This document compares Ford and Honda, two large automobile manufacturers. It analyzes their sales, markets, manufacturing locations, stock shares, employees, revenues, and profit margins from 2005-2010. It then performs SWOT analyses for both companies, identifying strengths like brand value, engines, and product diversity for Honda, and weaknesses like shareholder losses and nationalistic image for Ford. The document concludes by suggesting potential strategies for each company.

2. *
The following paper offers a comparison and contrast of two
of the world’s largest automobile manufacturers, Ford and
Honda. Both companies have experienced similar successes in
the hybrid vehicle market; additionally they are similar in
size, and in revenues. Honda Motor Company, a Japanese
company, has its largest customer base is in the U.S.,
alternatively Ford Motor Company, an American company, has
its largest customer base is in Asia. A SWOT analysis has been
performed for each company and the paper closes with
strategy suggestions for Ford and for Honda.

3. *
Y Ford Honda
2005-2009
-Asia/Pacific region, the U.S.
market
sales of almost 2.5 to 1
-total market share in the U.S
was 15.3% (car:9.8%, truck:
5.5%)
-Honda’s sale in the U.S. less than 1
to 1
- was 10.8%, (car: 6.5% , truck:)
4.3%.)
2010
-sells about 20% of their vehicles in
its local market
-Then Ford has consistently
produced more autos for sale in
Asia/Pacific region and Europe.
-Honda sells about 30% of its
vehicles in Asia
-Honda’s sales in this market have
decreased in recent years from 30%
to less than 15%. Honda’s reach into
the U.S. and Europe has
substantially

4. Honda, based in Tokyo, currently maintains automobile
manufacturing facilities locally and in the U.S. as well as in 11
other countries, while Ford, based in Dearborn, Michigan,
maintains manufacturing facilities locally and in over 25 other
countries but does not manufacture in Japan. Both supply an
extensive network of dealerships numbering in the thousands
worldwide. Immediately prior to submitting these annual
reports, Ford had 3,297,413,605 outstanding shares of common
stock trading at about $6.00/share on the New York Stock
exchange, while Honda had only about one half the shares
1,814,602,736, $30.00/share.

5. Ford and Honda have a similar numbers of employees at
198,000 and 176,815. while American companies generally work
for the benefit of their shareholders, Japanese companies work
primarily for the benefit of the company and its employees and
are generally not concerned with paying benefits to
shareholders.
Both companies reported similar annual sales for the previous
year with Honda reporting $92,552.1M and Ford reporting
slightly higher sales of $118, 308.0M, however Honda’s gross
profit margin at 27.34.% is substantially higher than Ford’s at
19.29%, .

6. Strengths:
1. Growth in Brand Value
Ford’s brand value gained 19% last year globally, despite the fact that
brand value dropped overall in the car category by 15%; this was in part
due to the fact that they were the only American car company not to
accept federal bailout money. (Schept, 2010).
2. Globalization
The Focus, the first American car produced globally, as part of Ford’s
strategy to build these automobiles near the markets where they are
sold. Ford has restructured itself to become a global corporation through
manufacturing hubs in Detroit, London, and Shanghai. (Schept, 2010)

7. 3. Marketing
Ford promoted the Fiesta in Europe through
social media by giving 100 cars away to
bloggers in exchange for them commenting
about the car, the promotion generated 50,000
requests for information, (Schept, 2010).
5. Financing

8. 4. Collaboration
Ford has recently begun collaborating with Microsoft
to deliver a voice activated music and information
system called AppLink that communicates from the
driver’s Smartphone to their vehicle. Through this
collaboration Microsoft will be adapting applications
directly from the driver’s mobile phone for their
vehicles, allowing them to keep up with the rapidly
changing technology, rather than Ford owners relying
on computers embedded in the automobile’s console.
Additionally Ford has engaged in many international
joint ventures that produce vehicles on common
platforms, (Hoovers, n.d.).

9. *Weaknesses:
1. Security
2. Air Pollution
the 8th of the top 100 most toxic air polluter in March
Ford was ranked of 2010, by the Political Economy Research
Institute, PERI, in the United States with 5.09 million pounds of
toxic air .
3. Nationalism
Ford is still seen internationally as an intensely American brand
rather than an international brand.

10. 4. Shareholder losses
Although they have witnessed a gradual increase per year for
the previous five years, at 5.5% in 2009, Ford still has a
dismally small share of the U.S. market for automobiles which
is a great loss for its shareholders. Additionally the trading
value of their stock at $6.00/share upon the filing of their
annual report represents additional shareholder losses that
the company needs to recover from.

11. *5. Product Diversification
While other automobile manufacturers gain brand recognition
from producing other motorized vehicles in addition to
automobiles, Ford currently produces only cars and trucks.
There are a myriad of motorized products that Ford could use
their technological know-how to produce including, but not
limited to, recreation vehicles, all terrain vehicles, golf carts,
motorcycles, scooters, water vehicles, and snow vehicles.

12. *Opportunities:
1. Government Regulations
Continued government intervention internationally regarding
safety issues is likely to increase growth in the automobile
manufacturing industry. U.S. has 100% penetration of air bags
and other safety devices many other countries do not and the
governments in mature markets (Haelterman, 2010).

13. 2. Environmental Issues
Ford is generally seen as an environmentally friendly company due to
the success of their hybrid vehicles, however there is much more that
they be doing to decrease their environmental impact. Following GM’s
lead and introducing zero-landfill manufacturing facilities would be a
noteworthy start. Ford has recently secured the approval for low
interest loans from the U.S. Department of Energy to begin
reengineering their U.S. plants to make them capable of producing
cleaner and more efficient engines, transmissions, and vehicles,
(Hoovers, n.d.).
3. Luxury Hybrids
Ford has a substantial investment in and considerable knowledge of
hybrid automobiles. should be an opportunity for Ford to increase its
market share.

14. 4. Electric Vehicles
As Ford has successfully introduced electric delivery vehicles
into Asia, the development and introduction of electric delivery
vehicles suitable for other markets, including the U.S., would
seem to be a significant opportunity for Ford especially as
many companies in major American cities could take advantage
of off-market utility prices to charge their fleets.
5. International Growth

15. Threats:
2. Fuel Pricing
Oil prices have resumed upward movement since early
2009, from a low of less than $40.00 per barrel to the
current price of over $80.00 per barrel, (USEIA, 2010).
3. Unions
Ford has taken steps to drastically reduce its inventory
in 2010 to match lower demand as consumers are
keeping their cars longer to save money.

16. *4. Bailouts
*
The government bailout of Chrysler and General
Motors could upset the competitive playing field for
Ford in the coming years as each of these
companies had a significant amount of debt
forgiven. While Ford negotiated with creditors to
reduce their debt, their positioning as a competitor
with these two American companies as well as with
foreign automobile manufacturers is still at a
disadvantage as these obligations still exist.

17. *5. International Competition
American automobile manufactures face increased
competition from international companies in other
countries in addition to the competition that they
have faced in the past from Japanese automobile
manufacturers. By 2006 Ford only had a 16% market
share in the U.S. and had lost share to Japanese
competitors each year for the previous decade,
(Kundnani, 2006). 2009, in fact, was Ford’s first
profitable year in over five years. Now Korean
brands are keeping pressure on American mid-level
automobiles as well, (Schept, 2010)

18. *FORD STRATEGY:
Scent recognition is the most powerful memory aid. In order
to more fully gain acceptance into international commercial
markets Ford should consider infusing their automobiles with
scents that appeal to local nationals. Ford can take a lesson
that perfume companies have already learned that
modification of fragrances to suit a regional market is
necessary. Although this might be a radically different
approach, rather than equipping new cars solely with a “new
car” smell, Ford should consider equipping their automobiles
lightly fragranced with a barely detectable base scent that
will appeal to potential customers regionally. Ford could
ultimately make their cars seem less American and more
local by adopting this strategy.

19. *
*
Strengths:
*
1. Brand Value
*
Despite a decrease of 2% in the last year in brand value, Honda still has
the third highest brand value of all automakers and is 46th overall in
BrandZ’s list of Top 100 Global Brands, with their brand value
estimated to be worth $14,303M. (Schept, 2010)
*
2. Engines
*
Honda is noted for their ability to produce highly efficient gasoline
powered engines that are economical to run. The innate ability of this
company to produce highly fuel economical engines, combined with the
introduction of hybridization of the automobile engine has made them
a market leader for hybrid automobiles.

20. *3. Product Diversification / varieties
*
Not only manufacturing automobiles, Honda also is
the world’s largest manufacturer of motorcycles, in
addition to manufacturing all terrain vehicles,
personal watercraft, and a myriad of power
products. This type of product diversity under the
Honda brand name increases consumer awareness
of the company and can buttress diminished
automobile sales in a downturned economy.
*

21. 4. Employee Loyalty
5. Customer Satisfaction
Weaknesses:
1. Higher End Pricing
Although their vehicles are noted to retain their value better
than other brands, Honda’s pricing is still at the high end of
the mid-level market despite the fact that their styling is
rather middle of the road, making the purchase of similarly
sized and equipped, but less expensive automobiles, an
obvious choice for recession-minded consumers.

22. 2. Recent Quality Issues
Honda has recalled more than 1.2 million automobiles in the
U.S. since January of 2010 due to problems with air bags,
electric switches, power steering, and brake pedals,
(Hoovers, 2010).
3. American Dependency: ភាពនៅនរោមចំណ ុះ
Honda is overly dependent upon sales in the United States, as
witnessed by the recent economic downturn and the decrease
in sales since 2007, over dependence in one specific region
can result in a loss of growth.

23. 5. International Luxury Automobile
Although Honda has introduced their Acura in North America they
have yet to introduce a higher end luxury vehicle into any other
market. Their brand appeal could easily be translated into sales in
other markets where there is an emerging middle class.
Opportunities:
1. Latin America
Honda currently has automobile manufacturing facilities in both
Latin America and South America but reported sales in these areas
under “other regions”; in both 2008 and 2009 this was their lowest
geographical market indicating that there is a lot of room to market
and increase sales of their automobiles to these consumers where
they are already manufacturing their product.

24. 2. Toyota Customers
With the bad publicity surrounding Toyota’s recent recalls
and the company’s unwillingness to acknowledge fault or
assume responsibility, Honda as one of the big three
Japanese automobile manufacturers could attempt to
market directly to Toyota customers who are looking for
replacement automobiles and gain market share.
3. Shareholder Rights
As a Japanese company Honda has no obligation to
increase shareholder rights, however, they could
voluntarily do so and in making such a commitment,
purchasing shares in the company would be more
attractive to Americans.

25. 4. Joint ventures
Honda currently controls almost all of their manufacturing facilities
with limited joint venturing predominantly occurring within Asia. As
Honda expands into other international markets it could consider joint
ventures with a local automobile manufactures that would benefit both
companies, allowing Honda to get their newer products into these
market more quickly and allowing local manufacturers to capitalize off
of their association with Honda.
Threats:
1. Bankruptcies
As Honda provides financing primarily to its North American customers
and dealerships, the increased financial instability of the American
population could lead to bankruptcy and debt forgiveness that the
company might not be able to easily absorb or have made provisions
for. Net charge-offs from sales alone increased from .93% in 2008 to
1.15% in 2009 despite an increase in provisions of 10%.

26. *2. FOREX
International sales, especially to the United States, are the crux of
Honda’s business. As such, fluctuation in the value of the yen
against other currencies exposes them to a high level of risk.
Specifically, if the U.S. dollar, as this is their largest market, were
to gain substantial value over the yen, Honda would experience a
rapid devaluation of products already delivered to their dealerships.
3. California
Under the U.S. Clean Air Act individual states are allowed to
determine their own emission standards that can be more stringent
that federal standards. California is currently attempting to enforce
the strictest emission standards in the world and recent legislation
in 2009 and 2010 are making their standards even more stringent
beginning as early as 2011. As the state represents 10% of the
American population this could potentially be a threat to Honda
sales, specifically those cars that are already in the pipeline.

27. * HONDA STRATEGY:
Honda should reduce its dependency upon customers in the United States and focus
on increasing sales in other regions. Specifically Honda already has established
manufacturing facilities in Mexico yet has limited automobile sales in Latin America.
Implementation:
Honda must develop a strong marketing presence that will connect with consumers
in Latin America. Obviously a major restructuring of their production in this region is
called for. Honda must reduce or cease the production of vehicles that aren’t selling
and increase the production for lines that are experiencing even moderate sales
growth. Automobiles currently in production and intended for customers in the U.S.
and excess automobiles already at dealerships can easily be redistributed to Mexico
via NAFTA on demand from dealerships there; as the U.S. has much more stringent
emission requirements there should be no retrofitting required, additionally a
minimum amount of other modifications, other than those pertinent to language
issues, should be required. Those automobiles currently in production and intended
for Mexico can be redistributed to neighboring countries throughout Latin America,
(this may require Honda to partner with auto dealerships in countries that they have
not already entered). Additionally Honda should extend their financing opportunities
to qualified customers throughout Latin America, thereby mitigating the effect of
the financing obligations of their dealerships and additionally forgive a certain
amount of dealership indebtedness prorated according to the redistribution of
automobiles. In exchange for the debt forgiveness, U.S. dealerships should be
required to pay the shipping costs to Mexico so that only those dealers truly in need
of the alleviation program will participate.
*

28. *CONCLUSION
Although both companies are relatively similar and offer similarly
featured mid-range automobiles, Honda and Ford essentially appeal
to two different customers in the U.S. and abroad. In addition to
automobiles each company has developed its own unique strength
to further penetrate markets, Ford with trucks and Honda with a
variety of other products, most noticeably motorcycles. Together
these two companies will continue to be at the forefront of the
introduction on new vehicles into their respective markets by
capitalizing on the innovation that is inherent in their organizations.