Since the Ford automotive market is prone to rather depressive trends, the company urgently needs new proposals and bold leadership that can restore its former success. In the first months of 2019, the sales decline was 2.6 percent, which is the largest recession since 2009 and the evidence of the need for competent changes (Assenza et. al., 2019). This paper conducts a situational analysis of the internal and external environment to identify potential threats, opportunities, strengths and weaknesses, and strategic proposals for implementation.
Situational Analysis of Internal and External Environment of Ford
The external environment of the Ford company can be defined as an area that has been a significant problem for management in recent years. The automotive market is consumer-oriented, and the company has managed to identify some needs that it can cover in order to maintain its place in a competitive market. When Ford Motor committed to putting self-driving cars on the roads in 2019, the company demonstrated that its main opportunity lies in adapting to market trends (Assenza et. al., 2019). However, there were threats that the company exposed with its loud statement. For instance, Ford could not stand the competition, breaking its promise to release cars by 2019, while General Motors (GM) took the initiative in the market and launched the corresponding models ahead of Ford (Assenza et. al., 2019). This led to increasing disruptions in the industry and the need to repay debts to investors, which became a significant threat to the external environment.
The internal environment of Ford can be defined as unstable due to the frequent change in management. In five years, the company has replaced three CEOs, which concludes that there is no clear plan for doing business in the long term (Assenza et. al., 2019). Failures in the market force companies to make constant changes in management, which creates a weakness in the form of the inability to fix a position in the market and the lack of a stable strategy. However, there were strengths in the internal situation, which appeared with the occupation of the CEO position by Jim Hackett. He insisted on rethinking how the company designs vehicles. According to Hackett, it was necessary to move from a production line focused on several types of cars to one where each team was dedicated to a specific product line (Assenza et. al., 2019). Accordingly, the strength of the internal environment significantly invests in the company’s external opportunities, demonstrating readiness for change and adaptability to the needs of the market.
Based on the above, some functional value chain activities are becoming obvious. First of all, the rich history and branding allow the production network to spread around the world, conducting operations in different parts of the world and provoking active external logistics. To reduce production costs, Ford is guided by a policy in which the company supplies more cars worldwide with fewer platforms and suppliers (Assenza et. al., 2019). Moreover, the growing competition in the automotive market is causing difficulties for the marketing department. It led to Ford’s marketing strategy becoming focused on changing products and switching to more compact and fuel-efficient cars (Assenza et. al., 2019). Last but not least, the complexity of the market and great competition force the company to be focused on restoring financial stability, which has been lost for many years. The economic issue escalated in 2018, giving the company the worst global performance in the last ten years (Assenza et. al., 2019). Nevertheless, it is worth noting that the emergence of financial difficulties in the automotive market was provoked not only by an unsuccessful strategy, but also an external crisis.
Based on the analysis of the internal and external environment, several options for business strategies can be offered, which should be resorted to by CEO Hackett. One of these ideas is focused on overcoming the main threat to the company, namely the inability to stabilize its position in the market. Creating a sustainable business environment can be achieved by reducing the cost of product design. This strategy can be implemented by reducing energy costs or the company’s footprint by implementing a recycling program. A change in the business-level strategy will characterize this attitude to the market. It will help to achieve the sustainable development goals set by the United Nations and the Paris Climate Agreement. Thus, the strategy contributes to preserving the environment and increases the company’s credibility by introducing production that does not harm nature.
One of the corporate-level strategies proposed is to increase profitability across the entire product portfolio. This branch of development will be necessary in order to improve the overall short-term performance of the company in the nearest future and to cover the costs aimed at potentially enhancing the quality of products. This strategy mainly involves reducing the complexity of existing products, optimizing configurations, and increasing the volume of more profitable lines. Such a policy will create a basis for the company to advance in the market and implement new business strategies aimed at the long term, without fear of its inefficiency.
Another idea to consolidate the market from the category of business-level strategy is the development of new emerging markets. Since Ford has a big name and, despite the financial difficulties of the last decade, is actively gaining the trust and respect of other countries, it is important not to forget about the development of the product abroad. Expanding influence outside of one country will help strengthen branding identification among the younger generation and increase the marketing budget due to the receipt of new funds. Potential income can be directed to improving the quality of service and car models in the nearest future. Resorting to this strategy, it is worth paying attention to the experience of 2015. Opening the last of 10 new factories to support growth in the Asia-Pacific region and business units in all areas except South America was one of the most profitable strategies for Ford (Assenza et. al., 2019). The trend towards increasing influence in the new sites can be enormous for a company’s general marketing that needs an additional incentive.
Since the main strength of Ford is its ability to focus on customer needs, it is worth paying attention not only to the modernization of models and the introduction of self-driving cars. If the ultimate goal, despite the stable income, is also the client’s pleasure, then the company is able to win back its place in the market even amid fierce competition. The company should take care of the safety of its customers and contribute to reducing the dangerous situations on the roads at the design stage. Thus, the latest strategic suggestion is to increase the safety of manufactured cars and trucks. This goal can be achieved by additional financing of airbags and seat belts or by revising the structures of the most long-standing models. A competent marketing campaign that will contribute to spreading the strategy among the general public will contribute to Ford’s credibility.
Thus, the company’s main external threats and opportunities were identified in the form of customer orientation and the inability to conquer the more modernized competitors. Among the internal strengths and weaknesses, there was a willingness to innovate and unstable leadership mentioned. To overcome these issues, business suggestions such as reducing the cost of product design, increasing profitability across the product portfolio, developing new emerging markets, and increasing the safety of manufactured vehicles were considered.
Assenza, P., Korn, H. J., Damaraju, N. L., & Eisner, A. B. (2019). Case 34: An Auto Company in Transition. In G. Dess, G. McNamara, A. B. Eisner, & S. H. Lee (Eds.), Strategic Management: Text and Cases (pp. 277-287). McGraw-Hill.