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Ford Internal Environmental Analysis
Project 3
May 10,2022
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Ford internal environmental analysis
Founded in 1914, Ford Motor Company is an automobile producer. Ford
automobiles, efficacy automobiles, vans, and cars, as well as Lincoln extravagance vehicles,
are all factory-made, marketed, and examined by the corporation. Motorized, Agility, and
Ford Credit are all divisions of the company. The Automotive division is responsible for the
progress, production, distribution, and maintenance of Ford and Lincoln vehicles, as well as
their parts and accessories. Argo AI (an inventor of self-driving schemes) is a major
component of the Mobility segment. Ford also has equity interests in a number of other
mobility-related companies. When it comes to financing and leasing for automobiles, much
of the work done by Ford Credit goes into this market. Dealers across the world may get a
variety of auto financing options from Ford Credit.
Ford Motor Company's corporate strategy.
Ford automobile company's future success, it has developed and implemented The
Plan, which will be unveiled in October of this year. Ford is transforming the way it does
business, streamlining its operations, using its assets, seeking out new possibilities, and
putting people and customers first. Although COVID-19 had its struggles, the company
concluded the year in a solid spot, and the additional half of 2020 will show growth against
Ford & Weissbein, 1997). Investments will be made in "uniquely Ford" rechargeable
vehicles and connected resolutions in the next year.
Enhanced eminence, condensed budgets, and quicker restructuring of its global
manoeuvres are all fragment of the Strategy. Value, client satisfaction, working fineness,
and top-line development are all important to the company. With this tactic, Ford design to
invest further in its strongest businesses and vehicle franchises, expand its commercial
vehicle business with computer software services that endorse allegiance and income, and
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tactical method partnerships to gain a better consideration of our clients. Ford’s usual
locomotive productions will be "disrupted”, and we will collaborate with others in order to
gain acquaintance and effectiveness. A focus on its core competencies means that we're
putting its money where its mouth is when it comes to the creation, production, distribution,
marketing, funding, and maintenance of automobiles and commercial vehicles. New
potential in electrification, self-driving technologies, and transportation solutions will be
maximized.
The Purposes of the Organization
• Build a Relationship of Confidence
Ford’s goal is to "become the most trusted firm in the world," and it’s working hard
to get there. Ford exemplifies these deeply held principles through helping people with
integrity and skill on a continual basis. Ford’s most valuable asset will be the trust it builds
with its worldwide stakeholders.
• Improving the Quality of Life
Using the Erb Institute at University of Michigan, Ford steered a two-year training
with the goal of "helping construct a better world," and it came up with a way to quantify
human progress. Civil rights, well-being and security, increased admittance to communal
goods (such as agility), and increased common fiscal success were all considerations in its
process.
• Make a Difference
Ford aim to produce a net beneficial impact on society and the milieu slightly than
reducing the negative impacts of fords actions. Ford wants all their cars to be more energy
efficient and emit less pollution. As a result, its long-term vision, which includes the
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creation of a linked transportation network with ever-more intelligent vehicles that
communicate with each other and the biosphere around them, will improve people's lives
for the better.
The market strategy adopted by the Ford business focuses on people. For example, it lays
high emphasis on its workforce so by creating a diverse and inclusive work culture.
Similarly, it gives high priority to the needs of the target market audience so that they can
have the best driving experience without compromising their safety. The ability of the
automobile business to understand the customer and focus on their needs has helped Ford to
create value for them over the years (Hoggan, 2020, p. 74).
An in-depth SWOT analysis.
Ford's capability to resolve the subjects exposed in this SWOT scrutiny has donated
to the company's capability to persist the planet's fifth largest car maker. A SWOT analysis
reveals a company's strengths and weaknesses, as well as its opportunities and threats, so
that the company may take advantage of them. Ford's SWOT analysis reveals the most
important challenges that need to be addressed in order for the organization to perform
better. The goal is to dominate the worldwide automobile market. To attain this goal, Ford's
SWOT analysis must be included in its tactical expansion procedure.
It is important to understand Ford Motor Company's core competencies (Internal
Strategic Factors). Ford's product, world-wide manoeuvres, and study & expansion are the
company's strong point. This segment of the SWOT analysis emphases on the corporation's
internal characteristics (internal tactical elements). Among the many advantages that Ford
Motor Company enjoys is the ability to a well-defined brand identity and supply chain
throughout the world.
Innovative methods that are well-structured
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With a reputation as one of the global top car producers, Ford has a strong product
reputation that enhances the automobiles appeal and client satisfaction. It's also value
noticing that Ford depend on a world-wide supply chain to sustain its worldwide operations.
The company's invention procedures have also enhanced since the Ford ingenuity was
implementation. Ford's expanding strong point are emphasized in this section of the SWOT
analysis.
Weaknesses (Internal Strategic Factors)
The shortcomings of Ford can be traced back to the company's inherent limits when
compared to the industry. Organizational limitations or insufficiencies are internal tactical
variables that diminish business budding, as shown in this SWOT analysis section. Ford's
main flaws include the following:
1. The manufacturing network has a limited worldwide extent.
2. Increased prices as compared to rivals
3. The pace of invention is too sluggish.
Likened to Toyota's global system of production locations, the Corporation has a
noteworthy drawback. As a result of this vulnerability, Ford has also recently shut down
some of its European production locations. Although Ford has boosted its innovation
effectiveness, its expenses and prices are higher than those of competitors like Toyota, and
its innovation processes are slower than those of Toyota. By comparison with other leading
companies, Ford's SWOT analysis shows that it is comparatively weak.
In comparison to Toyota's extensive global network, Ford Motor Company has a
weakness in its production facility network. In recent years, Ford has also closed down
some of its European production sites, which has exacerbated this deficit. Even if the
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company has improved its innovation effectiveness, Ford's expenses and prices remain
higher than those of Toyota's, and the corporation's invention procedures are slower to
respond to new-fangled or emergent trends than those of Toyota. Thus, Ford's SWOT
analysis shows that the corporation is not as strong as its rivals, particularly Toyota, in this
area.
The table presented below captures the strengths and weaknesses of the Ford
company. e The identified elements can play an instrumental role to shape its strategy at
diverse levels.
SW Table
Strengths
Weaknesses
The wide product portfolio of Ford acts as
a major strength that influences its
profitability
The rate of invention of Ford is slow as compared
to its competitors in the automobile industry.
The well-defined brand identity strengthens
its goodwill in the global automobile
market
The cost that Ford incurs to work on its
automobile offerings is higher as compared to that
of its competitors. It negatively affects its financial
performance.
The supply chain network of the business
spread across the world which enable it to
procure inventory and raw materials at an
affordable rate e
The production network of the business is limited
which restricts its ability to produce automobiles
in an efficient manner.
The global presence of Ford acts as a chief
strength of the business since it enables it
to target the global audience.
There exist gaps in the research and development
function of Ford which is evident from its high
recalls of vehicles due to issues such as oil leak
(Shepardson, 2022).
The ability to adapt to the evolving
business climate is a chief strength of Ford
which has helped to carry out its business
operations sustainably.
The presence of Ford in emerging markets is weak
as compared to its rivals.
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Recommendations from Ford Motor Company's SWOT Analysis
Ford's SWOT examination emphases on the corporation's limitations in invention, as
well as rivalry from existing and fresh participants. Increasing rivalry and the advent of
advanced competitors mean that Ford must enhance its R&D investments as well as its
invention rapidity. Ford must also improve its production network in order to increase
economies of gauge, which can cut budgets and bills to make Ford automobiles extra
actives.
Internal Factor Evaluation Matrix
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The Internal Factor Evaluation (IFE) matrix has been used to capture Ford’s internal
elements such as strengths and weaknesses.
Key Internal Factors - Strengths
Weight
Rating
Weight Score
Well-known brand
20 %
2
40 %
Wide product range
20 %
4
80 %
Vast supply chain network
10 %
3
30 %
Key Internal Factors - Weaknesses
Gaps in research and development
leading to product recalls
20 %
2
40 %
Slow pace of innovation
15 %
2
30 %
Restricted presence in emerging
markets
15 %
1
15 %
Total
100 %
235 %
e
Some of the factors that work in favor of Ford brand and act as its chief strengths are the
well-known brand name, availability of a wide product range and the existence of a vast
supply chain network. However, some of the areas that the business entity needs to work
upon include existing gaps in research and development function, slow pace of innovation of
the business and the limited presence of Ford in emerging markets. These internal variables
have a significant implication on the strategic direction of the business.
Internal Resources/Departments/Processes Play a Strategic Role.
A wide range of customers are in Ford's target market, which is global. Because of
this, the company's marketing strategy is comprehensive. Currently, it is the fifth largest
automaker in the world also the second largest in the United States. With this spot, an
accomplished selling plan is vital to guaranteeing lasting achievement. To ensure Ford's
world-wide attractiveness, the company's selling mix and related strategies will continue to
evolve time after time.
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Target Audience and Ford's Product.
Some of the most popular products of Ford are Ford EcoSport, Ford Aspire and Ford
Endeavour. The business entity has integrated unique designs and specifications into its
models in order to target diverse customer groups including young individuals, businessmen
and other customers who are interested to purchase affordable automobiles.
Services related to money
Recognized for its sedans, Ford Motor Company is a domestic name in the
motorized business. Trucks, buses, and tractors are all part of the firm's produce line. Aside
from Ford-specific parts, the company's Motorcraft brand provides automobile parts that
can also be used on automobiles made by other manufacturers, such as Toyota. Lower Ford
Motor Credit Company provides clients with finance through Ford (Ford et al., 1986).
Additionally, the company offers automobile leasing services mostly to corporations. In this
way, Ford's marketing mix demonstrates the breadth of its product offering.
Ford distributes its products at locations that are typical of the company's
distribution strategy. Clients are gotten and to sold to in these sites, which is the emphasis
of this part of the promotion mix. e The following are the primary locations where Ford
distributes its products:
1. Charters
stores that sell auto parts
3. The Ford Parts site
Grand Strategy Matrix
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The grand strategy matrix is a useful instrument that helps in creating alternative and diverse
strategies for an organization. The tool has been used for analysing the strategic implications
at the corporate level and business level.
weak
competitive
position
Quadrant 2 – Weak
competition and rapid market
growth
Quadrant 1 – Strong
competition and rapid
market growth
Ford
Quadrant 3 – Weak
competition and weak market
growth
Quadrant 4 – Strong
competition and weak
market growth
slow market growth
Source: (Bittner, 2016)
The Ford Company belongs to Quadrant 1 in the grand strategy matrix owing to strong
competition as well as rapid market growth. Thus, some of the strategic approaches that the
business entity needs to adopt in order to sustain in the market setting include integration of
development to develop new products and market penetration in emerging economies. The
strategies are aligned with the current weaknesses of the company. The company must work
on its R&D aspect and leverage innovation to develop efficient and better automobile
products. Similarly, to compete with other automobile businesses at the global level, it must
start targeting the audience members in emerging economies such as India so that its
customer base can expand. e
Financial Services Division
There are a large number of charters that account for the majority of sales. It is
possible to buy automotive materials and accessories from third-party retailers in addition to
the Ford Parts website. Consumers can acquire banking services from Ford Motor Credit
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Company in the company's offices or via members of staff at showrooms. The portion of
the business model displays Ford's strategy for generating revenue using multiple
corporation venues and third-party suppliers.
Business-level strategy of Ford
The business level strategy of an organization primarily focuses on its policies, goals, and
actions to deliver value for the target market audience while maintaining a competitive edge.
In Ford, the structure and functions play a cardinal role to shape the strategic approach of the
automobile entity. Ford applies intensive growth strategy to expand its existing dealership
and increases its sales turnover in the global market setting. It lays emphasis on diverse
processes such as the sources from where raw materials are procured, the designing aspects
of its vehicles as well as the interaction with potential and existing customers (Shepardson,
2022, p . 7). By focusing on intensive growth Ford is able to protect its current market
position while expanding its profitability through better sales.
Structural changes to the company.
Chairman, President, and Executive Vice President are the top three positions in
Ford's organizational structure. With equal authority, all functional leaders report directly to
the executive vice president. Machine bureaucracy is practiced by the firm to the extent that
it relies on economies of scale for its success. Jim Farley, the CEO of Ford plays an
instrumental role to provide direction through his leadership approach. He has served as the
chief change agent who has helped Ford to undergo restructuring and focus on key growth
areas such as autonomous as well as electric technologies.
Engineers and technicians make up the majority of Ford Motors' staff, which makes
it a professional bureaucracy. With regards to project management, decision-making is
decentralized due to the high level of skill and specialization. Ford Motors reaps the
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benefits of both machine and professional bureaucracies by integrating them into its
organizational structure (Raterman et al., 2019) However, while the structure is a matrix, it
has several features that make it extremely effective in its management.
Alignment of function-level strategies with Ford’s vision and mission
The vision of Ford is ‘Helping Build a Better World ’ and its mission statement revolves
around making the lives of people better by making mobility accessible as well as
affordable. There elements serve as chief pillars that guide each functional unit at Ford to
contribute towards the business goals. For example, the operations team, R&D team, HR
team, Finance team and Procurement team focus on the vision and mission of Ford to help
the business entity create world-class automobile solutions that can meet the needs of the
target market audience. Some of the chief elements that act as the foundation for the
functional departments within Ford include sustainability, innovation, and ethical growth
(Shepardson, 2022).
Vision vs. strategy for a corporation.
The One Ford initiative, introduced in 2008 under former CEO Mulally's leadership,
defines Ford's corporate culture. With this strategy, the company seeks for uniformity and
synergy through unifying its global organization. Based on this plan, Ford's organizational
culture might be summarized as follows: For example, F: Foster Functional and Technical
Excellence; O: Own Working Together; and R: Role Model Ford Values.
The Benefits and Drawbacks of Ford's Business Culture
Ford's organizational culture places a focus on cooperation among its employees. A
number of distinct cultures and product lines existed across Ford's global network prior to
the One Ford strategy being implemented. Today, the company's organizational culture is
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centred on synergy and togetherness, which improves the company's business skills.
However, there is a downside to the firm's lack of flexibility. Ford's corporate culture
should be flexible to foster resilience and efficient problem-solving, according to the theory.
Financial analysis.
Ford Motor Co.
Financial Leverage
Dec 31, 2021
Selected Financial Data (US$ in millions)
Total assets
257,035
Equity attributable to Ford Motor Company
48,519
Solvency Ratio
Financial leverage
5.30
Benchmarks
Financial Leverage, Competitors
General Motors Co.
4.10
Tesla Inc.
2.06
Financial Leverage, Sector
Automobiles & Components
4.07
Financial Leverage, Industry
Consumer Discretionary
4.28
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2021 Calculation
Financial leverage = Total assets ÷ Equity attributable to Ford Motor Company
= 257,035 ÷ 48,519 = 5.30
Financial leverage at Ford Motor Company for the years ended in 2017 to 2021 was
on average 7.2 times higher than the industry average of 7.2. Ford Motor's economic power
from financial year ending 2017 to 2021 averaged 7.3x. The company's e financial leverage
culminated at 8.7x in 2020 when looking back over the previous five years.
Ford Motor Co.
Gross Profit Margin
Dec 31, 2021
Selected Financial Data (US$ in millions)
Gross profit
11,499
Automotive revenues
126,150
Profitability Ratio
Gross profit margin
9.12%
Benchmarks
Gross Profit Margin, Competitors
General Motors Co.
11.49%
Tesla Inc.
25.28%
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2021 Calculation
Gross profit margin = 100 × Gross profit ÷ Automotive revenues
= 100 × 11,499 ÷ 126,150 = 9.12%
The current ratio, often known as the liquidity ratio, is a measure of a firm's
capacity to meet its short-term financial commitments. During the three-month quarter
ended December 31, 2021, the company's current ratio was 1.20, according to the company.
Ford Motor Company's fast ratio increased from 2019 to 2020, but then somewhat declined
from 2020 to 2021 because of a combination of factors.
The financial evaluation of Ford shows that the business has succeeded to showcase
consistent performance in the market which has positively influenced its financial health and
position. For example, the gross profit margin (2021) of Ford has revealed that the financial
health of Ford is strong. However, while comparing Ford’s gross profit margin with that of
its industry rivals such as General Motors and Tesla, Ford seems to be lagging. The
performance of its rivals is far better, and they are in a much stable financial position. The
financial leverage ratio of Ford has revealed that the company relies on debt, and it forms a
significant part of its capital structure as compared to its competitors.
Conclusion e
An in-depth internal environmental analysis of the Ford business has been carried out. The
strengths and weaknesses of the automobile company have been identified since these
internal variables have a direct and significant influence on the strategic performance and
strategic direction of the business. The corporate-level strategies as well as the business-
level strategies of Ford have been identified. The strategic approach that is adopted by a
business plays a key role to influence its sustainable market performance. The financial
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evaluation of the business has revealed that even though Ford is in a stable condition
financially, the financial position of its industry rivals such as Tesla and General Motors is
much better. Thus, it is necessary for Ford to capitalize on its strengths so that it can gain an
edge over its rivals in the evolving automobile business landscape.
References.
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Ford, J. K., & Weissbein, D. A. (1997). Transfer of training: An updated review and
analysis. Performance improvement quarterly, 10(2), 22-41.
Ford, J. K., MacCallum, R. C., & Tait, M. (1986). The application of exploratory factor
analysis in applied psychology: A critical review and analysis. Personnel psychology,
39(2), 291-314.
Hoggan, C. (2020). Editor’s Preface: Striving to Build a Better World. Journal of
Transformative Education, 18(3), 187-189.
Raterman*, K. T., Liu, Y., & Warren, L. (2019, October). Analysis of a drained rock
volume: An Eagle Ford example. In Unconventional Resources Technology
Conference, Denver, Colorado, 22-24 July 2019 (pp. 4106-4125). Unconventional
Resources Technology Conference (URTeC); Society of Exploration Geophysicists.
Shepardson, D. (2022, April 4). Ford recalls 737,000 U.S. vehicles over software and fire-
risk issues. Reuters. Retrieved May 17, 2022, from
https://www.reuters.com/business/autos-transportation/ford-recalls-737000-us-vehicles-
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over-software-fire-risk-issues-2022-04-
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