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A competitive advantage allows a firm to have been more efficient in selling their products and in cutting cost to increase profitability. Companies around the world develop a competitive analysis to determine their competitors and how to conquer the market system and be a leader in it. The three significant automobiles in the US were at several times forced in history to develop a competitive advantage and try to outsmart competitors from the Asian counties who designed cars that were efficient at gas consumption in at a lower cost.
Ford automobile faced a stiff competition both globally and from the domestic market. This coupled up against the fluctuating prices of oil which reduced the sales for Ford Company significantly and hugely impacted on their sales as efficient fuel consuming cars were developed in the Asian countries and found its market in the USA. Ford applied a cost leadership to tame high cost of production. The company took the action of reducing cost and met with unions and employees and together in one accord promoted the one Ford. They decided to cut costs and improve their sales by closing most of its subsidiaries and reducing its workforce by 40%. This tremendously helped in increasing profitability.
How it works
Ford applied a different formula by redesigning new cars such as Taurus, Focus and Fiesta models into more modern and more efficient models while scrapping of older models that were not sellable and had high fuel consumption like the Crown Victorian and Mercury brands. This greatly helped the company to turn things around and increase profitability.
A Competitive Analysis for GM motorsDespite the fact that GM acted a little too late, it still found its way to roar back into the market and redeem itself of its lost share. Their first action plan was to apply a cost leadership approach by cutting on its production and closing majority of its production lines.
The company also utilized the price strategy to close down on its competitors. Its new CEO spent massive cost on penetrating the market through skimming, advertising, and bundle promotion strategies. It also developed the Chrysler model which accounted for 70% of the sales for the company in 2010.
Chrysler, on the other hand, applied differentiation on its products. Taking advantage of their partnership with the Italian company fiat, they changed their strategy by producing fuel-efficient cars that could withstand competition from the Asian companies. They also managed to cut cost by using new methods of production using highly efficient Fiat productions. Distribution networks were opened in other parts of the world particular Europe to increase their sales.
GM motors were the premier in the car automobile industry and thus had a more significant market than the rest three. However, this worked to their disadvantage as they failed to see their impending downfall. They had been acquainted with being the market leaders and could not follow the rests, and this negatively impacted them in the economic depression of 2008. Their business was brought to its knees and thus forced to request a bailout from the Congress.
Chrysler has some lower market share compared to the other two giants in the field. They faced stiff competition from home and the foreign companies who had infiltrated the market. Thus they were the first to always suffer blows from biting economic times and also from the oil crises. Ford Company on the other had a competitive advantage over the three companies. They were able to learn business strategies and had foresight into what could happen and thus caution itself. They emerge as leaders through their production suffered blows” they cannot be compared to the other two.
Resource similarity and market commonality matrix of the three companies
All the three groups shared similar market commonality and resources. They paid almost similar wages and had nearly the same labor force. The three targeted related markets in the country had market similarity matrix.
All the three automobile industries in Detroit faced similar business challenges and at some point had the identical road to success. This provided a case study on competitive analysis of the three companies.
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