FORD
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Ford: Opportunities and Risks
Brittany Crowe
Colorado Technical University
8/22/18
FORD: OPPORTUNITIES AND RISKS
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Ford: Opportunities and Risks
Compared to the early decades of the twentieth century, businesses in the contemporary
world are able to engage in activities across continents, much due to globalization. According to
research, globalization was in the early stages regarded as a destabilizing force in social,
economic, and global equity (Wejnert, 2014). However, the contemporary society has since
learned how best to harness the advantages presented by globalization to the benefit of the
businesses in question. This explains the continuous use of internationalization opportunities by
businesses to expand their operations to overseas markets as has been the case with the Ford
Motor Company’s operations in Europe despite the company being American. However, such
opportunities from globalization do not necessarily imply the absence of challenges from the
progress. Just as much as there are positive gains from operating in a globalized market, the
companies operating therein have had to deal with issues ranging from legal, political, to
compete for the market share that they would otherwise not experience.
Ford Opportunities from Globalization
One of the primary advantages of globalization has been an increase in the market
available for business operation. In essence, globalization involves an improvement in transport
and communication across different locations, to the extent of improving the level of interaction
between the regions involved (Wejnert, 2014). Therefore, Ford Motors has opportunities to
conduct business with ease in Asia without necessarily having to open offices in the country. On
the contrary, if the company appropriately conducts marketing in markets such as Asia and
Africa, it would gain significant market share to the extent that it would easily export products to
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these markets to the consumers therein. Therefore, globalization provided an opportunity for
companies to reach an infinite market size due to ease of communication with consumers within
the said markets.
Additionally, globalization provides an opportunity for Ford Motor Company to diversify
its products to suit the different markets available. In essence, one of the company’s weaknesses
has been the high cost of its units compared to the cost of the units sold by its competitors
(Rowland, 2017). Under a diversity program, the company would be in a position to make both
high-end vehicle units and units good enough for the consumers in a less endowed economic
market. For instance, some vehicle units may be appropriately suited for the American and
European markets where off-road vehicles are not needed as much by the consumers. On the
contrary, focusing on a market such as Africa would require specialization to suit the off-road
requirements of the market therein. Such specificity would present economies of scale to the
company, which ultimately make production cheaper, and could end up reducing the cost of
making the units. Therefore, the diversification resulting from globalization increases the
possible gains from an increase in sales volumes.
Ultimately, the primary gain from globalization has been an improvement in the ease of
business management. For instance, Ford has been in a position to observe the changes in the
European market following the Brexit vote, based on which it has made the decision to remain in
the European market irrespective of the potential changes that could occur in the future within
the market (Winton, 2018). Ultimately, the management in Europe is able to communicate with
that in the United States and consult on different business decisions with much ease owing to the
opportunities presented by globalization. The ease of interaction among the business managers in
different geographical locations presents an opportunity for Ford Motors to make further
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investments based on the market conditions in various locations. Just as much, it would be easy
to establish operations in other areas such as Africa and Asia based on the ease of
communication with the expatriates in these areas.
Ford Risks Associated with Globalization
While globalization has increased the opportunities available for various businesses, it
would be important to note that the improvement in opportunities is available to all investors
with enough resources to make the investment in the market in question. For instance, Toyota’s
success in the American market is a primary result of the impact s of globalization. Despite being
an Asian company, Toyota has managed to engage in operations effectively within the United
States at the expense of native producers such as Ford Motors. Consequently, with every player
competing in a globalized market, there will always be a case in which some producers are
pushed out of the market due to challenges associated with efficiency as would be provided by
operating on economies of scale perspective. Such advantages have benefited Toyota much more
than they have worked to the benefit for Ford.
On the other hand, operating in an international market provides legal challenges that
would otherwise be non-existent if the market was not as globalized. For instance, the Brexit
decision implies that companies that initially used Britain as the base of their operations in
Europe will need to reacquaint themselves with the legal parameters that will guide their
decisions once the process is entirely complete. Ford Motors chose to remain in the European
market, and such would require that the management and other executives consider the legal
challenges that will result from the changes experienced following the total implementation of
the British nationals’ decision to leave the European Union.
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Additionally, globalization exposes companies to social, economic, and political issues
that are at times to the detriment of the companies in question. For instance, the trade war
between the United States and China would not be as impactful to the global economy if the two
economies were not as influential to the world market. However, the adversities experienced by
the two counties due to the continuous policy changes intended to influence either one of the
economies has a trickle-down effect on Ford, whereby consumers in either market may decide to
reduce their consumption levels of the product, owing to constraints in their income levels.
Under different circumstances, Ford would not be concerned about the trade war since its
impacts would be limited to the company’s consumers.
In conclusion, globalization and the internationalization of trade relations have been of
significant consequences for different industries. Its positive impacts on Ford Motor Company
have included an increase in the market available for the business in addition to providing an
opportunity for further investment across continents. However, such a venture also exposes the
business to various risks such as potential political adversities in one country having an impact
on the entire company. Therefore, despite the existence of infinite opportunities for investment in
different geographical locations, it is always important for a business to conduct a clear analysis
of a market before making an overseas investment.
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References
Rowland, C. (2017, February 5). Ford Motor Company SWOT analysis. Panmore Institute.
Retrieved from http://panmore.com/ford-motor-company-swot-analysis
Wejnert, B. (2014). Reflections on the impact of globalization: Diffusion, equality, and
opportunities. In Voices of Globalization (pp. 255-261). Emerald Group Publishing
Limited.
Winton, R. (2018, January 18). How committed is Ford Motor to its European operation?
Forbes. Retrieved from https://www.forbes.com/sites/neilwinton/2018/01/21/howcommitted-is-ford-motor-to-its-european-operation/#44c2e4520ea4
INTERNATIONAL BUSINESS OPERATIONS
International Business Operations
Phase 2 Individual Project
Colorado Technical University
Brittany Crowe
8/29/2018
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INTERNATIONAL BUSINESS OPERATIONS
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International Business Operations
Introduction
International business is a broad term that is used to refer to the internationalization of
multinational corporations as they expand their operations into new countries and regions across
the world. When a business has its operations in more than one country, it is considered to be a
multinational corporation. It does not depend on which operations or activities take place in which
country so long as the operations are in different countries. When a firm is a multinational, it must
possess the capability to coordinate different activities that are being undertaken simultaneously
through proper management. The extent of the operations of multinational corporations means that
there are very huge risks that are associated. However, there are also huge benefits that are
attributable to institutions that operate as multinationals. This is mainly due to the large market
where they can sell their products and services. The aim of this essay is to pick an organization of
interest and describe its business operations while at the same time assessing the risks and benefits
that it faces in its operations around the world.
Ford International Business Operations
Ford Motor Company is an automobile manufacturing multinational company that is based
in Dearborn, Michigan. The company is considered to be one of the biggest automakers in the
world with a significant percentage of the international market. The company was incorporated in
1903 by Henry Ford. It produces two major types of vehicles namely luxury cars under the Lincoln
brand the commercial vehicles under the brand Ford (Banham, 2012). Apart from the Ford
automobile line, Ford Motor Company also owns Troller which is a Brazilian car manufacturer. It
INTERNATIONAL BUSINESS OPERATIONS
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also has an 8% stake in United Kingdom's Aston Martin. In China, it has a 49% stake in Jiangling
Motors. Apart from these investments in the automobile industry, Ford is also in business ventures
with other car manufacturers in countries such as Taiwan, Thailand, Turkey, Russia, and in Europe.
The company is listed and traded on the New York Stock Exchange. The family of Henry Ford
still controls some of the major operations through its board and this has ensured sustained success
over the decades.
Due to its many operations across the globe, Ford can be considered to be a perfect example
of a multinational corporation. It produces and sells its vehicles to all countries across the world
meaning that its operations are very vast. In the United States, it is considered to be the second
largest automaker behind General Motors. Globally, it is the fifth largest automaker. In the Fortune
500 list, Ford is listed as the eighth company in the United States. The global revenues also go a
long way to suggest that Ford is one of the biggest companies in the world. The revenue for the
year 2017 was over $156 billion. The net income for the same year was more than $7 billion. In
2017, Ford produced over six million automobiles that were supplied to different countries from
around the world. It employs more than 200,000 people in more than ninety plants in different
destinations around the world.
In its operations, Ford is faced with many risks and benefits due to the vastness of its
activities and the large scope in terms of areas where operations are undertaken. Assessing these
risks and benefits requires an individual to clearly identify its operations through the use of
examples in its activities. One of the major benefits of operating on the international scale is that
there is a greater potential for growth than in the local or domestic market. The domestic market
is limited in terms of units that can be sold to the public since the number of consumers is less.
However, the international market is one that can never be exhausted since there are over seven
INTERNATIONAL BUSINESS OPERATIONS
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billion people in the world who could act as ready markets for the products and services that are
produced. With a bigger market, profitability can be guaranteed through high revenues as the one
produced by Ford.
Operating on an international scale also improves the financial performance of the
multinational corporation. Financial performance can be improved through enhanced stability in
revenue and profits. When a firm is operating in the domestic market, there are times when
economic downturns affect the local economy meaning that there would be reduced sales and this
would affect the revenues and profits of the company (Woods, 2014). However, when a company
has operations across the world or in different destinations, it is impossible that all regions could
be going through economic downturns. This means that at every single time, the company is
assured of revenues and this plays a huge role towards stabilizing the cash flows of the corporation
in the international market. Stability of cash flows is a great attribute that is desirable by many
firms and one that Ford has achieved through international business operations.
Despite the advantages associated with operating on the international scale, there are many
risks that also come into play. One of the major challenges is cultural differences across different
countries. These cultural barriers often require the firm to differentiate and tailor the products and
services so that they can meet the needs of the customers in the market. Doing this is often
expensive and can reduce the profitability of the company. Political and legal issues in different
countries can also affect the operations of the business (Czinkota, Ronkainen, & Moffett, 2011).
Legal issues can affect the business operations whereas political issues can cause disruptions to
the operations thereby creating huge losses for the company. Severe exchange rate risks can also
be observed in international trade when converting the foreign currencies into the local currency.
This risk can increase the losses that the business reports.
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Conclusion
Operating a business in the international realm can be seen to have both advantages and
disadvantages. Before a business decides to go international, it must delve into some of the factors
that could determine its success or failure. Such an assessment must at all times be conducted so
as to guarantee that the investments that are made when expanding into the international market
do not go to waste. Many firms can learn a lot from the operations of Ford and how it has dealt
with different challenges when operating in the international realm. A firm must thereby be
cautious as it decides to delve into the international market as it is one that is also associated with
high competition and rivalry. Such competition can harm a business of the management does not
possess the appropriate skill set that would allow them to prosper is such a market.
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References
Banham, R. (2012). The Ford century: Ford Motor Company and the innovations that shaped
the world. San Diego, Calif: Tehabi Books.
Czinkota, M. R., Ronkainen, I. A., & Moffett, M. H. (2011). International business. Hoboken,
NJ: Wiley.
Woods, M. (2014). International business. Houndmills, Basingstoke, Hampshire: Palgrave.
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