Unit 5, Assignment 2
This paper will provide a brief background on Ford Motor Company, its industry structure, how it’s regulated by the EPA, its competition, factor markets, pricing, economic profits, cost structure and the overall long-term outlook of the company. I’ll also do a critical analysis of the microeconomic and macroeconomic environment and challenges that the company faces. “Ford is an intrgal part of the automotive manufacturing industry and is an important component of the U.S. economy. It’s particularily important in several mid-western and southern states.” (Thompson, M. F., & Merchant, A. A. (2010) Below is a graph depicting how significant the automotive industry is in the United States. I generated the graph on the U.S. Bureau of Economic Analysis website.
Ford Motor Company (FORD) is an Automotive Manufacturer that is comprised of two sectors. First is the automotive sector. It is made up of two brands of vehicles, Ford and Lincoln. The other sector is Ford Motor Credit Company LLC. Ford incorporated in 1919 and is now a global corporation. Ford has operations such as: Ford North America, Ford South America, Ford Europe, Ford Asia, Ford Pacific and Ford Africa. The North American operation also encompasses the development, manufacturing, distribution and parts associated with Ford and Lincoln automobiles. (www.reuters.com) Ford operates nearly 65 plants worldwide, but gets more than half of its sales from North America. Ford’s headquarters are in Dearborn, Michigan. (finance.yahoo.com) Industry
“Ford Motor began a manufacturing revolution with mass production assembly lines in the early 20th century, but today it is one of the world's largest automakers.” (www.hoovers.com) Some of Ford’s popular models are my favorite the Ford Mustang, the F-Series pickup, and the very popular fuel-efficient Focus. Ford had a partnership with Mazda from 1979 -2010 and owned 33.3%. In 2006 they decided to sell off their interest in Mazda. It was just in time because the economy hit the wall in 2007 – 2008 with the banking/lending industry and the bailouts of GM and Chrysler. By 2008 Ford only owned 3% of Mazda. (en.wikipedia.org) Industry Structure
Ford started off as a Monopoly when it first introduced the Model T in 1908 with a price of $825. Henry Ford, the inventor of the Model T and mass assembly line production had once “envisioned his Model T in every American garage and a world of travel round every corner.”(www.resorttrades.com) that dream was interrupted by Americans wanting an identity and not wanting “any color as long as it’s black.” (www.tandfonline.com) In 1923 Alfred Sloan began working with another automotive manufacturer called General Motors. His philosophy was, “A car for every purse and purpose.” And with that, he carefully positioned each car model to attract a unique market segment and price point. This reduced cross-line sales while creating an upgrade ladder from the economy-priced Chevy to the luxury Cadillac. And he offered them in colors—lots and lots of colors.”(www.resorttrades.com) Today Ford is part of an Oligopoly. It’s an oligopoly because there’s only a small amount of companies selling similar products. Ford has 3 major competitors they are General Motors Company, Chrysler Group LLC, and Toyota. (business.lovetoknow.com) there are other competitors such as Kia, Honda, Volkswagen, Daimler Benz, Saab and Nissan. The list doesn’t encompass all but the rest of the competition is relatively smaller and they make up a small percentage of the automotive market. EPA regulations
U.S. Environmental Protection Agency (EPA) has required companies like Ford to meet greenhouse gas emissions regulations using their authority under the Clean Air Act, while the U.S. National Highway Transportation Safety Administration (NHTSA) has continued to pursue fuel...