In business operations, risks and rewards are common.
Risks occur through factors that lead to losses. On the other hand, rewards
arise through profit and organization growth. Therefore, the company should be
ready to handle its risks and ensure rewards are more than losses. The
initiative helps in increasing business survival. The paper will discuss growth
strategy in Ford Motor Company. It will also discuss the rewards and risks of
the organization.
Growth
Strategy
Ford Motor Company
has been enjoying one of the largest market positions in the automobile
industry. They have been competent in the industry. However, their success is
attributed to the intensive growth strategies. To enhance growth, the
organization management has used two approaches, intensive and generic strategy
(Meyer, 2017). Intensive strategies are aimed at reinforcing firm's growth.
They include market penetration, market and product development. Similarly, the
generic strategy is applied by an organization to enhance business
competitiveness. In Ford Company, the generic strategy has been reported to change
with time.
In generic growth,
they started with a generic strategy of cost leadership (Meyer, 2017). The
initiative was aimed at minimizing cost while increasing productivity. Low
prices and cost reduction attract customer. To boost the strategy, they developed
an assembly line method. The approach provided them with a competitive
advantage. However, the strategy did not protect them from major companies such
as General Motors. In 1972, they were overtaken by GM where it became the
American leading automobile manufacturer (Meyer, 2017). As a result, they
changed their strategy to differentiation to competitive advantage. In this new
approach, they were after increasing product innovation where they would meet
most customers' demands and taste. Hence, they gained a strong competitive
advantage.
Similarly, their
intensive strategy focused on market penetration. In the strategy, they
increased the sales volume and the number of the dealership. The approach helps
them to have a bigger market share. Additionally, they aimed at product
development where they increased sales revenue. Further, their approach in
market development, they focused on entering a new and potential market.
Risks
Ford experienced
the risk of their stock experiencing a downside trend. Additionally, they face
the challenge of reduction in the number of sales of F-series truck. Their
competitive advantage has not been helpful in uplifting their stock over that
of their competitors. Another risk that they experience is large competition from
upcoming automobile dealers. As mentioned, General Motors have been a challenge
in the market. Another risk they face is loan crisis. The loans have been
multiplying making it hard for the company to earn effective profit from their
sales. The financial position in Ford Motor Company has been worsened by the
Europe market status. Europe has been facing a recession that affected new-car
sales. Besides, the state is not expected to improve soon. Another major risk
that the company has encountered is the quality of their products. Over the
years, they have been emphasizing the quality of their models. However, a
quality survey that was carried on their models indicated that they were far
below what they have been telling their customers. To make the matters worse,
the survey gave their opponents General Motors higher marks. The approach can
reduce the number of car sales in Ford while their good reputation has been
destroyed.
Rewards
They have been able
to form a strong outlook. The approach has added advantage to their products
through attracting more customers. As a result, they have loyal customers who
cannot be wavered from choosing their brands. Additionally, they have been able
to use their market power to utilize and exploit most regions in the world.
Therefore, they have an extensive coverage that increases their ability to
reach new customers. They have experienced and skilled workers. Additionally,
they have boosted their research networks to enhance innovation. Hence, they
are able to satisfy customers’ demands.
Proportionality
of Risks and Rewards
In Ford Motor Company, risks and rewards are not
proportional. The organization faces few risks compared to rewards. In
addition, the company has been in operation for several years. As a result,
they have developed effective strategies for overcoming risks and uncertainties
that can face their organization. Besides, they have invested heavily in
research. Therefore, the department is always aware of the possibility of
experiencing a different form of risks. After detecting risks, they update the
management, which in turn enact measures to curb the situation. On the other
hand, the company has been competent in the automobile global market. The
market advantage allows them to increase their rewards through having loyal
customers. Hence, their level of sales improves their financial stability.
Thus, any financial risks such as downside of stocks or recession cannot easily
affect them.
Moreover, the
organization has competent management that gives them an added advantage. The
management ensures that all business operations are running smoothly as their
plans. Besides, the management has been hiring competent and skilled personnel
to assist in business operations. Therefore, they are equipped to face business
challenges and risks.
In conclusion,
businesses are usually prone to both risks and rewards. An organization becomes
successful if their rewards are more than risks. In Ford Motor Company, they
face the risk of recession especially in the European market which has affected
the level of their sales. However, the level of the market coverage is high and
their products are competent.
Reference
Meyer, P. (2017). Ford Motor
Company: Generic & Intensive Growth Strategies. Retrieved from
http://panmore.com/ford-motor-company-generic-intensive-growth-strategies
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