Porters Five Forces analysis of Ford Motor Company Essay

Tradition bothy maximizing profits has been considered to be the physical object of any troupe. Not any more than.This criteria has now been dis automobileded. Now companies be supposed to pee multiple objectives, m unmatchabletary as well as non-monetary. There are short-term objectives as well as long ones. Strategists are supposed to prioritize all such objectives, happen an affectionateness on the competitors and g oernment policies, so that there is clarity and ease of finding making in situations where there is an apparent clash of objectives. While intend for long term objectives, the attach to is supposed to remain competitive.It was in 1974 that Michael hall porter, who had been operative on a crude sub-field of economics known as industrial Organization (IO), prepared a Note on the structural depth psychology of industries which is considered to be the topic behind the five forces model of Porter in subsequent years (Karagiannopoulos et al, 2005). In 1980, he published his first book, belligerent Strategy, which owed much of its success to the five forces framework, that this paper focuses on (Porter, 1980). This framework has since been regarded as a strategic tool to figure out the relative strengths of a corporation, and decide about the possible strategic policies that a company stern adopt to make way for a long term survival.The company stern acquire competitive advantage on its rivals on handbill of grocerying efforts, brand building, value creation, innovation, operational efficiencies etc. But more important is to sustain the advantage, for which the company will drive home to take circumspection and devise adequate policies for its clients, suppliers, competitors and other stake holders. The five forces, defined by Porter includeBargaining Power of Suppliers i.e. to what extent suppliers behind have an influence on the insurance policy making of the company. Suppliers play an important piece in making flavour prop ositions for the company. The process of value creation encompasses managing quality in the entire chain of processes leading to the reapingion of final harvest-time or service.Bargaining Power of Customers i.e. to what extent the customers can affect the policy making and fortunes of the company. Customers are indeed the key ingredients for a company, scarce the companys profitability depends upon to what extent customers are willing to pay for the product. curse of tonic Entrants often limits the diversification policies of a company. Depending upon such a menace the company decides whether to go it all alone or take the travel guidebook of merger and acquisition. Such a threat of new entrants often results in a sense of urgency for the company.Threat of Substitute products often leads to locomote like enlargement of portfolio, enhancement of quality, reduction in prices etc. agonistic contestation between Existing Players makes an interesting copy for newspapers and mainl ine media, as they thrive on the competitive rivalry and the steps and counter-steps being choose by the competing companies. The level of competition greatly affects the earning potential of the company.In racing shell of Ford Motors Company the Five Competitive Forces can be typically described as followsBargaining Power of Suppliers Suppliers comp explicates all sources for inputs that are necessary in order to provide penny-pinchings or services. Ford is one of the bombastic Three manufacturing companies in the US with its range of political machines selling in over 200 markets across six continents. Since the company has manufacturing facilities at more than one place, so the suppliers profile too varies from one place to another. The suppliers too can be categorized in different categories likeMetal/ torso realm suppliers Such suppliers are often not found to be too much of a threat for the company, as there is good amount of rivalry amongst such companies as well.IT/I TES suppliers The modern cars require a range of technologically advanced features which determine the quality and other typical features of the car. Therefore, such companies are in need of regular research and developing mode depending upon the requirements of the car manufacturer. For type Sony Corp.s is one of the suppliers for Ford whirl Sony-branded audio systems in Ford and Mercury vehicles.Engine and auto part suppliers Such companies too hold a good amount of leverage over the car manufacturer. For example, Ford has signed an agreement with Neapco, an affiliate of mainland Chinas auto parts supplier Wanxiang Group, to sell its Automotive Components holding units propshaft operations.In a market where speed to market is extremely vital for beating the competition, Fords dependency for such key components on its associate companies with whom it has long term agreements will of scat help in warding off any appreciable threat from the supplier side. Ford has been able to maintain good working relations with its suppliers is homely from the statement of Alan R. Mulally, President and Chief Executive Officer of Ford during the companys 2006 annual report when he sought to highlight the bang-up supplier, dealer and union partners (Datamonitor, 2007).Bargaining Power of Customers Customers of course have heap of options in the market place. And the customer will weigh all his options in the beginning going in for the purchase. Therefore Ford needs to be in advance(p) and rely more on product differentiation. though Ford has been give to different customer segments in different measure, but of late the customer seems to have becoming very demanding and asking to have quality product at cheapest possible prices. In fact that includes the desire of having the best fuel consumption rate providing car. Other car manufactures like GM, Toyota, Rolls Royce threaten to take away its monopoly over the luxury cars with their own version of sleek cars.Threat of New Entrants Though it is not easy for new entrant to enter the Car and automobile industry as it is a capital intensive business as the economies of scale (minimum size of it requirements for profitable operations) leaves little room for a new start up company challenging the existing market share, til now the threat emanates from the existing competitors. For example the recent acquisition of Jaguar and kingdom Rover by an Indian car company presents some idea of the future threat emanating from the developing humans. Till now, companies from West and the developed world used to dictate the policies and used to acquire companies from the developing part of the world, but the emergence of India and China on the horizon as strong contenders appears to have tilted the balance somewhat in their favor. Tata, an Indian car manufacturing company, is in the final stages of sealing the deal with Ford.Threat of Substitutes A cars substitute exists in the form of another car. For exam ple a SUV can be a substitute for an MUV, a mid size car can be a substitute for a small size car etc. Therefore, the threat from substitutes exists if there are alternative products with get off prices and with better performance parameters for the same purpose. Ford faces aggressive competition in all areas of its business. The market design, manufacture, and sale of Cars and related peripheral products has become super competitive. Moreover this market continues to be characterized by rapid technological advances in both hardware and software development, which results increasing the capabilities of existing products and software. This is resulting is the frequent incoming of new models with much reduced prices and better feature, and performance. Ford needs to keep its R&D activities in motion all the time.Competitive Rivalry between Existing Players The car industry is indeed one of the more or less competitive industries in modern times. With the purchasing power of the co nsumer on the rise thanks to the globalization and liberalization era, which has tremendously boosted the earning potential of the professionals, particularly in the field so of IT and ITES. Car manufactures have been targeting this very segment with all the resources at its command. The profile of existing players keeps varying with the kind of market that is looked at. For example in US and most of the western part big manufactures also GM, Rolls Royce, Toyota are the brands that Ford will have to contend with, while in Asia pacific region the local players have a key role.ReferencesKaragiannopoulos, G.D. Georgopoulos N. and Nikolopoulos K. (2005). Fathoming Porters five forces model in the internet era. VOL. 7 NO. 6 2005, pp. 66-76, Emerald Group Publishing Limited, ISSN 1463-6697.Porter, M.E. (1980), Competitive Strategy, Free Press, New York, NY.Datamonitor (2007). Ford Motor Company-Company Profile. Datamonitor Americas, NY