Case study

Swarupa Kudale
2k181151
Finance specialization

COMPARATIVE REVIEW ON STRATEGY ON FORD MOTOR AND GENERIC

MOTOR
Ford Motor Company’s market position as the fifth biggest automobile manufacturer in the
world is supported through the firm’s intensive growth strategies aligned to its generic strategy
for competitive advantage. Intensive strategies are used to support organizational growth. In this
case, Ford’s business growth is dependent on the varying emphases on market penetration,
product development, and market development. On the other hand, a generic strategy defines the
general approach used for business competitiveness. Ford’s generic strategy changes over time,
although its original generic strategy of cost leadership remains a significant force. Ford’s
generic strategy and intensive growth strategies determine the company’s approaches to grow its
business. Ford Motor Company’s generic strategy (based on Michael Porter’s model) shows the
general trajectory of developing the firm’s competitive advantage. The intensive growth
strategies define specific approaches used to support Ford’s growth. Ford Motor Company’s
Generic Strategy (Porter’s Model) Ford’s generic strategy has changed over time. Initially,
Ford’s generic strategy was cost leadership. This generic strategy supports business competitive
advantage on the basis of cost reduction and low prices to attract customers. In the early 1900s,
Ford’s vision was to make its automobiles affordable for working-class Americans. To apply this
generic strategy, the firm developed the assembly line method to minimize costs and maximize
productivity. Ford succeeded in attracting customers based on this generic strategy. A strategic
objective for competitive advantage based on this generic strategy is cost minimization through
process streamlining. However, Ford Motor Company’s generic strategy did not protect the
business from competition with General Motors. By 1927, GM overtook Ford to become the
largest American automobile manufacturer. GM used its generic strategy of broad differentiation
to offer a wider array of products. Americans were gaining higher wages and started valuing
style and design, and not just low prices. Today, given its current One Ford plan, Ford Motor
Company has been moving its generic strategy to emphasize differentiation for competitive
advantage. Ford still maintains its cost leadership generic strategy. However, the firm is moving
toward the broad differentiation generic strategy to compete against firms like GM and Toyota.
Thus, a strategic objective based on Ford’s current generic strategy adjustment is product
innovation to gain stronger competitive advantage.
Ford Motor Company’s Intensive Strategies (Intensive Growth Strategies) Market
Penetration.
Ford’s primary intensive growth strategy is market penetration. This intensive strategy entails
selling more products to current customers to grow the business. Ford applies this intensive
growth strategy by increasing the number of its dealerships and increasing sales volume. This
intensive growth strategy is linked to the strategic objectives of increasing customer retention
and increasing sales to existing customers. This intensive strategy is linked to Ford’s generic
competitive strategy by highlighting the benefits of low costs and increasing differentiation to
gain a bigger market share.
Product Development.
Ford Motor Company uses product development as its secondary intensive strategy for growth.
This intensive growth strategy involves offering new products to increase sales revenues. Ford
applies this intensive strategy through R&D investments for new products, such as the all-
electric Ford Focus Electric. A strategic objective based on this intensive growth strategy is to
increase R&D investments for product innovation to improve business growth and competitive
advantage. This intensive growth strategy supports Ford’s generic strategy adjustment toward
broad differentiation.
Market Development.
Market development is only a minor or supporting intensive strategy for Ford’s growth. This
intensive growth strategy involves providing entirely new products or entering new markets or
market segments. Ford already has global operations, which means that market development is
not as significant as it has been for the business in its early years. Also, Ford has not taken any
significant strategic action to enter entirely new industries or market segments in recent years.
GM MOTORS
General Motors Company (GM) has a generic strategy (Porter’s model) that ensures competitive
advantage amid increasing competition in the global automotive industry. Michael Porter’s
model indicates that competitive advantage is created through a generic strategy that the
company effectively applies in relation to variables in the target market. In this case, General
Motors’ generic competitive strategy emphasizes the benefits of economies of scale, which is
one of the company’s strengths. The firm also employs intensive growth strategies based on the
business effects of such generic strategy. Each intensive strategy contributes to the growth of
General Motors. However, these intensive growth strategies have different degrees of
significance in the business. For example, General Motors benefits more from one intensive
strategy compared to the other intensive strategies in terms of their effects on organizational
growth and appropriateness to the target market for automobiles and related products. The
effectiveness of General Motors’ generic strategy has a direct link to the organization’s ability to
address issues associated with competitive rivalry. Competition is a major external force that
affects the company’s growth and development. The Porter’s Five Forces Analysis of General
Motors Company shows the significance of competition in determining the performance of the
automobile business. Thus, the generic competitive strategy must match the needs of the
organization, while considering the external business environment. On the other hand, the
effectiveness of General Motors’ intensive growth strategies influences how the business grows.
The competitive advantage based on the generic strategy and the growth potential based on the
intensive strategies contribute to the long-term success of General Motors.
General Motors Company’s Generic Strategy (Porter’s Model)
General Motors’ generic competitive strategy is cost leadership. Based on Porter’s model, this
generic strategy creates competitive advantage based on the attractiveness of low costs and
corresponding low prices of products. For example, General Motors’ automobiles are offered at
prices that are lower than premium or luxury automobiles like Mercedes-Benz. The relatively
lower prices attract customers, leading to GM’s competitive advantage. A strategic objective
based on this generic strategy is to enhance manufacturing process efficiencies through
automation and continuous improvement to support General Motors’ competitive advantage.The
differentiation generic strategy has a supporting role for General Motors’ competitive advantage.
However, cost-leadership remains the company’s main generic competitive strategy. In
differentiation, the strategic objective is to make products attractive on the basis of features,
brand image, quality, and related variables. For example, the differentiation generic competitive
strategy is applied through General Motors’ research and development efforts toward producing
energy-efficient automobiles. The features of these products should also differentiate them from
the competition, to ensure the company’s competitive advantage. This generic strategy supports
the technological advancement and value emphases in General Motors’ mission statement and
vision statement, respectively.
General Motors Company’s Intensive Strategies (Intensive Growth Strategies)
Market Penetration (Primary).
General Motors uses market penetration as its primary intensive growth strategy. This intensive
strategy contributes to the company’s growth by increasing sales in current markets. For
example, General Motors expands its market reach by increasing the number of its dealerships.
In this way, the distribution of GM automobiles increases, improving customers’ access to these
products. General Motors’ cost-leadership generic strategy creates competitive advantage that
facilitates the successful implementation of market penetration. Based on this intensive growth
strategy, a strategic objective is to continue expanding the company’s distribution network to
support business growth and development.
Product Development (Secondary).
Product development serves as a secondary intensive growth strategy in the case of General
Motors Company. This intensive strategy ensures growth through new product sales. For
example, every new product or product line translates to a potential increase in GM’s revenues.
This intensive growth strategy supports the differentiation generic competitive strategy by
focusing on uniqueness in the design and features of new products. Thus, General Motors’
strategic objective based on product development is to achieve a high rate of innovation in new
product development.
Market Development (Supporting).
General Motors employs market development as a supporting intensive strategy for growth. In
this intensive strategy, the company grows by entering new markets or market segments. For
example, General Motors’ growth as a global automotive business has been significantly based
on new market entry, such as when the company adds a country to its areas of operations and
sales. However, considering the firm’s current worldwide operations, this intensive growth
strategy now only serves a supporting role in business growth. Based on market development, a
strategic objective is to enter new markets in Africa or develop novel products to enter new
market segments for General Motors’ growth. The differentiation generic strategy can contribute
competitive advantage needed to maximize the benefit of implementing the market development
intensive growth strategy.
Diversification (Supporting).
Diversification is another intensive strategy that has a supporting role in General Motors’
growth. The company has a low probability of using this strategy. Diversification supports
business growth through new business. For example, General Motors could acquire a car rental
services company in a domestic market to fuel business growth.