M3 Team Assignment: External Factor Analysis
By Team Einstein: Andrew Clapham, Benjamin Coyle, Joseph Leon, Ria Shields, & Tim Riley
Raymond A. Mason School of Business, The College of William & Mary
BUAD 5907 (A2): Strategy
January 29, 2017
Introduction The Ford Motor Company is a multinational automobile company that is headquartered in Dearborn, Michigan. They produce a wide range of vehicles that are sold around the world, and based on sales, they are the fifth largest automobile manufacturing company in the world (David & David, 2017). This paper is a case study of the external factors that affect the Ford Motor Company’s strategic planning. It will use three tools to analyze Ford’s strategic position. The three
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• Competition from auto-makers with regards to vehicle financing options. Bargaining Power of Suppliers (Moderate)
• Suppliers have limited bargaining power: Globalization increases number of available suppliers.
• Supplier capital investment needed to manufacture parts limits bargaining power (i.e. cost to re-tool or cost of losing contracts).
• Market climate and quality issues may raise or lower bargaining power. Potential Development of Substitute Products (Moderate)
• Competition among competing models of vehicles; similar models/substitutes across manufacturers exist.
• Parts manufacturers produce replacement and aftermarket parts that undercut genuine automaker parts.
• Public and private transportation options (Bus, Uber, Trains, Lyft, Taxi, and etc.).
Potential Entry of New Competitors (Low)
• High barriers to entry; large amount of capital required to develop, manufacture, and sell.
• Economies of scale difficult to achieve as a new competitor. Bargaining Power of Consumers (Moderate)
• Cost to switch is moderate; vehicles in similar classes hold similar prices.
• Market climate may allow some bargaining power.
• High competition allows some bargaining power.
Sources: David & David (2017) and Ferguson (2015)
External Factor Evaluation Matrix
The External Factor Evaluation (EFE) matrix below in Exhibit 2 depicts Ford’s opportunities and threats from the outside market. After an evaluation of 20 factors, the organization performed slightly better than
Every external factor exhibits an open door or risk that the business must address through vital activity. As one of the main five players in the worldwide car industry, Ford guarantees that it addresses the issues in its PESTLE analysis. These issues are an immediate determinant of the hierarchical advancement direction of Ford.
These suppliers have slightly more bargaining power because of the differentiation between their work. However the need for these suppliers can be eliminated if furniture manufacturers produce every piece of their products themselves. A furniture manufacturer will only outsource production of parts if it proves to be cost effective for their company. Since the price of materials is consistent market and the outsourcing of production is unnecessary, suppliers have low bargaining power in the furniture manufacturing industry.
G.G. Dess, G.T. Lumpkin, M.L. Taylor, A.A. Thompson, and A.J. Strickland III, Strategic Management (Boston, McGraw Hill, 2004) pp. 141-148.
Strategic planning within a company is a tool used in companies that help mature areas in total quality management. This type of planning creates a cohesive management system for lower level employees to better adapt in. “Strategic planning determines where an organization is going over the next year or more and how it 's going to get there. Typically, the process is organization-wide, or focused on a major function such as a division, department or other major function”(McNamara, 2008). In order to plan effectively one must first make a clear assessment of the plan and have an analysis on the corporations mission statement and objective.
Analyze at least three factors that influence the company 's strategic, tactical, operational, and contingency planning.Format your paper consistent with APA guidelines.Support your presentation with the concepts discussed in class and in the text, and your personal experiences.Include the speaker notes to explain the key points in your presentation.Include at least two references to support your findings.
Hunger, J. D., & Wheelen, T. L. (2011). Essentials of strategic management (5th ed.). Upper
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Organizations that strive to be a leader in an industry must look beyond their domestic boundaries and expand into international markets. The Ford Motor Company remains the second largest automotive manufacturer in the United States and fifth largest automotive manufacturer in the world with Toyota leading the way. This essay will address the Ford Motor Company’s strategic approach to compete internationally and identify which resources and capabilities make it attractive to compete internationally. Additionally, the Ford Motor Company’s diversification strategy options will be described. Lastly, we will identify how chosen diversification strategy options would lead to a strategic fit for the Ford
A strategic plan can place the focus on the important issues for Blue Sky, will allow Blue Sky to analyze the internal business culture and evaluate its impact on the company's performance, recognize the impact the changing business environment is having on the company and affect the needed changes in direction, allow them to identify and analyze available opportunities and potential threats, they will be able to set more realistic objectives that are demanding, yet attainable, will allow for growth in the business to be accelerated and improved. The areas of Blue Sky that are poor performing, such as the automotive sector can be identified and possibly eliminated, and one of the most important aspects, develop better communications with those both inside and outside the
Introduction: Building an up to date and proper strategic planing is essential for the context of any company. it is the most important part that can make or break any business. Proper decision making and its effective implementation is quite significant in the success of a business. Let it be a multinational company like Kellogg, the same importance is apparent. For that understanding and analysing the environment of the business will be very helpful in making a proper business decisin making for the betterment of the same.
The bargaining power of suppliers for raw materials is low, while for facilities is high.
For strategic analysis part, we used PESTLE and Porter’s 5 forces for external analysis; and SWOT and Value Chain for internal analysis.
Ford in 2011 is on the rebound, having recovered from the darkest hours in the late 2000s. The company for the company is that many of its competitors are also rebounding, and there are significant long-run changes in the automobile industry. Ford needs to determine a strategy that will take the company through the next decade, and improve the company's competitive position. The company has four of the top fifteen best-selling cars in America, but also needs to set strategy globally, as many of the best automobile growth markets are overseas. Another strategic consideration is that CEO Alan Mulally remains in the process of changing the organizational culture at Ford, which had become stagnant and unresponsive to the changes in the industry environment.
Ford Motor Company preserves its place as one of the largest makers of vehicles globally by making changes to its strategies. Ford needs to create a plan of action and ideas that react to the most substantial effects from outside divisors in the motor vehicle industry globally. The Five Forces analysis of Ford Motor Company recognizes the most significant outside elements and how they affect the company, rendering data that helps in management’s decision-making process.
An External Factor Evaluation (EFE) allows strategies to summaries and evaluate economic, social, and cultural factor through the uses of a numerical rating. In our case we evaluated the EFE of Estee Lauder. By numerically scaling Estee Lauder’s opportunities and threats we analyzed the importance of the programs they have to offer. First assigning each factor a weight of importance