturing processes as a means of improving levels of efficiency.
Ford Motors Bahrain needs to examine the nature and
dimensions of each of the nine activities with a view to identifying how the
value added component can best increase. Value chain analysis should not simply
stop with the manager’s own organization, but in the case of a manufacturer
should also include the suppliers and distribution networks, since the value of
what an organization does will be magnified or constrained by what they do.
The Porter Generic Strategy ( Ford Motors ,Bahrain)
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Type of Strategy
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Ways to achieve the strategy
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Benefits
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Possible Problems
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Cost Leadership
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Size and economies of scale
Relocating to low cost areas
Modification/simplification of design
Greater labor effectiveness
Greater labor operating effectiveness
New sources of supply
Learning
Cost linkages
Superior labor and management
Advance technology
Smart buying
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The ability to :
1. Outperform
rivals.
2. Barriers
to entry
3. Resist
the five forces
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Vulnerability to even low cost operations
Possible price war
The ability to sustaining it in the long run
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Focus
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Concentration upon one or a small number of segments
The creation of a strong and specialist reputation
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A more detailed understanding of particular segments
A reputation to specialization
The ability to concentrate efforts
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Limited opportunities to sector growth
The decline of the sector
A reputation to specialization which ultimately inhibits growth and
development into other sectors
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Differentiation
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The creation of strong brand identities
The consistent pursuit of those factors which customers perceive to
be important
High performance in one or more of a spectrum perceive to be
important
Additional features
Design innovation
Distribution innovation
Speed of distribution
High Service level
Superior financing deals
Greater flexibility
Focused relationship building
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The creation of a major competitive advantage
Flexibility
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The difficulties of sustaining the bases for differentiation’
Possibly higher costs
Creating differences that customers do not value
Failing to develop barriers to deter imitation and customer switching
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FMB used the role of SWOT Analysis , although is one of the
best known and most frequently used tools within the marketing planning
process, the quality of the inputs often suffer because of the relatively
superficial manner in which it is conducted, Mann, N.R (1998) . There are
several ways in which SWOT analyses can be made more rigorous, and therefore
more strategically useful.
Faced with a constantly changing environment FMB develops a
marketing information system (MkIS) that is capable of tracking trends and
developments within the marketplace. Each trend of development can then be categorized as an opportunity or a
threat, and an assessment made of the feasibility and action needed if the
organization is either to capitalize upon the opportunity or minimize the
impact of the threat, Bancroft, A.L. and Wilson , R.M.S. (1987 ).
Although in many markets it is often a relatively simple
process to identify a whole series of environment of environmental
opportunities, few organizations have the ability or the competencies needed to
capitalize upon more than a small number of these. On the basis of this sort of
analysis it should be apparent that, even when a business has a major strength
in a particular area, does not invariably translate into a competitive
advantage, Hooley , G.J. (1993), .
FMB makes better use of the SWOT framework and proposes five
guidelines, Ford Motors Preamble, 2012):
1.
Focus the SWOT upon a particular issue or element,
such as a specific product market, customer segment, a competitor, or the
individual elements of the marketing mix.
2.
Use the SWOT analysis as a mechanism for
developing a shared vision for planning. This can be done by pooling ideas from
a number of sources and achieving a team consensus about a future and the
important issues.
3.
Develop a customer orientation by recognizing
that strengths and weaknesses are largely irrelevant unless they are recognized
and valued by the customer.
4.
In the same way, that strengths and weaknesses
must always be viewed from the viewpoint of the customer; so the analysis of
opportunities must relate to the environment which is relevant to the
organization’s point of focus.
5.
The final guidelines is concerned with the
structured strategy generation: The Matching strategies which strength must be
matched to opportunities, since a strength without a corresponding opportunity
is of little strategic value; Conversion strategies which are designed to
change weaknesses into strength and threats into opportunities; creative
strategies that emerge as a result of a detailed analytical process rather than
the vague and unfocused lines of thought ; iteration a process of identifying
hidden strengths, matching strengths to opportunities, converting weaknesses to
strengths.
TOWS analysis of Ford Motors
Bahrain
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Strategies
Tactics
Action
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Internal Strength
1. Cash
position
2. New
Car models
3. Location
close to suppliers
4. Engineering
and Technology
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Internal weaknesses
1. Venturing
into unrelated business
2. Organizational
diversity
3. Reliance
on past successes and bureaucracy
4. Long
cycle for new model development
5. Relatively
weak position in MENA region
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External Opportunities
1. Electronic
Technology
2 . Prosperity in GCC region
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S-O strategy
1. Develop
new models (using high tech) and charge premium prices
2. Use
financial resources to acquire other companies or increased production
capacity
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W-O strategy
1. Reduce
costs through automation and flexible manufacturing
2. Manufacture
parts in China and in the future Dubai
3. Reorganization
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External threats
1. BMW,
Lexus, Infinity in GCC region
2. Political
instability in Bahrain
3. Diesel
emission
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S-T strategy
1. Develop
new models to compete especially in GCC region
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W-T strategy
1. Strategic
alliance
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Recommendations and Conclusion:
FMB is determined by the extent to which the organization
reflects the five major attributes and strategies they have undertaken:
1.
A customer oriented philosophy
2.
An integrated marketing organization
3.
Adequate marketing orientation.
4.
A strategic orientation’
5.
Operational efficiency
Each of these dimensions can be measured relatively easily
by means of a checklist and an overall rating. It needs to be recognized,
however that an organization’s management effectiveness is not always reflected
in current levels of performance. FMB
performs well simply by force of circumstance rather than because of
good management. In other words, good performance may be due to being in the
right place at the right time as opposed to anything more fundamental. A change
in strategy as a result or performance review might have well then have the
result of improving performance from good to excellent, Ames B.C (1968).
Equally, FMB may be performing badly despite seemingly excellent marketing
planning. Again, the explanation may well be environmental rather than poor
management. Recognizing this, the purpose of going through the process of
management effectiveness rating review is to identify those areas in which
scope exists for marketing improvements. Action, in the form of revised plans,
can then be taken to achieve this,
References:
1.
Ames B.C (1968): Marketing Planning for
Industrial Products, Harvard Business Review, Vol. 46, No. 5- September
–October ,pp 100-1001
2.
Anthony, R. N. (1968) The Management Control
Function, Boston, MA: Harvard Business Review School Press, pp 13-14
3.
Aspinal , L. (1998) “The Characteristics of Good
Theory, in Lazer, W, and Kelly, E, Managerial Marketing , Homewood, IL: Irwin
4.
Atkinson, P.E. and Naden, J (1998), “ Total
Quality Management: Eight Lesson to Learn from Japan, Management Services, Vol.
33, No. 3, pp. 6-10
5.
Baker K (1986) , quoted in Clark, E, “ Acorn
Finds New Friends”, Marketing, 16, December, p13
6.
Bancroft, A.L. and Wilson , R.M.S. (19987) Management
Accounting in Marketing, Management Accounting, Vol. No. 11, December , pp25-30
7.
Hooley , G.J. (1993), “ Market Led Quality
Management, “ Journal of Marketing Management, Vol.9 No.3, pp 315-35
8.
Jacobson, R and Aaker, D.A. (1995), “ Is Market
Share All That It’s Cracked Up To Be ?”, Journal of Management, Vol. 49, No.4 ,
pp11-12
9.
McDonald, M.H.B. and Wilson, H. (1999),
“Research for Practice: The Internet and Management Strategy , Management
Business, June, Special Feature
10.
Mann, N.R (1998) , The Keys in Excellence: The
Deming Philosophy , London: Mercury, pp 156-157.
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