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4.2.2 Easy market entry access and low barriers
Most of the emerging markets are eager for fast economic growth, rapid industrialization and high rate of employment. Therefore, they hope to attract as many foreign investments as possible (John, 2012). In order to realize this goal, most of them have offered easy market entry access to multinational companies. In addition to this, the emerging markets seldom set up too many trade barriers to the multinational companies. 4.2.3 High purchase needs
As emerging markets are not very powerful and advanced in automobile industries, the entry of the Ford Motor has well compensated for it. And the domestic needs for automotives will generally go to the Ford Motor, which promises a big market share for it. 4.3 challenges 4.3.1 Political challenges
While emerging markets like China is politically stable, some like Saudi Arabia are not. Compared with the economic aspect, challenges from the political respective are more easily influenced by a countries making of a law, changing of national leaders and even population growth and other activities such as demonstrations.
Due to this reason, the Ford Motor has conducted a lot of political risks analysis in the emerging markets. What’s more, it also consults many professionals who concentrate on the analysis on political risks in these markets. 4.3.2 Economic challenges
Researches have shown that emerging markets are more easily affected by the world economy. Therefore, this has constituted a big challenge for the Ford Motor. Whenever there is volatility in the world economy, the emerging markets will be affected (Isabel, 2005). The results may include a change in its interest rates, the rate of tariffs and may be also the change of laws relating to the economic side. All these are challenges to the Ford Motor as regards the emerging markets. Luckily, the Ford Motor is now paying a lot of attention on the analysis of market environments in an attempt to avoid economic risks. 4.3.3 Relatively low purchasing power
As its definition shows, most of the emerging markets are the under-developed and developing countries, which means that they are not very rich, and that their national wealth is not too much. Therefore, their purchase power for the automobile is relatively low. This is a great challenge for the Ford Motor.
5. An evaluation of Ford Motor’s international market entry modes
The selection of the appropriate market entry modes is of great importance to the majority of multinational companies. For those companies of small and medium-size, the thing of importance is to identify their target market, while for well established ones, it is important to decide which market to enter and how.
The below figures show the different entry modes that can be adopted by multinational companies 5.1 Contract manufacture
The Ford Motor has adopted the mode of contract manufacture as one of its international market entry modes. In fact, contract manufacture is a local manufacture which produces and sells products for its parent factory. The Ford Motor has build up a lot of contract manufacture around the world. From the income and profits perspectives, this is an especially successful mode for the Ford Motor in that it saves a lot for the labor costs and transportation costs. What’s more, by arranging contract manufactures, the Ford Motor can better focus on the purchasing, producing and selling activities because its investment has already been fixed. 5.2 Assemblies
It is a good idea for the Ford Motor to set up companies especially for assembling in the host countries. And actually, the Ford Motor has already done so. By doing in this way, the Ford Motor is saving a lot for the tariffs because normally, the tariffs on components are much lower than that on finished goods (Dusko, 2005). Besides, as cars are usually large products, there is another advantage for setting up assembly companies that is to save the costs for large products as well as to reduce the transportation expenses. There are also other advantages. For example, to set up an assembly company is one way of realize the specification of the work, which can help the Ford Motor to gain an economy of scale.
6. Comment on Ford Motor’s structure and control mechanisms for its international business operations
Early in the 1980s, the American automotive industry has gone through a depression. Ever since then, the Ford Motor has made a lot of trials in attempts to reduce the costs. One of them was the move to put accounts payable together with other departments in the company. Leading by this way, the Ford Motor has adopted the Mazda. And luckily, the Ford managers finally realized their goal.
7. The role of marketing in Ford Motor’s international business operations
The Ford Motor has always been taking a leading role in marketing, thus providing accurate and valuable analysis for many of the countries in which it invests. Therefore, the past decades have witnessed the fast growth of the Ford Motor’s businesses in different countries (Manrai & Manrai, 2001). As for marketing, the Ford Motor has adopted a lot of different methods, such as cross-cultural research, foreign research and multi-country research. Anyway, these marketing methods have helped the Ford Motor to identify the local market chances and grasp the market trends. More importantly, marketing helps to determine the strategies for development.
8. Management innovation for a better Ford Motor in the future
For the automotive industry, one of the biggest challenges now is relating to the topic of how to move on from a single engineering manufactures to a company with multifunction (Robert, 2010). As a matter of fact, the Ford Motor has many actions for a better future of itself, for instance, the customer focus and current development of products and the improvement of after sales services. However, management innovation has now appeared as a brand new concept for the multinational company.
A lot of evidences have shown that management innovation could enable a multinational company to enjoy some competitive advantages. Actually, the GM Company has already taken the management innovation which is known as the G-form (Ashoka, 2006). Besides, Toyota has also adopted the method of management innovation as lean production. Though researches have shown that these management innovations are closely associated with some of the cultural and institutional factors, the Ford Motor is indeed one of the multinational companies. By management innovation, the Ford Motor can at least narrow the gap between itself and other competitors in the automotive industry.
In addition to these, the Ford Motor itself is actually qualified for management innovations (Andrew & Samantha, 2006). On the one hand, the Ford Motor is operating its cross-border businesses in an international context which will inspire it to create a lot of management innovations. On the other hand, the complex domestic and foreign market situations also require the Ford Motor to make new management innovations so as to keep itself up to date, both in information and technologies. Actually, only by doing in this way can the Ford Motor promises itself a better company in the future.
9. Conclusion
Being one of the multinational companies in the automotive industry, the Ford Motor has gone through many years of development, during which it has both ups and downs. Nowadays, as globalization is progressing, a lot of companies are going international and competition has become more and more fierce (Debra & Colin, 2010). The Ford Motor has expanded its business into both developed countries and the emerging markets. On the whole, it has gained huge success. However, it also has some space to get itself improved, among which management innovation appears as a good idea.
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