For example, it can take advantage of the growing new-car ownership cycle and its current success with ESP by focusing further on ESP sales. It can also adapt its advertising strategy to evolving purchasing influencers by shifting the main focus of its advertising to its commitment to quality. Finally, Ford can adopt a “European” warranty program as a solution to its declining market share. These are all potential opportunities for Ford as it decides how to approach GM’s announcement (see Appendix A for SWOT table).
Recommendations
To decide how Ford should respond to GM’s improved warranty program, Ford should conduct a thorough analysis of each of its options. Market share and claims costs would be the main factors directly affected by improved warranty coverage. Cannibalization of ESP sales should also be considered, despite disagreement on whether it will actually be affected. Below is an analysis of the financial impact of the five options as described in the case (see Appendix B for calculations and assumptions).
Option 1. Do not respond. Maintain existing warranty