Essay on Strategic Analysis of Ford

Ford an American multinational automaker since 1903 has been one of the major automakers in the United States market for many years. But even Ford being one of the oldest automakers in the United States they have struggled over the recent years to stay relevant in the market. Many key forces have been an impact of the choices of strategy, at times with the choices they are forced to make it has led to success in the company but as well has caused failures in the company.

The first key force in the general and industry environments that affect Ford’s choice of strategy is the threat of new entrants. The new entrants into the automobile industry are Tesla-inspired companies, some of the new entrants are Waymo, an American automobile company that creates auto driving vehicles. Currently, Waymo only has auto-driving vehicles for a cab service in the Phoenix metropolitan area and auto-driving trucks in California, Arizona, and Texas, and New Mexico. (Waymo). With new entrants it will impact Ford's choice of strategy by the company will have to put more money into their research and development department to create their auto-driving vehicles to keep or increase their market shares in the automobile industry, which may lead to them making cuts on other departments to fund the projects.

The second key force that will influence Ford’s choice of strategy is the bargaining power of buyers. With Ford’s sales in the regions of South America, Europe, Middle East, and Asia in the negative, with a total of 2.2 billion. This is mainly due to the cost of the tariffs, $750 million in 2018, of selling the cars overseas. Ford must focus on how to market better with those regions. That can be by doing some market research, by asking their current customers what about their products that they like and do not like, as well asking those who are not their customers why they currently do have a Ford. As well Ford may have to lower their pricing to accommodate the market in the respective regions. As stated in the textbook Strategic Management, all the regions are currently going through political shifts which are leading to a decrease in sales.

The next key force of Porter’s five forces that will have an impact on Ford’s choice of strategy is the bargaining power of suppliers. As an impact of the reduction in the number of vehicle platforms, there was a decrease in supplier base from 1,150 to 750. Despite the reduction of cost in reducing their supplier base, Ford also has a negative impact on suppliers for example as stated in the textbook Japanese airbag manufacturer Takata had a malfunction, and Ford had to recall 850,000 vehicles which cost them $500 million. So, Ford can make changes to decrease their cost with their supplies but can also have a risk of a malfunction. 

The fourth key force of Porter’s five forces is products and services that will impact Ford’s choice, a major substitute of products and services are public transportation and bicycles. This substitute can only have a major impact in metropolitan areas that have a great public transportation system such as New York City. Even there are many residents in New York City most of the residents depend on public transportation or bicycles with an average of 10 million daily riders. But in areas such as suburban and rural areas where public transportation isn’t as accessible, Ford can market more.

The last key force of Porter’s five forces is the intensity of rivalry among competitors in an industry, as stated in the textbook the four major automobile companies with almost 60 percent of the United States of America market share have competed with each other for many decades. With the high competition, Ford’s market share has dropped almost 25 percent from 1999 where it was around 39 percent to its current percentage of 14. This was a cause of the foreign companies such as Toyota, Honda, and Nissan setting up production facilities in the United States in the 1980s and being accepted by the market. This will lead Ford to have to refocus their goals on not only just making vehicles but anticipating what the market would like to see next and ensuring they are marketing to their customers. 

With all the key forces stated above and the impact of Ford’s choice of strategy, they have had to make any changes to their strategy. An example of a change Ford has done was with the new entries of new companies such as Tesla and Waymo coming into the market in 2019 Ford started the process of creating self-driving vehicles and testing them in Florida, Pennsylvania, and Michigan. But with them entering the self-driving vehicles industry later than most of their competitors they have not been able to release the vehicles as an impact of that their stock market price has declined from 17.50 in 2014 to 10 2017. In response to the stock market price declining the CEO Mark Fields resign. 

Another example of change leadership done to implement strategy was because of the impact of losing the market share after the foreign vehicle’s companies entered the market in the 1980s. In 2006 they hired a new CEO Alan Mulally a former head of commercial airplanes at Boeing, Mullaly created a new vision of ONE Ford to reshape the company, after 3 years in 2009 the vision paid off and cause profitability to Ford and maintained profitability until his Mulally retirement in 2014. But after Mark Fields took over CEO there were some global challenges and lead to a 2014-year end profit drop of 54 percent. 

In conclusion, Ford has a lot of forces pulling them in many directions to make changes to their company strategy and mainly have to do with them marketing themselves better in the market. As well with the changes, they have implemented since the mid-2000s to recent years have caused Ford’s stock price and year-end profit to decrease.