Porters Five Forces analysis of Ford Motor Company

Porters Five Forces analysis of Ford Motor Company

Traditionally `maximizing ' profits has been considered to be the objective of any company . Not any more .This criteria has now been discarded . Now companies are supposed to have multiple objectives monetary as well as non-monetary . There are short-term objectives as well as long-term ones . Strategists are supposed to prioritize all such objectives , keep an eye on the competitors and government policies , so that there is clarity and ease of decision making in situations where there is an apparent clash of objectives . While planning for

long term objectives , the company is supposed to remain competitive . It was in 1974 that Michael Porter , who had been working on a new sub-field of economics known as Industrial Organization (IO , prepared a Note on the structural analysis of industries ' which is considered to be the idea behind the five forces model of Porter in subsequent years (Karagiannopoulos et al , 2005 . In 1980 , he published his first book Competitive Strategy , which owed much of its success to the five forces ' framework , that this focuses on (Porter , 1980 . This framework has since been regarded as a strategic tool to figure out the relative strengths of a company , and decide about the possible strategic policies that a company can adopt to make way for a long term survival

The company can acquire competitive advantage on its rivals on account of marketing efforts , brand building , value creation , innovation operational efficiencies etc . But more important is to sustain the advantage , for which the company will have to take care and devise adequate policies for its customers , suppliers , competitors and other stake holders . The five forces , defined by Porter include

Bargaining Power of Suppliers i .e . to what extent suppliers can have an influence on the policy making of the company . Suppliers play an important part in making quality propositions for the company . The process of value creation encompasses managing quality in the entire chain of processes leading to the production of final product or service

Bargaining Power of Customers i .e . to what extent the customers can affect the policy making and fortunes of the company . Customers are indeed the key ingredients for a company , but the company 's profitability depends upon to what extent customers are willing to pay for the product

Threat of New Entrants often limits the diversification policies of a company . Depending upon such a threat the company decides whether to go it all alone or take the route of merger and acquisition . Such a threat of new entrants often results in a sense of Threat of Substitute products often leads to steps like enlargement of portfolio , enhancement of quality , reduction in prices etc

Competitive Rivalry between Existing Players makes an interesting copy for newss and mainline media , as they thrive on the competitive rivalry and the steps and counter-steps being adopted by the competing companies . The level of competition greatly affects the earning potential of the company

In case of Ford Motors Company the Five...