I. Executive Summary
The Ford Motor Company has been facing a steady decline in market share for approximately the past twelve years. This decline is largely attributable to their reputation for building poor quality vehicles that break down easily, and rising gas prices reducing demand for large trucks and SUVs, which is Ford’s main source of sales.
Ford has already taken measures in response to this slump by introducing new car models such as the Fusion, as well as attempting to make their mark in the new crossover SUV market with the Ford Edge. However, many would argue that this is just too little, too late.
While the Edge does lack certain qualities with respect to its competitors, it also comes with a more affordable price tag. The biggest weakness for the Edge is the fact that it is simply under marketed. The best way to fix this problem is to launch an aggressive ad campaign for the Edge, focusing on the balance of practicality and fuel efficiency that comes with owning Ford’s new crossover.
II. Problem Statement
Ford Motor Company has been losing market share in North America for over a decade. In response to this crisis, they introduced the Ford Edge to the crossover market, but it is not doing nearly as well as it should be in the demanding market for fuel-efficient vehicles.
III. SWOT Analysis (Appendix A)
Ford is somewhat lacking in the way of opportunities. While there are certain opportunities facing the entire auto industry, none of those have been left unexploited. A key opportunity for the Edge however is the fact that gas prices have been steadily rising, and will likely continue to do so. This creates a great deal of demand for crossovers from those requiring the practicality of an SUV, but who wish to pay less for gas.
To add to the misfortune of having few opportunities, Ford also has a good deal of threats standing in their way.
One of the biggest threats facing Ford, and all North American auto makers is that of foreign companies. Imported vehicles, Japanese in particular, have gained a solid reputation over the years of building smaller, more fuel efficient vehicles that rarely break down. This has become greatly appealing to consumers and as a result, Toyota has become the new number one automaker for sales in North America.
Another key threat to Ford is the opinion the public has of their vehicles. Many now believe Ford to be an acronym for either “Fix Or Replace Daily” or “Found On Road Dead” . While Fords are easier and cheaper to fix than import models, the trade-off may not be worth it to many people since, although it may be more expensive, import cars tend to break down less often.
Gas prices can also be attributed to Ford’s decrease in sales. While the rising gas prices have affected the large vehicle sales of all auto makers, it seems to have affected Ford more than others, as for years Ford has relied heavily on truck and SUV sales. To make matters worse, Ford did not respond to this threat nearly as soon as they should have. While other automakers have been making crossovers and small SUV’s for years, the Ford Edge is only three years old. The combination of these factors means that gas prices have caused Ford to feel the effects worse than other companies, and now they’re having difficulty entering the crossover market.
Another threat to all automakers selling in North America, Ford included, is the soft market. In the summer of 2005 General Motors had an employee discount sale, during which all customers paid the same prices as they’re employees. This was seen as a once in a decade sales boom, and as a result, so many drivers have newer vehicles and sales will be reduced for the next few years. It was said, “GM had warned that its June sales would be down significantly because of aggressive discounts last summer.” As bright of a bright side as Ford can get out of this soft market, it has been...
References: 1. Bunkley, Nick. (2007). “Ford Edge Blunts Sales Decline”. International Herald Tribune: Business. Viewed 10/11/07, http://www.iht.com/articles/2007/05/02/business/edge.php
2. Associated Press. (2006) “GM Sales Decline Sharply in June”. Viewed 10/11/07, http://www.msnbc.msn.com/id/13687071/
3. Ford Motor Company of Canada, Limited. (2006). “Edge Overview”. Viewed, 23/11/07, http://ford.ca/main/default.asp?language=en§ion=1&source=&sVehCategory=FordSUVs&model=Edge
4. United States Department of Energy. (2007). Viewed 13/11/07, http://www.fueleconomy.gov/
5. Alexander, Sheryll. (2007). “Top Family Cars”. AOL autos. Viewed 26/11/07, http://autos.aol.com/article/general/v2/_a/top-family-cars/20070823222609990001
6. CBC News. (2007). “Ford exits minivan market to focus on crossover vehicles”. CBC News. Viewed 10/11/07, http://www.cbc.ca/money/story/2007/01/03/fordminivan.html
7. United States Department of Labor. (2007). “American Time Use Survey Summary”. United States Department of Labor. Viewed 26/11/07, http://www.bls.gov/news.release/atus.nr0.htm
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