Ford vs Toyota, SWOT Analyses - Essay Example

? Ford vs Toyota Overview Ford and Toyota are among the leading brands in the automobiles industry. The objective of this paper is to perform SWOT analysis of Ford and Toyota and to execute a comparative study of both the companies. Certain recommendations for both the brands have also been mentioned in this paper. SWOT Analysis Ford Motor Company Strengths One of the major strengths of Ford is its major contribution towards innovative technologies. In this regard, Ford has been noticed to be quite committed towards bringing up advanced innovations in its product lines Ford has been globally recognized to possess a work force which consists of a number of skilled as well as motivated workers which has been facilitating the company to grow as one of the leading automobile companies in the international market In relation to its production management strategies, Ford has been concentrating on significant initiatives towards producing eco-friendly products which apparently demonstrates its commitment towards protecting the environment Ford has often been categorized as one of the leaders in terms of innovating fuel efficient vehicles in the current automotive market Ford has expanded its business activities to several developing countries including the European, Asia Pacific, Middle-Eastern, African and American regions Weaknesses Ford has been noticed to significantly depend upon the automobile sector restricting itself from expanding to other segments. In this regard, it can be stated that Fords is likely to lack in diversification strategy The company has also been criticized on the basis of its efficiency in establishing sustainable markets for high end cars The company can be witnessed to face the limitation of continuously declining market share in its global market, especially in the Asia Pacific region owing to the increase in competition level Ford can be witnessed to consider defensive competitive strategies in most instances to cope up with the competition in the international arena Financial stability of Ford is significantly impacted by the economic fluctuations of that particular region Opportunities Ford has introduced hybrid cars which runs on electrical energy and is forecasted to have great opportunity in the near future The demand for fuel efficient vehicles of Ford has been notably increasing opening up significant opportunities for its future growth The increasing sales revenue evidently depicts that Ford has been well accepted in the global market by its customers The automobile sector has been noticed to demonstrate a growing trend in the small and medium markets Introduction of fuel efficient cars, such as ‘Focus ECOnetic’ of Ford in the European market, are likely to have significant opportunities for the growth of the company in its future Threats The sales volume of cars has been noticed to decline to a certain extent in various places such as US, Canada and UK among others imposing a market risk to Ford The company has been facing significant competition from the Japanese automotive companies operating within the Western regions The company faces difficulties as a result of the strict emission norms in certain nation such as US and Europe causing an obstruction on its marketing operations Ford has been facing a problem in capturing the Asian markets owing to the presence of automobile giants such as Toyota which in turn hampered the growth of the company in terms of its market share Economic fluctuations tend to impose a major threat to Ford’s financial stance in that particular region (Ford Motor Company, 2012; Richter, A. & Pahl, 2009) Toyota Motor Corporation Strengths Toyota is among the leading manufacturers of automobiles in terms of production capacity as well as sales volume Toyota is recognized as a company which is dedicated towards producing environmentally safe vehicles and technologies, since its inception Toyota is the manufacturer of world’s most excellent selling hybrid car, Prius which evidently rewarded the company a leading position in the international platform Toyota Motor Corporation is a subdivision of the parent company, Toyota Group which is among the world’s largest multinational companies Toyota Motors own a significant percentage of the global automotive market share Weaknesses Toyota has been significantly affected by the financial crisis in 2008 owing to its higher dependency on the Western economies. For instance, Toyota has been dedicated towards supplying most of its brands US and Japan instead of supplying on a global basis Toyota had witnessed a quite significant loss during the year 2009 in terms of finances hampering its financial strengths by a certain extent Several Japanese automobile companies have taken the opportunity to criticize Toyota as an importer of foreign cars Toyota has been facing aggressive competition from the new entrants as well as global mergers The spare parts of Toyota are quite expensive which significantly affects the demand of Toyota vehicles, especially in the low-cost countries Opportunities The fuel efficient vehicles of the company have been noticed as quite successful in the global market The government of China has reduced the tax rates to a certain extent for the automobile companies which can be quite beneficial to augment Toyota’s financial position within the market As a result of the large market share, Toyota possesses significant opportunities to diversify in future Toyota Group has its wholly-owned financial subsidiary from which Toyota Motors can avail financial assistance when needed Toyota has significant opportunities to opt for joint ventures with several international automobile companies Threats The Company has been facing severe adverse effects caused due to the alterations in the currency rates The preferences of the consumers in the automotive industry are significantly influenced by the variations in the fuel prices which tend to impose an inevitable threat for the company The competitors have been noticed to opt for aggressive promotional activities to persuade the commonly targeted customers, which in turn can have a negative impact on Toyota’s customer base Toyota faces significant competitive rivalry from its competitors and with the inclusion of new entrants it seems to increase continuously Regardless of its financial strength, the company needs to witness considerable pressure in terms of economic fluctuations as in the case of recent US financial turmoil (Toyota Motor Corporation, 2012; Bohm, 2009) Comparative Study Issues Ford Toyota Legal, Social and Economic Environments Produces environment friendly products to reduce carbon emission Have been globally accepted Faces difficulties due to strict environment laws Has been producing eco-friendly vehicles Widely accepted in various nations It is greatly supported by the liberalized form of Chinese government Management Structure It has a decentralized management structure The management structure of Toyota is centralized Operational & Financial Issues Faces difficulties as a result of economic downturn which imposes financial risks Enjoys financial assistance from different financial institutions mitigating its financial risks Analysis of Strategic Intent Ford has been largely concerned about its financial strategies in its recent functions Toyota has been significantly concentrating on its production strategies Social and External Challenges Continuously changing customer needs and demands Faces significant challenges in terms of cultural issues while operating in the foreign markets Current Manufacturing Utilizes assembly-line production system Toyota utilizes a production system which is known as the “lean manufacturing system” or “just-in-time system” Facilities & Distribution System Operates globally through traditional and online supply network comprising wholesalers and retailers Operates globally through traditional and online supply network comprising wholesalers and retailers Market Demand & Demographics Significant demand for its fuel efficient vehicles Produces the world’s largest selling hybrid car, Prius Alternative Fuels & Propulsion Systems Utilizes electrical energy in the hybrid cars Utilizes electrical energy in the hybrid cars Recommendations It is worth mentioning that both the brands, i.e. Ford and Toyota, have demonstrated certain traits of responsibility towards environment and society by introducing environmental friendly technologies in their production process. However, Ford has been noticed to concentrate solely on defensive competitive strategies which are not likely to be effective enough according to the increasing competitiveness of the automobile industry. Hence, it can be advised that Ford should render equal importance to aggressive competitive strategies as well. In relation to the current functions of Toyota, it has been noticed that unlike its competitors, it emphasizes more on the Japanese and US markets which in turn reduces the market share of the company. Hence, in this regard it can be stated the Toyota should endeavor to have a significant capture over the global market share rather than emphasizing on particular markets. References Bohm, A. (2009). The SWOT analysis. Europe: GRIN Verlag. Ford Motor Company (2012). Our company. Retrieved from http://corporate.ford.com/our-company Richter, A. & Pahl, N. (2009). SWOT analysis - idea, methodology and a practical approach. Europe: GRIN Verlag. Toyota Motor Corporation (2012). Company. Retrieved from http://www.toyota-global.com/ Read More