Ford Motor Company
I. Executive Summary The Ford Motor Company has been facing a steady decline in market share for approximately the past twelve years. This decline is largely attributable to their reputation for building poor quality vehicles that break down easily, and rising gas prices reducing demand for large trucks and SUVs, which is Ford’s main source of sales. Ford has already taken measures in response to this slump by introducing new car models such as the Fusion, as well as attempting to make their mark in the new crossover SUV market with the Ford Edge.
However, many would argue that this is just too little, too late. While the Edge does lack certain qualities with respect to its competitors, it also comes with a more affordable price tag. The biggest weakness for the Edge is the fact that it is simply under marketed. The best way to fix this problem is to launch an aggressive ad campaign for the Edge, focusing on the balance of practicality and fuel efficiency that comes with owning Ford’s new crossover.
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II. Problem Statement Ford Motor Company has been losing market share in North America for over a decade.
In response to this crisis, they introduced the Ford Edge to the crossover market, but it is not doing nearly as well as it should be in the demanding market for fuel-efficient vehicles. III. SWOT Analysis (Appendix A) External Analysis Opportunities Ford is somewhat lacking in the way of opportunities. While there are certain opportunities facing the entire auto industry, none of those have been left unexploited. A key opportunity for the Edge however is the fact that gas prices have been steadily rising, and will likely continue to do so.
This creates a great deal of demand for crossovers from those requiring the practicality of an SUV, but who wish to pay less for gas. Threats To add to the misfortune of having few opportunities, Ford also has a good deal of threats standing in their way. One of the biggest threats facing Ford, and all North American auto makers is that of foreign companies. Imported vehicles, Japanese in particular, have gained a solid reputation over the years of building smaller, more fuel efficient vehicles that rarely break down.
This has become greatly appealing to consumers and as a result, Toyota has become the new number one automaker for sales in North America. Another key threat to Ford is the opinion the public has of their vehicles. Many now believe Ford to be an acronym for either “Fix Or Replace Daily” or “Found On Road Dead” . While Fords are easier and cheaper to fix than import models, the trade-off may not be worth it to many people since, although it may be more expensive, import cars tend to break down less often. Gas prices can also be attributed to Ford’s decrease in sales.
While the rising gas prices have affected the large vehicle sales of all auto makers, it seems to have affected Ford more than others, as for years Ford has relied heavily on truck and SUV sales. To make matters worse, Ford did not respond to this threat nearly as soon as they should have. While other automakers have been making crossovers and small SUV’s for years, the Ford Edge is only three years old. The combination of these factors means that gas prices have caused Ford to feel the effects worse than other companies, and now they’re having difficulty entering the crossover market.
Another threat to all automakers selling in North America, Ford included, is the soft market. In the summer of 2005 General Motors had an employee discount sale, during which all customers paid the same prices as they’re employees. This was seen as a once in a decade sales boom, and as a result, so many drivers have newer vehicles and sales will be reduced for the next few years. It was said, “GM had warned that its June sales would be down significantly because of aggressive discounts last summer. As bright of a bright side as Ford can get out of this soft market, it has been affecting virtually all auto makers. Even imports have been facing reduced sales recently. In April of 2007 Honda’s sales declined by 1. 6%, Nissan’s by 11. 2%, and Toyota had its smallest increase since 2004, only increasing sales by 3. 7% . Internal Analysis Strengths Ford has been in business now for over a century, giving them plenty of experience. When it comes to the Edge, the replacement parts for the vehicle are relatively inexpensive. They are much less expensive in comparison to its competitors.
This is true for Ford in general as well. This is a major contributing factor when individuals go to buy a vehicle because even if a car is slightly less likely to break down than the Edge, but it has more expensive replacement parts, the individual may be inclined to take their chances since even if it does break down, the financial consequence isn’t a severe one. The Edge’s purchase price is also less than comparable crossovers, which is a definite strength to Ford. Another strength that was somewhat unanticipated is the fact that early on the Edge’s sales exceeded expectations.
It was said, “The sales levels, really coming from having no brand recognition, are kind of in the same sandbox as three really great products that have established themselves over the course of several years… I don’t know if I thought we could get there that soon. ” While they still aren’t on par with the other companies who have been manufacturing crossovers for a great deal longer, they’re still off to a strong start. Weaknesses One weakness that Ford has with the Edge is that it isn’t being marketed enough. There are very few commercials or ads out for it, which creates very little awareness about the new crossover and its benefits.
Ads were numerous when the Edge first came out, but since then very few have been seen. Another weakness of Ford in general, and very likely the Edge as well, is although the replacement parts are inexpensive; they are more likely to break down than many of their competitors. As mentioned before, the public has become aware of this fact. Ford has also been experiencing a steady decrease in sales and it has been going through financial difficulties, which makes it more difficult for them to promote and/or improve their products.
This has been ongoing for over ten years. This decrease in sales has forced Ford to reduce production, as well as cut jobs and downsize many plants. Ford has been forced to mortgage over 20 billion in assets to finance the costs of downsizing, as well as restructuring many of their plants, has left little room for research and development, making it difficult for Ford to get out of their current predicament. Another weakness, although somewhat minor, is the fact that the Edge doesn’t seem to be attracting many new customers.
While Edge sales did exceed expectations, as it turns out most of those sales were on trade-ins of Ford vehicles. The Edge hasn’t been attracting new customers, only current owners of older Ford vehicles. Granted the increase in sales helps, but if they’re only selling to people who are already Ford customers, Ford won’t be getting any increase in market share. Last but not least, a key weakness of the Edge is the fact that its competitors are superior. When viewed next to the Nissan Murano and the GMC Acadia, the Edge paled in comparison. One clear area where the Edge is inferior is in interior cargo volume.
While the Edge is in between its two competitors in curb weight, it has the least maximum cargo volume. Therefore, the dimensions of the Edge could be much more efficient than they are. Perhaps an even bigger weakness for the Edge however is its towing capacity. Its towing capacity is far inferior to the Murano and the Acadia. This can’t be blamed on inferior horsepower because the Edge has 265hp and 250 ft-lbs of torque while the Murano has only 240hp and 244ft-lbs of torque, and yet the Murano has more than one and a half times the towing capacity of the Edge.