Running Head: FORD AND TOYOTA

Business Management
Ford and Toyota SWOT Analysis
[Name]
[University Affiliation]

FORD AND TOYOTA

Abstract
The paper presents a comparative study of the two leading automotive companies, Toyota
Motor and Ford Motor. Both of these companies present world leading brands and are among the
first fifty on Forbes list of most valuable companies. The companies belong to two different
regions of the world, have different management and business approach and act as a great
competitor for each other. The legal and social environments, management structures,
operational and financial issues, strategic intents, social and external challenges, marketing and
manufacturing strategies and distribution systems for both the companies have been
comparatively presented in this paper. After a comparative study of both the companies, swot
analysis of both the companies has been presented separately. The paper also presents the
suggestions for both the companies to improve their performance where they can, gain a
competitive advantage where possible and better plan their future endeavors.
1. Introduction
Automotive industry today is one of the biggest industries in the world with nine out of top
hundred Forbes global biggest public companies belonging to the automotive and truck industry.
The industry has grown so much over the last five decades to become the leading industry of the
one today. Automotive personal vehicles are now seen as a need for everyone rather than a
source of luxury. Apart from the personal vehicles, the industry also produces vehicles for public
use, from buses and trains for public transportation to the small and large locomotives for the
transportation of goods from one place to another. The main players in the automotive market are
distributed around the world, from United States to Japan and from Germany to South Korea and
China. Japan, Germany and United States are, however, the leaders in the market (Kumar, et. al.
2008).

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Japan's biggest automotive company, Toyota Motor, and United States' biggest
representative of the automotive sector, Ford Motor, have been selected for the comparative
analysis in this paper. An overview of the other market players can provide a good basis for our
comparative analysis to come. The biggest automotive company, according to Forbes list, is the
German giant Volkswagen Group1. The next in the list is Toyota Motor with Diamler and Ford
Motor at number three and four respectively. The next Japanese member in the list is Honda
Motor at number 7 while the next United States' member is General Motors at number 6. Toyota
Motor and Ford Motor have been selected for this study because of the fact they are leading
automotive companies of their respective countries and represent to very different management
styles and business patterns (Womack, 2006).
The remainder of this paper is organized like this. Section 2 of this paper compares the
company profiles of both companies in detail. Section 3 discusses and compares the economic
and social environment and management structure of both companies. Operational, financial and
strategic issues along with external challenges are compared in section 4. Section 5 explores the
manufacturing systems and distribution channels of both the companies while section 6 looks at
the their market values and potential for alternative fuel and innovative vehicles. Swot analysis
for both the companies is carried out in section 7. Suggestions for improvements are discussed in
section 8 and the paper concludes the discussion in section 9. References are provided at the end
of the paper.
2. Company Profiles
As has been described earlier, both companies are the leaders in the market from their
national as well as global point of view. Toyota was founded in Japan 34 years after (1937) Ford
1

Toyota Motor however is on top of the list if market value of the company, rather than the assets, are
considered for the ranking. Toyota's market value is $167.2 billion with the next in the list being Volkswagen at
$94.4 billion.

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was founded in United States (1903). Since then the companies have seen many ups and down
and have grown to unprecedented level to become world leaders in the market. The salient data
of both the companies is presented in table 1.
Table 1. Company profiles of Toyota Motor and Ford Motor [Source: Forbes]
Company

Toyota Motor
Ford Motor

Assets (billion)

$371.3
$190.6

Market Value

Number of

Rank in Forbes

(billion)

Employees

world most

$167.2
$51.8

325,905
165,000

valuable brands
#14
#44

The tables clearly suggests Toyota is far ahead of Ford in terms of its size, capacity and
value. However, the conclusion is not that straightforward as Ford Motor has reported a profit of
$5.7 billion for the current year against a $3.4 billion reported by Toyota in the same period. So it
can be said that as of the current market position, Ford Motor is more profitable than Toyota
Motor despite being fairly small in terms of size and capacity than Toyota Motor.
3. Social Environment and Management Structure
The companies come from two different regions and cultures bringing along completely
different social and economic environments and strategies and approaches to their business and
management (Ito, et. al. 1994). As a matter of fact, global companies such as these are less
affected by their local economic environments than the environment of the world around them.
Their products are shipped to all parts of the world and the changes in the economic and social
environment in any part of the world directly affect their sales and profits. Because of the fact
that personal vehicles are still considered a luxury in many parts of the world, a poor economic
environment in a country makes it difficult for any automobile company to sell its vehicles.

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These affects are more or less similar for both Toyota and Ford. The companies were hit hard by
the global recession of 2007 and are still finding it hard to recover from that.
Toyota Motor is governed by the Board of Directors with the chairman and president of the
board on the top of the management hierarchy (Benders, et. al. 2004). Apart from the chairman
and president of the board of directors, the board has nine other individuals as the members of
the board. These nine members of the board are divided into five positions for the Executive vice
Presidents and four position for the Senior Managing Directors. After the board of directors
comes the corporate auditors, senior managing officers and new managing officers. These
managing officers are distributed across all territories where the company has its operations.
Board of Directors for Ford Motor, on the other hand, is headed by its executive chairman,
president and CEO and director emeritus, followed by the board members. The company has
several group vice presidents to look after its various management divisions.
4. Operational, Financial and Strategic Challenges
Let's first talk about the operational challenges facing Toyota. Drawback into the
operational management at Toyota came out very evidently in October 2009 when a large
number of its vehicles were recalled from United States customers. Around 7 million vehicles
were recalled in total prompting at discussion on the quality control of Toyota, once leader of
quality and excellence in the market (Cole, 2011). The problems cited were related with the
unintentional acceleration, sticky gas pedals and power brakes. These recalls made the
company's operational issues public and resulted in a sharp decline in company's profits. This
kind of operational issue presents the biggest challenge for Toyota to overcome especially when
the rival competitors are producing better and better vehicles (Cole, 2011).

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External challenge to the company's fortunes is no small either. The global market of the
automobile has grown from strength to strength in the last ten years, while in many of the
external markets, the production of vehicles by Toyota has gone down. Figure shows the global
market and rise in the last two decades. Toyota's performance in two main markets (United States
and Europe) has been presented in figure 2. It can be seen that while the global market has
increased from 49 to 67 million cars sold worldwide from 2008 to 2013, the Toyota's share in the
most buoyant markets of United States and Europe has remained either stagnant or has gone
down explaining the tough competition it has from other manufacturers.

Figure 1. The number of vehicles sold around the world from 1990 to 2013 in million

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Figure 2. Toyota sales and production in United States and Europe 2008-2012 [Source:
Toyota Annual Reports]
It can be seen that Toyota's production in both markets is not up to the level of market.
5. Current Manufacturing and Distribution Facilities
Toyota currently has manufacturing facilities expanded all across the globe totaling 52 units
around the world. These units are spread all across the continents with 24 in Asia (excluding
Japan), 11 in North America, 8 in Europe and 4 in Latin America. The company also has
manufacturing facilities in Africa, Oceania and Middle East. Ford Motor, on the other hand has
high presence in North America (its native country) with 25 manufacturing units. It also boasts of
its high presence in the European territory with 17 manufacturing and assembling units located in
different members of the European Union. Toyota, however, takes the lead with higher presence
in China (7 units) as compared to Ford presence in China (5 units).
Toyota's distribution channels are interesting much differently substituted as compared to
its manufacturing facilities. It has highest number of manufacturing units in Asia but its
distributors in Asia are only 16 which are quite small as compared to 30 distributors in Europe
where manufacturing units are only 8. This hints at the fact that most of the units manufactured
in Asia (especially China) are shipped for distribution to Europe and other territories because of

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the high manufacturing costs in those territories. Table 2 shows a comparisons of manufacturing
facilities and distribution channels of Toyota and Ford.
Table 2. Manufacturing facilities and distribution channels, Toyota and Ford.
Company

Toyota
Ford

Manufacturing Units
Americas Europe
Asia

America

15
37

s
46
30
16
Ford distribution is rather complex

8
17

24
21

Distributors
Europe

Asia

and cannot be compared in this

fashion
So it can be said that while Ford holds well in markets like Europe and USA, Toyota holds
the edge in Asia and Africa.
6. Market Demand for Alternative Fuel System
Over the last few years, there is an increased sense of environment protection and energy
conservation among the public at large, thereby creating a market for innovative fuel efficient
transportation system (Fildes, et. al. 2007). Hybrid Electric Vehicle (HEV) has been proposed
and the model has been adopted by many motor companies including Toyota and Ford. Data
collected from Electric Drive Transportation Association shows a sharp increase in the sale of
electric vehicles in the US market. The data is projected in figure 3.

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Figure 3.Figures of electric drive vehicle sales in US market only [Source: Electric Vehicle
Transportation Association]
Toyota Motor has kept up with all these innovations and their newest electric vehicle,
Toyota FT-EV III, represents a clean environmental mobility and completely runs on electricity
(Williander, 2007). They have also launched some small size electric vehicles, Plug-in Hybrid
Vehicles (PHV) and Fuel Cell Vehicles (FCV) thus keeping up with the pace of this new
innovation in automobile industry. Similar trend can be noted for Ford Motor. Three eco friendly
model are available: 2014 Focus Electric, 2014 Fusion Hybrid and 2013 C-Max Energi. These
models have incorporated fuel efficiency at different levels (Kasseris, 2006).
7. SWOT Analysis
Let's focus on Toyota first and see what are its strengths, weaknesses, opportunities and
threats. I think the biggest strength the company has is the brand name and prestige of the
company. Remember, Forbes lists Toyota as the world most valuable automobile brand. In
today's world of marketing and brand building, an established name like Toyota is a great
strength. Other strengths include leadership role in innovation over the years, high production

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and sale repute and leaders in go-green theme. Let's put all these parameters of swot analysis in a
tabular form and compare the two companies.
Table 3. SWOT analysis of Toyota and Ford
Company
Toyota

Strengths
Leading Brand
Value
Innovation
Leading
production

Ford

Hold on US
market

Weaknesses
Technical issues

Opportunities
Go-green

resulting in

vehicles

recalls

Acquisition

Small presence
in emerging
markets
High costs of
products and

Strength in

operational

Chinese

procedures

Go-green
initiative
8. Addressing Weaknesses

Less eco friendly

record

and resulting
growth

Go-green
vehicles
Increasing
prices of fuel
Innovation

Threats
Fuel prices
Intense
competitio
n
Natural
disasters
Fluctuating
exchange
rates
Competitio
n from
rivals

Toyota's biggest weakness has recently become public with the huge and unprecedented
recalls of their vehicles from the US market. That has fairly damaged the company's brand value
and the effect can also be seen on company's declining profits. The weakness can be addressed
with strengthening of quality control department at all manufacturing facilities of the company.
The first step I would suggest is to identify those manufacturing units whose vehicles were
recalled, identify those responsible for the lapse at quality control department and prepare for
their proper training. Most of the recalls were geared by problems in acceleration or brake

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failures and these issues should be technically resolved. A thorough investigation into the matter
of recall can suggest what were the lapses and what can be done. A test quality control clearance
procedure for all manufacturing facilities should be ordered in order to avoid any such problems
occurring in future because of the lapses in other facilities.
Ford Motor has a different set of weaknesses, the biggest one being the high costs of their
products. With so much competition around and availability of other similar vehicles on less
prices, customers are really attracted towards low price products. These high product prices are
due to the high operational costs at Ford which in turn are because of the high labor costs in
United States. An effective problem to this solution has already been implemented by many
corporations, including Ford to some extent. This is to shift the manufacturing facilities to those
parts of the world where labor costs are not too high, for example China, India and other Asian
countries. Ford Motor should try to shift most of its operations to Asia thereby reducing
operational costs that can help them reduce the final product cost.

9. Conclusion
This paper has presented a comparative study of the two giants of automobile sector, Ford
Motor and Toyota Motor. After presenting the company profiles for both companies, their
economic environments, management structures, manufacturing processes, distribution channels,
their efforts in developing innovative products that are eco friendly and their internal and
external challenges are discussed in complete details. Swot analysis for both the companies is
also carried out describing strengths, weaknesses, opportunities and threats for each corporation.
The ends with taking one particular weakness of each company and providing suggestions to
counter the weakness in order to effectively compete in the market.

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References
1. Williander, M. (2007). Absorptive capacity and interpretation system's impact when
going green: an empirical study of ford, Volvo cars and Toyota. Business Strategy and
the Environment, 16(3), 202-213.
2. Benders, J., & Morita, M. (2004). Changes in Toyota Motors operations management.
International Journal of Production Research, 42(3), 433-444.
3. Kasseris, E. P. (2006). Comparative analysis of automotive powertrain choices for the
near to mid-term future (Doctoral dissertation, Massachusetts Institute of Technology).
4. Kumar, S., & Putnam, V. (2008). Cradle to cradle: reverse logistics strategies and
opportunities across three industry sectors. International Journal of Production
Economics, 115(2), 305-315.
5. Cole, R. (2011). What Really Happened to Toyota. MIT Sloan Management Review,
52(4), 29-35.
6. Fildes, M., Nelson, S., Sener, N., Steiner, F., & Suntharasaj, P. (2007, August). Marketing
Opportunity Analysis for Daimler Chrysler's Sprinter Van Plug-in Hybrid Electric
Vehicle. In Management of Engineering and Technology, Portland International Center
for (pp. 1797-1810). IEEE.
7. Ito, K., & Rose, E. L. (1994). The genealogical structure of Japanese firms: Parent
subsidiary relationships. Strategic Management Journal, 15(S2), 35-51.
8. Haar, J. (1989). A comparative analysis of the profitability performance of the largest US,
European and Japanese multinational enterprises. Management International Review, 518.
9. Womack, J. P. (2006). Why Toyota won. Wall Street Journal.(Eastern edition).

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10. Global 2000: China Takes The Lead. http://www.forbes.com/global2000/ [retrieved

December 17, 2013]

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