Ford Motor Company SWOT and Strategy

Ford Motor Company is facing the challenge of a changing external environment in the long-run. In the short-run, business will continue more or less as usual, but in the medium to long run the company faces technological changes that will make electric cars mainstream, and will introduce driverless cars to the roadways, which will be a transformative development for society, one that might only be a couple of years away (Hars, 2016). Further, the costs associated with burning fossil fuels are likely to escalate, in particular the potential for carbon taxes, consumer rejection of burning carbon and a gradual shift in the first half of the 21st century towards different models of transportation. Ford will need to examine the long-run impacts of these trends to its business, and seek to find the right long-run strategy to build around for the future.

Scenario

Ford Motor Company is a leading producer of automobiles. Operating globally, Ford has one of the world's most widely-recognized brands. However, the company has enjoyed much of its recent success with larger vehicles such as its pickup trucks and crossovers (Morningstar, 2016), and it is an industry laggard when it comes to electric vehicles and driverless technology. Ford needs to examine what its role will be in the automobile industry in the 21st century, and start taking steps to position itself in the desired role. Part of that requires determining how sustainable their current model actually is.

Analysis

Ford has a number of strengths on which to draw. It operates globally, producing and selling in dozens of countries. Its 7.6% global market share ranks it fourth in the world in a fragmented market (Statista, 2015). The company has one of the world's most powerful brands, ranked 38th in the world by Interbrand, 5th among automakers (Interbrand, 2015). These strengths derive largely from historic eras, however, when Ford was a dominant player in the U.S. and expanded around the world. In more recent years, these strengths have been reduced by the number of different new players in the automobile market. The company still has dominance in one market -- pickup trucks in North America -- and that base of strength has kept it afloat through some otherwise trying years.

Ford comes with a set of weaknesses that is challenging it. First, it is highly-leveraged, and its income and profits are volatile (MSN Moneycentral, 2016). This creates a degree of financial uncertainty around the company. While it can borrow at low rates today, it is vulnerable to an increase in interest rates, as is expected in the coming year or so (Robb, 2016). Another weakness is that the company has historically been slow to adapt to changing circumstances. In recent years, the company has sought to eliminate this weakness, as a lack of innovation was cited as one of the reasons why the company went through a financial crisis in 2009. So while innovation remains a weakness, the strength of that weakness has been diminishing in recent years through the company's efforts to improve its innovative capabilities (Enderle, 2016).

There are a number of opportunities in the market. Increased wealth in many developing nations brings with it a desire for more cars, an opportunity Ford can exploit. Furthermore, Ford can leverage its distribution channels and the value of its company to take over firms that are innovating -- acquiring innovation might help Ford close the innovation gap more quickly. A third opportunity for Ford is that it still has cash cows in its roster, and it might just want to milk those a while longer.

There are several threats to Ford, however. The global marketplace has brought Ford opportunity to expand overseas, but it has also brought many new competitors both to the U.S. and to foreign markets. Ford trails Toyota and Volkswagen significantly in the global market, and there are many major competitors from Europe and Asia, as well as GM, for Ford to contend with. Another threat comes from technological change. If either electrics or self-driving cars (or both combined) go mainstream, Ford is presently not positioned very well with respect to that opportunity; it could lose market share quickly. Lastly, Ford is under threat from increased interest rates or other economic disruption because of how highly-leveraged it is.

Key Success Factors

In the global auto marketplace, the ability to produce quality cars in volume, and distribute them around the world, is more or less the key success factor. The company needs designs that appeal to consumers, and it has to be able to produce at a price point where it can sell profitably. Neither of these things is a given. For Ford, a key success factor has been to maintain dominance in trucks, the strength of its marketing, and the ability to maintain broad-based appeal with consumers. In the industry in general, it is important for companies to be able to differentiate from one another as competition is intense, and it is also important for companies to be able to understand the changing needs of the marketplace.

Marketing has long been the other major key success factor in the automobile industry. Emphasis has been placed on the distribution side of things, with dealer networks and building strong relationships there, and advertising has been key to reaching the audience, convincing them to buy more frequently than they otherwise might, and to create specific brand awareness and intent.

Conclusions

There are a number of conclusions that can be drawn from this analysis. First, Ford can probably operate with the status quo quite comfortably for a few years. It has leadership in trucks (Morningstar, 2016), its revenues are generally increasing (MSN Moneycentral, 2016), and it has both a strong market position (Statista, 2015) and brand (Interbrand, 2016). In the short-run, Ford's position in the market is not in danger. In the medium to long-run, however, this might not be the case. Observers see full electric and driverless vehicles both as being the next generation of personal transport, and both are expected to completely transform the industry (Hars, 2016). Ford does not have a great position in either of these businesses, and it is not an innovator in either. It is completely out of the driverless car game. It has an electric, an extension of the Focus brand (Ford.com, 2016), but is relatively new to this industry and there is risk in failing to differentiate the product from an existing line.