Ford Motor Company SWOT Analysis and Strategic Case Study

History, Development, and Growth

Ford Motor Company has been a vital American automaker since its incorporation in 1902. The company was founded by Henry Ford and has retained family members on its board of directors ever since. The company began by selling individually manufactured vehicles but soon moved to an innovation devised by its founder. Henry Ford wanted to make a car that could be easily mass-manufactured, and he achieved this through the Model A concept. Ford had all parts pre-made, and as individual cars progressed through an assembly line, components were added at different stations until each car was complete at the end of the line. This new method of manufacture allowed Ford Motor Company to undercut the competition on price per vehicle, and the company grew astronomically as a result.

Through the years since its inception, Ford has experienced the ups and downs of any automaker, mainly regarding the production of certain vehicle lines. The Model A was followed by the Model T, which became the standard vehicle for middle America. In 1958, Ford launched a new line of cars called the Edsel, named after one of Henry's sons. The Edsel was not popular with the public from the start, and production ended in 1960. During the 1960s, two of Ford's vehicle lines began their runs as American icons. The first pony car, the Ford Mustang, debuted and was an instant hit. The F-series pickup trucks also became an American standard during this period. The F-150 became the best-selling vehicle in the world in the 1980s and remains so today. With a rich history of innovation and market leadership, Ford has long been regarded as an American ideal (Funding Universe, 2004).

More recently, the company has experienced some of the same difficult times as the broader economy. The economic downturn hit the automobile industry especially hard, but Ford was the only one of the "Big Three" American automakers that did not accept money from the federal government. The company remained true to its founding principles and refused a government bailout. One reason Ford was able to successfully weather the difficult economic period is that it became a leader in green technology (Ford, 2010). The company dedicated itself to producing cars that reduce gasoline consumption. Because Ford transitioned to alternative fuel technologies across all of its brands, introduced new technology, and continued to manufacture vehicles with strong safety records, it became uniquely positioned within the American market (Ford, 2010). Ford also streamlined operations by selling off some subsidiaries and discontinuing others. It avoided widespread plant closures while remaining loyal to its customers and employees. Due to all of these factors, Ford remains a success.

SWOT Analysis

Ford Motor Company has many strengths that have made it one of the most resilient companies in America. It is the fifth largest automobile manufacturer in the world and second in America, ranks seventh on the Fortune 500 list, and produced more than 5 million vehicles in 2009 (Ford, 2011). The company has a global presence rooted in strong sales in both North America and Europe. The Ford brand is recognized worldwide as one that promises quality and dependability. In 2010, Ford received more awards from J.D. Power & Associates for customer satisfaction than any other manufacturer (Nestor, 2010), with five vehicles topping their respective categories and 14 others receiving recognition. Ford has also developed alliances with European and Asian automakers that have enhanced its innovation, quality, and sales in foreign markets. In 2010, Ford Motor produced a full-year profit of $2.6 billion — the first full-year profit gain in six years.

Ford has suffered, as have many other automakers, from the economic downturn that threatened the global economy. The company had to sell several of its subsidiaries — including Land Rover and Jaguar to Tata Motors of India, and Volvo — and reduce its stake in Mazda and Aston Martin (Nestor, 2010). These divestitures reduced Ford's overall sales capacity and weakened its worldwide footprint. The company was also forced to close some plants in foreign markets, and sales declined in fiscal years 2008 and 2009. A particularly damaging setback was the massive recall of the Ford Explorer when the vehicle was found to be prone to rollover accidents. Ford's association with Firestone Tire Company further compounded this reputational damage.

The future looks promising for the auto industry, and for Ford in particular, as new innovations in fuel efficiency begin reaching the market. Ford is working to introduce a new line of fuel cell vehicles powered entirely by hydrogen (Ford, 2009). The current drawback is the scarcity of refueling stations, which limits the practical viability of these cars, but automakers are working with fuel suppliers to develop the necessary infrastructure. Hybrid cars have been popular for nearly a decade, and advances in battery technology are making them even more attractive. The previous concern over resale value — driven by the high cost of battery replacement — is being addressed, as new batteries are becoming smaller, lighter, and less expensive. Ford is also positioned to release a fully plug-in electric vehicle. As consumers become increasingly environmentally conscious, such vehicles promise strong sales. Ford and other manufacturers are also collaborating on broader green initiatives (Ford, 2010), and Ford has the opportunity to pioneer new manufacturing processes that reduce its carbon footprint and appeal to environmentally aware consumers.

Like any major corporation, Ford faces ongoing competitive threats. As the fifth largest automaker in the world, it competes against companies that are better positioned to enter new markets and have greater resources for research and development. The risk of becoming irrelevant in a crowded and growing marketplace is real (Nestor, 2010). Ford is also vulnerable to rising global fuel prices. With the threat of unrest in the Middle East and political tensions involving oil-producing nations, automakers must accelerate their work on non-fossil fuel vehicles. The possibility of an unpredictable recall — as occurred with the Explorer in the early 2000s and more recently with Toyota — remains a constant risk. Additionally, as a multinational corporation, Ford must navigate unfamiliar regulations in the countries where it operates and maintain cooperative relationships with foreign governments. Other threats include substitute vehicles that erode market share, currency fluctuations, and the possibility of a prolonged economic recession.

Shared Vision and Social Media Innovation

The slogan has become the rallying cry for the entire organization, from top-tier management to hourly workers. Ford is dedicated to fostering a strong internal culture because it understands that maintaining quality requires employees who take pride in their work. This philosophy is also designed to make Ford a leaner, more responsive company. In the past, automakers believed that success required being larger than all competitors — growth through expanded product lines and acquisitions. Ford has since learned that this approach was handicapping the company and slowing productive growth. The company has successfully streamlined its divisions and created an environment in which employees at all levels have a voice in company decisions.

Ford has always been a company focused on the future. The status quo was not the foundation on which the company was built, and its present leaders are equally committed to innovation and positive change. Ford's main strength has consistently been its role as an industry leader in research and development.