Ford's E-Commerce Strategy

EXECUTIVE SUMMARY

In early 1999, Ford announced an integrated e-commerce strategy, with the objective of creating an interface among customers, dealers, vendors and even competitors. The SWOT analysis was studied for the development the strategy, as well as the chances of success of such strategy. With Ford's desire to shift from 'dealer-centric' selling to 'consumer-centric' selling, we looked at the typical characteristics of online customers and how dealers could reinvent themselves to remain relevant in the changing automotive industry. The quest of Ford's goal to become the world's leading consumer company that provides automotive products and services has compelled Ford into integrated e-commerce strategy in connecting with consumers through multiple touchpoints namely those Ford's automotive-related services. (ie. Hertz, Ford Credit and Kwik Fit) Ford has also reviewed her competitive advantage against her challengers to remain on course of her vision: "To become the world's leading consumer company for automotive products and services".

INTRODUCTION

With the rapidly advancing technologies that are occurring in modern business, organisations are required to be ready, and able to adapt within their ever-changing environment. It is true across all diverse industries that in order to stay competitive, organisations must be able to utilise the various tools that technology has to offer. Technological factors have been of growing importance, particularly in recent years. A major factor involved in these technology issues is the use of the Internet as a major issue to modern organisations. The Internet has been rapidly growing since its inception and is now commonly used in all sectors of societies, in all corners of the globe. The Internet has quickly become one of the most valuable assets in modern technology, and as such, is developing as an integral part of modern commerce.

FORD'S e-COMMERCE STRATEGY

In early 1999, Ford announced an integrated e-commerce strategy, with the objective of creating an interface among customers, dealers, vendors and even competitors. The strategy was expected to improve its supply chain management practices (through the creation of a B2B integrated supplier exchange), develop long-lasting employee relations to offering features customized according to the needs of the customers, online. (similar to Dell Computer's model) Hence the main objectives were to bring speed, convenience and information to customers. This initiative made Ford one of the first auto manufacturers to do business through the Internet.

SWOT Analysis of FORD

A SWOT analysis identifies a company's internal strengths and weaknesses and possible external opportunities and threats. Hence with this information, Ford began to formulate, and possibly implement, competitive strategies to deal with its future.

Strengths

* Size/global exposure - Largest trucks manufacturer in the world.

* Diverse range of products/business - world number two manufacturer of cars, auto-rental business with Hertz, conducts business with it subsidiary, Ford Credit and Kwik-Fit holdings, which provides car financing and repairs respectively.

Weaknesses

* Loss of market share - Due to foreign competitors, such as Toyota Motor, increasing their market share in the US.

* Struggling European operations - Increased competition from both European and Asian brands, and a negative outlook on net vehicle pricing in Europe has implemented dramatic cost cutting measures.

* Pensions contributions - Faces rising pension and health-care obligations for its large retiree base.

Opportunities

* Asian automotive market - Ford Motors has formed strong links in the Asian market with stakes with Mazda.

Threats

* Global industry exposure - Auto & Truck Manufacturers Industry has seen a dramatic slowdown over recent years. This is due to the world economy, increased taxes, petrol prices and general running costs may reduce public demand for new cars.

* Competitive environment - Strong competition from GM, DaimlerChrysler, Honda, Toyota, Nissan, Volkswagen, Volvo, etc.

Ford's current chairman and CEO, Bill Ford has a simple strategy, "Our vision for the future is simple: We want to build great products, a strong business, and a better world." Ford's vision is, "To become the world's leading consumer company for automotive products and services"

Chances of Success

However, there are many obstacles on Ford's path. To increase her success rate, Ford must shift from 'dealer-centric' selling, where consumers choose from the limited selection on a dealer's lot to 'consumer-centric' selling, where the buyer gets what he/she actually wants.

Cars are not like computers, which have just a few components and could be shipped by UPS in couple of days. Automobiles have thousands of parts produced by thousands of suppliers; hence the biggest challenge/success factor is to integrate all the individually wired entities in the value chain into a single, large network.

In addition, Ford needs to be constantly wary of stiff competitors like Nissan who claimed to be the first major automaker to introduce Web-enabled build-to-order (BTO) manufacturing and that its front-end configuration engine will provide the basis for a Dell-like custom manufacturing system which Ford is rather skeptical about.

The tussle with Franchise Laws, especially in US, is also a perpetual issue in which Ford has to content with and it will continue to be an obstacle for Ford's future.

WEB CUSTOMERS

Though there are customers who are willing to shop online for cars, I would like assume that such customers would have at least physically viewed the cars or they are so filthy rich that buying a car is synonymous to buying flowers online. Hence the typical characteristics of web customers are:

* Yearn for convenient customer service, 24 hours a day, 7 days a week

* Seek

...