Ford

(NYSE:

F) is

one

of

the

oldest

and

most

iconic

automobile

manufacturers in the world. The companys founder, Henry Ford, is widely

credited with launching the modern automobile industry by creating a mass
market for cars.
Ford is currently ranked the fifth most valuable automotive brand in the world
by Statista[1] and the seventh largest car manufacturer by Forbes.[2] It
manufactured around 5.97 vehicles at 90 plants worldwide in 2014. Fords
major products are passenger cars and light commercial vehicles (trucks and
vans); it produced around 3.231 million passenger cars and 2.64 million light
commercial vehicles in 2014. Ford also built 94,845 trucks in the same year.
[3]
Fords current assets include 90 factories, two automotive brandsFord and
Lincolnand the Ford Motor Credit Company. Ford reported revenues of
$141.95 billion on June 30, 2015. Fords largest market is the United States,
where it generated $82.67 billion in revenues in 2014, according to Statista;
Fords share of the global automotive market increased by 4.48% in 2014.[4]
To help investors better understand Ford and the automotive market, here is
a brief rundown of the companys Strengths, Weaknesses, Opportunities and
Threats, or SWOT:

Fords Strengths

Strong position in the American auto market. Fords U.S. market share
in the market for cars and light trucks in August 2015 was 14.8%, making
it number two to General Motors Corporation.

Fords biggest market is the United States, which has been doing better
economically than the two other large markets, China and Europe, in
recent years.

Ford has some popular models, including the F150 pickup truck, the
Transit Connect work van, the Fusion sedan and the Explorer SUV.

Strong financial position. Ford reported a free cash flow of $3.477 billion
in June 2015.

Proven expertise in manufacturing, research and development and

automobile marketing.

Strong dealership network. Ford currently has 7,500, according

to Automotive News.

Fords expertise in the manufacture and marketing of light commercial

vehicles, particularly vans. The demand for commercial vans is growing
because of the increasing demand for delivery service created by growing
e-commerce.

Fords Weaknesses

Inability to match the production capabilities or sales volume of the top

five automakers: Toyota, Volkswagen, General Motors, Renault-Nissan and
Hyundai Kia. Both Toyota and Volkswagen produced over 10 million
vehicles in 2014, or twice as many as Ford data provided by Statista
indicates.[5]

Poor reputation of American auto brands compared to European and

Japanese competitors. Lincoln in particular is widely considered an inferior
product to British and Germany luxury cars, even in the United States.

Heavy dependence on U.S. and European auto markets. Most experts

believe future growth in car sales will be in emerging markets such as
China and India.

Large operations in Europe, where car sales have been stagnant in

recent years.

Fords reputation as a working- or middle-class brand, which makes it

hard to market vehicles to the upwardly mobile.

Heavy reliance on pickup truck sales. Pickups have limited appeal

outside the North American market.

Dependence on some national auto markets that are in recession

because of falling prices for natural resources, such as Russia, Brazil and
Canada.

Fords reputation as a staid, conservative brand, which makes it harder

to market to younger consumers.

Low stock price $15.26 a share on October 19, 2015.

Poor reputation with investors, which can limit the companys ability to
raise capital. Ford had a market capitalization of just $60.55 billion on
October 19, 2015.

Opportunities for Ford

New automotive technologies, such as self-driving or autonomous cars.

These could increase demand for new models and sales. The publicitygenerated new technologies could also increase interest in car purchases.

Volkswagens diesel scandal. Ford has not marketed any diesel-powered

vehicles in the United States, which means it will not be hurt by the
scandal. Ford could take some market share by marketing disgruntled
Volkswagen customers. Volkswagen will lose the competitive edge that
diesel mileage gives it.

Fords alternative fuel cars, particularly the C-Max Electric and the
Fusion hybrid,[6] which are not dependent on diesel. Ford is marketing a
C-Max electric plug-in hybrid. The market for these is growing, particularly
with concerns about air pollution and a growing suspicion of electric cars
created by the Volkswagen scandal.

Growing auto markets, particularly in expanding economies such as

China, Mexico and India.

New uses for vehicles, such as app-bases serviced like Uber and Lyft
and short-term rental services like Zipcar. These could create new
markets for vehicles and for vehicle financing.

Increased levels of e-commerce, which could increase the demand for

light commercial vehicles that are used for delivery. Ford manufactures
one of the most popular delivery vehicles: the Transit Connect work van.

Threats to Ford

The growing presence of German and Japanese automakers in the vital

North American auto market, particularly Volkswagen and Toyota. Toyota
is now competing directly with Ford in the pickup truck market, and
Volkswagen is considering entering that market.[7] Mercedes and Nissan
are now competing directly with Ford in the commercial van market.

Some companies have a head start in alternative fuel vehicles. Toyota

and Honda are ahead in the production of fuel cell vehicles. Volkswagen
has greater expertise in electric cars.

Widespread adoption of electric vehicles could force costly upgrades to

plants and expensive changes to dealerships. This could reduce Fords
profits.

Lower fuel prices could limit demand for costlier alternative fuel
vehicles such as hybrids and electrics.

The Volkswagen scandal could limit the demand for diesel-powered

vehicles, including the Ford F150.

Todays young people are driving less than previous generations, news
stories indicate.[8] This means less interest in cars and could lead to
fewer car sales at some point in the future.

Some experts predict that new technologies, such as Uber and selfdriving vehicles, could limit the market for cars and financing. This could
limit vehicle sales volume at some point.

Like all auto companies, Ford is facing a radically changing auto industry. New
technologies are creating threats and opportunities that will redefine the
automotive market in the years ahead.

PEST analysis, which many refer to as a deeper approach into the

marketing

environment

consists

of

Political,

Economic,

Social

and

Technological features of a market. A more prolonged form of this analysis is

called PESTLE,

which

incorporates

the

aspect

of

Legal and Environmental factors affecting the marketplace.

PESTLE analysis is a detailed view of the environment a business is situated
in. It can be rightly called a birds eye view where a company or an individual
tries to ascertain specific trends of the market from a macroeconomic
perspective.
These factors are major determinants of strategic development and define
how conducive an environment is within which a business strives to thrive.
Their details are given below:

Political: It accounts for all the influences that a government may

have upon the business environment, including business cycles, the
economy at large and individual business industries. Tax reforms, fiscal
policies and trade tariffs form part of this analysis.

Economic: This analyzes the economy as a whole and its performance

owing to global trends and long term effects that may be evident.
Inflation rates, interest rates, economic growth, demand and supply
trends are all analyzed under this head.

Social: This charts the analysis of cultural trends, demographical

determinants, age distribution etc.

Technological: This analyses the technological trends of the business

environment. It accounts for the rate at which the innovations are
occurring and how directly and indirectly theyre influencing the business
youre in.

Legal: There are many laws and policies that directly impact the way
your business is run and the decisions that fuel its propulsion. These laws
can be social laws, regulatory laws, certain standards that need to be met
and other such laws.

Environmental: Your business has effects in the environment it

operates in, therefore you need to analyze in depth what implications
your business might be having on it. On the other hand, the environment
also influences your business directly or indirectly especially the tourism,
farming or agriculture business. Therefore these factors account for the
geographical location, weather, climate etc. but are not just limited to the
study of these only.

PESTLE can be rightly called a thorough view on the external environment in

which an organization is operating in. On the contrary though, SWOT
analysis is the analysis on the internal environment of the company based
on its products etc. SWOT tends to be more product/service specific as an
individual or an entity conducts this analysis based on that product/service.
The components of the SWOT analysis are:

Strengths: The S in the acronym stands for Strengths. Much to do with

the name, it analyses the companys strengths in line with the
product/service and counts the USP (unique selling propositions) that it
has. Strengths of a company or a product make it stand out when in
comparison with their competitors.

Weaknesses: The W stands for Weaknesses. It accounts for all the

current weaknesses that the company may have or may be facing and
how the product features them. It gives the company the view from an
external standpoint where they can understand what their areas of
lacking and then work upon them to remove them from their internal
environment.

Opportunities: O spells out Opportunities. These opportunities are for

the company to gain, master and then derive benefits from. Usually,
weaknesses are reflected here with a strategy to encounter them as
opportunities

where

the

company

can

work

upon

itself

or

the

product/service.

Threats: Threats, denoted by T take into account the threats that able
and

potential

competitors

pose

for

the

company

and

its

products/services. These also analyze the barriers to entry and how

potential competition can be tackled effectively.

Both these measures give an in-depth view to the company regarding the
environment theyre in or are about to enter and also about the products or
the services with which they plan to enter the marketplace.