Name of the Company: Ford Motor
Business Sector: Automobile
Operating Geography: North America, USA, Global
About the Company: Ford Motor has been pioneer in global automotive industry since its inception in 1903 by Mr. Henry Ford at Dearborn, Michigan. Ford Motors’ core business includes designing, manufacturing, marketing and servicing a full line of passenger cars, trucks, SUVs as well as luxury vehciles. Ford motors employ close to 201,000 employees globally across its 62 manufacturing sites around the globe.
Revenue: $141.5 Bn – FY ending March 2016
Competitive Analysis of ford motor
|1. Huge product portfolio and a total mobility solutions company|
2. Strong focus on emerging opportunities and future trends and technologies
3. Strong line of credit for financing facility to the customers
|1. Underperforming premium luxury vehicles under Lincoln brand
2. Lack of performance in developing markets as well as with small vehicles in various markets
|1. Rise in e-commerce that pushes up demand for LCVs|
2. New business opportunities due to future trends like electrification & autonomous driving technologies
|1. Global financial crisis in domestic as well as many exports market creating excess capacity conditions
2. Emergence of cheaper Asian alternatives to mobility solutions
3. Protectionist measures in US
1) Under performing luxury vehicles under Lincoln brand: Ford Motors has not been able to perform in the luxury premium market with its Licoln brand vis-à-vis the already established brands – Mercedes, Audi, BMW etc. Lincoln sold nearly 112,000 units in 2016 which is much behind than 340,000 units sold by Mercedes. Lincoln is unable to perform in domestic market also as it bags only 5.4% in US luxury car market by volume.
2) Lack of performance in developing markets as well as with small vehicles in various markets: Ford Motors couldnot charter sustainable profitability business in the markets of Indonesia and Japan and thus had to exit the markets. Also Ford Motors has to improve in the markets of Latin America, Middle East, Africa as well as India and China. It is due to partly inability of producing of large volumes of vehicles thus not exploiting the benefits of economy of scale. Also there have been several low cost manufacturers in emerging markets of Asia and has been able to exploit significant economy of scale thus providing cheaper alteratives to the consumers and command a high maret share. Ford Motors has to improve on its competency on compact vehicles offerings even in the developed markets along with the emerging markets.
1) Rise in e-commerce that pushes up demand for LCVs: There has been huge business expansion in electronic commerce across the globe that is likely to push up the requirement of light commercial vehicles. Electronic commerce is expected to rise by close to 6% and the trend is likely to continue till 2020. Thus, Ford Motors can exploit the opportunity by forging business alliances with e-commerce logistics companies thus pushing up the topline for the company.
2) New business opportunities due to future trends like electrification & autonomous driving technologies: Ford motors is foraying into building future vehicle technologies - electrification of vehicles and has committed to launch 13 new hybrid versions in next vehicles including F-150 and Mustang, transit custom plug-in hybrid in Europe as well as a SUV that can deliver upto an estimated range of 300 miles. Ford Motors is also committed towards developing an SAE level 4 fully autonomous vehicle by 2021 which will have no steering wheel, brake and gas pedal to be ready for commercial operations.
1) Global financial crisis in domestic as well as many exports market creating excess capacity conditions: There has been prevalent economic crisis in global markets – US, China, Japan,Europe due to financial crisis. There gas been increase in government deficits coupled with high levels of debt which affects overall macroeconomic scenario of the markets bringing down overall sales volumes. There has been rise in global commodity prices and energy prices which affordability of the vehicles by mass consumer segments and thus also responsible for pulling down the sales volumes. Due to global slowdown of sales volumes, there has been excess capacity across various key markets – 7%, 21%, 48% in the markets of North America, Europe and China thus reducing overall profitability of the company. The excess capacity conditions is likely to prevail till 2021.
2) Emergence of cheaper Asian alternatives to mobility solutions: Cheaper alternative Asian companies – Hyundai, Maruti Suzuki, Nissan etc. are posing formidable challenge to expensive products from Ford Motors. Due to availability of cheap factors of production locally for the companies in the developing markets, Asian companies are able to deliver cost effective and highly affordable products to the various markets across the globe.
3) Protectionist measures in US: Ford Motors is facing huge challenge in keeping its products affordable in US as new presidential measures clamp down on the cheaper outsourcing facilities. Thus, the products are expected to be less price effective in recent years. Also, Ford Motors has to invest domestically to produce the previously imported models thus leading to more capital expenditure as well as reduced utilisation of production facilities abroad. This will lead to reduction in passenger vehicles sales as people will be tempted to use cheaper alternative public modes of transportation.Ford Motors SWOT analysis has been conducted by Anindhya Sadhu and reviewed by senior analysts from Barakaat Consulting.
|1. Protectionist measures in US||1. Surge in global economic growth by 3.5% in 2017|
|1. Customer satisfaction|
2. Assisted driving & and active safety
|1. Involvement of software and semiconductors in automotive industry
|1. Regulations for lesser vehicle pollution and greater safety for the passengers||1. Growing criticism towards environmental pollution created by vehicles|
1) Protectionist measures in US: Ford Motors is facing huge challenge in keeping its products affordable in US as new presidential measures clamp down on the cheaper outsourcing facilities. Thus, the products are expected to be fewer prices effective in recent years. Also, Ford Motors should invest domestically to produce the previously imported models thus leading to more capital expenditure as well as reduced utilisation of production facilities abroad. This will lead to reduction in passenger vehicles sales as people will be tempted to use cheaper alternative public modes of transportation.
1) Surge in global economic growth by 3.5% in 2017: Global growth is expected to be 3.5% in 2017. Mostly driven by US economy which is expected to grow by 2.25% in 2017 due to various protectionist and domestic employment friendly measures taken by Mr. Donald Trump. Europe is expected to grow by 1.5% in 2017 which is consistent with labour market improvement for the last few years. Emerging countries although have mixed response, but barring few local markets, there is gradual recovery in the commodity market as well as industrial commodities and crude oil due to strengthening demand, coupled with growing productivity and efficient business processes are likely to boost economic growth. This will lead to higher employment and stimulate consumer spending. China expects to hit growth target of 6.5% in 2017. Europe is expected to grow by 1.5 % in 2017. It is mainly due to rising disinflationary pressures, reduced employment, easing fiscal policies. Thus, good fortune is expected for the automobile companies and thus, Hyundai can expect an improved demand for its products in Europe.
1) Customer satisfaction: Today’s consumers are putting a lot of importance towards using products embedded with newer technologies. Newer technologies promise enhanced performance of the products, more safety and improved driving experience due to enhanced features and specifications.
2) Assisted driving & and active safety: With rapid advancement in technology, consumers are demanding for safer features in the vehicles along with performance. Assisted driving is gaining popularity due to less human involvement and safer driving. Electronic components with software intelligence has led to integration of radar, thermal, camera technologies with steering and braking activities owing to electrification of power-train is vying to eliminate the role of a human driver thus ramping up safety and assisted driving functions.Ford Motors PESTLE analysis has been conducted by Anindhya Sadhu and reviewed by senior analysts from Barakaat Consulting.
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