Ford Motor Company has had its share of success and failures over the years. In order for the company to remain competitive and relevant in today’s economy, Ford should actively anticipate threats and have a strategy in place that allows them to minimize impacts while capitalizing on external opportunities. Ford Motor Company is one of three major domestic automobile manufactures. They also own Volvo, Aston Martin, Land Rover, Jaguar, and Mazda. Some of the external threats that face Ford Motor Company are the growing population of hybrid vehicles.
Ford was the first company to roll out the first hybrid sports utility vehicle. Since then, multiple companies have launched their own hybrid vehicles and created much more competition throughout the hybrid market. While Ford F-Series trucks have been the leader in industry sales for the last 33 consecutive years, the demand for these vehicles have dropped. Pickup and Heavy Duty trucks have been impacted by tightening regulations on emissions and gas mileage.
Gas prices continue to rise and these vehicles consume more miles per gallon than most vehicles on the road. Many of these vehicles are used in production, primarily construction. Heavy loads and towing will cause these vehicles to consumer greater amounts of fuel. With the declining housing market in the United States, new home sales have dropped as well, thus leaving less of a need for these vehicles (David,2009).
Although Ford is a well known brand, product recalls have tarnished the companies’ good name. The National Highway Traffic Safety Association, (NHTSA), tracks recalls and Ford has logged over 20 million vehicle recalls to date (Ford Recall History Puts Toyota Recall in Perspective, para4). The recalls coupled with a weak dollar have allowed foreign competitors to gain market share. Toyota also poses another external threat, as they are a non-union company. Ford and GM are affiliated with the UAW. The Union of Auto Workers contracts cost on average $2500 per Ford or GM profitability per vehicle.
Toyota, who is non unionized gains on average $1500 per vehicle sold (Toyota and the Government backed Witch Hunt, para.8) Although the crown jewel of the Ford fleet is its F-Series pickups, other vehicles are showing strong gains compared to their competitors. The Wall Street Journal has compiled the top 20 vehicles by sales. In looking at the detail, Ford has 25% of the vehicles listed and 27% of the total sales. Of the total September sales of 381,075, Ford was responsible for 104,066 vehicles. This is more than any other competitor, both foreign and domestic.
Even with those impressive numbers, GM still holds first place with 18% of the market share while Ford comes in a close second with 16.7%. Toyota and Chrysler respectively round out third and fourth respectively with 15.3% & 10.4%. The current financial climate at Ford Motors is showing signs of improvement. The company posted September sales results showing a 46% increase over this time last year. During the last 23 of 24 months, Ford retail market share has increased (Ford September Sales up 46%, para1).
The F-Series pickup is the top selling truck in America for the last 33 years and is responsible for 50% of Fords annual profits. In August of 2010, Ford sold its Volvo brand to Zhejiang Geely Holding Group Company for 1.8 billion. Ford’s Premier Automobile Group, which housed the Aston Martin division, was sold in March of 2007 for $925 million dollars but retained a 15% ($77 million) stake in Aston Martin (Aston Martin p.1). In March of 2008 Ford sold the Jaguar and Land Rover brands to Tata Motors of India for $2.3 billion. The sale of the luxury British brands helped to offset Fords losses and allow for restructuring. This was a key element that prevented the corporation from becoming bankrupt. In 2009, Ford was finally able to post a profit for its share holders.
Toyota, one of Fords forgiven competitors, is not convinced that historical methods are correct. They believe in a new consumer driven dynamic production environment. Lean Manufacturing System was developed for automobile production by an Engineer for Toyota after reviewing Fords operations, it’s no surprise they are much more efficient (A Brief History of Lean, para5). With Toyota being ranked by Fortune Magazine as the #3 most admired company and America’s best automaker, they provide very strong competition (David, p.84). Not only are they well respected, but they will be opening a new production facility in Mississippi in 2012, therefore doing something Ford has not been able to do-create jobs.
By creating jobs during an economic downturn, brand loyalty for Toyota should rise. Chrysler is redesigning and reintroducing 16 of its models in 2011 in hopes to reinvent its place in the market. In comparison, Ford is launching one new product and updating the look of two of its current models. Fords other domestic rival, Chevy, will be introducing 2 new vehicles in 2011. One of those vehicles is the Volt.
The Volt is Chevy’s answer to the hybrid revolution as it’s a gas and electric powered car. Objectives and strategies that I would recommend are to continue to build loyalty amongst consumers of the F-Series trucks. I would also suggest that on a global level, they review their products and streamline where possible.
Fewer products with a greater array of options would be beneficial in areas where money is not readily available for expensive purchases. By adjusting the product offering and options selection, it would allow a consumer to feel as if they purchased a vehicle that was customized to them and not a stripped down assembly line standard vehicle. Additionally, I would look to make sure these products are environmentally friendly and meet the needs of ever growing urban areas. As some cities are already overcrowded, creating a smaller, more maneuverable and energy efficient vehicle would satisfy consumer needs in almost any developed area.
References Aston Martin. (2010, October, 24). In Wikipedia.com, Retrieved on October 24,2010, from http://en.wikipedia.org/wiki/Aston_Martin Chrylser Corporation, (October 1,2010). 2010 Chrylsler Group LLC, Sales Archives. In Media.chrylser.com, Retreived on October 20, 2020 from http://www.media.chrysler.com/newsrelease.do;jsessionid=CB8CF1041991631C324AE4D231E19897?&id=9401 David, Fred R. (2009).Strategic Management: Concepts and Cases. New Jersey: Prentice Hall. Ford Corporation.
(October 1,2010) Ford September Sales up 46%; Ford on track to gain market share for second consecutive year. In Ford.com, retrieved October 19,2010, from http://www.ford.com/about-ford/news-announcements/press-releases/press-releases-detail/pr-ford-september-sales-up-46-percent-33285 Johnson, Brian. (no date).
Toyota and the Governement Backed Witch Hunt. In BIG GOVERNMENT.COM, Retrieved October 20,2010, from http://biggovernment.com/brjohnson/2010/02/17/toyota-and-the-union-backed-government-led-witch-hunt/ Levin, Mike. January 5, 2010. January 5).In news.pickuptrucks.com, Retrieved on October 20,2010, from http://news.pickuptrucks.com/2010/01/2009-year-end-top-10-pickup-truck-sales.html\ No Author Given. (2009). A Brief History of Lean. In Lean.org, Retrieved October 20,2010, from http://www.lean.org/WhatsLean/History.cfm No Author Given. (February 16, 2010). Ford Recall History Puts Toyota Recall in Perspective. In USRecall News, retrieved October 19, 2010, from