INDUSTRY ANALYSIS Rodgers 2 Running head: INDUSTRY ANALYSIS Part Two: Ford Motors’

INDUSTRY ANALYSIS Rodgers 2

Running head: INDUSTRY ANALYSIS

Part Two: Ford Motors’ SWOT and Competitive Analysis

Industry Analysis

Porter’s five in terms of industrial analysis focuses on a company’s competitive scale and how its general industry looks. An industry analysis for Ford motors covers five significant aspects that define the industry’s competitiveness. The critical elements that it focuses on are new entrants, the threat of substitutes, the bargaining power of suppliers, and the level of competitiveness. With these vital aspects, it is then possible to assess a company’s attractiveness on a global scale.

The Threat of New Entrants

The threat of new entrants is how easy or hard it is for new players to join a given industry. Ford Motors operates in the Motor manufacturing industry. Several factors significantly determine entrance to the motor manufacturing industry, where Ford is among the giant companies. First, there are the entry barriers that define the industry. Both regulators and manufacturing costs pose these. To manufacture cars, many licenses are needed. These are not easy to acquire. Besides, large companies like Ford had economies of scale that allowed them to manufacture cars at a cheap cost. For new entrants, this is not possible (Lavine, White & Allen, 2016). Another critical barrier to entry into the industry is the cost of setting up a car manufacturing plant. Cars require a lot of expensive materials, machinery, and even process. These cost a good fortune, making it hard for companies to begin manufacturing cars. Among other factors that prevent many companies from entering this space include customer loyalty and high switching costs that make it hard for customers to accept new car models. In essence, the threat of entry into the automobile business is low.

Threat of Substitute

This is how easy or hard it is for customers to switch to similar products. Ford motors produces cars, trucks, and sport utility vehicles. Many other companies in the same industry produce the same cars (Maxcy & Silberston, 2017). Among such companies are Toyota, General Motors, and Mazda. Not only this, but other companies that make specialty cars include RAM, which focuses only on trucks, posing a significant threat to Ford’s trucks. In its new segment, including the production of hybrid and electric cars, companies like Tesla have a more considerable share. Other motor vehicle substitutes include motor bikes, airplanes and water borne vessels. While customers face high switching costs to substitutes, it is clear that the threat of substitutes is relatively high.

Customer’s Bargaining Power

One of the key things that determine the attractiveness of an industry is its bargaining power. In the motor industry where Ford Motors operates, the bargaining power of customers is low because of a number of critical prevailing factors. In this, the production of cars is an expensive affair and involves using technology and raw materials that are very expensive to source (Sarguna, 2011). Furthermore, the prices of cars around the globe tend to be affected by the taxes of the resident country and the respective inflation rates. Moreover, the prices tend to depend on loan interest rates; hence, customers tend to have little say on the prevailing prices of cars produced by companies such as Ford Motors.

Bargaining Power of Suppliers

Suppliers in any industry play a critical role in making the industry attractive. In the motor vehicle industry, the bargaining power of suppliers is weak due to various factors. While Ford Motors sources its raw materials from various suppliers, no single supplier has a considerable share. Besides, many suppliers can supply the company with the same raw materials, which works to Ford Motors’ advantage (Sarguna, 2011). In other words, Ford Motors has no specific dependence on any supplier and hence, leaving many of them having no little say on the pricing. The fact that these suppliers are widely distributed across the world denies them a chance to have good bargaining power.

Competitive Rivalry

This is the level of competition in any given industry. The global motor industry, where Ford Motors is a major player, has an intense competitive rivalry. In this, the industry has significant manufacturers that are well established (Maxcy & Silberston, 2017). Among the common ones are Tesla, Toyota, Mercedes, Honda, Hyundai, and other car makers are known for their innovativeness and good engineering concepts. Through research, customer service, and incentives to make more sales, these manufacturers, from time to time, create ideas to beat each other for the market share, making the competition level extremely high.

Main Competitors

Ford Motors has tens of significant competitors in the global arena. The common ones include Toyota, Honda, Nissan, Mazda, and Volkswagen. On this scale, it is clear that Ford comes out as a significant low-cost competitor that focuses on premium functionality. In this function, the major competitors are Toyota and Honda. Mazda and Volkswagen tend to focus on style and comfortability on a budget (Lavine, White & Allen, 2016). Delving into other categories of assessing competition, there is an apparent reality that when it comes to hybrid and electric vehicles, Tesla Motors come out as the main competitor that focuses on producing premium electric cars (Maxcy & Silberston, 2017). Besides market targeting, Toyota and Nissan’s main competitors regarding reliability and budget. In contrast, regarding comfort and style, German’s BMW, Volkswagen, and Mercedes brands come out as the leading competitors.

Competitive Strengths, Weaknesses, and Market Outlook

The motor industry has distinct features when it comes to the competition strengths. Here, a car’s features, including the engine type and design, play a critical role. For small vehicles, the main feature of the engine is that petrol cars are more competitive (Mangram, 2012). In shape, sleek cars complemented with a good interior tend to become more competitive. Another critical competitive strength I the reliability of the vehicle. This is determined by the number of accidents caused in a given period and the number of reported defects. Lastly, innovativeness is another crucial feature when it comes to competitiveness (Maxcy & Silberston, 2017). Incorporating technology plays a key role in making a brand more competitive. On the other hand, the critical competitive weaknesses include car defects, the number of accidents, and poor reliability. Looking forward, the essential competitive features will rely on the ability of the car to fit the users’ lifestyles.

Eight Key Success Factors

Various factors play a critical role in determining the success of any given company. The first key is leadership which refers to managing the company. Next is customer focus. This is how a company focuses on customer needs and preferences regarding car manufacturing, design, and features. The following key feature is training and development (Lin et al., 2018). How well the car manufacturer trains, its employee plays a critical role in determining its success in the motor production business. Also, supplier quality management trickles down to the quality of cars produced. Suitable suppliers tend to raise the overall value of the cars or motor vehicles produced. Furthermore, there is the car design (Luthra, Garg & Haleem, 2015). From the engine, the interior to the exterior outlook, how sound manufacturers design cars play a significant role in their success. Among other key factors are the production process management and employee teamwork traits.

Competitor Profile Matrix

Ford

Toyota

Honda

Tesla

Market Share

0.3

0.4

0.2

0.1

Financial Position

0.3

0.3

0.2

0.2

Product Quality

0.25

0.25

0.25

0.25

Innovativeness

0.2

0.2

0.1

0.5

Price

0.3

0.2

0.1

0.4

In coming up with this matrix, Ford’s major competitors in each segment are determined to be Toyota, Honda, and Tesla. The essential comparative characteristics are market share, financial position, product quality, innovation and price (Alghalith, 2018). For each of these, a weighted average is used to compare the contribution of each manufacturer to a sum of 1. From research, the weighted averages are assigned as shown above and from the determined weights, a comparative analysis is done to show which competitor is critical in various car aspects.

Partial SWOT Analysis

Opportunities

Threats

Eco-friendly vehicles present the company with a clear line of its future products.

The market base keeps growing with the increase of globalization (Gaille, 2021).

Social media marketing has led to increased exposure with videos showing the abilities of different Ford models.

Increased acceptance of autonomous cars.

We increased our cryptocurrency focus.

The high competition that is posed by many other car manufacturers who focus on high-quality and cheap vehicles

Huge environmental cost.

The issue of regulations and compliance affects its production abilities and capacities (Gaille, 2021).

Market uncertainties, including shifting customer preferences.

Increased prices of raw materials.

External Factor Evaluation Analysis

External Factor

Weight

Rating

Weighted Score

Opportunities

Eco-friendly vehicles present the company with a clear line of its future products.

0.1

2

0.2

The market base keeps growing with the increase of globalization.

0.15

1

0.15

Social media marketing has led to increased exposure with videos showing the abilities of different Ford models.

0.1

2

0.2

Increased acceptance of autonomous cars

0.1

2

0.2

It increased cryptocurrency focus.

0.05

1

0.05

Threats

High competition is posed by many other car manufacturers who focus on high-quality and cheap vehicles

0.05

2

0.1

Huge environmental cost

0.05

3

0.15

The issue of regulations and compliance affects its production abilities and capacities.

0.05

2

0.01

Market uncertainties include shifting customer preferences.

0.05

3

0.15

Increased prices of raw materials.

0.05

1

0.05

1

1.26

An External Factor Evaluation (EFE) matrix can be used to assess the current business strategies. Opportunities are business areas where a business can take advantage, while threats are the situations that can increase the risk of a company making losses. First, the most prominent opportunities and threats are identified to come up with the above EFE matrix (Zulkarnain, Wahyuningtias & Putranto, 2018). After listing them down, weighted scores are assigned. These scores are subjective to the overall importance of strategy making. Overall, the set scores add up to a sum of 1. After this, a rating is added. A rating in Ford motors relates to how well it responds to each opportunity and threat. Needless to note, the rating in this case ranges from high, moderate, or low. The total weighted score is determined using the rating and the weighted averages (Zulkarnain, Wahyuningtias & Putranto, 2018). Using the total weighted score, a company can then decide whether it has appropriate strategies for the external environment or not.

Conclusion

In sum, it is clear that Ford Motors operate in a highly dynamic global industry. As seen from the porter’s five analyses, the primary force to consider is the high competition rate. Competition in the industry comes from companies including Toyota, Honda, Tesla, Hyundai, and Nissan. These companies compete with Ford Motors in different categories. To win this competition, Ford Motors must create strategies that can easily see it. Using the External Factor Evaluation (EFE) matrix, it is clear that Ford Motors needs to focus more on eco-friendly vehicles, increase social marketing, and produce more autonomous cars. With such an effort, the company will likely tap into new markets leading to new fortunes. On the other hand, it needs to control the threats of high environmental costs and meet shifting customer preferences. With these, there is an apparent reality that the company will be able to match the increased levels of competition.

References

Alghalith, N. (2018). Tesla: innovation in information technology. International Journal of Business Research and Information Technology, 5(1), 37-51.

Gaille, B. (2021). SWOT Analysis for the Ford Motor Company. BrandonGaille.com. Retrieved 13 June 2022, from https://brandongaille.com/ford-motor-company-swot-analysis/.

Lavine, B. K., White, C., & Allen, M. (2016). Forensic analysis of automotive paints using a pattern recognition assisted infrared library searching system: Ford (2000–2006). Microchemical Journal, 129, 173-183.

Lin, D., Lee, C. K., Lau, H., & Yang, Y. (2018). Strategic response to Industry 4.0: an empirical investigation of the Chinese automotive industry. Industrial Management & Data Systems.

Luthra, S., Garg, D., & Haleem, A. (2015). Critical success factors of green supply chain management for achieving sustainability in Indian automobile industry. Production Planning & Control, 26(5), 339-362.

Mangram, M. E. (2012). The globalization of Tesla Motors: a strategic marketing plan analysis. Journal of Strategic Marketing, 20(4), 289-312.

Maxcy, G., & Silberston, A. (2017). The motor industry. Routledge.

Sarguna, E. J. S. (2011). Ford Motors’ (India) Specific Strategies Using Information Systems. WINBIS‐2011, 471-486.

Zulkarnain, A., Wahyuningtias, D., & Putranto, T. S. (2018, March). Analysis of IFE, EFE and QSPM matrix on business development strategy. In IOP Conference Series: Earth and Environmental Science (Vol. 126, No. 1, p. 012062). IOP Publishing.