M3 Team Assignment: External Factor Analysis . By Team

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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
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