Ford Motor Company and The Divestiture Approach

Introduction

Ford Motor company has undergone several changes since it's was started in the 1930s. Among the changes the company has undergone are growth, development of the new models and general expand to other continents. Since the end of the world war two, the company has been producing domestic vehicles that are meant for the ordinary average citizens of the various countries. Since the company has generated million of profits, invested in other lines of business which include the acquisition of various subsidiaries to sustain the market and reduce competition. Currently, the company is competing actively with major competitors such as Toyota of Japan, General Motors' of united state and BMW Series Company of Germany (Shein et al., 2017). Among the improvement, the company has been focusing include the production of the hybrid vehicles that are environmentally friendly and produces a moderate amount of carbon IV oxide. Subsequently, the company needs to divest most of the assets to reduce risk in the long run. Also, the company requires the use of other approaches like mergers to reduce competition in the market. Therefore this essay explores the business divestiture approaches the current situation of the enterprise.

Situational analysis

Current Ford Motor Company is rank as the most improving company. The company recently has divested most of its assets in the bit to cap the rising cost and reduce competition in the market. Among the divested assets in overseas, the assets that were sold include Jaguar, Volvo, and Landover. The aim of the company for selling the property was to ensure efficient management and generation of the capital to expand the outlets in the United States and build more customer loyalty in the manageable environment (Adams, 2016). Also, the need to generate more income from the process of divesting and investing more profitable divisions was deemed appropriate by the company’s board. Currently, Ford motors are contemplating to divest most of Mazda shares in Japan. The Japanese automaker is partially owned by the Ford Motor company and has divested most of the assets. According to Reuters, the company is planning to sell its entire share to generate cash to invest in the country (Gurkov, 2016). As part of the plans, the company’s decision to sell most of its assets is reckoned by many competing firms as the approach to survive the fierce competition and produces the latest models that are required in the market. Current introduction of the electric rechargeable car by Tesla Motors Company endangers most of the cars firms in across the globe. The approach taken by the company in reducing the possible losses in the event that Tesla model will render all the fuel cars useless is the perception of most of the analysts.

SWOT Analysis

The strength, weakness, opportunities and threats surrounding the major decision of the divestiture by Ford is evident. Among the force of the company are the customer loyalty, skilled labor and market leadership. Such strengths promote the company to grow and expand in the dynamic market. The opportunities for the company include the production of the models that are affordable for lower and middle-income earners across the globe (McCarthy et al., 2016). Subsequently, the demand for the affordable vehicles by the middle-income earners is an opportunity to the company to unleash its potential. The weaknesses faced by the enterprise are a reduction in the supplies of the raw materials due to fierce competition for the industry rivals. Also, the approach used by the corporation in divesting is another source of weakness since most of the companies that bought the company company’s shares in overseas are competing for the same market. The threat that faces the company is the change in the technology and adoption of the latest automobile in the vehicle manufacturing industry. Also the variations in the policies of various governments which propose the adoption of the use of buses in the traveling to reduce pollution and cut importation cost by the country.

Discussion

The status of the Ford company is that it sold most of its overseas assets in the approach of divesting it’s to reduce the branches and enable easy management. The threats faced the company could partial the cause of the Tesla company technology of adopting divestiture strategy. The reduction is of the assets such that the firm could focus on the divisions in the country only. Among the threats that are faced the company is changing in the technology and stiff competition from the counterparts in the automobile industry (Hutomo & Augustrianto, 2016). Therefore the action taken by the Ford Company Management Board in the carrying out divestiture is to reduce the competition, enable centralized management and promote customer loyalty in performing divisions. The last segment which is Mazda is still in the process of being sold to the higher bidders. Despite the fact that it may fail to perform in the hands of the buyers, advantages of the Ford Motor company will have been attained in the long last.

Conclusion

Conclusively, the company is competing actively with major competitors such as Toyota of Japan, General Motors' of united state and BMW Series Company of Germany. Among the improvement, the company has been focusing include the production of the hybrid vehicles that are environmentally friendly. Amid the pressure from the competition and ever increase overhead cost in the overseas branches the company decision of reducing the assets is to overcome the management challenges and tangle the problem of threats in the automobile industry.