Market Environment and Structure of Automobile Industry

Market Environment and Structure of rail railroad car application1.1. Market EnvironmentThe grocery environment is the combination of actors and forces that affect an organisations potency to operate its operations effectively in read to provide its products and serve to its customers. (Jobber 2004) check to Jobber (2004) these forces can be break upified into internal or external environment and these will act in accordance with the companys touch in the merchandise as describen in appendix A.As this digest is about the automobile diligence and companies operating within this industry are alike facing these forces. Some of these factors are explored later on in this report.1.2. Market StructureChris Britton (2003) defines grocery store structure as the amount of competitor that exists among the rivalry organisations. gibe to him the market structure can be perfection competitor monopolistic competition oligopoly or monopoly accounting on the genius of commerce. As the automobile industry in non generally reign by bingle single firm and in polar split of realism at that place are different market leaders. So, in bigger picture the global automobile industry is having an oligopolistic structure where many pseud are there to share profit and for competition.1.3. Brief Profile of Automobile IndustryThe automotive industry is the industry involved in the see, development, manufacture, marketing, and exchange of motor vehicles. According to Datamonitor (2009), more(prenominal) than 40 trillion cars were exchange crossways the worldly concern which mover the market shrunk by 5.3% as compared to 2007.As europium is biggest consumer of new cars with 42% while Asia-Pacific and America accounts for 32% and 26% singly (Datamonitor 2009). The plunge in the consumption of new cars is caused by the recent time out and the motor crises which are widely affecting the auto industry. Meanwhile the wage hike fuel wrongs and increasing costs of sore material are other great concern for the manufacturer in order to survive in this turbulent atmosphere.Before the global crises the US market which was the biggest consumer of light vehicles was dominate by the big leash GM, Chrysler and hybridization, while in Europe fitted competition was seen among few companies ( cross, Volkswagen, and BMW) and Asiatic market was mainly dominated by the Toyota.In recent years the Toyota emerged as a big panic for US companies in the international market by dint of its hybrid engine room and is giving tough competition. The Tata has launched the world cheapest car Nano in 2009, India is the focus of both major car manufacturers due to its consumption of sm each(prenominal) cars and it is also describe as For small car, India is the centre of the Universe by Alan Mulally, cut across president and CEO (Business Today Sep 2009).2.0 Looking at family (Ford)2.1. Company (Ford Motor ) ProfileFord Motor Company is a global ly recognized company based in United States and it operates across the globe in six continents with its four brands (Ford, Mercury, Lincoln and Volvo). It operates primarily through its automotive business organization and secondarily through its financial operate. Its automotive sector consists of manufacture, normal, cut-rate sale service of small vehicles and super trucks, development and spare parts. The financial services are restricted to insurance and vehicle related finance and leasing.According to auto evolution (Dec 2009) ford was the yet one to survive among the three US car manufacturers without any aid or government care and not lone(prenominal) survived unless also pocketed the $1 billion earn income in the third quarter of 2009.Ford is k straight offn for its innovative design and applied science which is gained through its reverse engineering science methodology. The chairman of Ford, Bill Ford is following a plain strategy which is, Our vision for the future is simple We want to build great products, a unvoiced business, and a best world. (Ford.com)2.2. History of Company (Ford)Ford Motor Company was founded in US state Michigan in 1903 by an automotive pioneer atomic number 1 Ford which was first of its kind in the auto industry. The Model T developed in 1908 and resulted in the sales of over 15 million units. By the 1920s it has captured the 50% of the market share. After going into commonplace in 1956, the company has reached the global market with significant success.3.0 Macroeconomic depth psychology of Ford (Pest Analysis)According to Ian Worthington (2003) organisations operates their operations in an economic environment which is shaped by these operational activities. in that location are number of factors that influence the decisions of a business organisation although these are not under the control of that fussy organisation. These factors can be political, social, economical or technological.These factors have the wider influence on the Fords decision making as Ford is also a business organisation which operates through its auto manufacturing operations and financial operations.How these factors influence Fords strategies is discussed to a lower placePolitical AspectsFord Motor Company operates in 50 different countries so it has to fulfil the legal and safety requirements in accordance with their rules and regulations.stinting AspectsSocial AspectsTechnological Aspects4.0 Micro-Environment Analysis of Ford (Swot Analysis)4.1. Strengths to Build UponStrong engineering science and Design CapabilityThe one of the reason behind the success of Ford is its strong design and engineering capabilities. Ford every new depend on the success of its RD projects which are run through 50 engineering and design centre which are located in many countries across the globe.According to Datamonitor (2008) Ford launched Blind Spot Mirror in its cars in order to remove hazards and build the more traffic vi ews for drivers. Ford also introduced the accident-assistance feature in coordination with the National Emergency Number Association (NENA) in order to improve the emergency service in the same year. This shows how technology and innovation matters at Fords in order to remain competitive in the marketHigh Employee ProductivityFord has employed a strong work force that contri thates towards the company operations in order to fulfill its goals. It has recorded higher r counterbalanceue per employer ($1.8m) in 2008 as compared to its rivals (GM, Toyota, Honda, and Chrysler) its 3 quantify more and this simply because of the training and efficiency achieved by its employees.Fords Extensive DealersThe lead network acquired by Ford is wide spread in all parts of world especially in rural areas represents Ford through its range of products that included Ford, Mercury, Lincoln and Volvo.4.2. Weaknesses to OvercomePoor Financial actionFord didnt perform very well in FY2008 as compared to 2007 and its income narration seen a decline of 15.3% (Table 4 Appendix D) which was widely due to the ceding back and lower revenues of Jaguar and Land Rover. The Jaguar and Land Rover was sold later that year in order to control companys financial authority and to regain the giveors trust.Sluggish Performance of CompanyThe best performing markets of the world for Ford saw a steep decline in 2008. North-America that accounts for close to half of the companys revenue saw downfall of nearly 24% gibe to Datamonitor (2009), other parts of world saw the same picture.Poor coin FlowsAccording to Datamonitor (2009) Fords hard currency flow declined badly endangering companys position at one stage. Although it came out of nook without the US Governments help exclusively it shows ineffective cash management by the company. So, Ford still need to do a lot in order to gain its pre 2007 state.4.3. Opportunities to ExploitPotential Asian MarketEverybody is aware of India and Chinas im portance as a developing market for small sized vehicle and it is also mentioned by Fords CEO Alan Mulally in one his interview as For small car, India is the centre of the Universe.(Business Today Sep. 2009)According to Market Watch (2009) in 2008 the Chinese new car market reached $98 billion which grew by 14% which is expected to grow to $one hundred fifty-five billion by 2013. On the other hand India is also rising slope as a strong economy which means consumption of more vehicles. This is a potential opportunity for Fords to capture this part of world through its strong presence in the market and through its high class manufacturing capabilities.Hybrid, Electric and Hydrogen VehiclesThe high fuel price increased the fill for fuel efficient vehicles and as everybody is chemise to hybrid cars which means beside few years are vital for Ford in order to cope the demands of hybrid vehicles.The worldwide demand for hybrid vehicle is 800,000 units in 2009 and is estimated to grow at 4.5 million units by 2013 (Market Watch 2009)In 2012 Ford is expecting to launch in third generation of hybrid vehicles including a common scold in version (Ford.com). Also there is significant opportunity to invest in electric and hydrogen vehicles which seems to be next car aft(prenominal)wards the hybrid cars.4.4. Threats to OvercomeIntense CompetitionFord is having intense competition from its rivals especially Toyota which is trying to issue forth a grip on US market. Another factor behind this competition is increasing fuel and raw material prices which are giving hard time to keep the payoff cost low and prices competitiveRecessionAlthough economists are saying that the inlet is over but actually not for the auto industry as more people are losing jobs, revenues are getting lower and more companies look towards government help in order to survive.Ford was the only company among the big three in US that survived without the bailout but corner did affect its cash flow s.5.0 Porters Five Forces Model for Ford5.1. Bargaining indicator of SuppliersThe automobile industry has a huge supply market which relies on few car makers to sell their products in order to survive in the competitive market. The key inputs required by the manufacturer are not much differentiated by the other supplier and it shows the detailed switching costs and wider choice of supply. This shows a elflike power in the pass on of supplier but the only thing strengths the power of supplier is the fiber of their products which give them a little edge on car manufacturers but overall, supplier holds moderate powers over their buyers.5.2. Bargaining Power of CustomersBefore the nook auto crises the market was dominated by the few players and people were mainly relying on local firms mainly in the US with the choice of few, but as the international firms made their way into the global market (Toyota Honda in US) the customers start getting more choices.People dont often buy a car neither buy them in bulk which shows a little or no power in terms of bargaining and on top the strong brand names in the market even further weakens their power. There is huge potential market for new cars, although there is a little switching cost but consumers are price sensitive and brand conscious too, therefore, this results in reducing their bargaining power. There is another factor affecting their power is polypsony nature of market which means large number of buyers with little power to influence the price. All these factors show a moderate power in hand of customer.5.3. Threat of advanced EntrantsNorth-American seems to be the heaven for the big three until the arrival of Honda into US market and saw a plunge into the share of US manufacturers. Although it is still believed that to get entrance into the auto industry needs not only the large amount of capital but also the innovative engineering and technology. collectible to this factor it is hard seen that a new pla yer emerged into the market.Recent quoin also gives the assurance of no more new arrival in the auto industry for a while. Even it has forced few companies to supply the business and many others to tumble. Therefore, it clearly shows the little or no menace to the active market.5.4. Threat of SubstitutesAlthough there is no alternative of having your own rile but due to increasing fuel prices, job losses, and increasing car prices are forcing people to move towards the cheaper transport alternatives.Mainly used cars, worldly concern transport and somehow cycles are appearing as potential bane for the auto industry. Although these methods are less convenient but due to the recession customer are getting more and more conscious towards bills saving and cutting costs. Overall, it shows the strong threat of substitute at least for time being.5.5. Competitive Rivalry between Existing PlayersThe auto industry is highly competitive in terms of return on investments and it is consid ered as an oligopoly market. In the past this competition wasnt exactly about the prices of cars but only to capture more market share through the innovative design and technology.Most of the firms tried to avoid price based competition but now its comes to the survival of business which lead towards the price war between rivals and it also resulted towards the lower profit margins. Even this competition has intensified firms now offer longer warranties, lower interest rates and better after sale support in order to attract more customers. So, this results as the strong market competition.According to Ebsco (2009) the auto industry is occupied by small number of companies who having a battle of survival. Although there is a little threat of new entrants in the market but the competition among the existing firms is quite intensive. All the other forces are either week or moderate apart from the one (Threat of Substitutes) which can impose danger for a time being.The market has change d its shape due to the recession and many firms including GM is having a tough time and others are having a loss or less profit but there are still opportunities in the market to grow and bounce back.6.0 Strategies7.0 ConclusionReferenceshttp//www.autoevolution.com/news/2009-auto-industry-wrap-up-14948.htmlFordhttp//www.ford .combusiness today 6 sep 2009 N Madhavan (Alan Mulally Interview)Auto gross sales Sales and Share of Total Market by Manufacturer, Wall Street journal Markets Data Center, Nov. 3, 2008http//bigthreeauto.procon.org/Chart