Ford Motor Company: Strategy, SWOT, and Five Forces

Introduction and Company Overview

Over time, the Ford Motor Company has grown from a relatively obscure automaker into one of the world's most recognized motor vehicle brands. Founded in 1903 by Henry Ford, the company's core business remains the production of trucks and cars. However, through several of its subsidiaries, the company also engages in motor vehicle financing.

Mission, Vision, and Primary Stakeholders

Ford's mission, as outlined by Lewis et al. (2006), is as follows:

"We are a global family with a proud heritage passionately committed to providing personal mobility for people around the world. We anticipate consumer need and deliver outstanding products and services that improve people's lives."

This statement successfully captures the company's purpose and, in doing so, also succeeds in outlining the firm's overall goals going forward. The company's vision, according to Lewis et al. (2006), is "to become the world's leading consumer company for automotive products and services." This vision is well written; in addition to effectively highlighting where Ford is headed, it is designed to serve as a source of inspiration for the company's employees.

Ford's primary stakeholders include its employees, stockholders, suppliers, customers, and creditors. Stakeholders, broadly defined, are all parties who can be affected by the company's actions or whose actions can affect the firm in one way or another. The firm's employees include all individuals engaged by Ford to perform a specific duty or task, for which the company pays salaries or wages. Ford's stockholders are all individuals who own the company's stock or shares. Suppliers include the entities that provide Ford with the parts and materials it needs to assemble its products. Customers are those who purchase the company's products — that is, motor vehicles — and/or its services, such as motor vehicle financing. Finally, creditors include all those who lend to the company so that it can meet its various goals and objectives in terms of production, quality, or shareholder wealth maximization.

The Impact of Porter's Five Forces on Ford

Porter's Five Forces framework, in the opinion of Henry (2008), remains "a tool of analysis to assess the attractiveness of an industry based on the strengths of five competitive forces." Examining these five forces enables a firm to assess its ability to compete effectively in the marketplace. The following sections highlight the impact of each force on the Ford Motor Company.

According to Henry (2008), this force concerns the likelihood of new firms entering an industry and negatively impacting the profitability or bottom line of incumbent entities. In the case of Ford, significant entry barriers exist in the auto manufacturing industry. These include the influence of established motor vehicle brand names on consumer purchasing decisions and the substantial startup costs required to enter the market. Additionally, accessing dealership networks represents another meaningful barrier for new entrants. Given these factors, it is unlikely that new competitors will gain significant market entry in the near future. As a result, Ford's profitability and market share cannot be considered under any immediate threat from new entrants. It should be noted, however, that protectionist measures — including subsidies and tariffs favoring indigenous manufacturers — may hinder Ford's entry into certain developing markets.

Buyers can impact an industry in several ways, including by demanding lower prices or choosing among multiple competing sellers (Henry, 2008). In the automobile market, the bargaining power of individual retail buyers is relatively limited, meaning retail buyer power is significantly curtailed in practice. However, a significant portion of Ford's sales comes from fleet purchases made by corporations, state governments, and non-governmental organizations. In these contexts, buyer power is more pronounced, as large-volume purchasers are in a considerably stronger negotiating position than individual retail customers.

Supplier power stems from the ability to impact market participants by raising prices or reducing the quality of goods and services (Henry, 2008). In the auto manufacturing industry, supplier power represents a substantial threat, largely because of the limited number of substitute inputs available. Most of the raw materials and components that suppliers provide to manufacturers like Ford are considered critical inputs. This is especially true for specialist components, where the bargaining power of suppliers is considered quite high. Moreover, because many of Ford's parts and components are differentiated from those used by other manufacturers, switching costs could also be considerable.

In this context, competition does not arise from new market entrants but rather from products capable of satisfying similar consumer needs. For auto manufacturers, public transportation is seen as the closest substitute and poses a significant competitive threat — particularly given the dwindling supply of oil and rising fuel prices. Air travel also remains the most cost-effective option for long-distance travel. Ford's long-term viability in this environment will depend largely on its ability to develop fuel-efficient vehicle models that reduce consumers' cost of ownership.

Industry rivalry remains one of the main determinants of both profitability and competitive dynamics. The auto manufacturing industry is widely regarded as highly competitive. Key competitors of Ford include Chrysler, General Motors, and Toyota, among others. While the number of major competitors is relatively small, this concentration intensifies competition rather than diminishing it. A company like Ford must maintain its relevance through effective differentiation of its models in terms of performance, durability, and fuel efficiency.

In the opinion of Dyck and Neubert (2008), "SWOT analysis examines an organization's internal strengths and weaknesses in light of external opportunities and threats." The following SWOT analysis is applied to Ford.