Internal Strengths and Weakness of Ford Motor Company Paper Example

Introduction

Ford Motor Company (FMC, Ford, or the company) has been able to maintain its position as one of the leading vehicle manufacturers due to the ability to leverage its strategic strengths or address pertinent operative issues it faces. This report evaluates the existing internal characteristics that allow Ford to increase its efficiency and profitability. It also assesses some internal challenges that adversely affect its operations. The report also includes indicates how Ford manages to leverage its advantages and a discussion of ethical dilemmas the company may face in the course of conducting business.

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Ford's Internal Strengths

FMC's strengths lie with its brand image, strong financial position, extensive global supply chain, the F-series model strong performance and dominance in the U.S. market, "One Ford" management approach, and innovative customer relation program. Ford's strengths are associated with its brand, global operations, and research and development.

Brand Image

FMC is one of the top automobile industrial leaders. Interbrand ranks FMC as the 35th best global company with a valuation of $13.995 billion. FMC is, therefore, only behind Toyota, Benz, BMW, and Honda in the auto industry (Interbrand, 2018). This recognition indicates that the company has a strong brand image, which makes its products to be more attractive to consumers. The positive brand reputation aids FMC to collect loyal customers, 48% of whom are highly likely to return (Edmunds, 2018). The strong brand image has, similarly, allowed FMC to enter into strategic relationships with numerous automotive global partners. For instance, FMC has six joint ventures with auto assembling and components manufacturers in China (3), Germany, Turkey, and Thailand (Ford Motor Company [Ford], 2018). These kinds of arrangements arise because such partners have confidence in the international presence of FMC and allow the company to reach more market and meet demand effectively.

Strong Financial Position

FMC's targets to maintain an automotive cash and credit liquidity of $30 billion annually. In December 2017, the company's liquidity was $37.4 billion. This financial war chest permits the company to invest in innovative products per its customer's needs, pay debt obligations, protect its interests in case of global economic crises, and pay regular dividends to its shareholders. Being in this financial position thus gives FMC a competitive advantage in the industry enabling it to keep ahead of the competition in introducing innovative products. For instance, the company allocated $8.0 billion to R&D in 2017. Also, the company plans to introduce 40 all-electric cars in a joint-venture with Zotye by 2022 (Ford, 2018).

Global Supply Chain

The company has an extensive efficient supply chain network all over the world. Apart from the joint ventures mentioned above, the company has a total of 61 plants all over the world (Ford, 2018). The widespread supply chain allows the company to streamline its production, thus, FMC is able to meet all demand in time and to deal with customer issues quickly. The company also has a purchasing team which, in consultation with a global risk management committee, negotiates raw material acquisition contracts (Ford, 2018). The agreements, whenever possible, include purchase prices to protect the company against price hikes thus mitigating its cost (Ford, 2018).

Strong Market Position in the U.S. and Performance of the F-Series

Ford market share in the U.S. rose by from 14.6% (2016) to 14.8% (2017) (Ford, 2018). The company sold 2.6 million units compared to 17.5 million industrial volume (Ford, 2018). About 1.1 million of these units were trunks, with its F-series pick-ups outselling all other brands in the track segment. As a result, FMC became the best-selling auto company in the U.S. for the 8th time in a row and the F-series took its 41st best-selling truck title (Ford, n.d.). The strong market position in the U.S. and the performance of F-series help to drive FMC sales and profitability (Ford, 2017).

Innovative Customer Care Program

With the help of CISCO, FMC implemented an innovative customer relation platform that uses enabling technologies that offer in-car communication with FMC's car owners and indicates issues (Cisco, 2007). The system also provides a channel for real-time collaboration between FMC and its dealers during car services and combine the customer service call centers and FMC website databases (Cisco, 2007). It also offers self-service and also allows the company to monitor internet chatter concerning FMC's products (Cisco, 2007), which gives FMC a head start into understanding the problems car owners are facing. The program has streamlines customer services, reduced information conflicts between, cut costs for offering customer care and expedite delivery of solutions (Cisco, 2007). The program has Ford's customer care, reduces the cost of maintaining multiple databases, and has seen an increase in customer satisfaction and sentiment towards the company (Cisco, 2007).

"One Ford" Policy

Since the implementation of the 'One Ford" policy, the company has been able to streamline its global operations. The strategy integrated all major components and under the leadership of President and CEO Alan Mullaly, this policy enhanced visionary thinking and innovative products, the capacity ability of the whole company to push new thinking on all levels, teams, functions, and partners (Caldicott, 2014). The CEO had visualized that the "One Ford" policy would foster collaboration and transparency between the different entities that make up Ford. Additionally, the management trimmed down the brands the company was marketing from 97 to 20 (Caldicott, 2014). This strategic restructuring has since enabled Ford to a simpler, leaner product line, which offers room to the management to concentrate in instilling manufacturing, product development, and customer service excellence (Caldicott, 2014). The management implemented this strength by bringing all its employees together as a global team, compacting all its unique automotive knowledge and assets, manufacturing of automobiles that consumers cherished, and arranging for the capital the company to achieve the above (Caldicott, 2014).

Ford's Weaknesses

FMC weaknesses arise from limitations such as the over-reliance on the U.S. market, product recalls, dependency on sales of heavy-duty vehicles (trucks and SUVs), and low penetration into the emerging markets.

Over-dependency on the US Market and Heavy-Duty Vehicles and Low Penetration in the Emerging markets

Though the global industrial volume increased by 2% in 2017 compared to 2016, Ford's market share fell by two-tenths of a percentage (Ford, 2018). FMC blamed this to low market share in the Asia Pacific, Europe, and Middle East & Africa (Ford, 2018). These markets are emerging ones with an appetite for smaller and economical cars. This situation exposes Ford to a risk of under-diversifying in case there is an economic crisis in the US. Over-relying on the sales of heavy-duty vehicles implies the company cannot take the full advantage of the emerging markets in Pacific Asia, Europe, Middle East, and Africa, regions that have a higher demand for smaller, fuel-efficient cars. Also, the heavy-duty segment raises an ethical and strategic dilemma for Ford. That is because, on one side, the company needs to implement its environmental sustainability, while on the other, heavy-duty vehicles are more fuel-intensive and thus emit more carbon.

Products Recalls

In 2018, Ford recalled 1.46 million vehicles of its Focus model due to defects that could cause them to stall, not restart, or difficult to restart (Snider, 2018). Studies indicate that recalling products negatively impact on the short-term perceptions of a brand and increases business costs (Kubler & Albers, 2012).

Conclusion

FMC's internal strategic strength include brand image, robust financial position, global supply chain, strong market position in the US and performance of the F-series model, innovative customer care program, and the "One Ford" policy. The weakness includes overdependence on the US market and revenue of heavy-duty vehicles, which restricts its entry into the emerging markets in Asia, the Middle East, and Africa.

References

Caldicott, S. M. (2014, June 25). Why Ford's Alan Mulally is an innovation CEO for the Record books. Retrieved from https://www.forbes.com/sites/sarahcaldicott/2014/06/25/why-fords-alan-mulally-is-an-innovation-ceo-for-the-record-books/#4553d5cd7c04

Cisco Systems, Inc. (2007). Ford's innovative customer relations programs increase owner satisfaction and promise 20 percent growth in annual savings (C36-438695-00 1107). San Jose: Cisco Systems, Inc.

Edmunds. (2018). Edmund Loyalty Report. Author.

Ford Motor Company. (2018). Ford Motor Company: Ford Financial Report. Author.

Ford Motor Company. (n.d.). Sustainability report 2017/18. Author.

Snider, M. (2018, October 26). This week's recalls: Millions of pounds of ready-to-eat food, plus Ford Focus cars and BMWs. Retrieved from https://www.usatoday.com/story/money/nation-now/2018/10/26/product-food-recalls-ford-focus-cars-bmws/1772313002/

Kubler, R. V., & Albers, S. (2012). The Impact of Product Recall Communication on Brand Image, Brand Attitude, and Perceived Product Quality. SSRN Electronic Journal. doi:10.2139/ssrn.2060858