External Factors Affecting Ford Motor Company
External Factors Affecting Ford Motor CompanyIntroduction
The purpose of this report is to examine the external factors affecting Ford Motor Company within the last four years. Dr. John L. Waltman has authorized this report. It is based on secondary sources, mainly gathered through the First Search Periodical Index. Authorized Publication includes Wall Street Journal, Financial Times, New York Times, and sources from the Internet. This report examines and analyzes these three external factors:
v Consumer Demand
v Increased Fuel Costs
v Visteon’s Spin Off
Consumer Demand
Ford Motor Company’s profits had been low in 1996. The company’s consumers were demanding increased quality and option at low prices. Ford was forced to cut costs. Ford also planned to reduce their product development time. The consumers demand for higher quality and more options had a major impact on Ford.
Consumer Demand Brings Low Profits
In 1996 consumers were demanding better vehicles for lower prices and Ford Motor Company’s Profits were low. Fords was not meeting these consumer demands. A Rubber and Plastic News article stated that this puts the company under a lot of pressure to cut costs (9,24). Ford Motor Company’s vehicles were not in demand and sales were low. Ford Motor Company’s profits were affected by this consumer demand.
Suppliers were a part of the plan
Ford Motor Company’s customers were demanding a better product for a cheaper price. A Rubber and Plastics News article stated that Ford’s suppliers play a major role in the plan to cut costs (9,24). Ford was forced to cut cost to be able to bring back the profit. Ford Motor Company and its suppliers were working together to cut costs. Not only did this consumer demand affect Ford, it also affected Ford’s suppliers.
Decreased Development Time
The need to cut cost had affected the company in many ways. Ford’s need to cut cost impacted their decision-making. A Rubber and Plastics News article stated the company was going to reduce cost by cutting vehicle development time (9,25). This was another impact that consumer demand had on Ford Motor Company.
Increased Fuel Costs
Ford Motor Company is the second largest automotive manufacturer in the world (3). Half of the Companies income is from selling high margin vehicles that are not very fuel efficient (13,47). Prices for fuel are increasing and have caused consumers to demand more fuel efficient vehicles. A recent Indonesian Commercial Newsletter states that fuel prices are decided politically and not by market demand (10,7). Concerns about global warming have also affected the automotive industry. This has caused Ford to change its construction of its Sport Utility Vehicles (SUV) and to use more magnesium parts.
Federal Fuel Standards
In 1997 there was a global warming conference to be held. Many of the issues to be discussed were the automotive industry and low fuel costs. It was the concern of many nations to...
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