INFORMATION TECHNOLOGY MANAGEMENT
TheRole of Information Technology in the Modern Organization: Ford MotorCompany
InformationTechnology (IT) has an important role in modern firms, particularlyin the motor vehicle manufacturing industry (Mandina,2014).The Ford Motor Company (Ford) is among the top automobile producersin the United States, and is also known for its effective use oftechnology as a way of ensuring competitiveness (Alhalabietal.,2016).This report illustrates the roles of three IT components, whichinclude: DataManagement, Management Information and Customer RelationshipManagement Systems. It also provides aPorter Five Forces analysis of Ford and General Motors (GM), a majorrival.
TheRole of Data Management
InformationTechnology enables efficiency in the sharing of data. The process ofinformation distribution often takes place among differentdepartments. A key benefit of the procedure is that it facilitatesbetter management of customer needs (Ford Motor Company, 2015). Datamanagement also enables proper activity coordination. According toSachsenmeierand Schottenloher (2013), Ford’s Product Data Management System iscoordinated through a computer-supported product development system,which links product development teams, suppliers and partners. Itintegrates the entire product innovation process, which is managedthrough a Metaphase.
Thesystem also uses IDEAS as the central Computer Aided Design (CAD)tool where up to 50 designers in different geographic locations canuse CAD tools that are connected to a single Team Data Manager (TDM).The CAD models within the system are ordered into master packagesthen copied onto a central vault accessible to everyone. The vault isin turn connected to a digital Mock-up Application that enableseveryone to analyze the product.
TheRole of Management Information System
InformationTechnology is an indispensable component of modern organizations. Forinstance, managers need to act, answer questions or ask the rightquestions at a given time. Consequently, computerized methods arepreferable. Data Warehouses or Decision Support Systems are some ofthe ways of achieving this objective (Oz,2014).At Ford, all information is stored within a Teradata Warehouse whichcombinessummarized facts from various systems. Managers therefore get aninstant snapshot of the whole organization. The warehouse alsodelivers information on the profitability of the organization whichis communicated to all stakeholders. The system has enabled Ford tocut costs and improve on efficiency.
Thesystem also aids marketing and structuring through guidingdecision-making and the analysis of profitability. The reliableinformation gained has also promoted inventory optimization acrossthe organization (Ford Motor Company, 2015).
TheRole of Customer Relationship Management (CRM) Systems
ACRM system is important for predicting customer needs, focusing onunique individual or group needs, and creating the best strategiesfor client acquisition (Mandina, 2014). According to Nasir (2015),Ford uses a Marketing Cloud Application (MCA) that offers betterunderstanding and collection of customer insights. The approach hasenabled the company to transform its customer communication approach.Through the MCA, the company has integrated all data relating to itsclients, with the aim of creating a closer connection between thecompany and existing or even potential customers.
Thefirm can review social networks, get insights about the customers andincrease its involvement in brand-related conversations. Additionally, the approach has supported better management of socialmedia content, advertisements, provision of customer reviews anddiscussions in general. The system has therefore created a morecustomer-centric culture at Ford.
Porter’sFive Forces Analysis
Supplierpower is usually moderate in the industry. As a result, when dealingwith big firms such as GM and Ford the power held by suppliers islimited. In the case of Ford, supremacy is minimal because thecompany has the Ford River Rouge Complex, which provides BackwardVertical Integration. Through the approach, Ford produces some of itsraw materials. On GM’s part, the power of suppliers is alsominimal, but unlike Ford, the company individually engages with manysuppliers.
The industry is competitive due to the existence of rivals such: asChrysler, Nissan, Honda and Toyota that invest heavily in marketingand innovation. Exit barriers are also quite high due to highinvestment costs, therefore ensuring continued firm participation.For GM, rivalssuch as Ford are constantly rushing for its market share. On theother hand, in the context of Ford, manyof its close competitors are extremely aggressive, although thenumber of firms using its manufacturing approach is relatively small.
Threatfrom New Entrants
Thebarriers to entry are minimal. The key inflecting factor is the largeamounts of capital that a firm has to invest in setting up thebusiness. In addition, high costs are required in the running thebusiness. The cost factor, therefore, locks out possible newentrants. GM and Ford also have very predominant and strong brandnames as they are among the largest vehicle manufacturers. For GM,economicchallenges and high costs of research and development notably make itproblematic for new enterprises to copy its manufacturing approach.
The two firms are both threatened by substitutes, mainly because ofinstability in oil prices, an increase in public environmentalawareness and limited credit facilities. A customer, for instance,has the option of using a bicycle or taking public transport.Switching costs are low, but there are many cases where theperformance of substitutes is not as good when compared to a Ford orGM car, due to safety and convenience. For GM, thethreat of substitutes is notably worsened by difficult economicconditions and a general reduction in buying power.
Consumer bargaining power is high because switching costs are low. Potential buyers can move to other firms. Substitutes also providealternatives, making the choice of a Ford or GM product optional.Buyers are also highly informed, and dealers give discounts therebyboosting the power held by consumers. Customers,however, do not frequently switch to other products due to the highcosts involved in purchasing a new car. Individual Ford purchases arealso limited by factors such as revenue and price, which implies thatsmall changes in buyer demand can significantly affect the company.
FordMotor Company operates in a challenging and competitive environment. As a result, the development of a competitive advantage can beattained through IT. Data Management at the company ensures customersatisfaction. The systemalso supports the integration of production data, which makes it easyto coordinate engineering teams. The management of technology on itspart guarantees: regular production, profit-related information inreal-time and easy decision making. The firm’s CRM system expeditesthe connection between the product and customers. As a result, brandattractiveness and loyalty is ascertained.
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Sachsenmeier,P and Schottenloher, M. (2013). Challengesbetween Competition and Collaboration: The Future of the EuropeanManufacturing Industry.Heidelberg: Springer