A Comparison Of Strategic Management Between Ford And Toyota In The Automobile Industry Essay.

Background of Ford Motor Company

Identify the main challenges that Ford Motor Company.

According to Jeyarathnam (2008), the success of any business organization depends on factors such as finances, environment, and competition. Some organizations tend to do better than others in the same industry depending on the strategies that they put in place to ensure that they remain relevant in the competitive market. This report, therefore, aims to compare and contrast a successful and unsuccessful company in the automobile industry from the strategic management perspective. In this case, the companies under study are Ford Motor Company and Toyota Motor Company. The purpose of this report is to identify the main challenges that Ford Motor Company is facing and then recommend possible solutions for the company that is likely to solve the problems they are facing in the marketplace. For instance, one of the reasons why Ford Motor Company is lagging behind is that they are very slow when it comes to innovation and adapting new technology to create models that are impressive to the customers (Peng and Meyer 2016, p 79). While their competitors like Toyota and General Motors are coming up with hybrid models Ford is yet to reveal its hybrid technology. On the other hand, this report intends to explore the reasons behind the success of Toyota Motor Company for it to be the world’s leading automobile company.

Founded in 1903 by Henry Ford, the Ford Motor Company commonly known as Ford is one of the leading Americas automobile makers. Additionally, the company is placed fifth world’s largest automobile manufacturers after General Motors, Hyundai-Kia Toyota, and Volkswagen as per the report given in 2010. The company sells all vehicle models including tractors, commercial, and luxury cars with luxury cars under Lincoln brand while the commercial vehicles are mostly are Ford brand. In 1914, Ford introduced large-scale manufacturing strategies commonly known as Fordism with the aim of being the leading automobile manufacturers in the world while providing the consumers with quality and affordable products. Based on the global report of 2009, the company’s total revenue stood at $ 118.3 billion, total equity totaling to negative $ 17.311 billion, while the assets were $ 222.997 billion (Ford.co.uk 2018).

Ford’s financial challenges started in the early 21st century during the financial crisis which almost made the company bankrupt. Despite being a leading automobile company, Ford is facing significant problems that are preventing it from fully utilizing the opportunities that are presented by modern technology and other social and economic factors. If these challenges are not resolved early, they may make the company shut down in the near future. Some of these challenges are discussed below, and at the same time, some recommendations are given to ensure the company’s sustainability in the competitive market.

Challenges Facing Ford Motor Company

When economic and financial factors are put into consideration, it is obvious that majority of car owners prefer vehicles that are cost-effective in terms of fuel consumption. Many people before purchasing a car will first look at how effective it is when it comes to fuelling. With most of the countries facing economic crisis recently, people do not want to use a lot of money fuelling cars. Besides, the cost of gases has been rising for the last few years. In this case, for Ford Company to remain relevant and competitive in the industry there is need to put this factor into consideration. This is because most of the Ford vehicles are not cost-effective when it comes to fuel consumption (Baker 2015, p. 37). Furthermore, people are now are buying cars which have more desirable features such as hybrid models which are produced by General Motors. The fact that most of the governments are encouraging the consumers to purchase vehicles that are fuel-effective through offering incentives is a reason why Ford needs to act quickly lest they find themselves left behind in the automobile industry. Time is moving very fast, and Ford need to acknowledge this feature to ensure that they remain competitive. With the major competitors such as Toyota and General Motors, being at the forefront of producing hybrid car models, Ford need to embrace the same idea too (Henderson 2007, p. 107).

Although the Company is one of the leading automobile manufactures, its models are not sustainable or environmental-friendly as expected. The issue of environmental safety has been discussed on several occasions. Anybody who is environmentally conscious desires to own a car that does not pollute the environment. It is so unfortunate that Ford has not been able to produce models that do not pollute the environment. This is the reason as to why the company is still lagging behind giant companies such as General Motors that promote environment conservation by manufacturing hybrid cars. This is one of the reasons why Ford has been struggling to maintain a sustainable business environment while upcoming companies like Toyota have been able to do business comfortably in the industry (Showi 2018, p. 129). Planning is all that matters in any business since it determines the success of the whole organization. The plan of the company can be termed as poor because in this age having no alternative energy and hybrid models it means that Ford has a long way to go. As a result of this poor planning, the company loses consumer confidence which leads to decrease in sales. It also reduces the company’s market share even in the foreign markets, for instance, the South Asia Africa sector where it owns only 2% of the total automobile sales. Additionally, the company has minimal entry into China and India markets where the competitors like General Motors and Toyota are getting a lot of income (Human 2007, p. 89).

Background of Toyota Motor Company

The automobile industry has significantly been affected by what is known as financial crunch and Ford has not been spared too. The crisis which was experienced at the beginning of the 21st century almost made the company bankrupt but it survived and since then it is gaining profitability. The current economic status is not very favorable to the company hence there is need to come up with strategies that will protect it from bankruptcy in the future. Besides, the act of the government to finance the competitors such as General Motors poses a risk to Ford. Further, the company has been losing a lot of money since European recession because it reduced the company’s total sales. For instance, in 2013, research shows the company lost a total of $ 462 million in the first quarter (Baker 2015, p. 22).

Toyota Company is the leading automobile manufactures in the world as of the report of 2016. Unlike Ford Company, Toyota commands the largest market share in the industry closely followed by General Motors. The company traces its history back to 1937 where Kiichiro Toyoda founded it as a family business. The company produces vehicles under five brands namely Lexus Toyota, Daihatsu, Hino, and Ranz while it owns a stake of 5.9 in Isuzu and 16.69 in Subaru (Yusoof et al. 2016, p. 97). Since 2012, the company has been leading automobile producer manufacturing approximately 10 million vehicles yearly. It has since then been able to remain at the top despite the competition in the industry since then and it attributes its success to the following factors.

At Toyota Motor Corporation, the employees are not just workers but they are taken as human beings who possess knowledge. Due to this fact, the company gives its employees an opportunity to bring new ideas and their innovations for the success of the company (Showi 2018, p. 112). It is due to this factor that Toyota has been able to remain ahead of the competitors because they know the importance of using human skills. The company has heavily invested in people’s capability which the competitors have entirely ignored. The company’s culture requires the employees to come up with fresh ideas to solve any challenge that they may come across in their daily operations (Homepage et al. 2018). As a result, Toyota has been able to achieve a lot through this initiative. This can be related to the company’s key value called Kaizen which means continues improvement. Basically, they believe in slow but sure innovation process research with most of the ideas coming from the ordinary workers within the company.

Success Factors for Toyota Motor Company

In every country you visit, you are most likely to come across a Toyota, vehicle model. TPS is the company’s manufacturing model that was laid down sometimes after the World War II, to ensure that the available resources are fully utilized be it machines, waste products, and human beings. The company is so much obsessed with waste such that one of the primary goals of TPS is the elimination of waste including time wastage by employees and production materials.

One of the major factors that have made Toyota sustain itself in the automobile industry is its ability to develop long-term plans that look into the future of their industry. They do not only look forward to producing sustainable and quality vehicle models but also try to come up with products that will last for a long period despite the economic and environmental changes that may be experienced in the future. An excellent example of this planning is the Prius Hybrid which was manufactured by the company some eight years back. This model has helped Toyota maintain a lead in the hybrid technology which is currently being advocated for since it is cost-effective and environmentally-friendly (Fileru 2015, p. 805).

This paper recommends the following steps for Ford Company to ensure its success and sustainability in the automobile industry. First Ford needs to create awareness to the existing and potential customers about the current products they offer as well the future of the hybrid technology they are building. They should take advantage of the social media platforms such as websites, Facebook, and Twitter to reach many people since most of the people have access to these sites currently. This campaign should start immediately and continue until the company is back to its feet. With competitors such as Toyota in the industry, Ford needs to invest heavily in this strategy to ensure that they win back the confidence of the customers.

Secondly, Ford must come up with new models that will compete well with those of General Motors and Toyota. Mostly, unveiling their hybrid model will profoundly boost their sales because it means that they will have come with vehicles that are cost-effective. Additionally, forming partnerships and relationships with energy firms such as Lockheed Martin will give Ford a competitive advantage.  Last but not the least, people and more specifically the employees are very crucial to the success of Ford Company. While their competitors like Toyota and General Motors are coming up with hybrid models Ford is yet to reveal its hybrid technology. Ford must ensure that they involve the employees regardless of their status in the planning of the company just as Toyota does. Through this, the company will be able to come up with new and great ideas to create models that will boost its sustainability.

Conclusion

Although Ford may be facing a lot of challenges, they can be overcome through dedication and proper planning. Nothing is hard to achieve as long as there are commitment and innovation. Therefore, the success of any company largely depends on its willingness to adapt to changes and use the opportunities that come along for its growth. To achieve sustainability in the automotive industry, Ford must be willing to improve their models through innovation and commitment to meet the consumer’s demands. Additionally, there is the need to review the marketing strategies to ensure that they fully utilize the opportunities presented by the modern technology. If all these factors are considered, then Ford will be able to compete with companies such as Toyota.

List of References

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Fileru, I. 2015. Toyota Prius – A Successful Pioneering in Hybrid Vehicle World. Applied Mechanics and Materials, 809-810, pp.1139-1144.

Ford.co.uk. 2018. Home. [online] Available at: https://www.ford.co.uk/ [Accessed 4 May 2018].

Henderson, M. 2007. Everything Old is New Again: Lessons from Dodge v. Ford Motor Company. SSRN Electronic Journal.

Homepage, T., Plus, G., emission, O., billion, $. drivers, ~., million, O., emission, O., billion, $., drivers, ~. and million, O. 2018. Toyota USA | Official Toyota Website. [online] Toyota.com. Available at: https://www.toyota.com/usa/ [Accessed 4 May 2018].

Human, J. 2007. Business studies. Cape Town: Nasou via Africa.

Jeyarathnam, M. 2008. Strategic management. Mumbai: Himalaya Pub. House.

Peng, M. and Meyer, K. 2016. International business. Australia: Cengage Learning.

Showi, A. 2018. Automobile Industry: Past, Present and Future. SSRN Electronic Journal.

Yusoof, S., Iylia, F., Zuber, F., MNSR, H., Zamziba, N. and Toriry, S. 2016. Relationship Between Economic, Political and Technology Factors: Case Study on Toyota Company. International Journal of Academic Research in Public Policy and Governance, 3(1).