Internal and External Strategic Analysis of Ford Motor Company

Internal and External Strategic Analysis of Ford Motor Company

Ford Motor Company is a multinational automotive company that has its headquarters in Michigan, United States of America. Ford was founded and incorporated in 1903 by Henry Ford. The Ford Motor Company sells the commercial and automobiles under the Ford brand. It also sells the luxurious brand under the Lincoln brand. The famous model cars of Ford Motor Company are the Mustang, F-150 Raptor, and Ranger Raptor, among others. Ford is termed as one of the largest motor companies in the world (Wong, 2019). It is the second-largest in the United States of America after the General Motor Company. The Ford Motor Company has acquired the market in almost all parts of the world. In addition to that, the Company has created a positive image to its customers by coming up with efficient and effective strategies. The Company has a strong strategic management team that ensures that every aspect of management by the Company is performed accordingly. The strategic management involves both external and internal concerns. The internal concerns include the inbound logistics, the general operations of the Company, outbound logistics, sales and marketing strategies, the support staff, technology and the firm’s infrastructure; this would be explained using the SWOT analysis and Porter’s five forces model. The external concerns include the political, economic, social, and technological activities. The internal and external analysis defines the Company’s position in the market and how they do to ensure that they are competitive in the market. This paper will, therefore, analyze the internal and external dimensions of the Ford Motor Company while tackling the above named dimensions. The paper will also note down the crises which are existing in the Company and try to come up with the recommendations as long as the internal and the external factors are concerned.

Internal Analysis (SWOT analysis Model)

Internal analysis is generally defined as the exploration of the competency of the business or organization on the bases of competency, cost positions, and the competitive abilities in the market. While conducting the internal analysis, the firm or organization gets more concerned with the strengths, weaknesses, opportunities and the threats commonly known as the “SWOT” analysis. In addition to that, there comes another section of the internal analysis that is concerned with the internal environment (Aamodt, 2016). Under this perspective, the internal environmental analysis is defined as the process where a firm identifies and assesses the particular features of the organization, which includes the resources, capabilities, and competence. Simply the internal analysis explains the factors within the Company and which affects the normal operations and the entire business performance. In the internal analysis, the paper will carry out the SWOT analysis and Porter’s five forces for analyzing the competitive environment of Ford Motor Company.

SWOT analysis model

As it was explained in the introduction part, SWOT analysis deals with the strengths, weaknesses, opportunities and the threats which the business face internally. The SWOT analysis of Ford Motor Company explains how the Company has employed its competitive advantages to increase its sales and maximize their profits. Ford Motor Company has been termed as the Company that is leading in selling the pick-up trucks in the United States for more than forty-one years in a row. The Company sells the pick-up trucks in the famous F-series. The F-series are best described as the lifestyle commercial automotive which has the enclosed cab and an open rear cargo with the sides which are low and also the tailgates.  The internal analysis using the SWOT model only tackles the strengths which are discussed.

The Strengths

The Ford Motor Company also associates its strengths with the brands they work on, international operations, and their research and innovation developments. The main strengths of the Ford Motor Company include; the unique global supply chain, the strong brand images, and the effective innovation processes.

Since Ford is one of the top multinational corporations in the world about the automotive industries, it has a good brand image which helps in attracting as many customers as possible. The brand image also helps in winning the loyalty of potential customers all over the world (Singhal, Tripathy & Jena, 2018). The other strength that Ford has is the strong processes of innovation and research. This can be confirmed since there was a launch of One Ford Plan in the year 2008. The Company employs modern technology to come up with new products. The internal management is also capable enough to analyze the market the Company is operating in and try to come up with the customer-focused products. Those factors have helped the Ford Motor Company to realize high profits as one of the primary goals of the Company.

The Weaknesses

The weaknesses of the Ford Motor Company are said to have their bases on their limitations when they compare them with the competitors. Under the weakness section of the SWOT analysis, things such as the constraints of the organization, and the internal strategic factors which drawback the normal operations of the business. The major weakness for the Ford Motor Company includes; the slow innovation processes, high cost of their products compared to those of their competitors, and the limited global market or the network of the production.

When you compare Ford Motor Company with the Toyota Motor Company, you will find out that Toyota has a large global network. This is one of the major weaknesses affecting the Ford Motor Company in the global market hence making it difficult to pursue their goals (Singhal, Tripathy & Jena, 2018). The Ford Company has also closed down some of its production facilities in Europe hence saying that it has increased the weakness of international networking. When it comes to the prices of Ford’s products, they are said to be relatively higher than those of the other related companies like Toyota. This makes many customers switch to the products of the other companies, which are pocket friendly (Bhatia, 2016). The innovation processes are also said to be slow when they are compared to the other companies. They are sometimes slow in adapting to the environmental changes hence making some of its operations outdated. Under this point, Toyota can be said to be under the threats and with time, it might lose many of its clients, and as a result, realize fewer profits. To respond to this, the Ford Motor Company should ensure that all the technical issues are addressed and that all the things associated with the threats are addressed. Things such as the technology, management styles, and the global marketing networks are all considered to be the threats of the Company, and Ford Motor Company has not been addressing the related issues successfully.

Inbound logistics

Inbound logistics is used to refer to the processes of transporting, storing, and then delivering the goods which are coming into the Company. For instance, in the assembling industry, the Company only receives the raw materials for making the products and then assembles them to get the final product. Inbound logistics also has things to do with the handling of the materials, inventory control, scheduling of the vehicles, and the return to suppliers among other dimensions (Singhal, Tripathy & Jena, 2018).. Ford Motor Company has two different sections of the inbound logistics; the first is when the Company transports some of the parts from the suppliers who are loyal to the plants which are locally situated (Bhatia, 2016). The second part of inbound logistics is the transportation of the products from United States of America to the global markets. Ford Motor Company allows for the local assembling of the products to the markets they operate. This means that majority of its operations are outsourced hence making the inbound logistics simple. The Ford also has the reliable suppliers who ensure that the raw materials are made available in all the Ford markets within the time period given. In short, Ford Motor Company has outsourced the operations to the third parties, and that is why the inbound logistics is not a matter of concern for the Company.

Operations and the outbound operations

Ford Motor Company has a strong innovative approach for designing their products. They have the patent rights which have helped them protect the goods and services they produce of the daily bases. The Company has also recently come up with strong distribution strategies. By outsourcing its production activities to the third parties, Ford Company has made its products readily available to the market when compared to the competitors. The Company has also introduced the online buying and selling platform (Bhatia, 2016)s. Under this section, Ford Company diversifies the markets in the different parts of the world and makes it simple to respond to the online customers depending on their regions. This means that Ford Motor Company has entered into the digital selling programs and its outbound operations can be easily managed hence using it as a competitive power and winning the loyalty of as many customers as possible.

External Analysis (PEST Model, Porter’s Five Forces Model and SWOT analysis Model)

Michael Porter’s Five Forces Model

Michael Porter’s five forces model describes the competitive environment for the organization or Company. The five forces include the number of the rivals and their power, the power of suppliers, the power of the buyers, threat of substitution, and the threat of new entry.  On the point of competitive rivalry, Ford Motor Company has faced stiff competition from the leading companies such as the Toyota Company, and the General Motor’s Company. The external factors which affect the Ford include; the unfavorable exit barriers, and the aggressiveness of the competitors (Bhatia, 2016). To deal with the rivalry, the Ford Company ensures that it deals with the competitors. First, the Company ensures that the modern strategies are employed when it comes to the marketing techniques within the firm or organization.  The Ford Motor Company has diversified its operations to many suppliers such that when one supplier fails, the goods would not be unavailable to the market.

On the other hand, the Company has recently ensured that it is more concerned with the customers rather than the profits they make. This has made them win the loyalty of many customers and attracted the new ones. The Company also ensures that it easily can substitute the type of automotive they produce depending on the consumer specifications (Singhal, Tripathy & Jena, 2018).. Finally, on the point of the threat of the entry to the new market, the Company ensures that it employs the techniques of first learning and understanding the behaviour of the customers before they invest in a certain market. It can, therefore, be said that the model best explains the external competitive features of the Ford Company and how it has been able to deal with it.

SWOT analysis model

Under this model, the opportunities and the threat parts are all about the external factors. The Ford Company is actively involved in analyzing the opportunities existing in the market. The F-series brands are regularly updated depending on the advancing technology. This can be defined as a kind of opportunity and with this; the Company can claim the new customers and increase their sales (Bhatia, 2016). The Ford Company also analyzes many markets across the world before they invest and ensures to identify the market gaps to be filled as soon as they appear. The Company also has created an online platform where the customer views can be read, which would be used as the point of analyzing market opportunities (Bhatia, 2016).

On the other hand, the Company has the techniques of identifying the threats from far. This is done by the serious analyzation of the competitors and the customers and knows the areas where the risks may arise from. The things which Ford Motor Company considers include the technological risks, political risks, and economic risks among others. Having taken care of all those concerns, the Company is said to be in a position to expand and get as many customers as possible.

PESTEL Model

PEST model is regarded as the best model used in analyzing the external environment of the business firms or organizations. The PESTEL model describes the political, economic, social, technological, environmental, and Legal factors on how they affect the operations within the organization (Bhatia, 2016). Ford Motor Company, as a multinational corporation, is affected by the named external forces either positively or negatively. The PESTEL model, concerning the Ford Motor Company, is described below as per each dimension.

Political Factors

Political factors are the ones which are related to the leadership in the country of operation. Ford Motor Company is based in the United States of America and therefore, most of the political issues happening in the country affect the general sales of the Company. The political issues may include the kind of leadership concerning the businesses that happens in the country of operations, the corruption crises, and the country’s position in the international political system (O’Cearnaigh, 2019). Ford Motor Company has its operations from more than 62 countries whereby each country has its political system. Ford Motor Company has been in the frontline to ensure that it has several ways of dealing with the political issues taking place in a certain country. For example, when a country has political crises, Ford Motor Company decides to switch. The main political factors that Ford Motor Company considers before it establishes in a certain market include; the stability of the government, the level of corruption, tax policies, freedom of expression, control of the trade activities, and the legal concerns related to the government. Ford tries to balance all the political issues in both the mother country and the other countries of operation. In summary, the political factors are said to have brought pressure to the automotive industries, especially to the markets where they are similar industries.

Economic

The economic factors that affect Ford’s operations include the growth rates, rate of inflation, interest rates, rats of exchange, trends in employment, cost of labour, the stages of the business cycle, fluctuations on the prices, and fiscal policies among other dimensions. In this case, Ford has had several economic crises in many countries like in the African countries, where the tax rates and the level of inflation are high (Arroyo, 2019). Ford claims that the economic factors are the ones which determine the business would succeed or not. The automotive industry is generally affected by the economic status of the country. In developed countries, there are few economic crises, and the automotive industries tend to thrive in such countries. Ford has, therefore, invested highly in economically stable countries and the other countries which have no economic crises.

Social and Technological factors

The social factors related to automotive industry include the education status, attitudes towards the goods imported, attitude towards the work, the lifestyles of the citizens, the buying habits of the customers, the growth of population, and the social classes among other dimensions (Bhatia, 2016). Ford Motor Company has invested in more than 62 countries and each country; they have different socio-cultural dimensions which are addressed wisely by the Company. For that matter, the firm has had no a lot of issues within the communities they operate. On the other end, the technological factors include the level of infrastructure, how the technology is easily adapted, research and innovation processes, the ability to access to the modern technology, and the communication infrastructure (Arroyo, 2019). The Ford Motor Company puts all those dimensions into consideration before they invest in a certain market. The Company also takes part in implementing some of the important things like infrastructure as a way of fostering their business.

Current Strategies and Recommendations

The marketing and sales strategies

Ford Motor Company, as it was explained in the introduction part, is a multinational corporation. It is the fifth-largest automotive Company in the world and second in the United States of America. In the past few years, Ford Motor Company has actively involved in implementing the competitive marketing techniques. Because of the advancing technology, the world is becoming a global village. For that matter, the Company in the year 2019 revisited its marketing strategies and came up with the solutions which seemed to be working. The Company has now invested in digital marketing and social media advertisements. The Company is using Facebook, Twitter, and Instagram to market its goods and services (Arroyo, 2019). The Company has also created the online platform known as the Ford Motor Company, whereby the potential customers and sellers can meet and interact with the products and the general services provided. For that reason, Ford Motor Company has increased its sales since 2019, with more than 20% (Dines, n.d). In short, the Ford Motor Company uses digital marketing strategies and social media advertisements to market their products to online customers. They also incorporate the other dimensions of marketing as a way of maximizing their customers and being competitive enough.

The Management support team strategy

The Ford Motor Company is much concerned with the type of management used in each market segment. For this matter, the Company has strong departments, namely; the procurement team, the human resource team, and the line management team. The procurement management team is responsible for ensuring that the products reach the market during the right time, and thus the customers should not wait for long. The human resource management team ensures that the employees within the firm are satisfied, and they are recruited depending on their academic qualifications. The line management team ensures that the products in each line are readily available at any time needed by the customers (Anh,  n.d). The Company ensures that the support team is active all the time and can easily identify the areas leaking and which can be used by the competitors as the weak points. The good management has been termed as the key to the success of many automotive industries and those which operate in the international markets. For that matter, the Ford Motor Company has taken it as its advantage to make its management strong. The Company has delegated some of its duties to the country level whereby in any market they operate; there is independent management. The independent can learn the market and try to come up with the strategies which target the customers and also the business expansion. This strategy of management has helped the Ford Motor Company in exploring and entering the new markets strongly.

Technological strategies

Technology in modern society is advancing at an alarming rate. This has made Ford Motor Company come up with how they can adapt to the changing technology. For that matter, the Company has come up with the technological department with qualified information technology employees (Gathuku, 2015). The technology experts are assigned to the duties of researching the new technologies applied by the other firms and let the Company know about it. They also help the Company in coming up with the new designs which are hot in the market and which would win the loyalty of as many customers as possible. Ford Motor Company has also switched some of its operations online. The Company has websites where the management and the clients can meet and discuss the things concerning Ford’s products. The Company also has opened the online shops where the clients can purchase their products and get them at their comfort zones. In addition to that, many operations in Ford’s Company are digitally operated. This makes it difficult for their information to be leaked by the competitors. Digital operations also ensure that all the business processes are carried out accurately, and there are few errors which can occur. This means that digital technology has helped in dealing with both internal and external factors.

Recommendations for the future

The internal and external forces are very sensitive dimensions to be considered when it comes to business activities. It is, therefore, important for business firms or organizations to consider all those factors for them to be able to deal with stiff competition in the modern markets. Ford, as a multinational corporation and an automotive industry, has to learn the internal and external environment. The paper, therefore, comes up with the following recommendations on what the Ford Motor Company should do to deal with the external and internal environment. First, the Company should ensure that it has strong management that is capable of handling both the international and local issues. Ford Company should also ensure that the department of technology is competent enough to understand the modern business techniques and more so the internal and the external factors affecting the Company. Second, the Company should use the different competitive models such as the PESTEL, SWOT analysis, and the Michael Porter’s five forces to ensure that they have the full information about the market can understand their competitors better. Third, the Company should ensure that they regularly revisit their strategies to make them cope up with the market changes. Finally, Ford Motor Company should make sure that it observes the legal requirements by the markets they operate and consider the economic, political, social, and technological forces concerning business success.

Images of the models

Figure 1: SWOT analysis Model

Figure 2: Porter’s five forces

Figure 3: PESTEL Model

References

Wong, M. K. (2019). An Analysis of the Effects of Operating Margin and Beta for Performance on Ford Motor Company.

Aamodt, I. (2016). Impacts of import-substitution on the automobile industry in Brazil: SWOT analysis of repercussions of the policy 1990-2014 (Master’s thesis, Norwegian University of Life Sciences, Ås).

Singhal, D., Tripathy, S., & Jena, S. K. (2018, June). Factors influencing the remanufacturing of electrical and electronics products in India: A SWOT-AHP approach. In IOP Conference Series: Materials Science and Engineering (Vol. 377, No. 1, p. 012061). IOP Publishing.

Bhatia, J. (2016). Porter’s Five Forces Industry Analysis of Indian Passenger Car Industry. Pacific Business Review International, 8(7).

O’Cearnaigh, E. (2019). More Life, Less Speed: Industrial Unrest at the Ford Motor Company in Britain and the Politics of Working-Class Autonomy in the Long 1970s (Doctoral dissertation, Goldsmiths, University of London).

Gathuku, N. U. A. (2015). Analysis of Competition in the Motor Vehicle Assembly Sector in Kenya Using Porter’s Five Forces Model (Doctoral dissertation, United States International University-Africa).

Anh, H. T., Case, M. F., & Bao, N. D. Managing Business Activities to Achieve Result.

Dines, P. A General Motors case study.

Arroyo, D. (2019). Ford and the New Auto Industry.