The objective of this paper is to examine Ford Motors and understand the strategies used by the company to have an edge in the competitive market. It analyzes the host country by macro-environmental factors. It further discusses the entry mode and strategies of the company in the host country. At last, it concludes the findings of the paper.
Aim of Fords Motor.
Source of competitive advantage.
Host Country analysis.
Ford Motors strategy in Singapore.
The aim of this paper is to select an MNE from Fortune 500 companies list of 2019 and to gather knowledge about the company, history, operations and resources and how these resources help the company to gain a competitive advantage in the world market. In addition to this, the paper will also give insights gathered from the host country like the current situation there, the opportunities and challenges that the organization is facing based on the operation selected. It will further discuss the strategies of the companies and the structure of the MNE's before entering the new market. The paper will also emphasis on the benefits and pitfalls of the company's decision. At last, it will give some recommendations on how the company must run its operations in the host country. The key findings of the entire paper will be disclosed at the end in the conclusion section. Ford motors have been selected for the purpose as it provides technologically advanced, most reliable, and fun to drive vehicle in the world.
Ford Motors was founded by Henry Ford and eleven other investors in 1903 in Michigan, United States. It is one of the three leading automobile manufacturing industries in the country. The company has a long heritage of progress(Minchin 2019). It is visible through $5 pay to aluminium truck bodies. It has put the entire world on its wheels since its inception.
During the early stage of the company, it used to manufacture a few cars in a day at its factory. Ford introduced the methods of large car manufacturing and thus had a huge workforce with it. The company not only manufactures car but also truck, tractors, automotive parts and accessories. The very first model of the Car after experimentations was launched in 1903 named Ford T. The declining sales of this model forced the company to keep up with its experiments. In the year 1911, the company established its first automobile plant in Kanas city and opened it's first to oversee plant in Manchester, England (Macdonald 2017). The company was performing outstandingly well in America. In the mid of 1914, the company sold out more than 5,0000 T models and was slowly acquiring 20 per cent of America's automobile industry. It acquired Lincoln Motor Company for producing Ford's luxury Lincolns and continentals. In 1919, the company was reincorporated due to disagreements with the investors. Ford was acquired by its family gaining full ownership. By the end of 1920, Ford has successfully established 13 plants in different countries of the world.
The company launched its first medium-priced car named Mercury line in 1938. In the year1948, Henry gave the companies responsibility to its grandson, Henry Ford II. He recognized the tangled financial system and thus he reinvigorated its corporate culture. He began hiring talented managers for the company(Soliman et al. 2019). The company later acquired some of the biggest corporations around the world like Jaguar and Volvo. In the year 2008, when George Bush announced emergency condition, the company came out with the increased sale.In 2010 Ford sold Volvo to some Chinese company and announced that it will no more work on the Mercury Line. In 2016, the company came with car-sharing ventures and initiatives known as Ford smart mobility. This initiative aimed to take people to the next level of connectivity, customer experience and autonomous vehicles. The automaker even announced that it will increase the line of electric cars. The company also made into notice that it is phasing out with its passenger cars. The company shifted its focus on the cross over vehicles, pickups and SUV from 2018.
The Ford Motor aims to become the world's most trusted company. And the company's objective is to drive human through freedom movement.
Ford motors through its operations have touched the lives of the people of every corner with its business style and innovation. The work at the operator is divided into various units like transmission, assembly line, forging, stamping and engine(Esch 2018).
Initially, the competitive strategy of the company was based on cost reduction that is the low prices of the car to attract more and more customers. The ford vision during that period was to produce and affordable vehicle for everyone but it did not prove to be profitable thus the company changes its generic competitive strategy to differentiation strategy to offer a wide range of products (Direction 2016). It was identified through research that Americans changed their perception of looking at the vehicle. They now wanted stylized designed four wheelers for themselves. The firm is moving towards broad differentiation to compete against its competitors in the world market which includes Toyota and Generic motors. The company has changed its generic strategy to product innovation and differentiation to gain a competitive advantage in the world environment.
Host country analysis can be carried out by analyzing the macro environment of the country through PEST analysis.
The political risk in Singapore is quite low. It was found through an analysis that Singapore experiences the least economic and political risks in comparison to the other countries in the continent. The stability in the political grounds has resulted in peace and a better standard of living. It has improved the business condition of the country. MNE’s like Ford can establish their business in Singapore.
The people in Singapore follow family traditional values whereas the younger generation is influenced by western culture and norms. The residents of this country work hard to fulfil their materialistic desires. The entire country urges its people to do well and it has increased the overall productivity. The people of the country thus have a higher consuming power in comparison to other countries in the world(Lim 2017). It creates a better opportunity for Ford Motor to conduct business operations. It has been analyzed through research that Singaporeans dislike blue-collar jobs like construction, working as a maid etc.
Singapore is considered a vibrant free-market economy which is developing at a very fast pace. The people's per capita income is high in comparison to other Asian and countries. It is one of the most advanced and corruption-free business sector. People in Singapore value high education and it is due to this reason workers of the country remain motivated. The financial and legal factors also help in conducting business in the country (Lim 2017). Its strategic geographical location has brought tourist from all over the world. The country has invested in diversifying Singapore.
The lifestyle of the people and the quality of life they live has brought technological advancements. The internet speed of the country is 5Giga bytes which is a dream of the other countries. Its fast speed internet helps its citizens to communicate and increase connectivity. It decreased the cost of conducting business and thereby has also reduced the time. The IT infrastructure of the country has gained appreciation from all over the world. The government is moving towards electronic era(Higgins et al. 2019). To launch a new electric car in such a market will be beneficial for the organization as it will increase profitability and growth.
Ford Motors has a hierarchical organization structure which states that Executive Vice president of the company reports to the CEO, while the managers of the organization report to the Executive Vice president. It has traditional business management as it follows the top-down approach. Through analysis, it was also found that the company had shut off its existing plants in the country. (Keegan, 2017).The key factor for the sudden change in the organization policies was its organization management. The company was changing its vision by focusing on how to earn profit and how to make use of the resources of different strategic units to the fullest. The company was emphasizing on how to reduce its overall cost and for it would also have to change its existing organizational structure. The geographical division in its organizational structure was an advantage for the organization as it helped the company to keep a hold in the entire world market.
A mode of entry is the medium by which any organization enters in the host country. There is no specific mode of entry as it depends on the external factors of the country in which the company is planning to expand its business. There are different types of mode of entry in the foreign market. These include foreign direct investment, joint venture, and licensing, exporting and sole venture. For any organization, it is not easy to decide which mode of entry it should proceed with. There are three types of determinant factors which helps a company to decide its entry mode (Fetzer 2017). These include location advantage, ownership advantage and internationalization advantages. These factors force any firm to enter the host country market. Since Ford motors are planning its international expansion in Singapore, the company must analyze all the factors and decide the entry mode for the country.
Ford Motors established its plant in Upper Bukit Timah road through Foreign direct investment in 1941 but a year later Japanese took over the place and created a military hub for commanding all of its forces. The company had to bear huge losses until 1946. In the year 1947 the company was resumed again it started producing car, vehicles and equipment for local as well as international market. But in 1980, Ford closed its door permanently in the country and was left abandoned. In my opinion, this was the biggest pitfall in the company (Silinevicha and Kalinina 2017). The company’s decision in 1942 to establish a plant in Singapore did not help it to reap benefits. The company lacked the understanding of the market and Japanese arrival in the country to capture Singapore, all hurt the profitability of the company.
To enter again in Singapore, the company instead of establishing a plant again can look for some other measure. After analyzing it was found that the company can select the exporting entry mode choice. It is one of the easiest ways to enter in the international environment. It will decrease the cost of developing operations in an entirely new place where there is limited labour. Through analysis, it was identified that people in Singapore have high collar jobs and they do not have a need to do blue-collar jobs like to work in a construction based industry or to work as a labour in some automobile company. In the exporting entry mode choice, the company must take care of the contractual agreements. While exporting the car to the country it must pay attention to the pricing strategy. A low price car would not gain much attention than a high price car with advanced features in Singapore (Emmanuel and Panagiotis 2018). Advertisements, local shows and trade shows are some form of marketing style through which the company can increase its sale and thereby growth in the country. There are certain disadvantages of the exporting country mode as well. These may include the high price of the transportation good and high price of the tariff applied to these goods. These will impact profitability as well as will also harm the environment. As far as exporting of Ford Car is a concern in Singapore the company needs to pay attention to the coordination of the four players that is exporter, importer, transport provider and the government.
The company has changed its strategies from low-cost car production to the development of a wide range of luxurious products. The people in Singapore want to live a lavish lifestyle. The company needed to change its strategy otherwise the business of the company would have to face huge losses. People in Singapore get attracted to materialistic dreams and Ford luxurious car will become a materialistic dream for them. The living standard of the people in Singapore is high. Launching Ford as an economic car will lesson down the sale of the company. It would turn out to be the greatest mistake of the company. The differentiation strategy to gain a competitive advantage would be best for the organization (Emmanuel and Panagiotis 2018). People would come and purchase the car according to their choices. Seeing the opportunity rates in the country, the company must drop its other plans and invest in Singapore.
If I were to be the head of the MNE, I would make sure that the decisions taken by me would favour the organization and increase its profitability. I would make sure that f I am expanding a business in a host country like Singapore I would first analyze all the factors properly before making and entry into its market. Single decision can result in huge losses for the organization. I would make sure the correct entry mode by understanding the changing behaviour of the people. Since the current strategy of the company is differentiation hence I will try my best to increase the number of projects in each category accept the Mercury assembly line. If needed I will enter the Singaporean market to create synergies by acquiring Singapore’s automobile company. It will help the organization to make use of the resources of the other company’s unit. It will help the company to increase the sales and revenue of the organization. I will also try to change the organizational structure which is based on the hierarchy level as it takes time to decide the case of emergencies(Marx 2016). If all the managers will get the power to take decisions it would become easy for the company to handle any sort of situation. It will also help the company to increase revenue percentage and help it to flourish in the national and international market.
It can be concluded from the above findings that Ford Motors is a leading automobile producer and has captured the entire world market with its car, vehicles and pieces of equipment. It has made possible the movement of people with its low price passenger cars. The initial strategy of the company was to provide an affordable car but with the pace of time, it realized that differentiation will help the company to flourish more in comparison to the cost reduction strategies. It also evaluates the Singaporean market with the help of PEST analysis. The paper further helps to understand how Ford motors enter Singapore and which decision of the company failed in that country. It was recognized that the company in the year 1942 entered Singapore with foreign direct investment. But later it had to shut off its plant in the country. Later on, the company decided to capture the entire Singaporean market by changing its mode of entry to exporting. It will help the company to increase its sale without worrying about the labour and the problems of operating a plant in the country. The company will just have to bear the cost of transportation and advertisement. Singapore being the vibrant economy will make it possible for Ford motors to increase the sale and thereby the revenue percentage.
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