OL421_ Project 2_Ford Motors Credit Company_Monitoring competitors’ Performance

Ford Motors Credit Company: Monitoring competitors’ Performance

12 April 2022

e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e Company’s overview

The Ford Motor company was founded in 1903 in Dearborn, Michigan. It is esteemed as

one of the top sellers in the automobile industry that offers commercial cars under the brand

name Ford while the luxurious vehicles are offered under the brand name Lincoln. In the United

States of America, it is considered to be the best automotive manufacturer. At the global level,

Ford holds the 5th rank. Most of the profits come from North America for the company. It is a

billion-dollar business in the world and here is a comprehensive analysis in monitoring the

competitors’ performance.

A comprehensive analysis has been carried out and resented in the report to understand

how organizations develop and manage strategies to function in the evolving market landscape

in the 21st century. Some of the key tools that have been used to perform the analysis are

SWOT analysis, Porters 5 Forces analysis, External Factor Evaluation (EFE) Matrix and

framework, emphasis has been laid on opportunities and threats since they arise in the external

business climate.

Opportunities

The company strives to be technologically adaptive and this is good for they can

leverage this in producing fuel efficient cars and commercial vehicles. They can also try and

penetrate markets such as Asia or even emerging economies of smaller countries so as to

broaden their customer base. In the fast growing world of technology, the company has an

opportunity to do more digital marketing so as to grow its customer and supplier interactions.

The company can also look into venturing into an auto relate industry such as rentals so as to

diversify their portfolio.

Threats

The company has a very cut throat competition in companies such as Tesla and GM

and this puts them at a point where they could potentially lose their customers. Another issue

would arise in the high and increasing cost of raw materials which narrows the profit margin.

Due to the environmental agreements there have been increased regulations and compliance

compared to the previous years. The table presented below shows the five key opportunities

e e e e e Threat of New Entrants:

Setting up an automobile company requires a huge sum of capital for the infrastructure

and distribution channels. This also leads to a point where the entry barrier is set to a new high

for those wishing to try a hand in the industry. As compared to its world competitors, Ford has

a well build brand name and years’ worth of relationship with their suppliers and distributors

which has given them an upper hand in the determining the cost in the long run. This helps with

cushioning their customers. Since the barrier for entering this industry is too high, then the

threat of new entrants is low. Thus, it can be said that the threat that Ford faces from new

entrants is low. The high level of uncertainty, complexity and ambiguity that exists in the

automotive industry further makes it challenging for new entrants to enter into the market

setting (Simonazzi et al., 2020).

The Ford Motor Company specializes in cars, trucks, and SUVs there are public

transport, bicycles, and bikes which can be substitutes. Electric vehicle can offer another way

in which the company can broaden their portfolio since most companies are leveraging on the

fact that there is a need for going green. However, the threat for substitute is still low as the

company is specialized in a niche that is not interested in public transport. Also the

offers high convenience as well as flexibility to users (Automobiles May 2017 - IBEF, 2017).

interested in another brand, there is no cost for switching and some customers might consider an

electric vehicle more than a fuel consuming vehicle. These factors give the customers a high

supplier. This definitely lowers the bargaining power of the customers. The bargaining power of

customers depends on the availability of diverse options in the automobile industry. Since there

exist a large number of manufacturers in the automobile industry, the customers have an

advantage over the Ford business. They have an option to prefer the vehicle of another brand if

they are not satisfied with the offerings of the Ford brand.

to Japan Sweden and Colombia. This has given them an upper hand in that there is no

geographical concentration of supplies which means that there is no concentration of power.

Further, there are no switching costs in switching suppliers, except when terminating existing

contracts. Also, the suppliers have no ability to produce what Ford is producing. So, overall, the

bargaining power of suppliers is a weak force as per the Porter’s model. However, in recent

and faces competition only from companies like Toyota, Volkswagen, Honda, Hyundai,

Chevrolet, General Motors etc. Since the industry is capital-intensive, with a great amount

of the customer moving to the competitor. The threat from competitors is extremely high in the

automobile industry which increases the level of complexity for Ford (Nagy & Jámbor, 2018).

Competitive Analysis - Three competitors

(Investor relations | General Motors Company, 2021). Tesla is a relatively new automobile

business that came into existence in 2003. It gives a tough competition to Ford since it leverages

innovation to produce electronic automobiles. The Shyft Group specializes in designing,

engineering and producing a broad range of automobiles like chassis, specialty vehicles, etc.

The solid financial performance and brand presence add to the competition that Ford faces in

Competitor Profile Matrix

The Competitor Profile matrix has been used as an important analytical tool to evaluate

competitors. In terms of revenue, Ford Motors and General Motors (GM) outcompete Tesla

valued at 127,144,000,000, 122,484,000,000 and 31,536,000,000 respectively. According to

Tesla (70,757 employees) and the Shyft Group company with 3,000 employees. Ford company

prides itself on its cutting edge design and technology. Their innovation focuses on designing

environmentally friendly and self-driving vehicles, a venture they continue to succeed in.

General Motors is well known for its utility vehicles, including pickup trucks. The

business has planned to launch over 30 electric vehicles by the year 2025 by leveraging digital

technologies. Tesla's entrepreneur Elon Musk believes that the faster the world moves from

depending on and using fossil fuels, the better. The company specializes in electric vehicles and

clean energy and storage products. The Shyft Group is characterized by its exceptional

capability of combining in-depth industry knowledge, expertise in engineering and

manufacturing, and purposeful innovation to develop highly efficient and reliable products and

services.

Key factors of Ford Motors, GM, Tesla, and Shyft Group

Competitive Analysis – Success Factors

An in-depth competitive analysis has been caried out by critically making a comparison

between Ford and three of its major competitors in the automobile industry namely General

Motors (GM), Tesla and Shyft Group. One of the key elements that has been taken into

consideration while making the comparison is profit margin. Profit margin refers to the

percentage of sales that a business entity is able to retain after taking into account all the

incurred expenses (Nariswari & Nugraha, 2020). The comparison of the profit margin of all the

companies has revealed that in 2021, Ford had the highest profit margin as compared to its

competitors since it stood at 13.16 %. Tesla is its closest rival with the profit margin of 10.25 %