The Automobile Industry, Research Paper Example

Ford Motor Company and the Toyota Motor Corporation

Abstract

In business, it mostly occurs that more than one company produces similar products. This brings in a healthy competition, and more often, one of the companies gains a competitive advantage over the rest. Smart, conscious, and strategic planning is what makes a company have the competition advantage, thus determining its success of failure. This paper gives a research report, analysis, and comparatives of the strategic plans of two automobile industries: the Ford Motors Company and the Toyota Motor Corporation.

Introduction

The Toyota Motor Company (TMC) is a leading auto manufactures globally. It has its headquarters Toyota City while another one is in Tokyo. Toyota is one of the oldest automobile companies, founded in 1937. The Toyota Company has strategies of its own kind. It seeks to protect its employees at a higher level as compared to other companies.

On the other hand, Ford motor is a multinational automobile company, whose headquarters are in Dearborn, Michigan, United states. It has branches in four countries i.e. US, Brazil, Canada, and Mexico. In 2000, the company launched its strategic plan that aimed at increasing its global market in the 21st century. Ford industries worked on a vision that led to the development of the strategy of increasing the quality and quantity of vehicles produced. Upon achievement of these goals, then Ford would end up being a global motor vehicle producer.

Summary comparing Ford Motor Company and the Toyota Motor Corporation

Comparative table

Comparing the automobile companies

Legal, Social, and Economic Environments

Toyota dwells in a country with a close relationship between the legal system and the political system.  Taking an example of the survival, existence, and growth of the Toyota, it highly depends on the degree of independence of judicial from the political process (Toyota Motor Corporation SWOT Analysis, 2012). Health and safety standards are National laws that affect the Toyota Company at large. Legal laws as investment of capital, customs duties on imports, and the payment of dividends for foreign investors affects the operation of Toyota Company.

The economic environment of the Toyota Company comprises of hydra-headed indices. This includes inflation rate, national income, taxation, availability of resources, and the relationship between the power of local and international currency. There was a global financial crisis in 1990s, whose effect at the Toyota still felt. There is a likelihood of institutionalized capital playing havoc with markets and currencies from one time to another, affecting emerging markets as that of Toyota. However, investment is likely to pick in nations where Toyota operates.

The Social-Cultural factors in relation to global vision 2030 has brought in a tedious task in trying to balance between the battle with the society and culture, and the manufacturing process of the automobiles at the Toyota company. To attain consumer and social confidence, Toyota emphases on transparency on information of products and services, handling of workers, the environmental practices. Toyota Company offers support for civic activities, and political contributions that enable the customers judge a company (Hiraide & Chakraborty, 2012).

In dealing with legal factors, Ford has a competitive advantage over Toyota. It takes care of the necessary precautions for allowing their vehicles pass the Federal Government inspections. Ford maintains safety regulations and financial regulations among many other regulations to maintain its standards.

The economic factors do not spare Ford Motor Company, and it has suffered in the past years. Their ability to maintain at level of business enabled them stay afloat when some automobile companies closed. Ford motor company has the ability to adapt to changing economic circumstances. This proved right when Ford stood the 2008 recession. Again, it survived the collapse of the banking industry that followed shortly. Ford Motor Company is a strong one, with the ability to survive in tough moments, while it has n impressive financing capabilities.

To achieve the Socio cultural Factors and requirements, Ford increased their advertising. This helped the consumers in understanding the innovative and exciting company. The new, pertinent, sleek in design, and with higher capability vehicles of the Ford came into recognition. Ford considers the consumer classes, thus having cheaper models for the middle-income earner

In considering the Legal, Social, and Economic Environments, Ford is trying to accommodate all classes of people, unlike Toyota that has not considered those. However, Toyota is at a better economic condition as it survives the economic tragedies successfully.

Management Structure

The Ford Company adopted the formulation of a Centralized and strategic leadership to attain a strategic management structure. Ford motors ensured that the decision making process handled by expertise who comprise of the top management team. This was a strategic method that enabled the company identify great market opportunities both locally and internationally. It offered a chance for the marketing department to identify loopholes in the motor industry. They identified their weaknesses and worked towards improvement and betterment of the same.

On the other hand, the Toyota Company involved everyone in contributing to the efficient management. Every employee has equal chances in decision-making. The approaches by Toyota Company summarized as (Toyota Motor Corporation SWOT Analysis 2012):

• Using long term philosophies in the decision making process
• Using visual control to bring problems to the surface, where every employer’s problem considered and solved immediately; no problems are hidden.
• using the pull systems that works towards avoidance of over production
• Standardizing the tasks, and leveling out the work load, to ensure no overworking of employees
• Embracing the use of acknowledged and sure, and latest  technology
• Invests in its workforce, in things like trainings, seminars; this helps improve their skills while making them have a competitive advantage over their competitors
• The Toyota ensures decision making through a consensus
• Ensuring relentless in self examination, and examination of their products to ensure that no problem comes out of the product
• Ensuring maintenance of the overall production process at the highest quality level
• The Toyota Company has an open system that motivates employees to think outside the box, thus every individual contributes in the improvement of the production

Comparing the two management structures, Ford has a centralized leadership and management approach, while Toyota almost treats every employee equally.

Operational & Financial Issues

The Ford Company operates under decentralized policies. Decentralization and the implementation of policies act as a pillar to the centralized decision making procedure. The decentralized implementation of policies enabled flexibility of decisions while at the same time; it played a role in quickening the implementation of decisions, more especially at their smaller branches (Hiraide & Chakraborty, 2012). The communication process improved, where personal expression was empowerment, unlike other companies that have bosses overruling the other staff imposing control on them. Financial matters handled from one centralized department.

The Toyota Company operates towards ensuring efficient marketing strategies. The marketing strategy employed by the Toyota Company is ensuring a continuous production of quality vehicles. Thus, this approach has played a major role in making the Toyota Company enjoy a great market share in the US market. Like the Ford Company, The Toyota Company also handles financial manners from one centralized department.

Analysis of Strategic Intent

The Toyota Company has employed a marketing strategy of introducing low cost automobiles into the US market, which gained a competitive  favor compared to the General Motors and Ford. Studies show that the Toyota company cars are efficient in gas consumption compared to other American models, thus, they have the ability to cover a considerably high market segment. These strategies have enabled the Toyota Company to have a greater share in the market.

The Ford recognized that customers always have high expectations in terms of the model of an item. If, for example, a person bought a certain model of car, then within a short span of time, the model goes out of fashion. Such a customer would desire to get a later model during the next purchase. Their centralized leadership approach enabled the Ford company engage the top management in developing their products to satisfy the customer needs, expectations, and desires

Social and External Challenges

Both the Toyota and Ford companies face the competition challenge, and they still feel the effect of the 2008 recession. The automobile industry is highly competitive, thus requiring companies to adopt strategies to keep surviving in business. Toyota, for example, recorded a loss of $4.4 billion in its financial year 2009. Citizens expect so much of the companies, than they can offer.

Market Demand & Demographics, Alternative Fuels, and Propulsion Systems

The market demand is of unique items. The Toyota Company employs Product differentiation, a marketing process a company employs to highlight the difference that uniquely differentiates its products from those of other s. The Toyota Company invests time in the development of the product. This has played a major role in enables the company to achieve their product differentiation measure. After Toyota Company established itself in the market, it started producing different cars that adequately served different market segments. In 1989, for example, the Toyota Company manufactured the Lexus cars. This model of car competed with Mercedes and BMW in the luxury car market. So far, Toyota rates the number one in the production and introduction of new models into the market.

Other than autos, the company also manufactures robots. They go ahead and provide financial services under its subsidiary, called the Toyota Financial services. This differentiation gives it a competitive advantage as the different lines of businesses give support to each other. The Ford is also at the run trying to produce newer cars.

SWOT Analysis

Toyota

Strengths

• Size and Brand Name: Toyota presents the world’s largest vehicle with a widely known brand name.
• Pioneer in Innovations: Toyota is competent in technological development while considering industry and consumer tendencies
• Lean Manufacturing: Toyota ensures efficient manufacturing approaches like Just-In-Time (JIT) production method, and Total Quality Management (TQM) among others
• Integrated Supply Chain: Toyota ensure maintenance of a close relationships with suppliers and customers
• Organizational Culture: Toyota loyalty culture holds from all the employees. The company holds Japanese cultural values, and thus has the respect for the highest order. Every employee is empowered equally.

Weaknesses

• Size: its large market and big market share, a slight natural disaster affects the company.
• Decreasing Market Share: there is a decreased market share lately and in the first quarter, 2011, GM outsold Toyota globally with a margin of 2.2 million.
• Recalls: Toyota recalled an approximate of 8 million trucks globally, due to the quality issues in the first quarter of 2010.
• Expenses: expenses relating to post retirement benefits to employees are increasingly high
• Recession effect: the effect of the 2008 recession still follows in affecting Toyota’s performance.

Opportunities

• Innovation – Toyota should be the first to develop commercially mass-produced hybrid gas-electric vehicles. This includes the Prius model, based on advanced technologies and R&D activity.
• Oil minimization cars- With oil prices increasing at all time, Toyota should invest and widen a product portfolio that fits consumers looking to alternative sources of fuels away from gas guzzling cars.
• Promotion of eco-friendly vehicles– Toyota should promote the sale of cars that reduce environmental impact. E.g. Toyota’s Eco-Vehicle Assessment System (Eco-VAS) helps a great deal in production, usage, and disposal.
• Emerging Markets: The rapid development of emerging markets in China offers Toyota an opportunity to boost sales within the faster growing markets and produce at lower manufacturing costs.
• Consumer Preferences: as consumers shift towards smaller, cost-effective cars, fuel-efficient Toyota can benefit from being a leader innovator in the areas.

Threats

• The Japanese Yen has been strengthening against the Dollar and Euro. This focuses potential shifts in exchange rates, which would affect profits.
• Repetition of natural disasters might jeopardize future sales growth of the company.
• Rising fuel prices, changing customer preferences, and rising raw material costs might be challenging threats increasing
• Increased competition, intense marketing campaigns increasing competitive enforces pressure on the Toyota Company.
• Predictions of a downturn in the economy e.g. recession, would affect car purchases as household budgets tighten. This could lead a decline in new car sales.

Ford

Strengths

• Strong brand portfolio –Ford is the second-largest automotive company in the world in terms of sales, production and its braches in six continents (Ford Motor Corporation SWOT Analysis 2012).
• Strong engineering capability- Ford motor is the best manufacturer in terms of diversity due to its engineering capability.
• Wide network of distributors and dealers- Extensive supply chain is the leading and the best contributor towards the betterment of the company.
• High employee productivity
• Strong advertisement strategy

Weaknesses

• Continued decline in market share
• Product recall- Due to the product recalls, there is harm in Ford’s brand image.
• Declining efficiency in operations and weak returns
• Inability to accommodate new products as per changes on the market
• Very tough competition from General Motors and the Toyota companies

Opportunities

• Opportunities in India and China for new emerging market opportunities
• Launch of new models Hybrid vehicles- Various products were predicted to switch towards the hybrid electric engines
• Increasing demand for dual fuel vehicles
• Appeal of a national brand in crisis
• Promotion of eco-friendly cars

Threats

• Sluggish light vehicle production in developed markets
• European Union vehicle regulations
• Economic slowdown in the US and Euro zone
• Rise in competition is one of the major threat towards the productivity of the company

Proposed strategies

The Toyota Company’s size is an issue that Toyota can handle positively. Perfect management of these branches is a strategy to produce higher returns that would take care of possible natural calamities. On the other hand, Ford’s inability to accommodate new products as per changes in the market should forma stepping stone, to budget for expansions, innovations, and inventions in the financial year to follow.

References

Ford Motor Company SWOT Analysis (2012). Ford Motor Company SWOT Analysis. p1-9. 9p.

Hiraide, Norikatsu, Chakraborty, Kalyan. (2012). Surviving the Global Recession and the Demand for Auto Industry in the U.S. A Case for Ford Motor Company. International Journal of Economics & Finance. Vol. 4 (5) p85-93. 9p.

Ford Motors SWOT Analysis

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