Can someone rewite this? Microeconomic Analysis for FORD Motor Company Richard J
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Can someone rewite this?
Microeconomic Analysis for FORD Motor Company Richard Jessell ECO-201 Southern New Hampshire University Microeconomic Analysis for FORD Motor Company Introduction Microeconomics refers to the study of behavior of firms and individuals’ decision making when faced with limited resources. Typically, microeconomics pertains to how the market factors affect the conduct and behavior of the firm. Specifically, microeconomics looks at the behavior and decisions of the firms that are affected by the demand and the supply of services and goods. The supply and demand of goods and services has an impact on the prices that are levied by firms and those expected by the customers. Analyzing the microeconomics factors that affect a firm is important as it enables the firm to understand these factors and readily determine their effects. This is important in designing the best way to approach their effects. This paper takes a look at the microeconomic of Ford Motor Company and its consequences to the firm’s operations. First, the paper presents the history of the company. The analysis will then focus on the demand and supply conditions. The determinants of demand and supply for the industry as well as Ford’s are also investigated. After, this paper presents price elasticity of demand and how it affects the company’s pricing strategies. The cost of production as well as an overall market analysis is conducted to put the matters into perspective. The paper ends with recommendations pertaining to how Ford can improve on its operations in relation to the microeconomic factors. History Ford Motor Company was founded by Henry Ford in the year 1903 (Ford, 2016). The company has managed to remain under the ownership of the Ford’s family since its inception. From the year 1909, the company produced its famous Model T cars that revolutionized the sales of vehicles to the middle and lower class workers in large numbers. The company also produced vehicles and planes for the allied group during the First World War. Internationally, the Ford has operated since the year 1904 when it opened a branch in neighboring Canada in a bid to gain the commonwealth market. Whilst the company largely managed to remain competitive and profitable in the line of business they created, trouble started when other companies entered the US market. In 1956, Toyota Motor Company entered the US market and made its first car in the country. This move marks the beginning of a transition in the US motor market. With the 21st Century beckoning to an end, Ford began experiencing falling market share and difficulties in remaining the competitive company that characterized the first half of the 21st Century. Falling demand in its most profitable line of vehicles coupled with the increased costs of operations such as pensions for retiring workers are some of the challenges that were faced by the company during this period. In the year 1996, the company attempted to make a strong comeback in the industry by launching the ‘Ford 2000’. However, despite the streamlined organizational structure as well as success in lines such as Ford Focus, the costs incurred by Ford were still higher compared by those of its competitors. The appointment of Alan Mulally as the CEO of Ford in 2006 provided some form of reprieve for the company (Ford, 2016). ‘The Way Forward’ campaign managed to push the company back into the top three automobile companies in the world. The CEO has managed to make the company more stable with the ability to compete against its perennial competitors. References Ford - global vehicle sales 2012-2015 | Statistic. (n.d.). Retrieved from http://www.statista.com/statistics/380104/global-vehicle-sales-of-ford/
Explanation / Answer
Economics is the study of how individuals make choice under different scenarios. It is the study of behaviour and allocation of resources for efficient outcome. It is broadly divided in two streams that is Macroeconomics and Microeconomics. Macroeconomics involves larger scale studies such as fiscal policy and monetary policy while Microeconomics is concerned about individuals and small firms.
As stated. Economics is all about of allocation of resources and it is real life fact that resources are limited. So there involves market for such resources and subsequent demand and also supply. These market forces decided the price of that resources in such a way that one who will use that most efficiently or to whom it will be most profitable should pay the highest price. Such price laddering decided the market clearing price and quantity. Individuals and firms observe and study these factors for decision making
First, the paper presents the history of the company. The analysis will then focus on the demand and supply conditions. The determinants of demand and supply for the industry as well as Ford’s are also investigated. After, this paper presents price elasticity of demand and how it affects the company’s pricing strategies. The cost of production as well as an overall market analysis is conducted to put the matters into perspective. The paper ends with recommendations pertaining to how Ford can improve on its operations in relation to the microeconomic factors.
History
Ford Motor was founded in 1903 by Henry Ford and 11 other associates but it later converted to family owned organization in 1919. Ford Motors launched its first car in 1903 and five years later it introduced Model T. It was received very well by the public and huge demand fuelled the complete revamp of manufacturing process by Ford, which introduced assembly process to cut the cost and achieve mass production. Model T was one of the best selling cars in the world as it sold 15 million cars before ceasing its production in 1927.
Ford company opened its first international manufacturing unit in Canada in 1904 to cater entire British Empire market. It followed by opening of sales office in Paris in 1908.
In later half of the 20th century cycle turned unfavourably as Japanese companies entered in the US market. Increased operating cost due to higher expenses on labor front such pension benefits along with competition from foreign brands created difficulties for Ford. It tried to gain the market share by launching new products such as ‘Ford 2000.’
However, Japanese companies and especially Toyota, picking points of Henry Ford developed new tactics in manufacturing to increase productivity and reduce the cost. Ford could emulate the success once it has pioneered and continued to linger under the higher operating costs thus making it uncompetitive in automobile market.
Ford took strategic decision to appoint Allan Mulally as a CEO and he made good efforts to steady the ship. Under his leadership, Ford managed to break into the big 3 of the automobile industry. Although the decision to sell JLR brand proved to be wrong as Tata Motors managed to revive that brand to make it a cash generating machine.