Select a public organization (Ford Motor Company of your choice, identify and evaluate the company, its strategy, and performance using class concepts and frameworks, and then provide a set of recommendations based on the risk profile you have developed.
- Choose a publicly held company of your choice.
Addresses the following four parts:
1.background: Summary of company background (e.g., what’s going on and why is this important?).
2.ANALYSIS: Conduct a thorough external and internal analysis (including a thorough evaluation of its financial statements for the most recent 3-5 years) by applying pertinent concepts and theoretical frameworks to identify strategic risks, interpret, and evaluate challenges facing top management.
3.recommendations: Provide feasible recommendations for the company’s strategic improvement that will increase its performance (e.g., where to go from here: what future areas/advice do you have for managers (3 to 4 strategic recommendations).
- bibliography: APA Format with Bibliography.•
There are no restrictions to sources and their dates seehttps://libguides.du.edu/mgmt3000) for easily accessed research sources). •This assignment is open to creativity. The main guidelines I would provide is to say that you should focus on getting to the bottom of the real issues (for example, did Amazon disrupt Walmart or were there other underlying deeper issues that would have led to its decline regardless of Amazon’s presence?
Ford Motor Company
Ford Motor Company is an international automaker headquartered in Michigan. The company, which is family-owned but listed in the New York Stock Exchange, is well known for its trucks and utilities, which generate significant revenue and profits for the entity. For years, the company has maintained a considerable position as the second-largest automaker in the United States. Despite its significant position in the industry, Ford Motors Company is exposed to strategic risks such as shifting consumer preferences, geopolitical and unfavorable trade policies, and supply chain crisis, which require immediate action like the reviewing of supply chain contract, exploiting the potential of other product portfolio and expanding its production to other areas such as Mexico and Eastern Europe to mitigate the effects of these risks.
One of the primary challenges facing Ford Motor Company is the increase in and changes in strategic risks. As the literature suggests, strategic risks are risks resulting from changes in strategic decisions and business environments, such as the entry of new competitors in the market and changing customer demand (Chockalingam, Dabadghao & Soetekouw, 2018). In essence, strategic risks stem from the top management’s decision regarding a firm’s objectives or external factors that threaten its ability to achieve its goals.
An external analysis of Ford Motor Company reveals that consumer preferences’ potential shifts are a considerable strategic risk. As the corporation’s financial report shows, a change in consumer preferences from larger, more profitable vehicles such as trucks and utilities beyond the management’s current planning assumption could result in an immediate adverse financial condition (“Ford Motor Company,” 2019). It is worth noting that trucks are among the company’s cash-cow and a significant contributor to its revenue and profits. For example, in the fourth quarter of 2019, the entity sold 330,075 trucks in the United States, which was about five times the car sales (Deep, 2020). The high reliance on profits from the trucks and utilities and the potential changes in consumer preferences triggered by economic conditions such as plummeting fuel prices and government actions may pose a significant risk to the company’s profit maximization objective. Therefore, the firm’s top management faces the challenge of balancing the sale of its vast product portfolio to mitigate potential losses arising from changes in consumers’ preferences.
Moreover, an analysis of Ford Motor’s external environment reveals that geopolitical and international trade policies could pose a significant risk on the establishment. As stated in the company’s annual report, the global economy’s increasing interconnectedness can have an immediate and material adverse effect on markets globally (“Ford Motor Company,” 2019). For example, as an automaker, Ford relies on global markets to sell its products and generate revenue for its sustainability. Therefore, disruptions in these markets caused by unfavorable trade policies, as is China’s case and geopolitical factors, could adversely affect Ford Motor Company’s financial condition by slowing down the sale of automotive and disrupting its international operations. Hence, the top management has a significant challenge to establish contingency plans that will protect the firm from adverse financial effects stemming from unfavorable political and international trade policies.
The other strategic risk facing Ford Motor Company is the supply chain crisis. As the literature suggests, supply chain risks are the likelihood and impact of an unexpected macro or micro level condition that adversely influences any part of a supply chain leading to strategic, tactical, or operational level failures (Ho, Zheng, Yildiz & Talluri, 2015). In this context, Ford Motor Company is exposed to supply chain risks from its high reliance on sole suppliers of specific components. This claim is evidenced by the most recent temporary halt of its F-150 trucks’ production following an explosion in one of its key parts supplier Meridian Magnesium Products of America, in Eaton Rapids, Michigan (Howard, Bomey, Hinkley & Lacy, 2018). This supply chain risk led to a revenue decline between 2018 and 2019, from 148,294 to 143,599 million in its automotive segment (“Financial highlights,” 2018; “Ford Motor Company,” 2019). Arguably, the high reliance on single suppliers on specific components is a significant threat to achieving the company’s objectives. This strategic risk poses a challenge for the top management of ensuring that the firm’s goals are not disrupted by changes or crises within the supply chain.
As seen from the external and internal analysis, Ford Motors Company is prone to multiple strategic risks such as changing consumers’ tastes and preferences, unfavorable geopolitical factors, trade policies, and supply chain crisis. If left unmitigated, these risks may adversely affect the company’s objectives, financial position, and competitiveness in the industry. Therefore, Ford Motors Company needs to embrace some strategic improvements that will boost its performance.
Among the strategic improvements that the entity should adopt are reviewing its supply chain, exploiting other product portfolio potential, and expanding its production to other areas such as Mexico and Eastern Europe. As noted, the entity’s high reliance on single suppliers exposes it to a supply chain crisis. For Ford Motor Company to mitigate this risk, the management should review their current supply chain contracts and add other diverse suppliers for key production components to avoid the adversities of failure of one supplier to deliver on time. Moreover, Ford Motor company should capitalize on marketing its other product portfolio to make it popular. This strategy would help the company generate significant revenue from its various product segments regardless of consumer preferences changes. Lastly, Ford Motor company should consider expanding its production to other areas such as Mexico and Eastern Europe, where logistics is more efficient for the transportation and exportation of cars out of the country. This expansion would help supplement and enhance the firm’s local production.
“Ford Motor Company 2019 annual report” (2019). Ford. https://s23.q4cdn.com/725981074/files/doc_downloads/Ford-2019-Printed-Annual-Report.pdf
“Financial highlights” (2018). Ford Annual Reports. https://www.annualreports.com/HostedData/AnnualReportArchive/f/NYSE_F_2018.pdf
Chockalingam, A., Dabadghao, S., & Soetekouw, R. (2018). Strategic risk, banks, and Basel III: Estimating economic capital requirements. Journal of Risk Finance, 19(3), 225-246. https://doi.org/10.1108/JRF-11-2016-0142
Deep, S. (2020, June 1). Fourth-Quarter sales 2019. Ford. https://media.ford.com/content/dam/fordmedia/North%20America/US/2020/01/06/sales-4q2019.pdf
Ho, W., Yildiz, H., Talluri, S., & Zheng, T. (2015). Supply chain risk management: A literature review. International Journal of Production Research, 53(16), 1-56. https://www.researchgate.net/deref/http%3A%2F%2Fdx.doi.org%2F10.1080%2F00207543.2015.1030467
Howard, P.W., Bomey, N., Hinkley, J., & Lacy, E. (2018, May 11). Ford F-150 pickup supplier had trail of safety violations before blast hit plant. USA Today. https://www.usatoday.com/story/money/cars/2018/05/11/ford-f-150-supplier-explosion-halted-plant-production-safety-violations/601221002/