Ford is well renowned for being the originator of the mass production system; but it has been over a century since. Since any large auto maker now uses the mass production system, what “is” the Ford’s core competency then? To start, it’s Ford brand recognition on a global scale. Let’s play a word association game. If you had to name of a car model for each product type what would be your answer? SUV (Explorer, Suburban), family sedan (Camry, Taurus), muscle car (Mustang, Camaro), truck (F150, Tacoma), family van (Odyssey, Wind Star), coup or compact (Civic, Accord)? While Ford does not have a model in every category it does in most.
A more strategic core competency of Ford’s is its global supply chain network. Ford’s strategic alliances and supplier base is quite possibly one of the most advantageous in the world. Thanks to Ford’s global supply chain network it is competing and leading on a global level.
Monday, March 22, 2010
Ford’s New Business Level Strategy
Until recently if you were to discus Ford’s business level strategy it would have been hard to do without a straight face. Ford’s previous business strategy was to find something with high sales potential and high profit margin and make the hell out of it. Basically milk the cash cow till it runs dry, afterwards slaughter it and use the meat. Anyone who knows the business strategy of Detroit over the last century knows that it has drastically changed in order to survive the new entry of leaner global competitors. Some critics may argue that the “Big Three” have not changed enough to meet the market conditions, without the being bailed out by the Federal Government. Ford has taken its knocks over the recent years, but the fact that it did not take the “bailout” funds in 2009 shows that it is starting to stabilize. Based on Ford’s over exploited then short-lived successes in the past how do we know that this is not more of the same. In all honesty we don’t, however, it looks like Ford is using its resources to gain and maintain a market advantage by minimizing its scope.
For the last decade Ford, GM, and Chrysler, have all been criticized by buyers and investors that their prices were too high, the quality was too low to compete with the high quality European automakers and the economical Eastern automakers. The initial response from Detroit was none at all. After the Big Three began losing market share the response was more audible. By the time the Big Three decided to effectively mount a counter initiative it was too late.
Ford during that time of bleeding market share Ford and GM were notoriously trying to find a new golden goose instead of putting their resources into to their existing product line. The SUV (Suburban, Explorer) era in America is a microcosm of the Ford’s overexploitation of a cash cow. The Taurus, which at one time was the cash cow had been put out to slaughter.
Rather than trying to find the next golden goose, Ford seems to be adopting a much more sustainable strategy. The One Ford strategy looks less like a traditional American strategy and looks more like Honda’s. Honda’s corporate level strategy has always been to put all resources into a current product line until it is the market leader, only when that market lead can be sustained, will Honda look to enter into new markets. This form of strategy has sometimes been argued to be too slow; no one can argue its upward trending stability.
The One Ford strategy is a business strategy that consolidates the product design and development into one product to make it the best possible. Many of the new models will use the same chassis, a practice that has been use by the Japanese to have more responsive product releases and cycles.
For the last decade Ford, GM, and Chrysler, have all been criticized by buyers and investors that their prices were too high, the quality was too low to compete with the high quality European automakers and the economical Eastern automakers. The initial response from Detroit was none at all. After the Big Three began losing market share the response was more audible. By the time the Big Three decided to effectively mount a counter initiative it was too late.
Ford during that time of bleeding market share Ford and GM were notoriously trying to find a new golden goose instead of putting their resources into to their existing product line. The SUV (Suburban, Explorer) era in America is a microcosm of the Ford’s overexploitation of a cash cow. The Taurus, which at one time was the cash cow had been put out to slaughter.
Rather than trying to find the next golden goose, Ford seems to be adopting a much more sustainable strategy. The One Ford strategy looks less like a traditional American strategy and looks more like Honda’s. Honda’s corporate level strategy has always been to put all resources into a current product line until it is the market leader, only when that market lead can be sustained, will Honda look to enter into new markets. This form of strategy has sometimes been argued to be too slow; no one can argue its upward trending stability.
The One Ford strategy is a business strategy that consolidates the product design and development into one product to make it the best possible. Many of the new models will use the same chassis, a practice that has been use by the Japanese to have more responsive product releases and cycles.
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