Porter’s Five Forces Analysis of Ford Motor Company
|Name||Ford Motor Company|
|Headquarters||Dearborn, Michigan, United States of America|
|CEOs||James D. Farley|
|Revenues||US$ 136 Billion,2021|
|Profit||US$ 17.9 Billion,2021|
|Competitors||General Motors, Toyota , Volkswagen ,|
Headquartered in Dearborn, Michigan, United States of America Ford Motor Company, operates in Automotive, Mobility (Sales, Used Vehicles and Services Businesses) and Ford Credit(Financing, Leasing and Insurance) Business. The famous brands under Automobile Business are Ford, Lincoln and Troller. It was founded by Henry Ford, on June 16, 1903.Its reported revenues are US$ 136billion with net assets valued at US$ 257 billion, as of FY Year 2021.Ford’sbrand value is estimated at US$ 10.4billion, as 6th most valuable brand in automotive sector worldwide, in Year 2021, declared by Statista. Ford is ranked 22nd by Fortune 500.Also ranked 59thplace in the Forbe’s World’s The Global 2000 Companies list.
Porter’s Five Forces Analysis
The most widely referred model to design companies’ strategies in reference to its industry for better profits and less exposure to competition is “Porter’s Five Forces Analysis”, defined byProfessor Micheal E. Porter in 1979,at Harvard Business School.
Ford Rivalry among Existing Competitor
- Ford Business Revenue Analysis of 2019-2021: Ford gave a record revenue of US$ 136 Billion in FY 2021, compared to previous year US$ 127.1 Billion, which is a recovery growth of 7% respectively. While in 2019 Ford gave a record revenue of US$ 155.9 Billion.( Ford is declaring it’s 2022 results in February 2023)
- Ford Business Segmentation Revenues from 2019-2021: Ford generated major revenue from its Automotive Segment which is US$ 126 Billion in FY 2021, compared to US$ 115 Billion in FY 2020 and US$ 143 Billion in FY 2019.
Ford’s other Business Segments generated revenues as follows:
Ford Credit generated US$ 10.07 Billion from in FY 2021, compared to US$ 11.20 Billion in FY 2020 and US$ 12.2 Billion in FY 2019.
Ford Mobility generated US$ 0.1 Billion in FY 2021, compared to US$ 0.04 Billion in FY 2020 and 0.03 Billion in FY 2019.
- Ford Business Category Sales: Ford is dealing in Trucks, SUVs (sport utility vehicle) and cars. Ford globally sold 3.9 million vehicles while North American market contributed the wholesale sales of 2 million sales in FY 2021, declared by Statista.
- Ford Geographical Presentation: Ford is operating globally and reporting its revenues as divided into following regions: North America, South America, Europe, China and International Market Groups.
- Competitive Rivalry – Global Automobile Market Share: Global Automotive Industry is ruling by Toyota by having highest market share of 10.5%, while Volkswagen having the 2nd highest market share of 6.4% business of the world. The 3rd highest market share is acquired by Honda having 5.3% and Ford is on number 4th by having 5% of the total global automotive business. The other following companies are Hyundai with 4.7%, Nissan with 4.6% and Chevrolet with 4.4% business of the world.
- Competitive Rivalry with Toyota& Volkswagen : Toyota is giving tough competition to all the giants in the automobile industry by giving a record sales of US$ 276.57 Billion in FY ending March 2021.While Volkswagen generated a record revenue of 250.2 billion euros FY 2021.
- COVID-19 Impact and Semiconductor Shortages Effected Automobile Industry: Due to COVID-19 lockdowns (Specially China – Market Leader of Semiconductors) there was critical shortage faced by car manufacturers globally for semiconductors. Moreover, there were disruptions in Supply Chains, delays in manufacturing and other factors impacted the car manufacturing industry at mass level. Car manufacturing industry dropped the unit manufacturing by 11.3 million vehicles in 2021 and estimated that 7 million vehicles in 2022
Ford Threat of New Entrants
- Electric Cars: Ford is offering some awesome EV cars with easy charging solutions, for example with Blue Oval Charge Network (BOCN) having 75000 charging public places in North America. While overnight charging and hybrid charging plug in batteries are also available. There is also tax incentives available on tax savings in USA state wise. So threat of new entrant should be considerable specially existing automobile players in EV category and other big tech giants. Also as infrastructure will be developing it will be easier for new entrants to launch themselves in the market.
- Start Ups& Researching in Automobile Industry : There is a lot of research is going on specially Vehicle Electrification and governments are looking for alternatives of petrol, gas and other natural resources to electricity. So any start up or any new alternative can picked up by the market.
As Tesla’s entry was quite unexpected in 2001 and Tesla experienced a massive growth especially in EV sales category, even in 2021 Tesla sold it’s Model 3of Electric Cars over 1 million units. . Tesla is going to launch electric light duty truck in Year 2023.
Ford Bargaining Power of Suppliers
- Supplier Diversity Program: Ford also believes in diverse portfolio of suppliers including women, minority, veteran and LGBTQ. Ford Motor Company also partnered with disable –owned companies and small organizations to have diversity and support economic growth.
- Strong Relationship with Suppliers: Ford maintains and celebrates strong ties with it’s suppliers as strong relationship with supplies is very important in automobiles industry, as it requires excellent after-sales services, parts and accessories availability. Ford recently celebrated Ford23 World Excellence Award .Some direct Ford Suppliers are Flex-N-Gate, Autoliv, Warn Industries, NHK Spring etc. Also Autoliv won a Top-Performing Supplier status for Ford.
As Ford is educating and influencing the supplier industry so Ford is having edge over suppliers, also Ford is high-end product provider which also gives edge over supplier industry.
Ford Bargaining Power of Buyers
- Customer Satisfaction Score: Ford score 76/100 in American Customer Satisfaction Score (ACSI) as of 2022, which is a 3 point dropped compared to 2020. While Toyota’s Lexus competed all other brands and automobile makers, by scoring 84/100 in the category of “Selected Automobile and Light vehicle brands in the United States in 2022”
- Customer Satisfaction (EV Category) :There is toughest competition going on in the category of EV specially customer satisfaction and customer experience is one of the key contributors in the success of any new automobile model. Ford Mustang Mach-E and Kia Niro EV acquired the best customer satisfaction of all electric market cars. Tesla is also giving tough competition in this category by Model 3 and Model Y.
Ford Threat of Substitute Products or Services
- Environmental Friendly Alternatives: Ford is targeting to a higher class of society which highly active in environment friendly planet and practices. So any policy or trend in practicing more environmental friendly practices may shift the customers to that side include two wheelers, electric bikes etc.
- Government Policies to handle the Economic Impacts-Recession 2023:As per World Bank it is expected that the global GDP would be decrease by 0.5 % in 2023 and gave an analysis that the world is experiencing a global recession in 2023.
This may lead to mass level government policies to support the basic business infrastructure and economic system due to COVID-19 recovery, Russia-Ukraine war and recent Economic Recession 2022, which may result into import traffic cuts, high charge of sales tax, mass reactions by national level to support GDP may impact the national and global sales of Ford’s luxury brands.
- Forbes, Profile, Ford Motor Company
- Statista (August, 22,2021) Global automotive market share in 2021,by brand| Statista. Statista.AvailableatStatista
- Ford Annual Report 2021, Available at Ford Annual Report 2021
- Statista (September, 13,2021) Car brands-Ford Statistics & Facts| Statista. Statista.Availableat Statista
- Forbes,The Global 2000 2022, Available at Forbes
- Statista (Decemberber, 20, 2022) Automotive industry worldwide –statistics & facts| Statista. Statista.Availableat Statista
- Statista (February, 10, 2022) Ford’s revenue from FY 2008 to FY 2021 (in billion U.S. dollar) – statistics & facts| Statista. Statista.Availableat Statista
- Statista (February, 10, 2022) Ford Motor Company’s vehicle sales at wholesale from FY 2009 to FY 2021 (in 1,000 units)- statistics & facts| Statista. Statista.Availableat Statista
- Toyota News Room, (May 12, 2021) TMC Announces Financial Results For Fiscal Year Ended March 31, 2021 .Available at Toyota News Room
- Statista (November,29, 2022) |Volkswagen Group –Statistics & Facts | Statista. Statista.Availableat .Statista
- Statista (June,10, 2022) |Volkswagen AG’s sales revenue from FY 2006 to FY 2021 (in billion euros) | Statista. Statista.AvailableatStatista
- Statista (December,13, 2022) Consumer satisfaction with Ford in the United States from 2006 to 2022 (index score)| Statista. Statista.AvailableatStatista
- Statista (September,8, 2022) Consumer satisfaction with selected automobile and light vehicle brands in the United States in 2022 (index) | Statista. Statista.AvailableatStatista
- The World Bank (September,15, 2022) Rise of Global Recession in 2023 Rises Amid Simultaneously Rate Hikes. Available at The World Bank.
- Supplier Diversity and Inclusion, Available at Ford
- Investopedia, Some of the key suppliers of Ford Motor Company
- Autoliv, Available at Autoliv
- Ford, Let’s go Electric, Together
- Statista (September,16, 2022) Tesla-Statistics & Facts, Available at Statista
- Insider, The Tesla Model -3,Kia Niro EV,and Ford Mach-E have the happiest customer among electric cars, February 22,2022 Available at Insider