Market Analysis of Ford Motor Company: An Economics Case Study

This case study provides a detailed market analysis of the Ford Motor Company, examining its position within the automotive industry. The analysis begins with a description of the company, its product portfolio, business model, and market share, followed by an assessment of the market structure, which is identified as an oligopoly. The study then employs tools such as SWOT analysis to evaluate internal strengths and weaknesses, as well as external opportunities and threats. Key findings include the company's strong brand image and global supply chain as strengths, while limited scope compared to competitors and slow innovation are highlighted as weaknesses. Opportunities for global expansion and product development are identified, alongside threats such as aggressive competition and rising oil prices. The study concludes by summarizing the key findings and offering strategic recommendations for Ford to maintain and improve its market position. The case study also includes data on market share, revenue trends, and profit maximization approaches.

Running Head: MARKETING
MARKETING
Name of the Student
Name of the University
Author Note

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Executive Summary
The aim of this report is to analyse the market condition of a selected company. Firstly. The
paper will provides a brief description of the company, its product portfolio, the business
model it follows and the market share of the organization. Further it will study the market
type in which it operates. Secondly, it will try to analyse the market of the company using
tools such as the SWOT Analysis to find out the internal and external effective elements.
Lastly, the paper will conclude by accumulating the results inferred from the analysis.

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Table of Contents
Introduction................................................................................................................................3
Data........................................................................................................................................4
Analysis......................................................................................................................................6
Elasticity.................................................................................................................................6
SWOT Analysis.....................................................................................................................6
Opportunities..........................................................................................................................7
Threat.....................................................................................................................................8
Strategies................................................................................................................................8
Market Position......................................................................................................................8
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Introduction
The chosen company for this project is Ford Motor Company. The headquarters of the
company are in Dearborn, Michigan, United States of America. It is a public limited
company currently trading its equity at $9.17 at the New York Stock Exchange. It operates in
the automotive industry. The company was founded on 16th June, 1903 by Henry Ford
(corporate.ford.com, 2019). It initiated its business in the United States and is currently
serving people worldwide. The products of the company are Automobiles, Commercial and
Luxury Vehicles, Component Parts, and SUV’s. On an average the company manufactures
over 6 million vehicles per year. The net revenue of the company is more than 160 billion
dollars with its net income of more than three million dollars (Macrotrends.net, 2019). The
major owners of the company are The Vanguard Group with 5.82% stake, The Evercore
Wealth Management with 5.58% stake and the Ford Family with 2% stake. The total number
of employees of the company are more than 2 million in number. It was the first company to
start the assembly line production to attain economies of scale and reduce the price of cars to
attain maximum number of customers.
The main source of revenue of the company is earned through sale of cars. The
flagship cars of the company are Ford Mustang, Ford Fiesta, Ford Focus and Taurus. The
market structure in which the company operates is Oligopoly in nature. Oligopoly is a market
situation in which the number of sellers in the market are few and have intense competition
between them and the number of customers is huge (Fudenberg & Tirole, 2013). The
company is categorised under this segment due to presence of only handful number of
competitors such as General Motors, Toyota, Honda and Tata. The number of customers of
the oligopoly market is huge so falls in the category of Oligopoly. The main strategy it uses
to preserve the market share it contains is low pricing and high quality. The uniqueness of the

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company is that it offers products at the lowest possible price (Okuguchi, 2013). This is
possible as the company has always believed in the philosophy of assembly line production,
which minimises faults in the product as well as decreases the manufacturing cost.
Data
The first aspect to analyse the company is to undertake the market share of the
company.
a) Market Share by Revenue (Worldwide)
Figure 1.1: Market share by Revenue (FY-2018) (Source: Statista.com, 2019)
Explanation: The above diagram shows the market share by revenue. The company
standing top of the list is Toyota with 9.46% shares and Ford stands at 3rd position
with 5.83% share.

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b) Revenue and Growth
Figure 1.2: Ford Revenue Trend (10 years)
2008 2010 2012 2014 2016 2018 2020
0
20
40
60
80
100
120
140
160
180
Revenue Trend: 2009-2018 (US$ millions)
Explanation: The revenue of the company has risen over the years. The company is
following an increasing trend and over the years it has a stable position though the revenue
values are nominal.
c) Profit Maximization Approach
Ford has always been an innovative company in terms of market capitalization. The
profit maximization approach of the company is through sales maximization and not
profit per unit of the product. This means that the company tends to attain the
economies of scale and reduce the manufacturing cost to such an extent that

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maximum number of people can purchase the product and revenue shall increase
drastically (Tisdell, 2015).
Analysis
Elasticity
As the company operates in an Oligopoly market, the demand curve is elastic in
nature (Waldman & Jensen, 2016). This means that if there is a rise in prices of the products
or its compliment (oil) the quantity demanded or sales will fall.
SWOT Analysis
a) Strength
i) Strong Brand Image: The Company has been around over a hundred years
now. Therefore, the brand value and reputation of the company among the
customers is very strong (Ewing, Wagstaff & Powell, 2013). Through the
revenue trend of the company it has been seen that the company has
consistently provided quality products to the customer. Therefore, it is evident
and justifies the strength of the brand.
ii) Worldwide Supply: Ford Automobile is one of the best supply chain in the
world. The company has a strong supply chain and production v=centres in
almost every cash rich market to reduce the cost of manufacturing and
maintain its philosophy.
iii) Technology: The technology used by the company is acclaimed to be one of
the best and cost efficient among its competitors.

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b) Weakness
i) Limited Scope: Though the global scope of the company is huge, but the relative
network of the company compared to its biggest competitor Toyota is low
(Pisano, 2015). As the awareness towards global warming is increasing over the
years, the sales will drastically fall over the years.
ii) Rising Cost: Due to inflation, the cost of production of the company is rising over
the years. On the other hand, companies like Toyota and Honda have their
production houses in China. Therefore, it is losing its market share to the above
mentioned companies.
iii) Slow Innovation: though the innovation process of the company is sound,
compared to other companies it is moving very slowly, which is a big weakness of
the company.
Opportunities
i) Global Expansion: The Company’s next step is to identify the future markets where
the per capita income and the gross domestic product is increasing. Then it must apply
market penetration strategy through low prices to attack the market.
ii) Product Development: One of the major faulty areas of the company has been the
innovation. It banks too much on its older versions. Therefore, the company must
utilize the opportunity and focus more on research and development of the company.
iii) Reduction in Cost: One of the foundations of the company has been the low price of
the products. But over the years it has moved away from its strategy and increased the
process. Therefore, the company must restructure the supply chain process in such a
way that the price of the products gets reduced.

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Threat
i) Aggressive Competition: Earlier the only strong competitor of the company was
General Motors. But after the foundation of companies like Honda, Hyundai and
Toyota who are equally capable in terms of technology and price are more aggressive
than Ford.
ii) Entry of New Firms: The new companies such as Tesla have created a massive
technological innovation and is aiming to eliminate the use of petrol and diesel from
the face of the earth. These companies are targeting the next generation customers and
will surely capitalise the markets.
iii) Rising Oil Prices: Due to the tensions of war in the Middle East countries have given
rise to movement such as the Arab Spring. This has resulted in the creation of market
imbalance and prices of Oil have drastically increased.
Strategies
i) The main strategy of the company ios using Aggressive Strategy. This is because the
company operates at lean profit margins. Therefore, the profit can only be increased
by increasing unit sales.
ii) People: The Company believes that the company to achieve its profits have to acquire
the best people (Piercy & Evans, 2014). It is an important part of every organization
and Ford maintains standard to achieve its targets.
Market Position
The company, though operates in an Oligopoly market but due to the increased
competition and upper hand of companies like Toyota, it is a price taker in the market.

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Conclusion
From the above study we can conclude that the chosen company is Ford is an old and
strong player in the market. Through the trends and graphs it can be said that the profits are
good for the company. But the lack of innovation of the company may reduce sales in the
future. The next thing the company must do is to restructure the research and development
and focus on the research and development of the company.

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References
Corporate.ford.com. (2019). Company. Retrieved 22 September 2019, from
https://corporate.ford.com/company.html
Ewing, M. T., Wagstaff, P. E., & Powell, I. H. (2013). Brand rivalry and community
conflict. Journal of Business Research, 66(1), 4-12.
Fudenberg, D., & Tirole, J. (2013). Dynamic models of oligopoly. Routledge.
Macrotrends.net. (2019). Ford Motor Revenue 2006-2019 | F. Retrieved 22 September 2019,
from https://www.macrotrends.net/stocks/charts/F/ford-motor/revenue
Okuguchi, K. (2013). Expectations and stability in oligopoly models (Vol. 138). Springer
Science & Business Media.
Piercy, N., & Evans, M. (2014). Managing marketing information (rle marketing).
Routledge.
Pisano, G. P. (2015). A normative theory of dynamic capabilities: connecting strategy, know-
how, and competition. Harvard Business School Technology & Operations Mgt. Unit
Working Paper, (16-036).
Statista.com. (2019). Topic: Ford. Retrieved 22 September 2019, from
https://www.statista.com/topics/1886/ford/
Tisdell, C. A. (2015). The theory of price uncertainty, production, and profit. Princeton
University Press.
Waldman, D. E., & Jensen, E. J. (2016). Industrial organization: theory and practice.
Routledge.