Honda Motors and Ford Motors corporations are automotive industries that contribute substantially to the world economy. Both internal and external factors are very essential in determining the economic progress of an organization. This work aims at discussing the SWOT analyses of the two firms and gives recommended strategies that should be implemented so as to ensure that both the companies remain economically viable.
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Ford Motor Corporation. Introduction
Ford Manufacturing Company is the third biggest global automotive industry (Billstein, Fings, Kugler, and Levis, 2004, p.1); Ford, DaimlerChrysler, and General Motors form the big three US manufacturers. In addition, with about 300,000 employees, its operations are mainly within America and Europe, while headquarters are in Dearborn, Michigan (Cornell, et al, 2005).
Moreover, The Company operates in both automotive and financial services, with the major automotive vehicle brands being Ford, Land Rover, Mazda, Mercury, Volvo, and Aston Martin.
Primarily, Ford’s automotive business entails the manufacture, design, development, sale, and serving of cars, trucks, and service parts. Apart from the production and sale of cars and trucks, the company also offers after sale products and services to its clients. This paper will provide the SWOT analysis of Ford Motors Corporation and Honda Motors Corporation.
Honda Motor Corporation
As was noted in Honda website (2010), Honda operates under the principle of respecting the personality and competence of each person. The Company also believes that each person coming into contact with the company, either directly or through their products should enjoy the experience. As from its formation in 1948, the company has aimed at providing high quality products at reasonable prices.
Moreover, the company’s operations are geared towards environmental protection and safety. As one of the leading automotives and one of the global’s leading motorcycle producer, Honda manufactures, develops and markets a wide range of products ranging from engines to sport cars (Honda website, 2010).
SWOT analysis for Ford motor company
Ford Motors Company has had some strength in its operations. First, financial reports for year 2005 indicate that the company has had substantial revenue from Ford Asia and Africa, as well as Mazda; and there was an increased profit margin made from Strong Ford Asia and Africa, and Mazda in comparison to the previous years. This gave the company a promising future revenue projection.
Secondly, the company experienced strong economic growth due to the high revenue generation from Ford Europe and Premier Automotive Group (P.A.G) in 2005. This growth helped the company to compensate for revenue reduction in its American division.
Thirdly, the company is kept afloat through its profitable financial services division. For instance, between 2004 and 2005, there was more growth in the revenue of the company’s financial services division than its automotive division. Over the recent years, even though the automotive division has not been performing well, Ford Motors credit division has continued to register profits (Paul, 2006).
Besides the above strengths, Ford Motors has its own pack of weaknesses. First, the North American automotive operation has a past record of poor economic performance (Cornell, et al, 2005). For example, the automotive division recorded a decline in revenue between 2004 and 2005.
The declining automotive operations in North America are because of not only rivalry from Japanese companies, but also due to a change from fuel guzzlers to more fuel efficient automobiles. Primarily, the sales of Ford Motors are mainly dependent on trucks, which are major fuel guzzlers. This has caused stagnation in the sales of trucks in the United States due to increased fuel costs.
Ford’s market share has also been taken away by Japanese based companies such as Toyota. Indeed, perpetual weakening of the company’s marketing share in North America has the potential of greatly affecting both the financial and marketing standing of the company. Secondly, there is maligned brand image of the company due to its frequent recalls.
In 2000, the company had to spend exorbitantly to replace its tires after an investigation from the United States transport department; indeed, the same prompted numerous pick up trucks and sport utility vehicles to be recalled many times in 2005 following a fire related risk due to overheating of the engine. Therefore, damaged brand image has adversely affected the company’s sales in Europe.
Thirdly, Ford has huge unfunded pension and other obligations, for instance, most of the company’s insurance obligations are unfunded. These include unfunded pension, health care and life insurance obligations. Through these unfunded obligations, the company’s cash flow would be adversely affected (Cornell, et al, 2005).
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In 2006, Ford a strategy to improve North America’s automotive performance was launched with the purpose of ensuring the American business was client-centered, product-oriented, and efficient. The North American division is to be restructured to be copportunity of developing hybrid vehicles.
In a few years time, most of the company’s products are supposed to be changed into hybrid electric engines due to the increasing global demand for hybrid products owing to strict emission levels, mounting fuel costs and environmental enlightenment. In addition, compared to the normal gasoline and diesel engines, hybrid engines are consuming less fuel and have a reduced environmental effect.
Therefore, the Company’s focus on hybrid electric products may help it revive the North American market. Additionally, there is a growing market demand for light vehicles in India and China that is likely to enable Ford to improve its sales volume.
The threats that Ford motors faces are several: to begin with, there are rising costs of raw materials due to industry consolidation. For instance, global steel prices are likely to rise following the merger between Arcelor and Mittal. Increased oil prices have also led to a rise in polymer prices, a situation that could negatively affect the company’s profit margins.
Secondly, there is intense competition from Japanese based automotive manufacturers like Honda and Toyota in the US light vehicle market. If the company does not modify its operations, this may adversely affect Ford’s North American division.
Thirdly, Ford’s low capital spending especially in its Research and Development may not make the company counter the competition from its rivals, who might be ahead s far as global marketing is concerned.
Implementation, Ramification, and evaluation strategy for Ford Motors
Due to increased competition from its Japanese based rivals, the company ought to invest more in Research and development. This will enable it come up with sufficient strategies that can enable it counter the competition and thus restore the North American market.
Secondly, the company is supposed to increase distribution of its light vehicle products to India and China where their demand is rising (Paul, 2006). Thirdly, to avoid further recalls, the company is supposed to work hard and implement its North American plan of ensuring focus on product quality.
SWOT analysis for Honda Motor Company
Honda’s strength is first evidenced in its thorough engagement in Research and Development, and innovation (Faul, 2008). This has made the company to explore robotics in the past. Investment into Research and Development ensures that the company continues to have a competitive cutting edge as well as perpetual production of quality products that cannot be matched (Dyck and Neubert, 2008).
Secondly, the company has taken leadership over the market share of automotive products. Retaining this market share will continue boosting the company’s revenue. Thirdly, the company has a very strong brand equity that has not suffered damage like it has happened for the case of Ford and Toyota in the past years.
Fourthly, the company’s unique and diverse products (automobiles, motorcycles and power products) have boosted both its market share and brand image. Additionally, the company has a product system that has undergone refining over the years, which helps the company to maintain its credibility and high product quality essential in market sustainability.
The Company has two main weaknesses; first, it over-relies on international profits, thus subjecting the firm to the challenge of varying economies of scale that result due to econo-political factors in various countries. Secondly, it has high cost structure such that, compared to Nissan and Toyota, Honda requires a deposit for higher purchases (Faul, 2008); the result being generation of rivalry.
Given its ability in high Research and Development, the company is in a better position to produce both fuel efficient and environmentally friendly automobiles as per the increased customer demand. Secondly, in its global strategy, Honda should consider penetrating China due to the latter’s closeness to Japan and its cost innovation benefits.
The main threats Honda is facing are four-fold. First, the 2008 global recession has caused the company to experience slow economic growth. Secondly, external factors such as politics, government regulations, and tax among member countries may be a threat to the Company’s economic performance.
Thirdly, Honda faces competition from lower cost imported Chinese products that may affect its sales revenue. Moreover, due to unclear product differentiation, there are price wars that may put the company into the fix of whether or not to revise the cots of their products to suit consumer demands.
Implementation, Ramification, and evaluation strategy for Honda Motors
First, due to the increasing demand for eco–friendly vehicles, Honda should use its Research and Development ability to come up with products that are environmentally friendly such as battery-powered care among others (Black, 2010). Secondly, as stated by Smalls (2010), Honda hybrid battery product has been foundered to develop problems among users.
The company should aim at reviewing its production and maintain its focus on quality. Thirdly, to keep up with the changing global economies, the Company should devise both short term and long-term plans so that neither recession nor any other politically motivated factor does adversely affect its operations.
Additionally, to counter the threat of low cost Chinese products, the company should continue investing in Research and Development so as to continue inventing and producing high quality products that justify their prices.
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Cornell, C. et al. (2005). Team Project – ERP Analysis: Ford purchasing system – “Everest”. Web.
Dyck, B. and Neubert, M. (2008). Management: Current practices and new directions. Boston: Cengage Learning. Web.
Faul, P. (2008). Businesses Environment: Test and Cases. New Delhi: Tata Mc-Graw Hill.
Honda Website. (2010). Company Overview: details of company’s head office. Web.
Paul, J. (2006). International Business. NY: PHI Learning Pvt. Ltd.
Smalls, R. (2010). DIY solutions to Honda hybrid battery problems. Web.