Analysis of Strategic Factors of Ford Motor Company

The business environment comprises of three major components. According to Ansoff (2014), these components include internal environment, the immediate operating environment (the industry), and the external business environment. Markedly, businesses need to formulate strategies that enable them to compete and to survive the changes that are inevitable in every industry (Worthington & Britton, 2015).As such, a strategy is a blueprint or a roadmap that dictates the path that a company will follow to achieve its objectives and desired future state (David & David, 2017). This paper focuses on analyzing strategic factors both internal and external that relates to Ford company and then making some recommendations for Ford to improve its competitiveness within the industry. Notably, external factors that cause the change in an industry affect or drive business strategy. An analysis of strategic factors (internal and external) concerning Ford will enable this company to survive the changes in the industry and to improve its competitiveness.

Strategic Factors Analysis

IFAS (Internal Factors Analysis Summary)

This section analyses the internal factors that relate to Ford Company and which enhance its competitiveness within the automotive industry that Ford operates. The table below outlines these internal factors.

Internal Factors Analysis

Strengths

Strong brand reputation or image

High loyalty due to a large customer base

Global supply chain leading to the global presence

Innovative and creative engineering

Strong research and development

Weaknesses

High costs of production

Slow innovation processes

Constrained global chain of production facilities as compared to its competitors (Toyota, Nissan, Honda, etc.).

The internal strategic factors of Ford Motor Company are related to innovation, global supply network, and its brand, research and development, and production facilities. Noticeably, Ford’s internal factors that serve as strengths include strong brand reputation, a large customer base that leads to high brand loyalty, innovation in engineering, and global presence due to the creation of the global supply network. These factors give Ford Motor Company an edge over its competitors (Toyota, Nissan, Honda, etc.). Nonetheless, Ford suffers from high costs of production, a constrained global chain of the production facilities as compared to those of its competitors, and slow innovation processes. Ford needs to formulate ways of overcoming these shortcomings.

EFAS (External Factor Analysis Summary)

This section deals with external factors that relate to Ford Motor Company within the automotive industry where Ford operates. To this end, this section outlines the opportunities and threats of Ford Motor Company and also focuses on external environment analysis using the PESTEL framework. The following table is an outline of Ford’s EFAS analysis.

External factor analysis

Threats

Entry of high technology firms in the automotive industry

Intensifying rivalry and competition in the automotive industry

Destabilization of the prices of oil

Increased environmental regulations

Opportunities

Expansion of the global market for automobiles more so for hybrid, fuel cell, and electric vehicles by the year 2020

Reduction of costs of production

Product development as a result of innovation

Emerging markets or demand in Asia and the world at large for efficient and small vehicles

PESTEL

Political Factors

Protectionist policy or measures in the US market for automobiles and other markets in Asia and Europe.

Increased government support

Economic Factors

Global financial crisis. For instance, in 2017, there was a 3.7 % surge in global economic growth.

The growth of the U.S economy

Strengthening of the currency (U.S dollar)

Social Factors

Increased environmental protection through CSR

Client satisfaction

Improved safety and assisted driving

Increased wealth gap

Increased customer preference for Ford cars

Technological Factors

Involvement of semiconductors and software in the automotive industry

Introduction of the power train

Investment in hybrid, fuel cell, and electric cars.

Increased mobile computing

Environmental Factors

Increased global criticism for emissions by automobiles that cause environmental pollution.

Climate change

Reduction in the reserves for oil

Slowed carbon trend

Legal Factors

Increased regulations to govern environmental pollution caused by automobiles.

Labor laws

Quality and safety regulations

Strategic Factor Analysis Summary (SFAS)

According to McGee (2014), SFAS is a representation of a quantitative SWOT analysis. Typically, companies use SFAS to measure the strengths and weaknesses of their position in the industry. The table below outlines an SFAS summary for Ford Motor Company.

Ford Motor Company SFAS summary

Strengths

Strong brand reputation or image

High loyalty due to a large customer base

Global supply chain leading to the global presence

Innovative and creative engineering

Strong research and development

Weaknesses

High costs of production

Slow innovation processes

Constrained global chain of production facilities as compared to its competitors (Toyota, Nissan, Honda, etc.).

Opportunities

Expansion of the global market for automobiles more so for hybrid, fuel cell, and electric vehicles by the year 2020

Reduction of costs of production

Product development as a result of innovation

Emerging markets or demand in Asia and the world at large for efficient and small vehicles

Increased government support

Threats

Entry of high technology firms in the automotive industry

Intensifying rivalry and competition in the automotive industry

Destabilization of the prices of oil

Increased environmental regulations

Recommendations

The quantitative SWOT analysis for Ford Motor Company outlined above represents main issues that Ford need to improve. Ideally, Ford needs to adopt efficiency in its processes to lower or reduce the high costs of production. Moreover, Ford Motor Company needs to invest more in research and development. To this end, with improved R & D, Ford will be able to increase its innovation processes and ultimately produce efficient cars that will enable them to have the edge over their competitors. Furthermore, as a way of increasing its economies of scale, Ford Motor Company must increase its production network that will, in turn, increase global presence and, therefore, enhance the consumers’ preference towards Ford cars. Primarily, technology is improving and changing how firms operate. Thus, Ford Motor Company must adopt latest technology and software in their operations to compete against new entrants in the automotive industry that utilizes an improved technology. Noticeably, competition in the automotive industry is intense and, therefore, Ford needs to adopt product differentiation, enhance customer loyalty, use high tech, and commit itself to the production of efficient vehicles. Such vehicles include hybrid and electric cars for them to have a competitive advantage over their competitors (Toyota, Nissan, Honda, etc.).

Markedly, each day environmental, labor, and safety regulations increase. For this reason, Ford Motor Company needs to be on the forefront with abiding by these regulations to operate efficiently and legally. Besides, Ford needs to engage in more corporate social responsibility (CSR) programs to enhance their brand reputation and to optimize the welfare of the society. Particularly, Ford needs to focus on both the existing and the emerging markets and as such should produce innovative products that suit both markets. Again, Ford needs to focus on fuel efficiency which will ultimately become a source of its competitive advantage. Further, for purposes of sustaining its profitability and growth, Ford Motor Company needs to focus on innovation and the supply chain and also low emission categories and low-cost vehicles, particularly for the Asian market.

To sum it up, an analysis of strategic factors (internal and external) concerning Ford will enable this company to survive the changes in the industry and to improve its competitiveness. Some of the internal strategic factors for Ford are strong brand reputation or image, high loyalty due to a large customer base, global supply chain leading to a global presence, innovative and creative engineering, and substantial research and development. Others are high costs of production and slow innovation processes. Similarly, some of the external strategic factors for Ford are increased competition, increased environmental regulations, expansion of the market for automobiles, increased government support, and production of hybrid and electric fuel cars. Ideally, Ford needs to adopt efficiency in its processes to lower or reduce the high costs of production; improve its economies of scale by increasing its global production and supply network, and adopt advanced technology to produce efficient vehicles. This strategy will allow Ford to have the edge over Toyota, Nissan, Honda, and other competitors.

References

Ansoff, H. I. (2014). Strategic management. Place of publication not identified: Palgrave Macmillan.

David, F. R., & David, F. R. (2017). Strategic management: Concepts and cases; a competitive advantage approach.

McGee, J. (2014). Strategic management. Chichester: Wiley.

Worthington, I., & Britton, C. (2015). The business environment. Harlow [u.a: Pearson.