Strategic problems can be crucial for any businesses and companies. There are so many problems that can affect performance of business. One of them might occur when auto makers limit themselves to narrow product line and don't invest in new- product development and innovation. Product development requires a lot of capital and time and when management refuse to look into the future the company will suffer, because it is not easy to satisfy customer's needs in today fast changing environment.
Ford is known as one of the largest US car maker. For many years their focus and concentration was on trucks and SUV. In a such competitive industry American legend have problems to attract customers due to high gas prices and tough competition from Japanese car makers: Toyota and Honda. Customers want to drive some mid-size and small hybrid cars and Ford is working hard to get loyalty of their customers back by improving quality of their cars and investing in a new products such as crossover vehicles. Company also face a big financial problems (net loss in 2007 was $ 2,7 compare to 2006 $12.7 billion). They had to put a lot of assets as collateral, reduced operating cost, cut workforce and sold their luxury brand Aston Martin . Hopefully, the management of the company will find the right solution in a such challenging time.
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Natalya,
Your suggestion of what Ford's problem is very interesting. The question of what has been ailing the US auto manufacturers is a question that has been bothering me from some time now. I kept thinking that the main problem was that the manufacturing costs have become too expensive compared to car manufacturers outside the states. I guess you're right, and that less capital allows for less models out there.
I agree that Ford's problem really came from the fact that they didn't put enough emphasis into expanding into new markets. It continued to produce the same type of cars while market demand was continuously changing. When Japanese cars were introduced, the younger generation was easily attracted and taken away from them.
As someone who had never purchased a car, and as someone who had been living i NY for 5 years, and as a potential auto buyer, I must say you are absolutley right, I would never buy a Ford, to me Ford is somethign a retired 60 year old buys, it seems as if they have trusted too much on brand loyalty and had lost the market in the process, seeing their advertisements on TV they still focus on the american who would buy the large truck, they seem to completely neglect a huge market share as they have not shown us, the young potential auto buyers, anything worth buying.
Nice job Natalya. I agree that a business need to evolve according to it's environment. I personally believe that when a business is at the beginning, it should not expand its product. Instead it should narrow it's focus on few similar products. But as the business grow into a larger company then it will definitely needs go beyond its initial products. Once they fulfilled the demand to the maximum point, they need a new product to sell.
I agree with you Natalya. Ford's new cars are not just for like low-income people anymore. They may sell lots of old cars to Taxi company and Polices, but people here want nice decent car especially in this US economy. I heard cars US is lowering the price due to high gas price. I know JEEP lowered the cost now and it's got better looks. anyways i'm just wondering if Ford is doing anything like that..
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