Swot Analysis of Ford

SWOT Analysis of Ford

The Ford Motor Company, founded in 1903, was a company developed by Henry Ford and his vision to make cars available to everyone. Ford Motor Company is a global company with two core businesses: Automotive and Financial Services. The Automotive business consists of the design, development, manufacture, sale and service of cars and trucks. The financial side provides the financing.

Ford, number four in the Fortune 500, is a huge conglomerate and the top pick-up truck producer in the world. Only General Motors, its greatest competitor, makes more cars. Toyota and DaimlerChrysler are other top competitors. Ford has grown so large that it has bought out many competitors in the car industry including Volvo, Aston Martin, Jaguar, Lincoln, Land Rover, Mercury, and 50% of Mazda. Ford and its subsidiaries operate more than 26,000 dealerships worldwide.

Everyone is familiar with the blue oval containing a cursive "Ford" in the center. Ford has a great reputation as an American company; many customers take pride in buying Ford - an American car. By not changing the name of its subsidiaries, Ford has maintained its American image despite having operations throughout the world.

Strengths and Weaknesses

Strengths:

1. Collaboration of Ford and Toyota: On August 22, 2011, Ford Motor Corporation and Toyota Motor Corporation announced that they will collaborate on the development of new advanced hybrid system for light truck and SUV's. "This agreement brings together the capability of two global leaders in hybrid vehicles and hybrid technology to develop a better solution more quickly and affordably for our customers," said Derrick Kuzak, Ford group vice president, Global Product Development. Ford has achieved a breakthrough with the Ford Fusion Hybrid, and intend to do this again for a new group of truck and SUV buyers. This collaboration will bring a huge benefit for Ford over its competitors as Ford is best in making Trucks and Toyota makes good fuel efficient cars.

2. Community Relations: In 1949 Ford founded a not-for-profit organization that supports three strategic areas like: driver safety, education and American-heritage. In addition to donations from the Fund, Ford also makes direct corporate contributions to a variety of charitable organizations and causes. In 2010 Ford donated $29 million. Out of that $18.9 million was in the form of grants and remainder was the corporate giving. A breast cancer awareness campaign was created in which celebrities were enlisted to tell how breast cancer has affected them. The company takes strides to protect the environment demonstrated by the development of an electric vehicle and efforts to increase fuel efficiency. Ford also encourages employees to participate in programs that build stronger communities through the Ford Volunteer Corps. During 2010, some 27,000 Ford employees and retirees in 41 countries provided more than 112,000 hours of work on more than 1,100 community service projects - the equivalent of $2.25 million of in-kind corporate contributions. Many of these volunteer projects received mini-grants to help complete the project.

3. Employee Relations: Ford provides incentives for employees to work at high quality levels. For example, the "Thumbie" award is given to employees who demonstrate a high personal commitment to their customers and community. Higher wages are also characteristic of the company. Hourly workers typically have wages from $19-$26 an hour, as skilled trade workers make $21-$30 an hour. The company also created a Family Service and Learning Center program for Ford workers, family members and retirees, offering health classes, after-school tutoring and trips for seniors.

4. Investor Relations: Ford maintains a high level of communication with its investors and potential investors as compare to Toyata Company who is not in top five of dividend payout for stock performance. The company accurately and honestly reports earnings and losses in ways easily accessible by the public via company Website, mailings, and print materials by request.

5. Reverse Engineering: Ford has used reverse engineering in the development of their products. The Taurus is one example of this tactic. Ford examined the close competitors of the Taurus to see which parts on each car were the best of the group. Ford designed the same parts as well or even better than the competitions. This tactic allowed Ford to "leapfrog" ahead of the competition in the family sedan category (Stevenson 130). At the same time Ford standardized its parts so it cannot be out of inventory now.

6. Top Awards: The new Ford Fiesta is chosen as a Top Safety Pick by the Insurance Institute for Highway Safety for this year, becoming the first mini-car to win the top rating since the group added a rollover test to its requirements. Both the 2011 Fiesta sedan and hatchback versions received top ratings for front, side, rollover, and rear crash protection, the IIHS said. The car was also praised for having electronic stability control as standard equipment (CNNMoney.com)

7. Innovation in new technology: Ford Motor Company has adopted videoconferencing and computer-assisted design and manufacturing technologies aggressively. These innovations have led Ford to staying successful and efficient in the auto industry. Another technology innovation is the use an online computer network to share ideas, create the actual designs, integrate the designs for the various parts and components, build and test prototypes via computer simulations. Ford has recently added Voice over IP phones to help control costs.

Weaknesses:

1. Investor Relations: P/E ratio of Ford is 6.2 as compare to industry that is 20.60. As a result of the recessing economy, investors are worried about slumping sales and profits, a possible dividend cut, a cash position that has fallen to $1.34 billion from $15 in few years, and now, the possibility of a credit downgrade. The Ford Board of Directors cut dividends on class B and common stock for the first time in a decade. Because of increasing expenditures from recalls and severance packages shareholders aren't receiving as big a return on their investments in the company.

2. Employee Relations: Since 2005, Ford reduced employment levels in North America business unit by about 65,700 individuals. Ford also have closed 12 manufacturing facilities in North America (including Automotive Components Holding plants). Four additional plant closures is to take effect by 2011. Most of our hourly worker reductions were the result of early retirement offers and voluntary separation packages to U.S. employees, including Ford employees at our ACH plants.

3. Customer