SWOT Analysis: Ford

Industry Analysis and Business Description 

The automotive industry is a vital segment of the United States economy and the manufacturing sector's backbone (MarketLine, 2020). As the world's largest consumer market, the United States relies heavily on the automotive sector to transport people and goods. Currently, the United States is the sixth-largest passenger vehicle maker in the world, making almost 2,700,000 automobiles in 2018 (MarketLine, 2020). In the first half of 2020, the automobile industry experienced a slowdown as the novel coronavirus ruined economies and eroded consumer confidence globally. Since the onset of COVID-19, the automotive industry has suffered considerably as vehicle manufacturers and suppliers were forced to shut down their doors and reduce their costs (MarketLine, 2020). In the first half of 2020, the global sale of light vehicles declined by 32 percent relative to the same period in 2019 as COVID-19 spread across countries. 

Ford Motors is one of the oldest automotive manufacturers in the world that is engaged in the designing, manufacturing, servicing, and marketing of a full line of Ford cars, SUVs, trucks, and luxury vehicles (MarketLine, 2020). Ford operates more than 62 plants globally spread across South America, the Middle East, Asia Pacific, North America, Africa, and Europe. The Ford Motor Company operates in an intensely competitive environment. The incentives driving Ford in the automotive industry include competitive drivers, the emergence of new markets, shareholder returns, and smaller volume market niches (MarketLine, 2020). Therefore, for the company to compete effectively in local and global markets, the company must take advantage of resources and grow its business to profitability in these markets – South America and Eastern Europe. To maintain a competitive advantage, Ford emphasizes investment efficiency as its primary operating strategy (MarketLine, 2020). This strategy involves the ability of the company to reduce its investment while optimizing value for the customer. 

Strategic Issues 

The Ford Motor Company reported its fourth-quarter and full-year earnings that were below wall-streets estimates. In addition, the management's earnings outlook at Ford for 2020 was below what analysts had expected. Under the leadership of Jim Hackett, Ford's shares dropped by 40 percent. The company's stock market that is valued at $26.1 billion dropped by 28 percent in 2020 (Williams, 2020) . Ford's shareholders have complained about the company's falling stock prices, and in response, Jim Hackett unveiled the organization's $11 billion restructuring program aimed at streamlining operations. In 2019, Hackett stated that financially, the company's performance was below the management's expectations and attributed it to the company's operational execution (Williams, 2020) . However, Hackett also claimed that Ford had assigned strategic alliances with EV truck startup Rivian and Volkswagen to strengthen Ford's electric vehicle and future product offerings. 

Ford has lost revenue in almost every region outside of North America in the last two years. The company's operating profit in the United States was $6.6 billion, which dropped by $1 billion compared with 2018 (Williams, 2020) . Ford's operations in China lost more than $200 million in the fourth quarter of 2019, and the management blamed this on the COVID-19 pandemic claiming that they could not provide sales estimates to their shareholders. 

Under Hackett, Ford discussed how much the company planned to spend on electrified vehicle terrains, self-driving cars, and the future of its mobility business. However, the company never told investors how all this would contribute to the bottom line (Williams, 2020) . Ford's falling stock prices and vehicle sales are a result of a poor communication strategy that has failed to resonate both inside and outside the company. In Contrast, General Motors, Ford's rival, has a perception lead in the mobility and autonomous vehicle space because of its effective communication strategies to its shareholders, customers, and the public through the media. Ford's communication strategy is outdated and ineffective in promoting sales for the company (Williams, 2020) . For example, Ford announced the rollout of four significant vehicles over the next 12 months – the Bronco and Bronco Sports SUVs, Mustang Mach-E electric SUV, and the 2021 F-150 pickup. However, the company has given little details about the vehicles and has not publicly relayed information on how it plans to make money from these investments. 

Internal Analysis 

Research and Development 

The Ford Motor Company uses its research and product development as its rigorous secondary strategy for growth. Ford's research and development strategy involves offering new products under strict deadlines to increase sales revenues (MarketLine, 2020). The firm's research and development strategies are aimed at towards improving customer satisfaction, performance, safety, and the development of new products. In 2018, Ford spent $7.3 billion in research and development efforts (MarketLine, 2020). Today, Ford holds more than 60,000 active patents globally, with an average age for patents of over five years in its active patent portfolio. Through resilient and robust research and development efforts, the company introduced the Ford Range in China and the Ford Focus electric (MarketLine, 2020). Over the years, Ford has been focused on increasing its research and development capabilities for product innovations to improve the company's competitive advantage and growth. 

Ford established the GPDS (One Ford Global Product Development System) that has enabled the car manufacturer to deliver vehicles faster, increase profitability and competitiveness (MarketLine, 2020). For example, the Ford Focus, Fiesta, and the Ranger are developed under a global product development team to ensure driving quality, design, fuel, interior comfort, technology, and convenience. This development strategy is followed by Ford's operations in different regions of the world, considering the product, the technology, and power terrain plans of all the company's vehicles (MarketLine, 2020). Today, GPDS enables Ford to take advantage of its best resources to deliver products that meet consumers' expectations. 

Strong Market Share 

Ford is a leading car manufacturer in the world. Ford has a strong market share not only in the United States but across the globe with a market share of 6.5 percent in 2018. Ford owns 14.8 percent of the Canadian automotive market. In 2017, Ford was the leading automaker in terms of volumes sold in 2017 (MarketLine, 2020). In a survey, Interbrand ranked ford as the 33 rd most valuable vehicle brand globally, pricing it at $13.643 billion. On the other hand, Forbes ranked Ford as the 39 th most valuable vehicle brand, valuing it at $13.8 billion (MarketLine, 2020). Based on these rankings, Ford is the most valuable automotive brand between General Motors and Chrysler. In the United States, the company boasts of the second most loyal customers in the U.S. automotive market (MarketLine, 2020). Although Ford has a strong global brand reputation, the company must strive to improve its rankings as the company ranked behind international rivals, Mercedes Benz, Toyota, and Honda by both Forbes and Interbrand. 

Strong Portfolio of Automotive Products 

The Ford Motor Company designs, manufactures, and sells cars, SUVs, and trucks. In 2017, Ford sold more than 6 million vehicles under its brand globally. In the last 40 years, Ford manufactured the best-selling pickup truck in the United States market under its F-series pickup trucks (MarketLine, 2020). In 2017, the Ford F-Series sold more than 200,00 vehicles outselling Chevrolet, hence taking 3.20 percent of the pickup truck car market. The key reasons that F-series gives Ford a competitive advantage in the United States are that pickup trucks are considered to be more profitable than SUVs or compact cars, pickup trucks are considered to be a status symbol and are seen as luxury vehicles by buyers, and the United States is the largest vehicle market globally, it has become Ford's primary market driving their sales growth. Besides producing vehicles, Ford also provides other products and services such as vehicle accessories and parts, extended service contracts, maintenance, and repairs (MarketLine, 2020). Ford's robust portfolio vehicles helps the company meet the dynamic needs of its consumers, which in turn provides an edge for the company over its competitors. 

Recommendations 

To resonate with its consumers and shareholders, Ford has to develop a robust communication strategy that provides consistent communication of the objectives and the progress made by the company. The One Ford Plan under Alan Mullaly provided the company with a powerful and elegant blueprint that reinvented Ford from its previous crisis. The executive management at Ford must learn from previous mistakes and build a new comprehensive strategy that should be the Mantra of its future (Ewing, 2020) . Ford's communication strategy should be centered on building and strengthen the brand promise of building cars for the next century. Ford has a responsibility to effectively communicate its strategy to its shareholders, customers, and the public through media. 

According to Analysts, the United States automotive industry faces a 30 percent decline by 2022. Because of the pandemic, people are traveling less now that they have discovered that more can be achieved from home (Ewing, 2020) . Due to the pandemic, the automotive industry needs to realign its strategies in order to drive sales and improve the bottom line. The automotive industry is experiencing challenges with the high costs associated with developing innovations that will define the future of driving, the slowing down of vehicle sales, and the ever-increasing strict regulatory environments in markets (Ewing, 2020) . 

The sale of electric cars has been stable even with the lockdowns more than gasoline-powered vehicles' sales. The partnership between Ford and Volkswagen to develop autonomous software could be expanded to the development of electric cars (Ewing, 2020) . Ford's partnership with other automakers would ensure that the company spreads around the cost of developing new technologies and electric cars. As shareholder value and profits decline, Ford needs to forge relationships with other companies and share the massive cost that is required in order to stay competitive. 

Alternatives 

Since its establishment, Ford's communication strategy has been to preserve a high positive media presence that allows its communications to reach targeted consumers and crucial influencers (Ewing, 2020). The media presence is also supposed to help the company build and maintain relationships with consumers, shareholders, and the general public. However, in recent years, the company has been plagued with a communication problem by failing to communicate its strategy to its consumers effectively (Ewing, 2020). Therefore, Ford should invest in communication and digital marketing strategy that resonates with its shareholders and consumers at a more personal level (Williams, 2020). With investments in autonomous vehicles, ride-sharing shuttle services, and new mobility services allows the company to compete with other automakers to increase profitability. However, without clear communication and digital strategy, all these efforts are futile (Williams, 2020). 

Implementation 

The future of mobility is unknown, and to reduce costs and expand its regional and global footprint, Ford should work on forging partnerships with other automakers, especially in the field of autonomous vehicles, pay-per-use, and ride-hailing cars (Williams, 2020). Ford should collaborate with automakers such as Honda, Volvo, and Daimler in order to prepare for an uncertain future in next-generation technologies (Ewing, 2020). The investment in research and development of these technologies costs billions. Since the industry is struggling to afford its own future, it makes sense for companies to share the responsibility rather than duplicating (Williams, 2020). 

Ford Motor Company SWOT Analysis 

Strengths 

Global Brand Equity – In the automotive industry, Ford has a brand equity of $40 billion, making it one of the most valuable and most robust brands (MarketLine, 2020). Although profits and shareholder value has been decreasing in recent years, Ford is a well-known car manufacturer in the automotive industry and the global markets because of its success in marketing and advertising (MarketLine, 2020). Also, Ford has adapted its manufacturing platforms, model names, environmental sustainability, and model names with the same positioning globally, which provides a mixture of product quality and innovation with an emotional appeal (MarketLine, 2020). 

Strong Market Position – An established market equity is vital for an organization to safeguard opportunities in the market while meeting the demands of consumers (MarketLine, 2020). The Ford Motor Company has the largest share in the United States – especially in North America, in terms of sales. In 2019, the company generated over $160 billion in terms of revenue and held a 15 percent share automobile industry (MarketLine, 2020). 

Weaknesses 

Product Recalls – One of the largest issues affecting the reliability and brand image of the company is product recalls. Recently, Ford recalled more than 28,000 vehicles that includes the Ford Explorer SUVs from 2013 – 2017 and the 2020 Lincoln Aviators and Ford Explorer due to suspension problems and defective drive shafts (MarketLine, 2020). This has resulted in the company incurring huge losses due to product recalls. In the first quarter of 2017, Ford lost $295 million for two recalls and $600 million in 2016 due to building defective vehicles that have affected the organization's bottom line (MarketLine, 2020). 

Overreliance on the U.S. Market – The market in the United States contributes to about 60 percent of Ford's net revenue (MarketLine, 2020). However, in recent years product sales have been declining in North America due to challenges in the cost of parts and mobility investments that are taking part in the region. It has been projected that Ford should focus on regional sales in emerging markets to reduce its dependence on U.S. markets (MarketLine, 2020). 

Opportunities 

Autonomous Cars – To increase its market holding, Ford should invest in autonomous cars. Consumer preferences are changing, and people are looking to reduce their overall carbon footprint in the environment (MarketLine, 2020). Therefore, Ford should realign its business model to meet consumer demands by investing in artificial intelligence and self-driving cars in order to secure its future (MarketLine, 2020). 

Partnerships – To expand its global footprint and reduce costs, Ford should forge meaningful partnerships with other car brands such as the Volkswagen partners to increase its sales and distribution channels (MarketLine, 2020). 

Threats 

High Competition – Ford operates in a highly competitive industry, and the company is experiencing increased threats from rival car manufacturers such as Toyota, General Motors, and Honda (MarketLine, 2020). Industry factors have led manufacturers to reduce the cost of production and offer incentives in order to grow their market share as well as investments in research, innovation, and marketing. 

Increased Prices of Raw Materials – The instabilities in the prices of raw materials and the establishment of lockdown directives due to the coronavirus pandemic could increase the manufacturing and operational costs at Ford, thus affecting its performance (MarketLine, 2020). 

References 

Ewing, J. (2020). The Pandemic Will Permanently Change the Auto Industry . Retrieved 10 November 2020, from https://www.nytimes.com/2020/05/13/business/auto-industry-pandemic.html 

Williams, J. (2020). Alliances between rival carmakers define future of auto industry . Retrieved 10 November 2020, from https://www.foxbusiness.com/industrials/alliances-between-rival-carmakers-define-future-of-auto-industry 

MarketLine. (2020). Company Profile: Ford Motor Credit Company LLC . (2019). In  Ford Motor Credit Company LLC MarketLine Company Profile  (pp. 1–15).