Ford Motor Company’s success in maintaining its position as the fifth largest automobile manufacturer in the world is partly based on its ability to address the concerns raised in this SWOT analysis. A SWOT analysis identifies the strengths that a firm can use to overcome its weaknesses, exploit opportunities, and address threats. Ford’s SWOT analysis shows the main issues that the company must deal with to improve its performance. The firm’s aim is to become the leader in the global automotive industry. To achieve this goal, Ford’s strategic formulation process must include the issues in its SWOT analysis.
This SWOT analysis of Ford Motor Company illustrates that the firm is capable of addressing the internal and external factors in its business. Focus on innovation and expansion can support the company’s continued growth and performance improvement.
Ford Motor Company’s Strengths (Internal Strategic Factors)
Ford’s strengths are associated with its brand, global operations, and research and development. This part of the SWOT analysis presents the organizational characteristics (internal strategic factors) that support business effectiveness. Ford Motor Company’s main strengths are as follows:
- Strong brand image
- Global supply chain
- Effective innovation processes
As one of the top players in the global automotive industry, Ford has a strong brand image that contributes to product attractiveness and customer loyalty. Also, Ford has a global supply chain that supports its operations around the world. Another strength is the company’s innovation processes that are now more effective following the launch of the One Ford plan in 2008. In this part of the SWOT analysis of Ford, evolving strengths support the company’s growth.
Ford’s Weaknesses (Internal Strategic Factors)
Ford’s weaknesses are based on the company’s limitations compared to competitors. This part of the SWOT analysis shows the organizational constraints or inadequacies, which are internal strategic factors that reduce business potential. Ford’s major weaknesses are as follows:
- Limited global scope of production network
- Higher costs compared to competitors
- Slow innovation processes
One of Ford Motor Company’s weaknesses is the limitation of its network of production facilities, especially when compared to Toyota’s expansive global network. Ford also closed down some of its production facilities in Europe in recent years, further worsening this weakness. In addition, compared to competitors like Toyota, Ford’s costs and prices are relatively higher, and its innovation processes are relatively slower to respond to new or emerging trends even though the company has increased its innovation effectiveness. Thus, this part of Ford’s SWOT analysis indicates that the company is relatively weak compared to other top players, especially Toyota.
Opportunities for Ford (External Strategic Factors)
Ford’s opportunities are linked to growth and expansion. In this part of the SWOT analysis, the focus is on market or industry characteristics (external strategic factors) that support business growth. The following are Ford’s main opportunities:
- Global expansion through market penetration
- Growth through product development
- Cost reduction through strategic supply chain management
Ford Motor Company has the opportunity to grow and expand through market penetration (e.g. more dealerships and improved marketing) and product development (e.g. innovation to introduce new products to satisfy environmental concerns). Ford also has the opportunity to improve its financial standing by expanding its supply chain to achieve better economies of scale and reduce production costs. In this part of the SWOT analysis, Ford has opportunities for growth through operational expansion and innovation.
Threats Facing Ford (External Strategic Factors)
The threats against Ford are based on competition and global oil prices. This part of the SWOT analysis presents the external strategic factors that could limit or reduce business performance. The following are the threats against Ford:
- Aggressive competitive rivalry
- New entry of high-tech firms
- Fluctuating oil prices
Ford experiences the threat of competitors like General Motors and Toyota, which engage in aggressive marketing and innovation. There is also the threat of technology firms like Google and Apple in their efforts to make driverless cars that could compete against Ford’s products. Moreover, oil price instability threatens the sales performance of Ford products, the majority of which have internal combustion engines. Thus, this part of the SWOT analysis shows that Ford must innovate to maintain competitive advantage.
Ford Motor Company’s SWOT Analysis – Recommendations
The main issues highlighted in this SWOT analysis of Ford are limitations in speed of innovation and scope of its production network, as well as competition with existing firms and new entrants. Ford needs to improve its research and development investments and increase its innovation speed to address aggressive competition and the entry of high-tech firms in the industry. Also, Ford needs to expand its production network to increase economies of scale, which can reduce costs and prices to make Ford automobiles more attractive.
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Automobile Industry, Automotive Industry, Case Study & Case Analysis, Ford Motor Company, SWOT Analysis
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Ford Motor Company is one of the largest automobile manufacturers in the world. Apart from manufacturing it also provides financial services through Ford Motor Credit. It has Ford and Lincoln under its banner. It is headquartered in Dearborn, Michigan in the United States. It has around 199000 employees working for them as of 2015.
Strengths in the SWOT Analysis of Ford :
Brand Value: Ford’s brand value stands at $19.771 billion according to the report of Brand Finance. It ranks 46th in the list of Brand Finance report.
Sector Rank: Ford plays in the automobile sector. Its rank in this sector is 4th.
Strong R&D: Ford spends a lot of R&D and is committed to making and improving the performance of its vehicles which includes fuel efficiency, safety, customer satisfaction, and developing new products. Ford spends around $6.7 billion on R&D.It has also opened a new Research and Innovation Center in Palo Alto.
Patents: Being a manufacturing industry it is important to see the fruits of its R&D. Ford currently has approx. 38,500 active patents and pending patent applications globally. The average age of patients stands at 5 and a half years.
New technologies: Ford is committed towards new technologies to give itself the boost in this cut throat competition. Their focus is on technology to enhance fuel efficiency like EcoBoost, direct injection of gasoline or diesel fuel, six-speed transmissions, and hybrid and plug-in hybrid powertrains. To enhance product quality they are working on light-weighting, cabin technology, and powertrain.
Market Share: Ford has a market share of 7.2% as of FY 2015. Its break up globally in terms of market share is as follows:
Product Portfolio: Ford has a huge product portfolio which reduces its dependence over one product range. Their products include small, medium, large, premium sedan cars, trucks; buses/vans (including minivans); full-size pickups; sports utility vehicles (SUV); and vehicles for the medium/heavy segments.
Weaknesses in the SWOT Analysis of Ford :
Product Fails: The brand image of the company gets a toll when they have to recall their cars due to fails or safety reasons. Ford had to recall approx. 271,000 2013–2014 Ford F-150 vehicles to replace brake master cylinders in May 2016. In May 2015 Ford had to recall vehicles due to the safety failures of the Takata airbags. These kinds of recalls harm the brand image of the company and reduce the faith of the customers on the brand.
Emerging Markets: According to the break-up of the market share of Ford it is not doing well in the emerging markets. These markets have high potential returns and it needs to focus on it to increase its overall revenues and global market share.
Opportunities in the SWOT Analysis of Ford :
Expansion: Ford is investing $2.5 billion in new engine and transmission plants in the Mexican states of Chihuahua and Guanajuato. The completion of $2.6 billion manufacturing operations in Valencia, Spain. This will increase their daily production capacity by 40%. New plants could drive the revenue of the company to new heights.
Global Automotive Opportunity: This industry is expected to grow at a CAGR of 6% till 2019 and reach a valuation of $1.5771 trillion. Also, the production volume is expected to rise to 189 billion units at a CAGR of 5% by 2019.
Hybrid, electric and fuel cell: With the focus shifting towards reducing emissions by using alternative fuels is a great opportunity for Ford. The demand is going to reach 7.5 million units at a CAGR of 19% by 2020.
Threats in the SWOT Analysis of Ford :
Environmental Regulations: This industry is facing many regulations coming up for a protection of the environment. This is making the laws more stringent and the company has to adhere to them by making changes to their production schematics.
Global Economy: The global economy is facing a slowdown and with 67 plants around the globe Ford needs to take care to keep the prices of the vehicles in check. Currency fluctuations will prove to be a game changer.
Competition: It faces competition from Fiat ChryslerAutomobiles, General Motors, Honda Motor, Hyundai-Kia Automotive Group, PSA Peugeot Citroen, Renault-Nissan, Suzuki Motor, Toyota Motor, and Volkswagen.