Ford Swot Analysis & Competitors – Know More

Company Overview:

Ford Motor Company is an American multinational automaker headquartered in Dearborn, Michigan. The company sells automobiles and commercial vehicles under the Ford brand and most luxury cars under the Lincoln brand. Let us know more about “Ford Swot Analysis & Competitors”

Ford Swot Analysis & Competitors - Know More

Products Summary:

The company produces cars, trucks, vans, sport utility vehicles, and parts. The cars are sold under the Ford brand in North America. Many of these are produced for the North American market in the United States and Canada.

Markets:

The company’s operational activities are organized in three geographic segments: North America, Europe, and the Asia Pacific.

History:

The Ford Motor Company was founded by Henry Ford and his business partner, James Couzens, on June 16, 1903. The first cars produced by the company were known as “automobiles” because they were built to be powered solely by an internal combustion engine. In 1903, the company purchased a failed motorcar company, called the Detroit Automobile Company of Pontiac, Michigan. The business was renamed the Henry Ford Company two years later, and in December 1905, Henry Ford included a section for “automobiles” in the new Hewlett-Packard dealership in Detroit.

Henry Ford introduced several innovations that are recognized today as trademarks of the Ford brand.

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Ford’s Strength:

1. Innovative vehicle designs

Ford vehicles include the Ford F-Series pickup truck, the Ford Expedition, and Lincoln Navigator sport utility vehicles, Ford Taurus, and Ford Mondeo mid-size sedans. The company also manufactures the Ford Ranger compact pickup truck, the Mustang sports car, the Fusion midsize sedan (North America), and the Lincoln MKS luxury sedan (North America). The company is also known for luxury models like the Mercury Grand Marquis sedans. Ford’s performance vehicles include its high-performance Ford GT sports car; it’s Focus RS; its Shelby automobiles; and its new generation of superminis like the Fiesta ST.

2. World-class manufacturing facilities

The company operates in three geographic segments: North America, Europe, and the Asia Pacific. It operates manufacturing facilities in the United States, Europe, and Asia. When necessary or practical, it purchases components and assemblies from third parties.

3. Popular services like SYNC

Ford SYNC is the de facto standard in-car infotainment system for several automakers. SYNC AppLink is a widely licensed software platform that lets you use your smartphone applications in the car. SYNC also includes a two-way voice-activated system that allows drivers to speak instead of using buttons and dials.

4. Strong Focus on Energy Efficient Vehicles

The F-150 truck has been in production since 1948, making it one of the longest continuously produced vehicles in North America. It has become a symbol of durability and rugged construction, and it has been modified for racing in NASCAR events. The Escape is a compact SUV with better fuel economy than most other vehicles in its class. The Fusion is a family sedan with a high fuel economy among midsize sedans. The C-MAX is a compact hybrid with one of the best fuel economy ratings in the non-luxury class.

Ford’s Weakness:

1. Declining market share in several growing markets

The company has been losing market share in North America and it is facing strong competition from foreign car manufacturers like Honda, Nissan, Hyundai, and Volkswagen. Ford’s competitors in Europe include General Motors, Renault, Peugeot Citroen, and Volkswagen. In South America, its main competitors are General Motors and Volkswagen. In China, its main competitor is General Motors’ Cadillac brand. In South Korea, its major competitor is Hyundai Motors Company. In India and Turkey, its competitors are Hyundai and Renault.

2. High cost to manufacture vehicles in the U.S.

The company has been criticized for operating manufacturing facilities in the North American market that have high production costs compared to other countries’ plants. In 2010, the company’s profitability was reduced due to its declining revenue from Europe, a region where it has been losing market share to foreign car manufacturers since 2007. The company’s sales in China have been under pressure from the Chinese government, which banned sales of foreign car brands without cooperation agreements with local car manufacturers between 2010 and 2012. Global sales were reduced by approximately 2% in 2011 due to this stringent regulation against foreign brands.

3. A Large number of layoffs

The company announced a major restructuring in 2007, which was followed by a reduction of 10,000 employees by the end of 2009. In 2010, the company announced layoffs of 3,800 employees. In 2011, Ford’s job cuts reached 31,728. In the first half of the year 2012 alone, Ford lost approximately 13,000 federal workers. The 2011 restructuring was called “The Way Forward” plan.

4. High debt load

The company has been facing financial difficulties since the 2008 crisis. With the termination of most of its labor agreements, labor costs have been rising significantly, and the company has been facing numerous lawsuits supported by government agencies like the United Automobile Workers and consumer associations like Consumer Reports. The company “suffered a $12 billion loss” in 2010 and is considered to be “the biggest American automaker to fail a credit test.” The 2009 restructuring was completed with $22.5 billion in loans from the U.S. government, which was an indication that Ford would be financially vulnerable if it had to sustain such losses again.

Ford’s Opportunities:

1. Growth in emerging markets

The company has been investing significantly in the emerging markets of China, Brazil, and India. In China, Ford’s market share is about 16%. In Brazil, it plans to introduce a new line of vehicles for the Brazilian market with a focus on small cars and SUVs. In India, Ford is planning to introduce a new line of cars that will introduce a global design language.

2. Strong operating margins in North America

Ford’s North American operations have been growing at a rate of 4% for the past two decades. The company has been gaining market share from subsidiaries like Mazda and Jaguar Motors in the North American sector.

3. Rising revenues from new products

Ford’s Lincoln brand, which is the luxury division of the company, was its third-largest producer of vehicles in 2011. The company has been planning to introduce a new version of its Continental sedan, which will be an important vehicle for the company’s limousines. In 2012, it debuted a new version of its popular F-150 truck to boost sales in the United States and Canada. In China, the automaker introduced a new version of the Fiesta sedan and a new SUV at a consumer exhibition.

4. Strong business in Latin America

In 2011, the company reported a record profit of $4.7 billion. In 2012, it announced a record-breaking third quarter with a net income of $3.2 billion, making it one of the most profitable quarters in the company’s history.

Ford’s Threats:

1. Rising costs in Europe and North America

As a result of negotiations with its unions, the company has been facing rising costs in Europe and North America. In 2011, Ford experienced a net loss of $1 billion from its European operations due to significant losses from its Jaguar and Land Rover brands as well as from its luxury Lincoln brand. In North America, the company recently announced a $600 million settlement to be paid by current and former workers at six Michigan plants with help from the U.S. government.

2. Government regulations

In 2011, the company was considered to be “the biggest American automaker to fail a credit test” due to the $12 billion loss from its European operations and $2 billion of losses from its North American operations in 2010. In 2012, the European government influenced car manufacturers with stringent regulations that limited their market share in the region. The new regulations also limited foreign ownership by limiting ownership of all kinds of cars and limiting discounting on vehicles sold in Europe.

3. Heavy competition from foreign automakers

Ford’s main competitors in Europe include General Motors, Renault, Peugeot Citroen, and Volkswagen. In South America, its main competitors are General Motors and Volkswagen. In China, its main competitor is General Motors’ Cadillac brand. In South Korea, its major competitor is Hyundai Motors Company. In India and Turkey, its competitors are Hyundai and Renault.

4. High return rate for cars sold in North America

The company has been criticized by several consumer groups for releasing unreliable cars into the market that need significant repairs and replacements regularly. In 2012, the company announced that most of its vehicles will be equipped with SYNC entertainment system and MyFord Touch, which was considered to be a costly mistake that affected its revenues and profits in the United States and Canada.

5. Declining car sales

Ford’s revenues from car sales decreased by $1.7 billion in 2010 and $1.8 billion in 2011. This decline was due to the company’s failure to adapt itself to the changing preferences of its customers. The company produced an extensive line of SUVs and pickup trucks at the expense of its sedan lineup, which was considered to be a serious miscalculation by analysts and consumers soon after new models were introduced.

6. High transfer prices

Many financial analysts believe that Ford’s SUV models are overpriced for their value. In 2012, some analysts argued that Ford’s pricing on new models was inconsistent with their competitors’ prices for the same vehicles, which would affect its market share in North America and Europe negatively.

Ford’s Competitors:

1. Tesla: 

Tesla was founded in 2003 by Martin Eberhard, Marc Tarpenning, Elon Musk, and Ian Wright. It sells its vehicles directly to consumers without using a dealership network. The Palo Alto-based company won the “Car of the Year” award for its Roadster model in 2008. Its Model S sedan was awarded “Best Car To Buy 2012” by Consumer Reports magazine. In June 2012, Tesla started selling its Model S vehicle in Europe and China as well as North America through its retail stores and online sales channels. Tesla’s sales were $581 million in 2010 and $413 million in 2011; however, it has been losing money due to research and development costs and other expenditures related to new models launched into the market. In 2011, Tesla reported a loss of $84.2 million from its automotive operations. However, it has been investing heavily in research and development for new technologies to be used in future models. The company’s Model S vehicle was rated “Best Car To Buy,” a distinction which is usually reserved for luxury or sports cars, by Consumer Reports magazine.

2. General Motors: 

General Motors is the world’s largest automaker and the largest producer of automobiles in the world based on sales figures from 2010 to 2011. In 2012, it held the No. 1 rank in sales among American automakers for the first time since 1995 when Toyota overtook it from being No. 1 in 2003. As of March 2012, the company was losing $1 billion a quarter. In 2010, it reported a record-breaking profit of $9.9 billion in North America and a record-breaking loss of $10.6 billion from its European operations due to significant losses from its British and German subsidiaries. As of September 2011, it had six models with over 1 million units sold globally: the Buick Lacrosse CXL, Buick LaCrosse LS, Cadillac Escalade ESV/ELR, Chevrolet Silverado HD/LTZ, Chevrolet Silverado 1500 HD/LTZ, and Chevrolet Colorado ZH2.

3. Volkswagen: 

Volkswagen is the second-largest automaker in the world based on sales figures from 2010 to 2011. In 2012, it announced a record-breaking third quarter with a net income of $3.2 billion, making it one of the most profitable quarters in the company’s history. Its luxury Audi brand sold over 1 million vehicles worldwide in 2010 and 2011, which helped its revenues increase by $10 billion. Its luxury Porsche brand sold more than 1 million vehicles worldwide during 2011 alone, which made it one of the fastest-growing automakers in the world. China is its most successful international market, accounting for more than 8% of VW’s global retail sales during 2011 with an estimated 10% growth rate for 2012.

Conclusion:

Ford’s problems are not new; it has been facing challenges in its operations for decades. However, the company has never faced such serious competition from its rivals and other factors that would affect its revenue and profits negatively. In 2008 and 2009, Ford was able to reduce its losses and increase its market share in North America by reducing the cost of producing vehicles while increasing its output to meet customer demand. However, the company failed to adapt itself to significant changes in consumer preferences for SUVs and trucks over sedans since 2008, which caused it to lose significant revenues, especially from middle-class families who resorted to buying cheaper vehicles or imported models from other countries instead of American-made cars. In addition, Ford’s competitors have been gaining ground in the market as well as in the world automotive industry as a whole, making it hard for Ford to compete with them. In addition, Ford has been struggling to increase its profit margins from the profit margin of its competitors for years.

Ford Swot Analysis & Competitors – Know More

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