Ford Motors SWOT Analysis 2018
Ford Motors is among the most renowned automotive brands of the world. Known as an innovative vehicle brand, the company has achieved a leading position in the automobile industry. The auto industry has grown highly challenging and competitive. Apart from research and development, marketing has also become major focus area for brands. Ford has continued to grow its revenue for several consecutive years. It owns both Ford and Lincoln brands and sold more than 6.6 million vehicles at wholesales worldwide in 2017. US is the largest market for Ford followed by China. The brand was incorporated in Delaware in 1919. It is a global company based in Dearborn, Michigan with around 202,000 employees. the company makes and sells a full line of Ford cars, trucks, sport utility vehicles (“SUVs”), electrified vehicles, and Lincoln luxury vehicles. The revenue of the brand has steadily increased over past several years. It reached 156.78 Billion in 2017, rising from 151.8 Billion in 2016. 2017 was an year of transition for Ford. The brand is aggressively focusing on reducing costs as well s reallocating capital and resources to the markets with the highest potential. Its president and CEO is Jim Hackett. Read more about Ford Motors in this SWOT Analysis.
– Brand image and equity:
Ford has got a strong brand image as an automotive brand focused on innovation, passenger safety and product quality. Brand image is an important strength in the vehicle industry and translates into high level of popularity an customer loyalty. Ford is considered a reliable brand whose popularity is quite high in the American market. High level of brand equity has led to consistent performance over the previous eight years.
– Strong manufacturing capabilities and supply chain:
Ford has got strong manufacturing capabilities and a well managed supply chain. These are critical strengths for any vehicle maker. The brand has 61 manufacturing facilities all around the globe. Out of these 61, 31 are located in North America, 8 in South America, 16 in Europe as well as 2 in Middle East and 4 in Asia Pacific. Total 39 of its manufacturing facilities are a part of its zero waste fill program.
– Large product portfolio:
Ford has a large product portfolio that includes SUVs, trucks, cars and luxury vehicles. the brand makes and sells a full range of Ford cars, trucks, sport utility vehicles (“SUVs”), electrified vehicles, and Lincoln luxury vehicles. Apart from that it also provides financial services through Ford Motor Credit Company LLC (“Ford Credit”), and is pursuing leadership positions in electrification, autonomous vehicles, and mobility solutions.
– Strong focus on innovation:
Ford has also retained a very strong focus on product innovation. Apart from a heavy spending on research and development, the brand has focused on R& D in several areas and most importantly electrical vehicles, autonomous driving and AI. The brand increased its R& D expenditure to 8 Billion dollars in 2017 from 7.3 Billion dollars in 2016. It is pursuing a leadership position in autonomous driving and electrical vehicles.
– Strong position in US and China markets:
Ford has retained a strong position in both US and China markets. These two are the hottest markets for vehicle brands. In the US market, sales of Ford vehicles have remained consistent for the last three years at 2.6 million units. In China however, the sales fell from 1.3 million vehicles in 2016 to 1.2 million vehicles in 2017.
– Strong financial position:
Ford’s financial performance has improved consistently over previous several years. Its total revenues grew from $149,558 million in 2015 to $151,800 million in 2016 to $ 156,776 million in 2017. The net income attributable to Ford Motor company also improved from $4.6 Billion in 2016 to $7.6 Billion in 2017.
– Strong marketing capabilities:
Strong marketing and branding are also critical strengths of Ford leading to higher brand recognition and popularity in key markets. The brand has always marketed itself as an innovative and consumer friendly brand. It also spends a large sum sum on marketing and promotions of its products and brand. Its advertising expenses for 2017 were 4.1 Billion dollars.
Frequent product recalls can taint a brand’s image and pose a major risk to its reputation. In 2018, Ford had to recall 550000 vehicles due to gear shift problems. This problem affects Ford Fusion and Ford Escape models. These models were recalled previously a few times too.
Weak position in India and other emerging markets:
Ford’s position is not as strong in India as it is in China or US. Its total sales in India were only around 100K units. The brand would need to work upon making its position stronger in the emerging markets.
AI and autonomous driving:
AI and autonomous driving are some hot areas that most vehicle brands are focusing upon to bring their autonomous driving vehicles first of all on the road. Ford is also investing in this areas as it presents a significant opportunity. Its plan is to begin production of fully autonomous vehicles for commercial use, such as ride hailing or package delivery, by 2021. The brand has advanced its capabilities a lot in this area during the recent years.
Digital marketing opportunities:
Digital technology presents significant opportunities for vehicle brands who can utilize it for better marketing as well as customer and supplier engagement. The brand can use digital channel to engage its customers as well as suppliers.
Supply chain digitisation:
Supply chains in he vehicle industry are generally very complex and require efficient management. However, one important thing that vehicle brands must do is to digitally manage their supply chains. It enables them to save costs as well as ensure timely availability of raw materials. Digitally engaging the suppliers also help build stronger and more reliable relationships.
The demand and popularity of electrical vehicles and hybrids is growing all around the world. As such te brands focusing on this area will find their sales growing in the close future. To speed up the design and development of battery electric vehicles, in 2017 Ford created “Team Edison,” a dedicated electric vehicle team to bring together technology, product development and advanced manufacturing to create leading-edge battery electric vehicles for customers around the world. The company recently announced a joint venture with Zotye, a pioneer in the Chinese all-electric vehicle segment. The sales of electric vehicles is poised to grow in near future which means focusing on this area will bring attractive returns for Ford.
Competition in the automotive industry has kept intensifying which means higher pressure related to product design, quality as well as innovation and marketing. Key competitors of Ford Motors with global presence include Fiat Chrysler Automobiles, General Motors Company, Groupe PSA, Honda Motor Company, Hyundai-Kia Automotive Group, Renault-Nissan B.V., Suzuki Motor Corporation, Toyota Motor Corporation, and Volkswagen AG Group. So, there are a large number of competitors in the market and most of them have formidable technological and manufacturing capabilities. They also enjoy high level customer loyalty and have a large customer base. Overall, competition is one of the biggest threats before Ford Motors.
Regulatory and legal threats have also increased manifold leading to a rise in compliance related pressure on vehicle brands. From labor to passenger safety and product quality as well as environment, the number of laws in these areas and the level of legal scrutiny around the globe has increased. Any brand wants to avoid a tussle with law. Ford also remains cautious about legal liabilities and focuses on compliance in local markets throughout the globe. Legal hassles can be very costly and can even result in fines worth billions which was proved in the case of VW.
Rising costs of raw materials and labor:
In this decade the cost of raw materials and labor all around the world has grown. This has led to higher operational costs as well as higher costs of HR. Every brand needs skilled HR as well as good quality raw material for production. However, these have become more costly than ever creating pressures on the vehicle brands’ profit margins.
Ford is among the most innovative global brands of automotives. The brand has been performing well consistently for past several years. Its revenues and net income have risen from 2016 to 2017. Now the brand is focusing on future of mobility to be among the first to enter autonomous vehicle market. the brand spends a large sum on research and development. It also has strong manufacturing capabilities. Overall, the brand is in a strong position to transition into the new era of mobility. 2017 remained an year of transition. The main challenges that are making the task tough for Ford Motors are competition and the high level of legal and regulatory barriers. Ford must focus on the emerging markets to grow its presence there for faster growth. Managing prices of its products could also help it grow its customer base in the fast developing economies of Asia.
Ford Annual Report 2017