MARKET STRUCTURES

Differentiating Between Market Structures of an Automobile Organization



Differentiating Between Market Structures of an Automobile Organization

Introduction

The organization that has been selected for the analysis in this research paper is Ford Motor Company from automobile manufacturing industry. The Ford Motor Company is the only one of America's "Big Three" automakers that weathered the 2009 recession without a government bailout or chapter 11 bankruptcy protections. By continuing its operations without resorting to bankruptcy our bailout, Ford has earned an enormous amount of goodwill from the American public, many of whom resent the aid given to GM and Chrysler (Ibis World, 2012a).

In 2010, Ford's three best selling cars in the US were the midsize Ford Fusion, the compact Ford Focus and the sporty Ford Mustang. Ford's US market share fell from 13.2% in 2005 to 12.0% in 2010, though it has improved significantly from a low of 10.4% in 2008. Ford is expected to maintain an 11.8% market share in 2011 (Ibis World, 2012b).

Industry Competition

Automakers compete primarily on the basis of price, fuel economy, reliability, styling and utility. Business customers and consumers place different weights on each trait; businesses tend to emphasize utility and reliability, while consumers are more concerned with price and styling. Automakers periodically redesign a vehicle's styling (typically every five years) but only occasionally change the vehicle's mechanics (Ibis World, 2012c). Recently redesigned cars typically sell in significantly higher volumes after the redesign, so automakers with a relatively fresh product lineup tend to outperform automakers that are lacking new vehicle styles. In some cases a redesigned vehicle will actually sell worse than the outgoing model, which can be a disastrous outcome for an automaker that has invested large amounts of time and money in the new product (Ibis World, 2012b).

Industry customers choose their vehicle purchases on the basis ...