Ford Motor Company
Ford Motor Company was established in 1903, introducing the world’s first assembly line for mass production. Such measure allowed keeping the price for the final product at a relatively low level (around 260 dollars), which made the company’s flagship product, Ford Model T, available to many people (Geyer, 2011). Its success allowed selling vehicles of this type for almost twenty years. In 1917, Ford started manufacturing other products, such as trucks, boats, and planes. In turn, the beginning of World War II provided the enterprise with contracts for the supply of trucks for the army, thus ensuring its profitability (Geyer, 2011). However, in the conditions of the post-war economy, Ford Motor Company has become subject to restructuring. The company lost its leading position in the market, thus there was a need for updating its line of vehicles. As a result, the enterprise started manufacturing such models as Mustang and Thunderbird, in order to regain its position. However, in the 1980s, the Japanese manufacturers started their expansion to the American market, but the managers of Ford Motor Company did not perceive them as competitors due to the significantly weaker engine and smaller size, which did not correspond to the image of the American car (Geyer, 2011). However, rising fuel prices gradually forced them to revise their strategy. In addition, it appeared that Japanese cars were safer and cheaper as well as more attractive in terms of design. The passive position of Ford Motor Company resulted in Japanese car companies controlling 28.5% of the U.S. market by the end of 2001 (Geyer, 2011). As a result, its sales have decreased significantly, which led the company to the brink of bankruptcy.
The primary competitors of Ford Motor Company are Chrysler Group LLC, General Motors Company, and Toyota Motor Corporation, which provides the conditions for a fierce competition for the leading place on the American automotive market (Geyer, 2011). Moreover, it forces the company to monitor not only the local players but also those that seek to expand to the U.S. market. At the same time, Ford Motor Company manages to retain its current position in the market due to the presence of following competencies and competitive advantages. First of all, it has a long history, being one of the first vehicle manufacturers that laid the foundations for the contemporary automotive industry. Thus, its reputation is among its core competences, which improves the competitiveness of the firm. Moreover, its line of vehicles is diverse, targeting a wide array of consumers. Some of these cars became iconic (e.g. Ford Mustang), which also contributes to the competitive advantage of the organization (Geyer, 2011).
In order to obtain a comprehensive portrait of the organization, it is required to analyze its internal and external environment. In other words, it is necessary to conduct a SWOT analysis to identify its strong and weak points.
Therefore, the strengths of the Ford Motor Company include Hoffman (2013):
- A unique image – Ford Motor Company is the cornerstone of the modern automotive business, with a reputation to match;
- A highly efficient management system based on the principles developed by Henry Ford;
- The outstanding working conditions (i.e. the provision of benefits, pensions, etc.), which lower the risk of the so-called brain drain and maintain the competitiveness of the organization on the high level.
- A considerable financial independence – Ford Company manages to operate even under the conditions of crisis.
At the same time, according to Hoffman (2013), the organization demonstrates the following weaknesses:
- The manufacturing of the low-quality products, which results in numerous product recalls and increased expenditures of the firm;
- The lowered income as a result of the financial crisis and the growing share of the Japanese companies in the American automotive market;
- A significant long-term debt of $127 billion that must be paid in the future;
- The lack of qualified personnel due to the company expansion.
The company’s opportunities are as following (Hoffman, 2013):
- The stability of the company’s reputation. Despite all the problems, Ford Motor Company is likely to retain its position both on the global and local markets, as well as the popularity among consumers;
- The expansion may increase the income of the company, as well as solidify its position on the market;
- The development of new vehicle models, including those targeted at the specific demographic groups (e.g. young people, women, etc.);
However, the organization has to be mindful of the following threats (Hoffman, 2013):
- A significant amount of competitors;
- Unstable oil prices, which makes it difficult to forecast the volume of sales and increases financial risks;
- The effects of global economic crisis (the lowered purchasing power of the customers, increased inflation, etc.);
- The problems with suppliers, Currently, there is a considerable demand for small engines, but the company cannot fully satisfy it.
The specific environment of Ford Motor Company is related to automotive industry and includes the competitors, clients, and suppliers of the enterprise. In this regard, it is necessary to analyze the impact of its following five forces. The first one is related to the emergence of substitute products. In case of Ford, its effect is significant as currently, there are many automotive companies producing vehicles similar to those manufactured by the enterprise. For example, Ford Freda can be substituted with Mazda Bongo Friendee, Ford Fusion with Volkswagen Golf and Ford Focus with Opel Astra (Hoffman, 2013).
The next force is related to the emergence of new players (competitors) in the market. However, the probability of such situation is insignificant. In particular, the automotive business is very profitable, but it is difficult for beginners to enter the market due to the following entry barriers. First of all, there is a need for significant investment. Not every aspiring entrepreneur has a sufficient start-up capital, the necessary technology patents for the construction of plants and production of equipment, and enough experience and information to work in this market segment. Next, there is a high level of branding. The new companies do not have the necessary fame and consumer loyalty, unlike Ford, the history of which goes back more than 110 years of successful work. Finally, Ford is known for its well-established management system. In case a new company does not have it, it leads to a dissonance between the internal elements of the organization (Geyer, 2011). All these factors create almost insurmountable entry barriers for the new manufacturers.
Next, there is the bargaining power of the company’s suppliers. It is rather low as Ford has a significant amount of partners, with many of them working with the company on the long-term basis, which provides for a reliable cooperation. Moreover, all of them must comply with the unified standards of quality established by Ford Motor Company (Geyer, 2011). This fact also ensures their low bargaining power, thus improving the stability of organization in the highly competitive environment.
The next force is related to the market power of the consumers. It should be noted that meeting their needs is one of the primary objectives of Ford Motor Company, i.e. their power is quite significant. During its existence, the organization was able to win over the clients because of high reliability of the brand and the transparency of its work. In particular, the buyers are being informed of all developments and innovations of the company, with all the necessary information being located on the official website of the Ford Motor Company (Geyer, 2011). Such measures attract attention of customers and improve the company’s image, while also being a sign of high power of the clientele.
Finally, there is a level of competition. The primary goal of every company is to maximize its profits, thus each manufacturer tries to increase the demand for its products by any possible means. In order to have a competitive advantage, Ford Motor Company has to implement innovations on a constant basis. In particular, recently, the enterprise has presented the new Ford Ecoboost engine, which is one of the most economical and at the same time powerful engine of this type in the world (Geyer, 2011). As a result, it is possible to say that the competition level is very high.
The general environment of Ford Motor Company includes a wide array of factors that have both direct and indirect impact on its activity. The first of them is politics, i.e. the measures taken by the government throughout the world. In particular, the governmental support for technological innovations shifts the company’s focus towards sustainability. Moreover, the increasing amount of international trade agreements provides for the easier expansion to the foreign markets. Finally, the rapid development of infrastructure in developing countries results in the increased demand for vehicles. The economic factors of the company’s environment are as following. Firstly, there is the growth of American economy, which provides for increased sales since the U.S. is Ford’s largest market. At the same time, the developing markets also provide an opportunity for the company’s growth. Finally, the U.S. dollar becomes stronger, which against the background of many Ford vehicles being produced in the U.S., lowers their attractiveness for the consumers (Hoffman, 2013).
The technological elements of Ford’s general environment are as following. First of all, mobile computing becomes more popular, making it possible for the company to use the tools of mobile marketing. On the other hand, the online fulfillment services provide for the direct delivery of the spare parts to the clients. However, the scarcity of the alternative fuel stations may hinder the growth of Ford’s departments engaged in manufacturing of the respective vehicles. Moreover, in the modern conditions, it is imperative to take into account the environmental factors. In particular, the climate change, together with low-carbon trends force the company to develop environmentally friendly products. Moreover, the declining oil reserves may be the reason for producing cars with the alternative power sources (Hoffman, 2013).
At the same time, demographics remain the primary element of Ford’s general environment due to the company’s consumer-oriented strategy. In this regard, it is possible to define the following factors that can be considered by the organization. First of all, nowadays, many people start considering the purchase of hybrid and electric automobiles, which may have a significant effect on the company’s vehicle line. However, the increasing wealth gap may make it difficult to sell most of the expensive cars to the consumers (Geyer, 2011). In turn, there may be a need for the pricing policy review.
By analyzing the provided information, it is possible to say that the strategy of Ford Motor Company has proven to be rather efficient over the years. The diversity of company’s products and services, their attractiveness for the consumers, and the flexibility of organization helped it to become the leader of the American automotive market, survive the World War II, and retain its leading position for decades. However, the company also had its share of inefficient managerial decisions, with the most significant of them being the insufficient monitoring of competitors, which resulted in the decline of sales. Moreover, the strategic planning at Ford was far from being effective. In particular, even despite the oil crises, it continued to manufacture powerful cars that consume much fuel. As a result, there is still room for improvement. In particular, Ford Motor Company should monitor the activity of its competitors, as well as the consumers to take preventive measures that will allow mitigating the negative impact of the changes in its external environment. Moreover, its products should be more attractive to the consumers, especially in terms of price. To solve this problem, the company should transfer more of its manufacturing capacities overseas in order to make the prices of its vehicles less dependent on the dollar exchange rate. Finally, there is a need for the further expansion. As it was mentioned before, the U.S. market is the primary target of the company, providing the major part of its revenues. However, such one-sided policy may have a negative effect on the stability of the organization. Thus, it is imperative that Ford penetrates the new markets in order to reduce the share of the domestic one in its profits.
By summarizing all the facts provided above, it is possible to draw the following conclusion regarding the future of Ford Motor Company. First of all, it is possible to say that despite the lowered sales and rather significant long-term debt, the company will not leave the market due to its exceptional reputation and high level of financial stability. At the same time, the high level of competition in the domestic market, with almost a third part of it being dominated by the Japanese companies, may force the enterprise to seek for additional profits overseas. Given the fact that there still many markets for the company to conquer, it is possible to assume that it will continue its expansion to the developing countries. By taking into account the economic growth of such states, as well as the considerable level of development of their infrastructure, one can say that the probability of such scenario is quite high. Thus, in the future, Ford Motor Company may become a stable multi-national corporation that does not have to focus on a particular market. Moreover, the sustainable and ecological vehicles may become its primary products in the years to come.