Competition & It’s Variables
The SUV & Light Truck industry is highly intense primarily because of changing consumer demands and international competition. The competition is both domestic and foreign with most of the foreign from Honda and Toyota. That being said, the industry is currently worth over 100 billion dollars and Ford is the biggest player earning more than 24% of sales. The other main competitors include General Motors (23%), Chrysler (15%), Toyota (13%) and Honda (9%). Together the big 5 make up over 85% of sales meaning there is a lot of manufacture power since there are a few number of producers making most of the products.
The performance of the industry is primarily driven by consumer sentiment and their purchasing power. Historically these two factors have been weak because of the recent recession, generally poor outlook on the economy and increasingly high demand for fuel efficacy. As consumers are becoming more price consciences they are moving towards lighter trucks with better mileage such as Japanese trucks. Ford is having trouble maintain is dominate position because developing fuel efficient cars isn’t one of their core competencies, in fact Ford does not benefit finically from this market because the production costs incurred in research hybrid and similar technology outweighs the benefit proved to customers. Simply stated, customers are unwilling to pay for hybrid Ford trucks because they do not value the added inputs from the manufacture more than they cost.
Other smaller factors that determine success in this highly competitive industry include flexible cost structures, establishment of export markets, optimum capacity utilization and research/development. The flexible cost structures are extremely important because consumer demand can and has radically changed year by year. Ford must be able to adapt its products to match consumers without a high cost of adapting assembly lines....