SWOT Analysis: The Ford Motor Company Case

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Introduction

The automobile manufacturing industry is a highly competitive and consumer-driven sector of the economy that has developed significantly over the past decades and has experienced a significant decrease in sales in the past two years. The Ford Motor Company was founded in the 1910-s and was one of the US pioneers of automotive vehicle manufacturing. Since its creation, Ford has produced multiple types of vehicles, both domestically and globally, for household and industrial purposes. As of 2019, the organization’s operations are distributed across 991 plants globally, employing almost 200,000 workers. Apart from car manufacturing, the company actively engages in autonomous vehicle designing, electrification, consumer mobility services, and innovation. As one of the leaders in the US automotive business, Ford has continuously set trends and benchmarks for competitors to follow. Recent changes in the market characterized by the fall in car sales and the socio-cultural shift toward alternative ways of mobility and less intensive usage of cars have imposed challenges for the company. The present report introduces the SWOT analysis of the Ford Motor Company business to generate appropriate recommendations for competitive strategic actions.

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SWOT Analysis of the Ford Motor Company

Table 1. Ford SWOT Analysis.

Internal Issues External Issues
Positive Effect Strengths
  • resilience
  • reputable brand name
  • capability to integrate innovation, such as autonomous and electric vehicles
  • Ford Smart Mobility as an experience in cooperating with start-ups
  • conceptualization of mobility services as a business strategy
  • successful history of being one of the international leaders in creating and selling multi-vehicle lineup
Opportunities
  • learning from new competitors for developing conceptual environment-friendly and technologically equipped cars
  • introducing new lineups of vehicles to the market
  • shift to fully electric vehicles to meet customer needs
  • compete with competitors by reducing cost
Negative Effect Weaknesses
  • investor pressure
  • insufficient leadership style
  • significant fall in sales and stock
  • delayed implementation of innovation
  • the lack of a well-defined focus in business operations
  • scattered partnership strategy
  • closed operations in Europe as the direction toward concentration on the US market only
Threats
  • change in market trends toward minimization of car use by the population
  • intense international competition presented by Asian and European automotive industries
  • growing competition in the US-based conceptual vehicle manufacturers as new entrants

Strengths

Ford is a company with a long history of leading the US automotive industry and setting trends abroad. It has survived several recessions, which is why its main strengths are resilience, the ability to adapt to the changing economic environment, and a reputable brand name (See Table 1). In terms of operation, Ford’s capability to integrate innovation, such as autonomous and electric vehicles, as well as mobility services. It launched Ford Smart Mobility, which is a strong feature providing experience in cooperating with start-ups. Marketing as a functional area of the company is characterized by a strong aspect of Ford’s conceptualization of mobility services as a business strategy capable of meeting multiple customers’ everyday needs in transportation. From the point of view of operations as a functional area, Ford’s strengths are in the successful history of being one of the international leaders in creating and selling multi-vehicle lineup. A well-developed and long-term established supply chain allows the company to design, manufacture, and sell functional and reliable high-quality vehicles with a reputation for accountability and affordability.

Weaknesses

When discussing the financial health of the company, one might identify several weaknesses in the internal environment of the Ford Motor Company. Indeed, the company is placed under investor pressure, which causes fast and often not effective decision-making. In recent years, the organization has suffered from a significant fall in sales and stock prices, which caused a shortage of revenue and negatively impacted the financial situation. Furthermore, sales as an essential functional area have decreased due to delayed innovative solution implementation by Ford in comparison to other entities in the automotive industry in the USA and abroad.

The company fails to lead the market and continues to sell conventional vehicles or hybrids while new competitors actively introduce alternative fuel cars and other innovative ideas. Other identified weaknesses include insufficient leadership style and scattered partnership strategy, which obstruct the company’s ability to implement innovation as quickly as the competitors do. Closed operations in Europe directed the company toward concentration on the US market only, which might be considered as a weakness due to the loss of global presence. Finally, the lack of a well-defined focus in business operations that are characterized by integrating multiple projects at once does not allow the company to maintain its development.

Opportunities

Given the external trends in the contemporary socio-cultural and economic environment, one of the opportunities for Ford would be learning from new competitors for developing conceptual environment-friendly and technologically equipped cars. Also, diversification of products by introducing new lineups of cars to the market would allow for an enhanced market presence and increased consumer demand. The company has a chance to shift to fully electric vehicles to meet customer needs, as well as compete with competitors by reducing cost for Ford’s products and services.

Threats

Another external factor is the threats to the business that are envisioned in the changes in market trends toward minimization of car use by the population. The decrease in conventional automotive vehicle use steadily leads to a fall in revenue. In addition, the strong international competition presented by Asian and European automotive industries presents Ford with new challenges for innovative solutions and marketing and sales strategies. Finally, growing competition in the US-based conceptual vehicle manufacturers as new entrants imposes a significant threat for Ford since the company is at risk of losing its leading position.

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Recommendation for Strategic Action

The results of the conducted SWOT analysis that integrates both internal and external issues related to the business issues at Ford allow for developing several recommendations to the CEO of the organization. The proposed strategic actions are designed with the aim of strengthening the position of the company in the market and integrating the findings into business- and corporate-level planning. As the SWOT analysis components imply, it is vital for the company to maintain strengths and eliminate or correct weaknesses within the internal environment. Similarly, the leadership of the company under analysis should use the opportunities for gaining competitive advantage and address threats within the external environment of the automobile industry and the global economy as a whole.

Recommended Strategic Action at the Business Level

Since the contemporary trends in the automobile manufacturing industry are directed toward finding new ways of meeting consumer needs by integrating alternative fuels, innovation, and technologies, Ford should compete in this area using a diversification approach. Indeed, such competitors as Tesla, Faraday Future, and Elio Motors constitute a significant threat to the Ford Motor Company by steadily occupying the market and leading the car industry in a technological and environment-friendly direction. However, this threat in the form of the competitors’ direction toward innovative product development and car manufacturing might be used as an opportunity for product diversification and long-term sustainable growth for Ford. Thus, for Ford to preserve its market share, the business-level strategic action it should take is intensifying the integration of alternative fuel utilization for new cars. It should introduce a new type of vehicle that integrates both the company’s long term image of a reliable and high-quality vehicle manufacture and the conceptually presented concern about the future in the form of alternative fuel usage. It will allow for maintaining a high level of market presence despite the overall decline in care usage in society.

In addition, to ensure a competitive advantage over other rivals in the automotive industry, the Ford Motor Company might implement a strategy of cost leadership. As it has been identified during the analysis, the reduction of costs for the services and vehicles produced by the company might significantly improve the market presence and enhance the demand of consumers. It would be a significant contribution to the conceptualization of consumer mobility since the company will demonstrate the concern about its target market by offering a high-quality but affordable vehicle. To succeed in this strategic effort, the company should review its current supply chain management and seek less costly materials and more efficient manufacturing opportunities.

Recommended Strategic Action at the Corporate Level

At the corporate level, the Ford Motor Company should integrate its opportunities and mitigate threats by developing a system of subsidiaries to allow for rapid and well-organized designing of different branches of production. As the SWOT analysis has shown, Ford’s dispersed and unfocused approach to innovation has resulted in monetary losses and instability of the company in the market. Therefore, to eliminate this weakness and ensure that the company is focused on a business model that prioritizes innovation, the organization should systematize the departments in accordance with the designated branches of business functioning. In particular, since the company has introduced the strategy-driving concept of mobility, it should concentrate on developing its own products and services based on the selected approach. In such a manner, the company will be able to meet consumer needs, ensure the increased demand due to the promotion of the brand name, and obtain a significant competitive advantage.

Another important corporate-level strategic decision is the implementation of a new leadership style that would allow for delegating innovative decision-making to the designated branch heads. It will ensure qualified management within each direction of business operations. In addition, such a solution will allow for eliminating the identified weaknesses of the lack of a well-defined focus in business operations and delayed innovation implementation. Indeed, when lead and managed efficiently and with the right focus, the company will be able to generate innovative ideas and implement them quicker than the competitors.

Conclusion

In summation, the conducted SWOT analysis of the Ford Motor Company showed that the internal factors of long-term experience, world-wide operations, reputable brand, resilience, and willingness to innovate are Ford’s strengths. At the same time, the company’s weaknesses include unstable financial health, inconsistent leadership, and business focus, as well as delayed innovation. As for external factors, the company faces threats in the form of competitors in Asia and Europe, as well as domestic alternative and innovative vehicle manufacturers and market preference shifts. However, there are opportunities for competitive advantage acquisition, including learning from competitors, innovation, partnership, and cost reduction, which might be achieved by diversification, cost leadership, and business model adjustment.

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BusinessEssay. 2022. "SWOT Analysis: The Ford Motor Company Case." October 14, 2022. https://business-essay.com/swot-analysis-the-ford-motor-company-case/.

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BusinessEssay. "SWOT Analysis: The Ford Motor Company Case." October 14, 2022. https://business-essay.com/swot-analysis-the-ford-motor-company-case/.