Case Study Questions
Question One
There are several ways that consumer preferences are changing and include choosing to purchase energy cars, favoring small cars, seeking tech-related experiences, and sharing of car ownership to distribute the cost of purchase. Additionally, some customers share their cars of other people and help with the maintenance and repair costs. The introduction of uber has led to many customers choosing to buy small cars. Yes, customers can articulate what they will purchase in the next five years. Due to the increasing interest in small cars and energy powered cars, many customers will prefer such vehicles especially electric-powered cars by Tesla. More importantly, small cars are cheaper to buy and five years from now, the economic situation will be unknown.
Question Two
The new industry entrants and their technologies are significant because they influence customer preference. For instance, Tesla introducing electric-powered cars leads to customers preferring to purchase such cars as opposed to petrol ones. The cars are however not lethal for established automakers. The introduction of these modern cars however means that competition against Ford will be high. I expected there will be changes in the short term, medium-term and long terms in terms of customer preferences. In the short term, Ford sales for petrol cars will below. In the medium term, some customers still prefer petrol cars as opposed to modern ones. In the long term, modern cars with new technology will sell more since customers prefer cheaper vehicles that do not consume fuel. In this case, many of the customers prefer electric cars developed by Tesla hence why in the long term, established carmakers will seek partnership with such organizations.
Question Three
The research and development initiative that Ford should bet on is the small car challenge. For a while now, more customers prefer to purchase small cars and this is likely to continue considering their convenience. In terms of quality, maintenance, and affordability, the small cars are being preferred to the SUVs. Therefore, Ford needs to concentrate on the production of these small cars as this is the current trend set to continue for at least five years. Ford is an established brand that has millions of customers and if they were to launch the small cars, they will be set to retain them.
Emerging markets in Korea and Japan have combined their efforts towards the production of the B-cars or subcompacts. Car automakers in these emerging markets like Toyota and Hyundai have concentrated their efforts on the production of these cars. Leaders of these companies claim that in the next decade, small cars are set to comprise two-thirds of the global market, especially in Asia. Therefore, there is a need for Ford to capture this growing market of customers preferring small cars. Also, the production of larger cars and trucks can be by order since these vehicles are convenient for both families and business purposes.
Ford needs to be aggressive in its marketing strategies and this requires developing an innovation strategy. In this case, they need a target market and this could the middle class. Targeting the middle class is important because small cars are affordable to them. To achieve this, Ford can offer packages of purchase for the middle class whereby they pay a certain amount for a specific period. This ensures that the customers are comfortable paying and this helps retain them, especially in a developed country. Ford must realize that the economy will be unknown in the next few years hence why it needs to be smart and aggressive in its marketing strategies.
Vehicle makers in the US are not keen on producing small cars as they placed their emphasis on larger trucks and cars. Ford can thus use the opportunity to penetrate the US market providing the subcompacts. As noted earlier, the company can target the middle class in the US for the next ten years. Other countries that the organization can invest in are developing countries for instance in Asia, South America, and Africa. Customers purchasing these small cars seek comfort, safety, and affordable price. Ford can provide cars meeting such demands in the developing markets.
Small cars have been incorporated in companies like Uber and many people have sought employment through the organization. Ford marketers can partner with Uber to produce cars that meet their standards. Competition is however high since Toyota and Hyundai are already producing cars that meet the standards of Uber. Therefore, Ford needs to invest in companies making profits from small cars. Such strategies ensure that Ford is aggressive in building new capabilities but more importantly, make profits by penetrating new markets in both developing and developed countries.
Question Four
With reference to theories of change, an organization like Ford can re-invent itself through partnering with other digital companies like Tesla and Mahindra. Partnering with such organizations ensures that Ford has the required strategies to meet the demands of the modern consumer. For instance, there was a change in consumer preference whereby customers now seek small cars most likely powered by electricity. Historically, Ford is known for making large trucks and vehicles but the customer change in preferences has led to poor sales in the organization. Partnering with companies meeting the demand of the modern consumer will aid Ford in its efforts to re-invent itself.
In terms of whether Mark Fields chose the right approach, yes this is the correct approach to help Ford re-invent itself in the digital age. Customer preference for energy powered cars means that petrol vehicles’ demand will continue to subside in the next decade. Additionally, customers are choosing to purchase self-driving cars provided by the company Tesla. I can further recommend that Mark Fields hold a discussion with Uber and seek a business partnership. Toyota and Hyundai in Japan and Korea are already making profits after investing in small cars. Therefore, Ford re-inventing itself should include making small cars to meet the increasing demand, especially in urban centers.
Question Five
There are several lessons from this case and the first is how an organization needs to constantly re-invent itself. Customer preferences continue to change especially after the introduction of modern technology in vehicles. In this case, customers prefer self-driving cars or electric-powered vehicles and shifting away from large cars and trucks. The second lesson is the significance of technology and the vital role it plays in car companies. In practice, I would incorporate modern technological features in vehicles to meet the demands of the current generation. To know the current demands of the consumer, I would conduct field surveys and interviews on what preferred cars especially the features they have.