Ford Motor Business Analysis

Ford Motor Company is an American multinational automotive industry. They sell automobiles and commercial vehicles under the brand, Ford and luxury vehicles under the brand, Lincoln. Ford Motor Company has also produced heavy trucks, tractors and automotive components in the past years. .Ford Motor Company’s headquarters is in Dearborn, Michigan, US. Ford Motor Company was founded by Henry Ford and was established on the 16th of June, 1903. Ford Motor Company has it’s “One Ford” mission and vision which is “One Team, One Plan, One Goal”.

2. 0 INTERNAL AND EXTERNAL ANALYSIS ON THE BUSINESS ENVIRONMENT OF FORD MOTOR 2. 1 INTERNAL ENVIRONMENT Ford Motor Company’s aims and objectives are combined into one which is known as ONE Ford. The goal of ONE Ford is to create an exciting and viable company with profitable growth for all. ONE Ford was put together to produce great products with high quality, green, safe and smart. It is also to establish a strong business which is based on a balanced portfolio of products and a global presence.

Furthermore, it is to create a better world which can be accomplished by Ford Motor Company’s sustainability strategy which aims to create value consistent with the long-term preservation and improvement in environmental, social and financial capital. Ford Motor Company has made a remarkable turnaround over the past several years. This is due to the disciplined adherence to the ONE Ford plan and resulting in the reinvention of the Ford Motor Company to be highly competitive in the global automotive industry.

In terms of financial resources and cost structure, Ford Motor Company focused on minimizing overcapacity and reducing inefficiencies to result in an even more financially stable Ford Motor Company. The ONE Ford plan and one global product strategy created a more flexible manufacturing operation that resulted in a faster product development and a more efficient production of innovative new technologies besides saving a lot of money. Ford Motor Company surpassed the two million mark for U. S. vehicles sales at the end of the year, 2011 making it the best selling brand in U. S. Total Ford Motor Company U.

S. sales were up 11 percent for the year, 2011 compared to 2010. Ford Motor Company was also the fastest-growing manufacturer in Germany with vehicle sales up 17. 6 percent over for the year, 2011 compared to 2010. Ford Motor Company remained as the market share leader in Britain and Canada, not forgetting the wholesale sales in the Asia Pacific and Africa region that were up 7. 5 percent in 2011, compared to 2010. 2. 2 EXTERNAL ENVIRONMENT 2. 2. 1 ECONOMIC Economy affects a business in terms of taxation, general demand, interest rates, exchange rates, global economic factors and so on.

It is more expensive for consumers to drive petrol fuelled cars due to rising petrol prices which means that eventually consumers will begin to change their cars which operates using diesel (The Guardian, 2005). Ford’s Sport Utility Vehicle’s sales declined due to rising gasoline prices which also resulted to the declining of the share prices (Reuters, 2005). Besides that, there is a rise in the demand for Japanese cars which consume less petrol than most American cars. This indicates automobile manufacturers the need to reduce their prices in order to sell their vehicles and to maintain their market shares. 2. 2.

2 TECHNOLOGICAL It is important for Ford Motor Company to keep a pace with the changing technologies in order to survive in the long run. Technological advancements are vital for those in the automotive industry for several reasons. Japanese companies owe their success and profitability to technological pioneering. Ford Motor Company are said to be pioneers in force-controlled robots for their transmission assemblies (Kochan, 2001), allowing them to have a competitive edge and to reduce costs used per vehicle. Besides that, petrol in the world is predicted to deplete within the next fifty years (BBC, June 2004).

Companies in the automotive industry must develop cars that use other source of energy in order to survive in the future. Chrysler, Toyota and Ford Motor Company are some of the companies in the automobile industry that have been affected by the technology factor. These companies have had to recall cars for expensive repairs in the past, which impacted negatively on their reputations. Ford Motor Company has been involved in a tyre scandal costing two billion dollars, Chrysler recalled cars due to faulty locks and Toyota in November had to recall cars due to corrosion of car parts (BBC, November 2005).

2. 2. 3 POLITICAL/LEGAL Ford Motor Company is a multinational company, which has its operations in many countries. The political environment in these countries is very important to the company’s operations. The September 11th terrorist attack which had occurred in the US reduced the sales of automobiles in the US, and specifically Ford’s sales by 10% (Ford Annual Report, 2001). Besides that, the economic recession in Argentina in 2002 affected car sales in Argentina negatively. Production volume in Argentina fell from 57,200 units to 31,000 units (BBC, January2002; Ford, 2005).

Apart from that, the Iraqi war also affected Ford Motor Company as their US sales declined by 7% (Ford Annual Report, 2003). On the other hand, the major legal factors which Ford Motor Company need to understand and act accordingly are the labour laws which keeps changing in many countries in the world. As an example, car manufacturers are drastically reducing their numbers of employees due to technology replacing man power. However, pressure from Trade Unions in the United States and in the Europe makes it difficult for car companies to dismiss employees.

This resulted to individual companies such as Ford and GM to make an effort to make deals with trade unions in order to protect themselves (BBC, September 2003). 3. 0 KEY SUCCESS FACTORS OF FORD MOTOR COMPANY Ford Motor Company came this far in the automotive industry due to several factors. The main factor of Ford Motor Company’s success is the 2000 globalization plan which was announced in the year 1994. The 2000 globalization plan was introduced to save costs which is one of the key success factors of Ford Motor Company.

Ford Motor Company’s operational costs were high and they were not making profit as their sales were not high and their cost were increasing at the year 1994 and the years before. This was done by creating synergies in different locations and plants and transforming from strategy of adaptation to standardization. This plan saved money in term of cost saving and helped to increase their profits. By unifying business operations they were able to achieve economies of scale and economies of scope. (Freyssenet, Shimizu & Volpato ,2002). Besides that, operational excellence is also one of the key success factors of Ford Motor Company.

The 2000 globalization plan was introduced to achieve operational excellence by creating synergy among different plant so that they can be the best and have an advantage above other competitors. 4. 0 CAN FORD BECOME A MARKET LEADER IN AUTOMOBILE INDUSTRY IN RECENT YEARS? Yes, I agree that Ford Motor Company can be a market leader in recent years. This is because Ford Motor Company have already started with the production of hybrid vehicles which will be a good sale due to the increase in fuel prices and an increase in environment conscious people. According to corporate. ford. com, the Ford Motor Company in U. S.

introduced the Ford Focus Electric, an all-electric sedan, which will be followed in 2012 by the C-MAX Hybrid, C-MAX Energi Plug-in Hybrid and Fusion Hybrid and in 2013 by the Fusion Energi Plug-in Hybrid. Besides that, Ford Motor Company took a step to further improve in the technology which will contribute as a factor to be a market leader in recent years. According to corporate. ford. com , Ford Motor Company remained involved in several collaborative research efforts aimed at developing and proving out “connected vehicles” that can communicate with each other and with the roadway and other transportation infrastructure.

A strong finance is also a factor for Ford Motor Company to be a market leader in recent years. According to corporate. ford. com, Ford Motor Company announced in early December 2011 that the company would reinstate a quarterly stock dividend of 5 cents per share, which was paid on March 1, 2012 due to the confidence the company has on their financial future. By doing this, Ford Motor Company can earn the trust of customers, suppliers, employees, dealers and investors to contribute in the future growth of the company and on being a market leader. 5.

0 SWOT ANALYSIS FOR FORD MOTOR COMPANY Strengths| Weaknesses| Strong Ford Asia, Africa and Ford Mazda OperationsGrowing Ford Europe and Premier Automotive Group operations| Weakening North American automotive operationsTarnished brand image| Opportunities| Threats| The way forward planHybrid vehiclesOpportunities in India and China| Rising raw materials pricesIncreasing competitionLow capital spending| 5. 1 STRENGTHS 5. 1. 1 STRONG FORD ASIA, AFRICA AND FORD MAZDA OPERATIONS The Ford Asia, Africa and Ford Mazda operations recorded strong performance in fiscal 2005.

The revenue from Ford Asia, Africa and Ford Mazda in the year 2005 has increased by 18. 5% from the year 2004. This segment recorded a higher income before tax in the year 2005 compared to the year 2004. This could prove Ford to be a large revenue and profit driver in the upcoming years. 5. 1. 2 GROWING FORD EUROPE AND PREMIER AUTOMOTIVE GROUP OPERATIONS The Ford Europe and Premier Automotive Group recorded strong revenue growth in fiscal 2005. This includes the sale of Ford brand vehicles in Europe and Turkey as well as sales of Premier Automotive Group vehicles such as Volvo, Jaguar, Land Rover and Aston Martin.

Revenues from Ford Europe and Premier Automotive Group in the year 2005 has increased by 11. 3% from the year 2004. Growing Ford Europe and Premier Automotive Group has enabled the company to counteract revenue decline in the Americas Division. 5. 2 WEAKNESSES 5. 2. 1 WEAKENING NORTH AMERICAN AUTOMOTIVE The Ford automotive operation in North America recorded a weak performance in fiscal 2005. Revenues from automotive operations in North America dropped by 2. 4% in fiscal 2005. Automotive operations in North America recorded a loss before taxes in fiscal 2005 compared to fiscal 2004.

The weakening of Ford automotive operation in North America is due to market shift away from light trucks such as Ford Western Hauler towards more fuel efficient vehicles and due to competition from Japanese automotive companies such as Toyota and Honda. 5. 2. 2 TARNISHED BRAND IMAGE The brand image of Ford Motor Company has been tarnished due to consistent product recalls. A large amount is spent by Ford in the year 2001 to replace 13 million tires made by Bridgestone/Firestone. Besides that, Ford recalled approximately 792,000 pickup trucks and sports utility vehicles.

The tarnished Ford Motor Company’s brand image has negatively impacted the sales in US. 5. 3 OPPORTUNITIES 5. 3. 1 THE WAY FORWARD PLAN Ford Motor Company launched a restructuring plan in the early 2006 to improve the performance of automotive business in North America. This plan aims to make the business more customer-focused, product-driven and efficient. 5. 3. 2 HYBRID VEHICLES More than half of Ford Motor Company’s product are expected to switch to hybrid electric engines. Hybrid vehicles will be a good sale due to the increase in fuel prices and an increase in environment conscious people. 5.

3. 3 OPPORTUNITIES IN INDIA AND CHINA China and India are known to be highly populated countries. Ford Motor Company reinforced its commitment to both these countries by launching the Ford Fiesta in India during the year 2005 and in China the sales increased by 46% in the year 2005. An increase in demand on light vehicles in both these countries would provide an opportunity for Ford Motor Company to diversify its revenues. 5. 4 THREATS 5. 4. 1 RISING RAW MATERIAL PRICES Steel and polymer are the two raw materials that are widely used in Ford Motor Company as well as any other automotive industry.

The recovering steel prices and rising polymer prices is a threat to Ford Motor Company and will have an obvious affect on the company’s ‘profit margins. 5. 4. 2 INCREASING COMPETITION Ford Motor Company’s market share in the US light vehicle market has dropped from 22. 8% in 2001 to 18. 2% in 2005. The competition from Japanese automotive industries is one of the factors for this drop. The intense competition from Toyota, Honda and Nissan is a threat to Ford Motor company’s market share.


Ford Motor Company’s capital spending is lower than its competitors. This also includes Ford Motor Company’s research and development expenditure which could affect the company’s growth. Ford Motor Company’s low capital spending will result to an aging vehicle range which would pose a threat to the growth prospects of the company. Word count, 2026 (Introduction and Conclusion not included) 6. 0 CONCLUSION In Conclusion, Ford Motor Company still remains robust despite the weaknesses and the threats that are posed.

In spite of all this, Ford Motor Company must ensure that their weaknesses are overcome and that they are prepared for the threats that are anticipated to be faced by Ford Motor Company in the future. This is to ensure Ford Motor Company to be a market leader in automobile industry in years to come. 7. 0 REFERENCE 1) Times, B. (2009) How Ford Avoided the Meltdown that Hit GM, Chrysler. [online] Available at: http://www. cnbc. com/id/30134908/How_Ford_Avoided_the_Meltdown_that_Hit_GM_Chrysler [Accessed: 21 Feb 2013]. 2) Corporate. ford.

com (2013) Ford Motor Company – Official Global Ford Corporate Information. [online] Available at: http://corporate. ford. com/ [Accessed: 20 Feb 2013]. 3) Detroit Free Press (2012) Detroit Free Press. [online] Available at: http://www. freep. com/ [Accessed: 20 Feb 2013]. 4) Yousigma. com (n. d. ) Ford Motor (SWOT Analysis). [online] Available at: http://yousigma. com/comparativeanalysis/fordmotor. html [Accessed: 20 Feb 2013]. 5) Media. ford. com (2009) Home | Ford Motor Company Newsroom. [online] Available at: http://media. ford. com/ [Accessed: 20 Feb 2013].