Ford Motors has been in the market since the primitive age of automobile history, and they’ve contributed the most in revolutionizing and developing the global automobile industry. In this century-long journey, the company has seen many ups & downs. But still, they emerged as one of the top-notch car makers in history. It has been possible due to its strengths like inventive motive and perfect leadership. Still, the company has some drawbacks that hinder the path to greater success and some threats that question the long-term sustenance of the company. There are also some key opportunities paving at the company. Let’s quickly analyze these factors that impact Ford Motors internally and externally.
Strengths of Ford Motor Company
Being the industry pioneer, Ford has developed its key strengths and differentiating factors that helped it grow over time. The dynamic leadership, constant innovation, flexible management, and worldwide recognition are many of its strengths. Let’s discuss some of its key points in detail.
Company Heritage
Ford Motors, the oldest automobile company, set out in 1903 and revolutionized the automobile sector in the world. For more than 100 years, the company has been working for the betterment of the world along with its core business, car manufacturing. [1] This heritage of help has created Ford as one of the most influential corporations in the plant, and this heritage is one of the strong pillars of the company.
Visionary Leadership
From the very outset, Ford’s leadership is what drove it to the peak of success throughout the history of its operations. The philosophy of leadership, created by the founder Henry Ford, has been followed by the successors over time. Ford’s visionary leadership style has developed its human resources adaptive & flexible, and it’s is one of the company’s biggest strengths up to this day.
Strong R&D and Wide-Range of Product Lines
Ford has always differentiated its products through continuous innovation and modernization. The company’s huge spending on the strong R&D department has broadened its opportunities and opened new horizons to explore. Only in 2020, Ford spent about $7.1 billion. [2] The strength of its R&D helps the company offer a wide range of products and cope with the rapidly changing world.
Worldwide Strong Presence
Currently, Ford has operations in over 125 countries around the world. [3] Its diversified geographical operations model helps to minimize the cost and develop region-based production houses. The wide & strong distribution and its worldwide brand recognition in almost every country help the company grow continuously.
Weaknesses of Ford Motor Company
Some factors in the company’s internal environment hinder efficiency and maximum utilization of the resources and the market opportunities. Ford, therefore has been trying to resolve such issues to keep a balance between these drawbacks and further growth. The company’s policy, Ford’s pricing strategy, and value chain model sometimes don’t let it make the best use of its key strengths; below are some of the critical weaknesses that led the company to possess these drawbacks.
Lacks Adaptability
Ford lacks adaptability compared to its competitors. Although the company’s R&D comes with innovative products to cope-up with the changing world, they always tend to be late to the market. This gives the competitors an advantage to prevail over Ford. For example, the company is only planning to enter the EV market with full fledge when the competitors are already dominating the market.
Dependence on Third-Party
Ford depends on third-party suppliers for its raw materials and different automobile parts. [4] The company has to include a huge number of intermediaries in its value chain. This increases the cost of the cars, and dependence on these suppliers lengthens the manufacturing time. Besides, different critical situations like Covid-19 disrupt the company’s normal operations.
Failure to Expand Properly
Most companies ensure their growth by expanding in emerging Asian and European countries. But Ford has failed to utilize these emerging markets properly. Recently, the company has even stopped its operations in India. This failure will hamper the company’s future growth and expansion, which may question the company’s long-term sustainability.
Quality Issues
Ford has a historically bad reputation for the quality of its products. Recently, the company had to recall thousands of its sold cars due to quality issues. This has impacted the brand image negatively. Since there are a lot of options consumers have in the market, they will choose these options over Ford.
Opportunities for Ford Motor Company
The automobile sector has seen only upper growth over time. The industry offers a plethora of opportunities for the market players to grow. Grabbing these will help ford move forward and strengthen its business. The rise of demand and technological changes are creating more options for automobile companies. Let’s have a look at the key opportunities that Ford can capitalize on.
Booming EV Sector
The need for electric vehicles is rapidly increasing. Due to the increment of traditional fuel prices and environmental consciousness, people tend to buy EVs and Hybrid cars. This demand will only increase with time. Since Ford is focusing on this sector, it can ascertain the opportunities by manufacturing eco-friendly and cost-efficient cars.
Growing Demand for Private Cars
The demand for private cars has been increasing day by day. The main reasons behind this are growing income, increment of the nuclear families, health risk in mass vehicles etc. The private car sector will grow around the world exponentially. Ford can capitalize on these factors and capture market share globally.
Emerging Markets
The growth of the automobile market in the emerging market is rapid, and the potential of these markets is huge in all terms. China, India, Russia, Brazil and Japan are considered to be the most emerging markets apart from the USA. If Ford can minimize its dependence on the USA market and develop its strong presence in these emerging markets, it can ensure its sustenance.
Exploring Other Technology Sectors
Rapid technological advancement and the need for technological products services pave new opportunities for companies like Ford. Robotics, AI, IoT are some sectors Ford can explore with its robust technological and financial resources. Besides, integrating these technologies with their vehicles can also open new horizons for the company.
Threats for Ford Motor Company
Some external factors possess potential risks for and threats for Ford Motors. The extreme market environment, better alternatives of the company’s offerings, supporting industry issues affect the company negatively. These institutional and non-institutional threats may make Ford face critical conditions. Let’s analyze the threats Ford needs to tackle.
Strong Competitors
although ford entered the automobile market at the very early stage of this industry, many competitors have risen and defeated Ford with their strategies and strengths.Competitors like General Motors, Volkswagen, Toyota, Daimler, Honda are the biggest player in the market and dominate the global industry with their vast financial and technological resources. If Ford wants to sustain itself in the market, these strong competitors will be the biggest issues.
Issues of Relevant Industries
The issues in relevant industries are also rising, impacting Ford’s sales growth. Especially, the fluctuating price of fuels in recent years has driven people to go for other alternatives. The price hike in the fuels industry threatens the sales growth of Ford’s traditional fuel-driven cars, which are the main ones in the portfolio.
Threats of New Entrants
Technological advancement, foreign direct investment, government support and easy access to finance have made it easier for new companies to enter the automobile sector. Especially in emerging countries like India, the number of automobile manufacturers has increased, dominating the local markets. Even I the new future, the number is expected to grow. This possesses huge threats for further domination for companies like Ford.
Changed Consumer Behaviours
consumers are now more aware than ever. They tend to assess the alternatives with the right information and choose the most suitable one. In this modern time, innovative features and the use of modern technology in cars have created hype among car buyers. So if Ford fails to be on the trend of technology, it’ll fail to cope up with this changing consumer behaviour.
Recommendations for the Ford Motor company
Ford needs to utilize its vast distribution and global presence to utilize the emerging markets with the right type of products. Even if local and global companies are dominating those markets, Ford’s brand heritage and financial strength can help the company solve such issues. Focusing on EVs and Hybrid cars manufacturing would be the most appropriate strategy to take the company to the next level by grabbing all market opportunities. Along with automobiles, the company should explore new areas of technology and expand its operations into the right area for long-term growth in this dynamic business world.
References
- The Official Website of Ford Motors;
https://corporate.ford.com/content/corporate/us/en-us/about/history.html - Ford’s engineering, research, and development expenditures from FY 2013 to FY 2020-Statista;
https://www.statista.com/statistics/260867/fords-research-development-expenditures/ - The Official Website of Ford Motors;
https://corporate.ford.com/operations/locations.html - Who Are Ford’s Main Suppliers? – Investopedia;
https://www.investopedia.com/ask/answers/052715/who-are-fords-f-main-suppliers.asp
I am a finance enthusiast who writes well-researched articles and blogs on business analysis, the financial service industry, and marketing analytics. My writings result from accurate market data and the application of my profound theoretical knowledge about business.