Ford Motor Company: the Product Warranty Program

1718 Words Nov 23rd, 2013 7 Pages
Introduction:
Ford Motor Company is America's one of the largest car manufacturer and seller. In year 1987 it faces an external business environment change in the form of new warranty policy announcement by its major competitors General Motor, which changes the current philosophy of warranty in U.S car market. This policy change may have implications not only on Ford’s sales and market share but also on various departments within organization (such as manufacturing, quality assurance, parts and service, and extended service plans) and their dealer network. In answer, Ford executives have to respond through a best suitable course of action by carefully analyzing the current market variables.
Changes in the business environment created
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market e.g. Korea and Yugoslavia. However, fast growth rate of industry have positive effect as during growth, competition is minimized. The increased production and substantial overcapacity both had negative effect.
Threats of substitutes: In U.S., an automobile was considered as necessity so for every adult there was car on roads. Even for inter-city travel more than 70% time cars were used. Buses, trains and other means didn’t have much impact. The growing array of higher priced imported models had negative effect.
Threat of new entrants: Intensified price competition as new entrants sought their share of mature market had negative effect. However, high capital requirements positively affect Ford Motor Company. High capital was allocated for research and development which was and advantage against new entrants.
Bargaining power of supplier: High levels of competition among suppliers act to reduce prices to producers. This is a positive for Ford Motor Company. Standardization of parts allowed Ford to reduce dependency on fixed supplier/vendor which goes into producer’s favor.
Bargaining power of buyer: 46% percent brand loyalty means product is important to customer and he can pay more for the product – had positive effect. Also a large number of customers minimize bargaining leverage.
Market Research:
Ford makes good use of market research on new car buyers…

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