Marketing essay on: Ford Motor Company of Australia Limited
Introduction
Ford Motor Company of Australia Limited also known as Ford Australia is a wholly owned subsidiary of Ford Motor Company of Canada. The Australian division is engaged in manufacturing, importing and distributing small, medium and large passenger and commercial vehicles for domestic as well as international markets (Ford Australia, 2012). It is one of the top three car manufacturers in Australia with comprehensive portfolio consisting of brands like Fiesta, Focus, Ford Kuga SUV, Ranger pickup truck etc.
The company has a glorious history as it was founded in 1925. It is known for its technological excellence and efficient processes in manufacturing and assembling of cars. The company has an established brand in Australia and its business has seen a healthy growth in the recent past. Apart from making profits from the business, the company is also engaged in local community welfare projects and hence striving towards a sustainable growth.
The interesting fact about the company is that it has got the global business outlook with updated technology experience gained world-wide and yet it can manufacture the vehicles that are built to work in the local condition. Thus the customers can enjoy world class technology that caters their local needs as well.
The company is now facing stiff competition from international car makers such as Hyundai, GM etc. who are expanding their businesses in Australia at fast pace.
Environmental factors affecting the business
(Doyle, 2007)
Understanding the external environment for the company is very important to run the business profitably in the long run under changing market conditions. The various market forces prevailing in Australian car industry are classified as below:
- Competitive rivalry:
The car industry as a whole is highly competitive. With new entrants coming into market and establishing their presence, it has become a cut-throat competition. Players like Hyundai have resorted to the price war. The technologies are seen to become more efficient and hence giving more options to customers to switch to the new technologies and exclusive products within their reach. The innovative car designs and better fuel efficiency is promised by almost every new product launched by any player. Local players like Holden have promised next generation cars at reasonable prices.
The presence of competition also gives upper hand to the raw materials and equipment suppliers as they also enjoy multiple clients. All these factors can affect the sustainability of business.
- Bargaining power of buyers:
Customers are becoming price sensitive as the features provided by all manufacturers have close resemblance and hence price plays an important role. There are also various discounts and financing schemes that manufacturers roll out from time to time. Most of the customers see car as heavy investment and hence are looking out for good financing schemes. The market overall has become all about the brand as well as price tag. Some of the local manufacturers such as Holden have target low income groups by providing them low priced cars with limited features. Hence, the competition cuts down the pricing power of manufacturers. The same has happened with Australian car manufacturers including Ford in the recent past. Hence, the profit margins have seen a declining trend.
Pressure from raw material suppliers and distributors
Even the raw material suppliers are now dominating the pricing and hence asking for high rates. The distributors also have multiple brands under their kitty and hence seeking large profit margins. This has put pressures on the profit margins of manufacturers like Ford. The distributors also have got an upper hand because of availability of multiple brands in the market. As a result of this, the overall demand management by the companies has been affected adversely.
- Labour market
Because of competition, the salaries of the workforce have seen an upward trend. The companies like Ford are facing difficulty to retain their trained manpower as they have limited budget for their salaries. The burden due to increasing salaries and the pricing pressure from market has become a big challenge for the manufacturers.
Major factors affecting the business
Based on above analysis of the external environment factors, there are two major factors that can impact Ford Australia’s business and for which the company needs to overhaul its processes. These factors are:
- Competitive rivalry:
The competition is increasingly eating up Ford’s market share in the recent past. Although the company has still posted profits, it will face pressure in the long run. The customers are now switching to more technology efficient as well as fuel efficient cars. Given the rising fuel charges, the competitors are coming up with fuel efficient cars in the market. The prices have been reduced by the competitors owing to their use of latest technology. Hence the company needs to keep its profits in tact in such a rival market.
- Bargaining power of buyers:
Customers have become price conscious as well as quality conscious. Since the rivals are now coming up with various after sales service offers, discounts and low priced cars, the company needs to rethink its processes and the technology utilization in its manufacturing plants. The planning process within the organization needs a revamp to cater to different market segments based on different price points (Hooley, 2011). The marketing also needs to be aggressive if the company has to increase its market share.
Hence, these factors must be kept in mind while re-aligning the management processes such as planning, organising, leading and controlling within the organization.
Management process
(Hunger & Wheelen, 2012)
The four basic management processes-planning, organising, leading and controlling that can help the business running profitably in the changing environment are discussed below:
Planning
The starting point for planning is to identify the market share the company is eyeing at. Assuming that the company aims to be the market leader in all segments viz. small cars, commercial cars and SUVs; the company must plan the demand management in each of these segments. The demand forecasted in each of the segment will then guide the resources to be utilized for them and the production processes to be used thereof (Lockyer & Oakland, 1988).
An example for this could be taken as when the company has more focus on small passenger cars, the R&D department resources must be fully focused on developing clean, fuel efficient and cost efficient production processes rather than utilizing more resources to develop commercial vehicles which may not see much of affect due to cost efficiency.
Similarly, the marketing resources must be tailor-made for different vehicle segments and the budget must be allocated to them accordingly.
Manpower planning is also guided by the company targets. For example, the improved technology in small car segment will result in automation of the production processes and hence free some of the manpower which could be utilized in other cars production.
Organizing
The planning is followed by organizing the resources. As discussed, manpower planning is very important. The quarterly targets must be set to gauge the utilization of manpower across different car categories. With the improvement of technology, the manpower must be distributed to the departments where the automation could not be done. The hiring must be done in key departments such as Research and Development to strive for improvement of the processes (Bechet & Walker, 1993). The marketing resources must be aligned with the improved and technologically advanced products to hit the competitor products in the market. The distribution system must be improved by building strong distribution networks and utilizing the economies of scale. The targets must be set for dealers as well as sales team to increase the sales to match with increased production targets. The inventory management will also play a crucial role to bring the cost efficiency (Marris & Wood, 1971).
Leading
The managers will play the lead role in attaining the planned objectives by the company. The managers must be trained from time to time to co-ordinate and communicate with the sub-ordinates to clarify them their roles aligned with the goals and objectives of the company. There must be an open communication between the management and the staff.
An instance to this could be the case if there is a restructuring within the staff due to technological automation rendering some staff redundant in one department. If the restructuring plan is not communicated well, it could create chaos among the workforce. Hence inter-departmental transfers must be supported by a well-communicated plan of better utilization of manpower.
Skill based training to the workforce is necessary to augment the refinement of the production processes with time. The managers must motivate the staff to take up such training and enhance their productivity. Hence, effective communication, co-ordination, coaching and motivation are very necessary for the resources to give optimum utilization and hence enhancing the productivity (Mourier, 2001).
Controlling
Once all resources are in action and actual production is being done, it becomes imperative to monitor the progress of the company to identify if it is on track to achieve the targets. A typical organization like Ford should set quarterly targets to monitor the profits and the revenues. However, monthly targets must be set for sales team and in fact daily production targets must be set for the teams on shop floor.
As an example, the revenues for each quarter coming from different categories of car must be compared with the monthly sales and daily production targets set specifically for these categories. Each segment must be considered in isolation and benchmarked against the corresponding market segment against its competitor products.
The consumer behaviour must also be monitored to tune the marketing strategy from time to time and effective pricing of the cars to match with the competition and still maintaining profitability.
Hence, it can be seen that basic management process will play a key role if the company wants to achieve its target of gaining the market leader position in all cars segments.
Conclusion
Based on the above study, it can be seen that even an old established brand like Ford needs to tune its processes and strategies with changing business environment. The market forces such as competitive rivalry, suppliers’ power, buyers’ power and manpower forces play a crucial role in defining the profitability of the business. If any company wants to stay competitive, it must change its management processes-planning, organising, leading and controlling. These are the basic processes which form the core of the organization. Ford is recommended to tune its management processes as described above to stay competitive and achieve market leadership.
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