Strategic Management: Comparing Toyota and Ford

This paper analyses internal and external environment for Toyota and Ford Company. The two Companies are major in the global Motor industry; they are facing a number of challenges and opportunities. The paper also provides strategies for addressing major problems facing these Companies.

SWOT Analysis

Issues Toyota Ford

Strengths

Legal issues

Product issues

Economic issues

Social issues

Structural issues

Manufacturing facilities

Distribution System

Human resources

Brand reputation and recognition

Wide geographic presence and large market share globally

Highly innovative

Efficient production technology and facilities

Stable long term automotive industry

Best working relationship with dealers in the industry

Wide geographic presence and large market share globally

Brand reputation and recognition

Advanced technology and facilities for product development and innovation

Strong portfolio of high quality products

Highly motivated employees through trainings, incentives and wages

Weaknesses

Competition

Current economy

Customer demands

Ecological issues

Cost issues

Alternative fuel vehicles

Mass recall leading to loss of trust and loyalty, raised red flag on quality and reputation of TMC (The Hufftington Post, 2010).

Declining sales due to competition and loss of loyal customers

Criminal and congressional probe into safety problems

Very bureaucratic and inefficient management structure in some sections

De-motivated employees, job mobility is minimal and pay is relatively poor

Low talent middle and senior management to provide good advice (Toyota Motor Corporation, 2010).

Frequent recall of products Increased expenditures and declining return on investment

Declining market share and profit margin

High production costs hence low profit margins

High debts put the company at financial risks.

Competition from Hybrid cars from other firms

Worried investors due to recessionary economy and slumping sales

Declining market in US, Europe and Japan due to global recession

Increased volatility as new cars loose market in a span of 2 years

Opportunities

Competition

Current economy

Customer demands

Ecological issues

Alternative fuel vehicles

High market potential in emerging nations

Rising middle class in China and Asian nations increase the demand for cars

Increased demand for eco friendly and fuel efficient vehicles

Developing technology for use in making eco friendly and electronic cars

Restructuring of company operations

Reduced taxes on new cars in China has potential for increased market

Rising middle class in China and Asian nations increase the demand for cars.

High prospects in emerging economies of Asian

Outlook for electronic and hybrid vehicles

Increased demand for eco friendly and fuel efficient vehicles

Restructured operations in the Ford company reduces bureaucracy

Threats

Competition

Current economy

Customer demands

Ecological issues

Cost issues

Alternative fuel vehicles

Intense competition from reorganized GM, Ford and Chrysler

Declining global market share and reputation

Volatility in exchange rates in US and Europe will impact on financial performance

Global economic slowdown reduces the demand for luxury goods and services

Economic slowdown in Europe and US reduced demand for cars

Intense competition from GM and Chrysler

Layoffs due to declining production worries employees

Safety and eco friendly laws in the US and Europe

Increased choices for customers than before (Ford, 2012).

Strategic implementation, Ramification and Evaluation

The problem of declining sales due to loss of trust in company products at TMC is the major strategic problem. This could be addressed by engaging in CSR activities to redeem the lost reputation. CSR strategy should address the relationship between the company and stakeholders. These include customers, business partners, employees, shareholders, local communities and global society. CSR strategy should portray the company as highly ethical and responsible to people and the environment by observing safety standards and procedures. Ford is faced with problem of stiff competition from other motor companies such as reorganized GM and Chrysler. The company should use product development strategy to develop highly innovative products that suits the changing market demands. The company should manufacture hybrid, electronic, eco friendly and fuel efficient vehicles that are demanded in the growing markets of Asia. This will be possible using advanced technology in motor industry and financial base from borrowed capital for use in research and development (Kotler, 2003).

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