The following essay covers the behind the curtain action that goes into the successful production and sale of a product in relation to Ford Motor Company. Ford Motors Company, one of the greatest automobile manufacturers in the world, has been in the business of manufacturing vehicles and motor parts in response to various consumer needs.
The material herein looks into exactly what goes into their successful production and how they have remained relevant ever since Ford Motors Company was established in late 19th century. It explains what influences the decisions they make and why they have found success in expanding and increasing their target markets.
Ford Motor Company is a multinational automaker based in Michigan, USA. It is involved with large-scale manufacture of cars and employs a large workforce. It has large manufacturing operations in various developed countries. Ford Motor Company has been a large car manufacturer with plans underway to produce electric vehicles as well as hydrogen fuelled vehicles. They have been known to improve their products over time. For example plans of producing more fuel efficient cars are underway.
History of Ford Motor Company
Henry Ford was born in what is today Dearborn Michigan in July 1863. At age sixteen he left home for Detroit city where he worked as an apprentice machinist for three years. Over the next few years he worked occasionally in a Detroit factory besides operating and repairing steam engines and helping with farm work at home. He married in 1888 and began to run a saw mill.
In 1891 he became an engineer with Edison Illuminating Company where he was promoted to Chief engineer in 1893. He then began experimenting on internal combustion engines and in 1896 he came up with his own self propelled vehicle, the Quadri-cycle. As such he was one of the pioneers of the motorist generation.
Henry Ford incorporated the Ford Motor Company in 1903 after two failed attempts at establishing an automobile manufacturing company. He was the vice-president and chief engineer of the company. His big break came in 1908 when he introduced the Model T. It was a huge success and by 1918 fifty percent of the cars in America were Model Ts. Ford Motor Company became the largest automobile manufacturer worldwide greatly due to its manufacture of the Model T. (Banham, 2002)
The company has grown massively since then to this day.
Ford Motor Company Products
Ford Motor Company is the fifth largest automaker in the world and the second biggest in the United States of America. Ford mainly manufactures automobiles (cars) and motor parts. Their products are stylish and possess quality performance motor parts. Among the popular products are ford power train products. These include remanufactured gas and engine assemblies, driver train components, transmission components, engine components and clutch kits.
Ford also manufactures accessories for the purposes of personalizing their cars. Accessories range from electronics, bed products, interior, exterior, appearance, wheels and air conditioning all in a wide range of variety. Maintenance appliances like chemicals and lubricants including coolers lubricants and cleaners are another major production by Ford Motor Company.
Ford products include the parts that are finally assembled to make a vehicle and parts that are related to vehicle maintenance. All parts ranging from hoses, fuel pumps switches, starters, steering, spark plugs ignition, belts brakes that are required during the usage of a vehicle are part of Ford products.
The main products however are cars, that is, trucks, SUVs, Hybrids and Crossovers and cars. Their more popular brands are the Mercury, The Lincoln and the Volvo.
Ford has manufactured a wide variety of automobiles to suit as many consumers, demographic and personal needs as possible. Different Ford car models target different age groups, income ranges, lifestyles and demographic areas. They also base their variations on different workloads, efficiency and performance and style.
Their variation in accordance to different consumer needs, tastes and preferences has been their best marketing strategy so far. They have catered for consumer preferences in relation to performance, price and style.
Another marketing strategy that has worked for them is manufacturing different brands each unique in its personality to cater for different target markets. This way they outshine other companies that only produce one brand that targets a specific target market.
Ford invests heavily on research and advertising and responds positively to the feedback. They stay updated on changing market trends, change in tastes and preferences and consumer’s satisfaction or dissatisfaction with their products. As a result they understand different levels of demand in different demographic areas and are able to supply accordingly.
Ford in general views every person as a potential client. Their products are designed to suit most if not all consumer needs, be it price, style, performance or quality.
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The marketing mix strategy
In general Ford has made perfect use of the marketing mix strategy popularly known as the 4 Ps of marketing. These four Ps stand for product, price, place and promotion which is what the various brands and models by Ford Motor Company is about. These are the four crucial ingredients in Sales and Marketing.
The product usually refers to anything produced with the purpose of consumer satisfaction. It therefore has to take into consideration the consumer’s need, taste and preference. This is the most important component of this marketing strategy as it is the reason for the strategy in the first place. The product therefore has to be innovatively and tastefully packaged as it is considered the ‘bait’ of the company. It has to appeal to consumers physically and spark their interest when they first encounter it. Ford has taken care of this by tasteful branding and quality production.
Price here is used to refer to the amount of money a consumer is willing to spend on a product. Price determination usually is the hardest of the four Ps. Price determination takes into consideration cost of production, price of related products, geographical location, the target market’s living standards etc. Ford has dealt with this issue creatively by ranging their prices in accordance to brand and model to cater for different income groups.
Place involves the distribution process from the point of production to final consumption by the consumer. It involves availing the right product at the right place at the right time and at the right quantities. The point here is to avail the product to the consumer when it is needed and whichever distribution channel that is used is based on this consideration. Ford deals with this by being strategically located worldwide in most if not all major cities and responding fast to consumer needs when they arise.
Promotion involves publicizing the product and creating awareness on the availability and function of the product. Promotion is essential in providing information on the product and in ‘wowing’ consumers. The most obvious way would be advertising the product. However other ways such as free samples, pamphlets and coupons, and open days are essential especially for new potential consumers. Packaging is also a popular way of promotion. Ford has successfully created awareness on their multiple products through advertising and differentiated packaging.
Challanges with the marketing mix strategy
It is a major challenge to use the right blend of the four ingredients of marketing in the marketing mix strategy. This strategy is especially useful for new products. It however does not cater for change in consumer taste and preferences, competition and emergence of equally good or better substitutes. The success of this strategy is based on a couple of assumptions that may or may not be the case. One assumption is that the market does not change especially in taste and preferences. This assumption more than any other cannot be constant. Change in market trends is actually what is constant.
Producing quality products that are consumer pocket friendly as well as profitable to the producer is a difficult balance to strike. A lot of things are taken into consideration besides production cost and mark up. Prices of substitutes, demographic location and consumer purchasing power have to be taken into consideration. Price determination usually is the hardest to arrive at since it is a major determinant of whether or not sales and profits are maximized especially when introducing a new product to the market.
The idea of selling more at a cheaper price most of the time does not work especially if production is quality. Tough decisions regarding price have to be made eventually and arriving at a constant price takes time.
Improvement on price strategy
An important step towards determining price is conducting thorough research over a period of time. The research should shed light on how much consumers in different age groups and of different living standards are willing to spend on quality products. Usually it is very detailed with issues like what level of quality they are willing to forego in order to pay less, or how much income they are willing to sacrifice to buy quality products. It also indicates what target markets are indifferent to performance and quality as compared to price and vice versa. (Didd, 1996)
The truth is it is not possible to have a universally acceptable price to every consumer, but it is possible to find a combination that works for the company. For example a company may consider lowering a considerably valuable quality product to a lower price to attract low income earners. This may work if they accept the price or may not work if they do not consider it low enough to spend on in which case the producer is better off retaining high prices and targeting high income earners who are willing to pay.
However, this can only be determined through research.
A lot of strategy goes into maintaining and growing a company’s profitability and in remaining relevant in the market. The obvious production, marketing, selling and logistics strategies are important but the challenge is in the detail. Details such as price determination, target markets and maintaining relevance in a consumer market are the trick. Finding the right profitability versus risk ratio is also important.
For a company like Ford Motor Company to get to where it is today a lot of marketing and operational strategy has been applied. It is imperative to sustain this position which is not easy, what with the ever changing marketing trends, economic fluctuations and increased competition. It calls for improved technology every short while and manpower improvement over time. Ford has managed to sustain quality production over the years, improvement with changing market trends, company overall growth over time and relevance in the market through the years. Seeing as change is the only constant in business and life in general, it is important that a company be able to adapt accordingly by always being flexible and better still a step ahead.
Total Quality Management and Just-In-Time Purchasing
JIT system uses electronic data interchange (EDI) that will assist it in connecting Ford with all its suppliers and customers. In this system, Ford will be transferring electronic documents and business data from computer systems in its head office to other computers in its branches and suppliers without the need of physical movements (Bragg, 2009). In addition to this, it will be making orders for the supply of components required in the manufacture of 2012 Ford Explorer from its computers as soon as customer demand for this model rises. Before Ford implements Electronic Data Interchange, it will need to agree with its suppliers on the specific information that they will transmit using this system in addition to how they should use this information.
Ford should use value-added networks (VAN) to connect its systems with systems of its suppliers and customers. VAN receives, examines and then routes transactions to a final recipient. Moreover, VAN will enable Ford to retransmit documents to its suppliers if these documents fail to reach systems of its suppliers and audit information received from all its suppliers. This system also provides delivery reports to the supplier immediately after the supplier’s components reach the premises of Ford. Since JIT systems use EDI, Ford will benefit in the following ways. It will save the company costs that it would have incurred if it used manual data entry. In addition to this, it will reduce errors such as billing and shipping errors since when an organization uses EDI, it does not need to rekey documents when they reach the destination (Bragg, 2009). It will also increase the speed at which Ford will be making orders to suppliers and thus there will be on time delivery of the components required to manufacture 2012 Ford Explorer as soon as customer demand rises.
JIT system uses total quality control as a business practice. Most companies use this philosophy in order to improve the quality of products and business processes. If Ford adopts this philosophy, it would be continuously examining all the processes that it is carrying out, learn where mistakes occur in these processes and find ways of reducing these mistakes in future (Kayak, 1997). This practice requires support of management, workers, suppliers and customers in order to identify areas in production that need improvement. The executive management of Ford should ensure that they create a good environment that will help the other employees to adapt to the total quality management model. In addition to this, it should ensure that it trains all its employees on the methods and concepts of total quality control. It should also ensure that the improvement of 2012 Ford Explorer is directed towards customer’s satisfaction. Moreover, it should ensure that it employs more staff in the quality assurance department who will be ensuring that all the stock supplied by suppliers is of high quality and that cars are produced to meet demands of consumers as consumers specified them.
Total quality management reduces inventory wastages. This is because the quality assurance department inspects all the incoming materials and thus suppliers will not supply defective products to Ford. In addition to this, this system relies on quality audits performed on the stock during stock taking exercises and thus management is able to identify ineffective stock control (Kaynak, 1997). Moreover, it carries out failure analysis in order to determine whether product failure was caused by poor inventory systems.
Just in Time system will add value to Ford in several ways:
Increase in the productivity of Ford Company
If Ford adopts this inventory system, the productivity of this company would increase. This is because this system uses total quality control and thus it is able to improve all the defective processes in its production system. In addition to this, this model uses electronic data interchange and thus it increases the speed at which the supplier’s deliveries reach the premises of Ford (Lai & Cheng, 2009).
Reduction of Inventory Costs in Ford
This system helps in minimizing stock holding costs. This is because if Ford adopts this system, its level of inventory will be zero or at minimum levels as it will order stock only when customer demand for 2012 Ford Explorer rises. In addition to this, it will not tie most of its funds in stock since stock will be purchased only when it requires using it in the production process (Sulivan, 2005). The warehouse charges such as rent, lighting and maintenance costs will also reduce since Ford will not need to hire space for storing inventory in anticipation of production. Moreover, Ford will not need to insure the inventory since it will be using its supplies as soon as they reach the premises of this company.
Improved Job Satisfaction
If Ford adopts this system, it would improve the level of job satisfaction of its employees. This is because this system requires employees’ participation in major processes and decision-making. Employees will thus feel that the management of this company appreciates their efforts and contributions. In addition to this, the implementation of this system requires extensive employee training programs so that all the employees understand the implementation of this system (Bragg, 2009). These training programs further improve skills of these workers and thus the employees feel more motivated. Success of Just in Time system requires participation and co-ordination of all departments in Ford. Since all the employees will be coordinated to archive goals of Ford, employees’ morale will improve thus increasing job satisfaction of all the employees.
Improved Competitive Advantage
Just in Time system concentrates on improving the business processes through total quality control. It also concentrates on designing products according to consumer’s specifications and thus it will design 2012 Ford Explorer according to the needs of its consumers. This will increase consumers brand loyalty and thus Ford will make more sales. This system also requires good communication and relationship between Ford and its suppliers. Suppliers will thus want to enter into contracts with Ford due to good mutual understanding (Sulivan, 2005).
Reduction in Wastages
By using Just in Time system, this company will eliminate the waste of overproduction of cars. This is because this company will produce cars only when customers demanded them. Furthermore, it will reduce the transportation costs since it will order components from suppliers only when it requires them and the automation of this system will reduce the wages paid to the drivers involved in the delivery process (Sulivan, 2005). It will also reduce waste arising from the production of defective cars. The automation of the system will help it to reduce these defects since machines will be involved in fixing of seats and battery placements. This system will also reduce idle time since employees will be involved in the production system only when the demand for the production of this model of cars increases.
Business Process Changes
Ford needs to change its businesses process and adopt a Kanban pull system. In this system the business processes are based on customer’s demands. If Ford adopts Just in Time, it will need to ensure that each production process is designed to produce what it can deliver and thus its business becomes leaner. Kanban pull system utilizes visual aids which show whether each department has finished a process or if it needs more supply of labor and raw materials (Louis, 2005). It triggers the production process in a backward motion. Moreover, it uses cards and containers as a signal media. By adopting this business process, Ford will achieve improved quality in material handling skills that will help in ensuring that parts are moving in synch from its inventory to the production departments. In addition to this, this system requires continuous sales forecast for its success and thus production will be in line with the market demand. This system also achieves a balanced inventory that will help Ford to meet the commitments of the customer’s lead-time (Louis, 2005). Moreover, it reduces inventory cycle time and thus reducing the level of buffer stock inventory.
It should also consider adopting the model of business process management proposed by Kohlbarcher. This model groups process management activities into six categories that include vision, design, modeling, execution, optimization and monitoring (Jeston & Nelis, 2008). Furthermore, this model designs its functions according to the strategic visions and goals of the organization. Ford should adopt this business process change due to several reasons. This process increases accountability in each department of the organization. This is because it tracks and monitors expenditures to ensure that departments meet all the deliverables according to their budget constraints. It will also avoid wastages in operations of Ford’s processes since it involves the assigning and tracking of corporate resources. Moreover, it will promote safe working condition for all the workers implementing JIT systems.
Ford Motor Company has managed to deliver in tune with need and utility over the years despite emergence of numerous substitutes, and with correct strategy should not find it difficult to stay afloat.