Industry Analysis
There are 13 automotive multinationals in the United States, which produce around 6 million vehicles annually. In global market, China tops the list of countries by crossing 13.8 million units in the year 2009 leaving North America behind. The changing rules, regulations, and laws related to the automotive industry have modified the working of the industry. New products are being introduced due the laws on emission of gases.
Technology has advanced and so has the consumer demand regarding automobiles as the industry has witnessed an overall growth in the demand of advanced automobiles. The industry has become the largest employment providing industry in the United States as it represents the total 4% of the Gross Domestic Product.
Competitive Analysis
The major competitors of Ford in the United States include General Motors, Honda, and Toyota. General Motors was formed in September, 1908 in Detroit, Michigan. The basic products produced by General Motors are automobiles. However, it also provides financial services related to automobiles to its consumers. It has currently over 200,000 employees all over the country.
Honda is also a major competitor of Ford. Honda was founded in 1948 in Tokyo, Japan. Honda is manufacturing above 13 products and has a vast variety of designs and technology available to compete with Ford.
Toyota was formed in 1937 in the city of Aichi in Japan. Toyota is a global automobile giant where it produces automobiles and offers financial services to its consumers. Toyota consists of above 300,000 employees currently.
Porter’s Five Forces Model Analysis
Porter’s five forces model studies five factors in determining the external competitive environment of a business organization, which are; Threat of New Entry, Power of Suppliers, Power of Buyers, Threat of Substitute, Intensity of Rivalry(Roy, 2009).
Threat of New Entry
It is an established fact that it is very difficult to enter in the automobile industry. In order to enter, small companies must produce automobiles at mass scale and make them affordable for the consumers as then only such companies can be successful in the industry. Moreover, huge capital is required as automobile industry needs research and development department in addition to other departments.
Power of Suppliers
Automobile industry does not extend much power to the suppliers, as automobiles are created with various parts, and there are multiple suppliers providing supplies in order to produce one vehicle. This distributes the power of suppliers among them.
Power of Buyers
Power of the buyers in an industry is high, as consumers are the primary target audience of a product. Moreover, the buying power of the buyers in the United States is fairly high. It is obvious that Ford like any other organization would have to keep its customers satisfied.
Threat of Substitute
Threat of substitute is high in automobile industry where there are not only direct alternatives to Ford available, but other modes of transportation are there as well, for instance walking, riding bikes, or taking a bus. In this scenario, it is important to earn customers’ loyalty, which makes it harder for the consumer to switch over to another brand.
Intensity of Rivalry
The level of rivalry is intense in the automobile industry as the central focus of each company is to sell cars to potential consumers. Every company tries to maintain the best quality, product features, and the durability within the same price range. Therefore, the competition is intense among the competitors.
SWOT Analysis
Strengths
Ford has strength of producing hybrid cars and vehicles. Also, Ford is high recognized in the United States automobile market. The financial services offered to the consumers are also beneficial such as Ford Motor Credit. Ford has its manufacturing plants in around 30 countries which makes it a big automobile company (Saloner & Shepard et al., 2001). Ford has something to offer to everyone as it caters every income class by offering the cars of every kind.
Weaknesses
Ford is losing its sales in North America and as a result, it is losing its market there. Ford is also facing decreasing truck sales with a rapid pace. Ford is also facing internal issues at workplace.
Opportunities
The opportunities in automobile industry are endless, as consumer demand is taking new shape with every passing day. Customers want to buy cars and vehicles which are fuel efficient but do not comprise on the mileage. Ford has also invested in the solar energy sector. Ford can also make its entry in China and Europe.
Threats
The raw material and spare parts are becoming expensive as the competition has increased more than ever. The automobile industry has suffered like any other industry post 9/11. The economy of the country is also dwindling due to the global financial crisis, which makes it hard for the industry to thrive. Fuel prices are also increasing day by day and this is posing a potential threat to Ford by reducing the count of its potential customers.
Current Market Strategy of Ford
At one hand, Ford has sold its few brands off including Jaguar, Land Rover, Mercury, and Volvo. On the other hand, it is investing in new horizons. As a part of its new competitive strategy, Ford is investing in more hybrid cars that are in vogue due to the concept of green environment and conservation of the energy. Ford is also developing the fiber made from natural resources instead of using glass fiber, which is used to reduce the weight of the vehicle while still keeping them strong.
A major breakthrough strategy to stand competitive is the sustainability policy or strategy of Ford where it has decided to use solar energy instead of traditional source of energy to manufacture vehicles. Global Electrification strategy is a landmark market strategy to maintain Ford’s competitive edge. Ford is also designing the strategy to work on the design of the car key, which is an innovation in the automobile industry. Ford is focusing to improve its customer base by marketing each and every product in a different manner than the other.
Recommendations
Ford should focus on the mass production of hybrid vehicles as the demand of hybrid vehicles is increasing tremendously in the country.
Ford should expand on a global level as the demand for automobiles is increasing all over the world, and Honda and Toyota have already developed them on a global scale. It is time for Ford to expand its operations beyond the geographical boundaries. This would require an intelligent and strong marketing campaign to create brand awareness in external markets.
Ford should sell off its weak brands and make investment in new product development and marketing strategy as the core business should revolve around the successful brands and around the ‘dogs’ of BCG matrix.
References
Roy, D. (2009). Strategic foresight and porter's five forces. München: GRIN.
Saloner, G., Shepard, A. & Podolny, J. (2001). Strategic management. New York: John Wiley.
