Section A: 3 Questions: (3 X 5 = 15 Marks)

Study, fully, the Case enclosed: FORD MOTOR COMPANY, and answer the following Questions
(BSFile ANNEXURE 1):

A.1. Define and discuss Ford's business-level strategy

Answer:
Business-level strategy part of the Organization’s Strategic Management. Business-level strategy
is usually referred to the strategic Management in the context of ‘for-profit business enterprises’.
It is also concerned with firm’s position in an industry, relative to competitors.
Ford’s business-level strategy is combination of Cost leadership and Product
differentiation strategy.
Cost Leadership:
It is a strategy that focuses on making a company more competitive by producing its products
lesser then the competitors. Ford is focusing on ONE FORD strategy where ford is standardizing
its product on global level, aggressively restructuring the organization hierarchy for faster
decision and cost reduction and maintain one team, one plan and one goal. As part of ONE FORD
strategy Ford has idle 10 of its Production Facilities in Aug 2016 to reduce inventory and
production cost. Ford also reducing the operating cost by consolidating the suppliers from 200 to
100 and Ford has also intended to source the Raw-material from lower cost geographical region
in-order to improve its gross margin.
Differentiation Strategy:
It is a strategy that focuses on developing products and services that are differentiated from
competitive products in terms of value proposition. Value is transferred to customer through
unique features and characteristics of the product. Ford has intended to improve its market
position by driving innovation, product design, and innovation in manufacturing process, and
marketing approach. Ford is involved with alternate fuel technology vehicles also developing
attractive safety and convenience features example: Advance traction, adaptive cruise control and
intelligent safety systems to maintain and expand its market share
Hence to conclude Ford Business-level strategy is integrated Cost Leadership and differentiation
strategy – allows engaging in primary and supportive activities that allow company to
simultaneously pursue low cost and differentiation. I have made out some points for Business
Level Strategy below:

 Henry Ford began an automobile industry which was a famous automobile business in
the world. After many years still Ford family controls the company and its decisions
through multiple voting shares and less equity.
 Their business level strategy is mainly differentiation strategy and saving more through
squeezing and optimizing internal processes amidst intense competition in the industry.
 They rely on dealership model and concessions especially with relation to retiree medical
costs etc.
 For consumers they differentiate themselves with innovative features provided in the car
such as Roll Stability Control as a safety measure or Ford SYNC for entertainment
purposes etc., and providing more of the information on the website for the available
models.

Submitted by – Prateek Saxena

  They also started focusing more on the hybrid cars that combine small engines with
electric power which provides more efficiency and lower fuel consumption to lure the
customers.
 Under Alan Mulallv the focus shifted and Ford started to work as one team which even
required major restructuring, this enabled Ford to survive the high debt and become
profitable again.

A.2. How can the company's value-chain activities be better linked to create value for the
company?

Answer:
Ford’s value chain activities can be linked to create value for the company by controlling factors
of production (innovative technology, production process, environmental), distribution and
marketing. Environmentally Ford is intended to improve manufacturing efficiency by making
ONE FORD and Limited platform initiatives, reducing the emission of the vehicle, working
towards alternate fuel energy vehicles, designing vehicles considering end of life hence
improving recyclable materials used in the vehicle.

Ford new designed website for client and dealers, this initiative focuses on bi-directional input,
enabling customer to request key information eg; quotation, product specification, test drive etc.
making the Ford process to customer very transparent also it allows Ford to push promotional
products and advertisement hence creation social value for the company. Economically Ford is
customizing its production capacity to meet the demand and supply while reducing the
operational cost. Also for different income level ford can plan the cost effective vehicles type to
meet the intended customer requirement a pricing. Another aspect of the value chain is
Technology especially in the safety standard of the vehicle. Providing the safe vehicle creates a
huge Company value. Ford safety innovation like Intelligent Safety system, Advance traction and
adaptive cruise control further create company value. Ford can link its Technology features,
safety features, affordable pricing to Social, and Safety and Economical values of the customer by
using the very transparent method of promoting/ advertising its products.
A.3. In what ways can the company effectively manage customer relationships to increase
strategic competitiveness with respect to national and international competitors?
Answer:
Strategic competitiveness achieved, when companies are able to satisfy their customer by using
their competitive advantages they possess in the market. Customer relationship can be
strengthened through delivery of superior values, which often results in increased customer
loyalty and profitability. Strong interactive relationship with customers are needed to provide the
foundation of business, profit and value by serving unique customer needs. Ford can utilize its
strategic leadership program to train its Leaders on customer relationship management. Ford
additionally can develop CRM (Customer Relationship Management) to have increased customer
access/connectivity, in depth detailed bi-directional flow of information between Ford and
Customers.
Viewing the product/solution through customer perspective and creating more value for
the customer.

Submitted by – Prateek Saxena

 To focus the customer needs and full filling the requirement Ford can further categorize the
customer in horizontal or vertical units eg; demographic, socioeconomic, geographical,
perceptual factors etc. Categorizing the customer based on the factors mentioned above will have
focused customer needs and hence it will be easy to formulate the best strategy to full fill the
customer needs.
Ford should also continuously strive to anticipate change in customer needs, failure to do so is
losing customer and brand value as well. Ford strategy should be to satisfy the customer
immediate needs and long term aspirations and to keep the company’s focus on market and
customers always.

Section B: 3 Questions: (3 X 5 = 15 Marks)

Study, fully, the Case enclosed: BLOCKBUSTER, Inc., and answer the following
Questions (BSFile ANNEXURE 2):

B.1. What are the critical strategic management and competitive issues facing the company at this
time?
Answer:

Incorporated in 1985, Blockbuster Entertainment is one of the largest video rental platforms in the States.
Blockbuster Inc. now, post more than two decades and $5.5 billion in annual sales later, faces a
substantial threat to its dominant business because of several challenges.

Challenges ranges from new companies coming into scene, to constant technological changes in
entertainment business. Video on demand, streaming, downloadable torrents etc. are options that today's
youth lean heavily on. Law's like FCC, antipiracy requirements which require strong encryption and
additional business procedures that adds to the existing cost of production.

Critical strategic management and competitive issues face by Blockbuster at present are:

 Blockbuster was burdened with a deep, organizational structure and decision taken by it were
majority authoritative from the top management.
 Strategic planning and its execution were flawed allowing the rise of competitors like Netflix and
RedBox. This is because Of poor leadership and poor planning.
 Blockbuster has failed to create a strategic plan that would allow them to conquer or even merely
compete in the video on-demand home delivery market especially with the biggest rival Netflix.
 They were challenged with the sheer number of local stores.
 Blockbuster faced increasing costs to outfit stores with computer systems and large inventories of
movies.
 Blockbuster did not have effective strategic planning that would have either beat Netflix to
market or identified them as a threat and made decisions to counter that threat during any of the
15 years in which Blockbuster and Netflix competed.

Submitted by – Prateek Saxena

  There were heavily burdened by the declining in the profits year after year.
 Continuous lack Of confidence from industry followers and analysts with new entrant eating its
traditional revenue base.

B.2. What are the external environmental forces that have strategic implications for the
company's success in the immediate future?
Answer:
Blockbuster Inc. which was incorporated in 1985 is a giant in video rental business is experiencing
drastic drop in business due to various reasons.
The major ones are the new entrants with business models and new mode and concepts of video rental
business challenging old traditional brick-mortar stores like Blockbuster. Other force is the technological
advancement in the industry.
Blockbuster was very reactive to the challenges rather it realized the challenge very late. It focused more
on strengthening its in-store rental business.
Blockbuster Inc. also faced other forces like their customers were buying the experience of watching the
movie but having a large selection of movies to choose from was important, but not the act of walking
into the store, every industry relies on consumer interests, so it must be aware of what satisfies the
consumers and select the right genres for such a process.
The preferences change because generations keep on changing while growing old, including on-demand
and online services when seeking for a product, Blockbuster was actually experimenting with a streaming
option but there was a lot of internal resistance.
The store managers viewed streaming as a competition to getting people into the store and to sell high
margin extras (popcorn, chips, soft drinks.) so this has drove them to closure, it has also tried to introduce
mail- order movie rentals to introduce movie streaming. The problem was they were too slow and too
focused on the way they had always done things. For the immediate success of the company it has worked
on its external environmental forces like rising customer expectations to digitize its entertainment
offerings for customer convenience, increase in consumer access to pirated media through online
resources, also increase environmental awareness among customers was likely be a way to promote the
‘green’ benefits of the digitized offerings. It has also increased the amount of entertainment content on
the web to make a market entry for survival in the changing market environment, increased concern about
piracy and digital rights management issues make the offering of entertainment content through new
media legally complicated and costly.
It, therefore, becomes important to learn every aspect of both internal and external factors surrounding a
business entity that can create a negative impact on its project. The change realized in the rental movie
business (Blockbuster Inc.) has been deemed to occur due to such forces as technological advances and
convenience like video on demand from the perspectives of enhanced distribution and marketing.
Opportunities come because of technology and therefore when a new company infiltrates the industry
with newer technology, such as online video streaming and video on demand, aimed at acquiring more
customers as Netflix and others, leading to immediate success of the company.

Submitted by – Prateek Saxena

B.3. Based upon your brief analysis of the Case, suggestions can you bring, to the upcoming
meeting, in the areas of changing the current business model and in expanding the
distribution channel by new channel entry and new channel partnerships?
Answer:
Blockbuster realized the changing trend in the video rental business, advent of new technologies and
entrance of new rivals with disruptive innovation and business model making huge strides in capturing
the market. But it was too slow in realizing this change, it was either arrogant, too slow to adapt to the
changing trends. Blockbuster business model based on profit making on penalizing its customers by
levying late fees. It also had a wrong strategy of acquiring competitors in order to capture market share in
a market which was being driven by technology and innovation. It failed to recognize this trend went on
building new stores. But its competitors had better models instead of charging to rent videos it offered
subscriptions which took out annoying late fee concept out of the business, they started to offer DVD
rental by mail, digital services providing movies on demand. Blockbuster eventually launched its digital
download services but its retail stored had become expensive liabilities reducing the profits and revenue
due high operational costs. Based on the analysis the suggestions which can be given are
1) Reduction of retail stores considerably and concentrate them in location where people still prefer
traditional way of renting videos. With CRM software it can actually find the trend and keep the stores
operational were it is required, rest can be closed down.
2) Make intelligent investment and not spend too much money on acquiring rivals who could quickly turn
into liability but spend on innovation and R&D to bring in new modes of delivery and business model for
renting video. Follow subscription model, movie on demand where late fee can be abolished. Internet is
going to be major mode of delivery medium due to better bandwidth and geographic reach of it. Also the
mobile technology will also make huge progress as people like to stay connected and would require
information on the move. Keeping this in mind new product must be innovated making use of internet
and mobile technology as delivery medium. Movie on demand application can be introduced for mobile
phones. Also, sell directly or franchise to nations where English titles are a craze.
3) Develop cooperative partnerships with complementary products, provide free subscription for a limited
period to those buying the complementary product and then convert them to paid customers. Provide
complementary titles for purchasing the products. Provide offers and discounts for loyal customers by
reducing subscription fee or providing free new release titles, start producing own titles and original series
or partner with production house making their titles available only under Blockbuster subscription.

Submitted by – Prateek Saxena