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Ford Swot Case Study

Essay by   •  December 10, 2012  •  Case Study  •  2,203 Words (9 Pages)  •  1,707 Views

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The purpose of this report is to conduct a SWOT analysis of the Ford Motor Corporation. The author will decide which parts of the SWOT analysis are most relevant to the decision to invest in the company. The author will identify the company's internal and external stakeholders and those stakeholders' wants and needs. The author will also explain how the company is fulfilling those needs and if they are not; why those needs are not being meet and how he company can fulfill the needs not being met.

Strengths

Brand Image

Ford Motor Company has strong brand recognition through out the world and is one of the oldest manufacture of automobiles in the world. The company manufactures and distributes automobiles in over 200 markets on six continents (Ford, 2012). Ford's main strength is it's brand image because of the Ford and Lincoln brand name (Ford, 2012). Ford place seventh in 2012 amongst the leading automotive brands, ahead of (a) Audi, (b) Hyundai, & (c) Lexus (Ford, 2012).

The company's market share in the United States increased from 14.2% in 2008, to 16.5% in 2011 on the combined sales of their cars and trucks (Ford, 2012). The company is the leading automaker in Canada and Turkey with a 17.1% and 15.8% of car and truck sales (Ford, 2011). Their share of the market in Brazil and Argentina is a respectable 9.8% and 12.9%. The company's market share throughout the world greatly enhances their competitive advantage and has increased bargaining power (Ford, 2012)

Operational Network

Ford operates a globally strong and diverse operational network. The company operates (a) sixty-nine manufacturing plants, (b) forty-one distribution centers and warehouses, (c) fifty-six engineering, research and development centers, and (d) one-hundred and ten sales offices throughout the world (Ford, 2010). Recently, the company recently broke ground on a one billion dollar manufacturing plant in Sannand, Gujarat India and opened Ford's first transmission plant in China. (Corporate Ford, 2011). The company is also investing five hundred million dollars in their engine and transmission plants in Brazil (Corporate Ford, 2012).

Engineering/Research & Design (R&D)

Ford operates fifty six engineering and R&D worldwide with a focus on improving (a) performance, (b) safety, (c) customer satisfaction and (d) developing new products. The car models, Fiesta, Focus, Fusion, Escape and Transit Connect van are global models, which are sold in multiple regions of the world (Corporate Ford, 2012). The company's strong engineering capabilities make it easy to upgrade existing product lines, while expanding its vehicle portfolio with new vehicles. This capability allows the company to maintain market competitiveness, while remaining at the top of the automotive industry (Ford, 2012).

Weakness

Pension liabilities

Ford provides a defined benefit retirement plan that covers all workers in the United States (US) and provides pension benefits for non-US workers and retirees with the primary focus in Europe (Ford, 2011). Currently these retirement programs were underfunded by fifteen billion dollars in 2011 (Pensions, 2012). That's four billion dollars above 2010 levels of eleven billion dollars (Pensions, 2012). These underfunded pension liabilities could force the company to reduce or delay investments and major expenditures (Pensions, 2012). If operating results and available cash are not enough to meet all the requirements of the pension, postretirement healthcare and life insurance programs, the company could face major problem with liquidity and may be forced to dispose of assets or operations to meet debt requirements (Pensions, 2012).

Product Recalls

Ford motors recalled several of its popular models due to manufacturing and design issues in 2011/2012. Over ten thousand 2013 redesigned Escape special utility vehicle (SUV) were recalled in the US, Canada & Mexico to fix problems which affected braking (Ford, 2012). One hundred and forty thousand models of the Ford Focus were recalled for potential problems with a windshield wiper motor (Ford, 2012). In 2011, Ford recalled over two point seven million Ford F-150 pickup trucks for various problems (Ford, 2012). These product recalls indicates problems with Ford's product quality control and could erode customers confidence in the brand and could strain sales (Ford, 2012)

Opportunities

Hybrid Vehicles

Worldwide demand for electric vehicles and plug-in hybrid vehicles (PHEV) has grown and is estimated to continue to grow over the next five years (Ford, 2012). The rising cost of fuel and tighter emissions requirements will likely increase demand for these hybrid vehicles. Ford currently offers two hybrid models in the US and is developing three more for a scheduled 2012 launch (Ford, 2012). Ford is in a great position to take advantage of this growth market because these investments and it should enhance their position in the market.

Emerging Markets

Countries such as Brazil, Russia, India and China are witnessing a rapid increase in car sales. In 2011, markets in Russia and India witness a volume over two millions units each, an increase of twenty four and eleven per cent respectively from 2010 levels (Ford, 2011). The market is expected to rise to about four million units for the Russian economy and about five million units for India by 2015. The markets in China are witnessing record growth of eighty five percent for China and the market for Brazil is expected to be over four million units.

Ford increased its production capacity, directly or through joint ventures, to meet the demands of these surging markets. The strategic advantage will allow the company to capitalize on its existing market strength and should enhance the company's growth.

Threats

Intense competition

Globally, the market for automobile sales is very competitive (Ford, 2011). Ford faces completion from many company's around the world including, (a) General Motors, (b) Honda, (c) Hyundai-Kia, (d) Toyota, & (e) a host of others car manufacturers (Ford, 2011). Because of the current economic situation in globally, the demand for automobiles has decreased sharply. High fixed labor costs and the constraints on the company's ability to close manufacturing plants limits their ability to reduce the fixed cost associated with producing automobiles (Ford, 2012).

Emission

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