3. Introduction
Ford Motor Company is a global automotive
industry leader based in Dearborn, Michigan
Manufactures and distributes automobiles across
six continents
Includes Lincoln & Mazda
2nd largest automaker in the U.S.
5th largest in the world based on annual vehicle
sales in 2010
118,308,000 in Revenues & 2,717,000 in Profit
2010
4. Introduction Cont.
Competitors GM, Toyota, and Honda
Products
Automobiles
Automotive parts
Services
Automotive finance
Vehicle leasing
Vehicle service
5. History
Founded by Henry Ford
1903: Ford Motor Company was incorporated
1908: Ford introduces the Model T
1913: First moving assembly line and making Model T
production 8 times faster.
1964: Ford Mustang and Ford GT40 was introduced as
super cars.
1975: The famous Ford F150 was introduced.
6. History Cont.
1990: Ford Explorer was introduced as sport utility
vehicle
1993: Ford opens its first dealerships in China. Its
brand sales in China increased 46 percent in 2005.
2001: Ford Motor Company recalls 13 million tires
and Bridgestone/Firestone dumps Ford as a customer
2006: Alan Mulally hired as new CEO to try to
revive the company
7. Key Executives
William C. Ford Jr., Executive
Chairman
Alan R. Mulally, President & CEO
Lewis Booth, Chief Financial
8. Ford’s Mission Statement
ONE FORD MISSION:
ONE TEAM:
People working together as a lean, global enterprise for automotive
leadership, as measured by:
Customer, Employee, Dealer, Investor, Supplier, Union/Council, and
Community Satisfaction
ONE PLAN:
Aggressively restructure to operate profitably at the current demand
and changing model mix
Accelerate development of new products our customers want and
value
Finance our plan and improve our balance sheet
Work together effectively as one team
ONE GOAL:
An exciting viable Ford delivering profitable growth for all.
11. Industry Analysis
U.S. consists of 13 international automakers
together produce 5.7 million cars and
commercial vehicles (9% of global output)
China surpassed North America in 2009 with
13.8 million units
Laws and government regulations have affected
the automotive industry
Emissions
Safety
MPG
12. Industry Analysis
New Marketing
Demand from consumers
Technology Advances
Different Age Focus
Automotive industry one of the largest
employers in the country
Represents 4% of GDP in the nation
14. General Motors
Founded September 27, 1908
Headquartered in Detroit, Michigan
Products are automobiles and financial services
209,00 employees
15. Honda
One of Ford’s largest competitors
Founded September 24, 1948
Headquartered in Tokyo, Japan
Currently manufacture 13 different products
16. Toyota
Founded August 28, 1937
Headquartered in Aichi, Japan
Products are automobiles and financial
services
317,734 employees
17. Market Analysis
China
Top auto market with 1.37 billion people and
growing affluence
This market is growing at a rate of 30.45% year
on year growth to 7.18 million units during the first
six months of 2010
Europe
Electric and hybrid cars are really taking over this
market
About 10% of new cars sold globally are either
hybrids or electric cars
18. Market Analysis
Electric cars
Automakers are looking to develop newer electric
cars powered by batteries, the sun, or hydrogen
fuel cells
Automakers are also looking for new ways to
secure the power to “refuel” these newer cars on
a national scale
19. Current Status (China)
Over the first half of 2010 Ford sold 301,524
units
Resulted in a 53% growth in sales
The Ford Fiesta was a popular model with the
younger generation in China
Also helped Ford gain market share
20. Chart
World Motor Vehicle Rankings by Country (Million Units
Produced)
16
13.8
14
11.95
12 11.6 11.56
10.8 10.78
10
8.88
9.25 Us
8.71
7.93
8
5.71 5.71
China
6
4
Japan
2
0
2005 2007 2008 2009
21. Current Status (Electric Cars)
Plans to launch a new electric Ford Focus
sedan and the Ford Transit Connect
commercial van
Retooling North American truck plants to be
used to produce
22. Current Status (Europe)
Has a weak marketing strategy
Focus on developing more fuel efficient cars
and developing the Focus and Transit vehicles
24. Porter’s Five Forces
Used for industry analysis and business
strategy.
Developed by Michael Porter of the Harvard
Business School in 1979.
Used to develop a competitive edge over rival
competitors.
25. Porter’s Five Forces
Threat of New Entry
Power of Suppliers
Power of Buyers
Threat of Substitute
Intensity of Rivalry
26. Threat of New Entry
Low
Manufacturers must be able to mass produce
automobiles so they can be affordable for
every consumer
Extreme amount of capital is needed in order
to manufacture automobiles keep up on
research and development
Difficult entering into established industry
27. Power of Suppliers
Relatively Low
It takes several suppliers to manufacture an
automobile because there are so many
different parts used.
When there are a large number of suppliers in
an industry, they do not have much power.
28. Power of Buyers
Fairly high
All of the manufacturers will depend on the
consumers because they purchase most of the
output
Most of the revenue comes from the buyer
If Ford cannot keep the consumer happy, they
will lose them to another competitor
29. Threat of Substitute
High
Other forms of transportation
Walking
Riding a bike
Public Transportation
Customer Loyalty
Ample amount of other options in car industry
30. Intensity of Rivalry
Very High
Most competitors have the same general focus
so it makes the rivalry intense
All competitors are trying to achieve same
common goal
Price, quality, and durability are factors that
are taken into consideration to become
superior to other competitors
31. P E S T Analysis
Political
Economic
Social
Technological
32. Political
Exchange rates of the US dollar compared to
other countries
Oil prices and free trade flows
Foreign ownership regulations
Foreign laws and regulations
Labor unions
33. Economic
The growth potential of foreign target markets
The size of potential target markets
Economic development
Oil price fluctuations
The sales increase of Eastern European
countries (Turkey, Hungary)
Ford is the market leader in the UK, Hungary
and Turkey
34. Social
Geographical changes
Consumer attitude
Travel habits of consumers
Cut on personnel and jobs
35. Technological
Supply chain collaboration
Ford’s operational capability
Technological improvements in distribution
Product development
37. Opportunities
Customers demand for more fuel efficient cars
Ford’s investment in the Solar Power industry
“The Way Forward Plan”
The European and Chinese markets
Release of the 2011 Ford Fiesta
38. Threats
Rising new material prices
Increasing competition
The “war on terrorism” and its overall threat to
the world market and economy
The economy
Rising oil prices
Housing market decline
40. Corporate Culture
Second largest car manufacturer in the world
Widely know for its vehicle service for its customers
Large emphasis on customer first and customer
satisfaction
Areas served are worldwide
Ford has invested $50,000 to help hundreds of Ford
volunteers complete urgent projects identified by the
company's nonprofit agency partners.
41. Current Mission
1.) “Aggressively restructure to operate profitably at current demand
changing model mix.”
2.) “Accelerate the development of new products our customers want
and value.”
3.) “Finance their plan and improve their balance sheet.”
4.) “Work together effectively as one team which emphasizes the
importance of working together as one team to achieve
automotive leadership , which is measured by the satisfaction of
our customers, employees and other essential business partners,
such as our dealers, investors, suppliers, unions/councils and
communities.”
42. Industry Rankings
Ranking Automake Jan. Jan. 2009 Year to Year to Jan. 2010
r 2010 Sales Year % Year % Market
Sales Change Change Share
(unadjust (adjusted
ed) )
1 GM 146,825 129,227 +13.6 +23.1 20.9%
2 Ford 112,406 90,596 +24.1 +34.4 16.7%
3 Toyota 98,796 117,287 -15.8 -8.7 14.1%
4 Honda 67,479 71,081 -5.0 +2.9 9.6%
5 Nissan 62,572 53,884 +16.1 +25.8 9.0%
6 Chrysler 57,143 62,157 -8.1 -0.4 8.1%
7 Hyundai 52,626 46,608 +22.3 +12.9 7.6%
Group
44. BCG Matrix
In the matrix there are four quadrants. These
quadrants are the Dogs, Question
Marks, Stars, and Cash Cows.
The Dog quadrant describes parts of the company
that are not doing well
The Question Mark quadrant deals with the parts of
the company that have low market share but are
growing
Stars are the part of the matrix where there is high
relative market share and high market growth
Cash Cows are the most desirable market segment.
These divisions have a high relative market share and
low market growth
45. BCG Matrix
Relative Market Share
High Low
Stars Question Marks
Market Growth Rate
Cash Cow Dogs
Low
46. CEO Book
Ford sales during the last year
Recorded revenue of $128.954 billion in fiscal year
2010
Net Income of $6.561 Billion
Operating Income of $7.149 Billion
Total sales grew by 15.2 %
Increased market share for 2nd consecutive year
Inventory Velocity is 21
Return on assets is 4%
47. Ford and their competitors
As of 2010, Ford’s net profit margin was 6.56 Billion
Honda net profit margin=3.8 Billion
Toyota net profit margin=5.2 Billion
General Motors net profit margin=4.7 Billion
49. Effects on Profit Margin…
Ford started to hire more employees
Ford must increase prices
There have been new implications for strategy
50. Cash Flow & Competition
Increased revenues 48.7%
Revenues have continued to increase
Ford is the second largest automotive maker in
the United states
52. Strengths
Producing Hybrid vehicles
Brand recognition
Profitable financial services division (Ford Motor Credit)
Manufacturing facilities in more than 30 countries
Wide Range of Products targeting all customer classes
53. Weaknesses
Weakening North American automotive operations
Recalls
Sales in trucks decreasing rapidly
Firing of Employees
54. Current Strategy
Use free cash flow to pay off significant amounts of
debt
Truck/car sales mix transitioned to 48%/52% from
54%/46%
Sell off preferred securities to reduce $2.98 billion in
outstanding principal, and decrease interest on debt
by 190 million a year
Reduce debt, generate free cash flow
Sold off Jaguar, Land Rover, Mercury, and Volvo
57. Strategic Issues of the
Economy
Fuel Prices
Better marketing strategies for automobiles
Finding ways to lower emissions
The US government and automobile
companies have agreed on a long term fuel
efficiency plan
Better quality and safety
58. Strategic Issues of the
Industry
Finding ways to attract customers in a
struggling industry
Expanding into other markets that offer a
greater potential (ie. China and Europe)
Finding a way to build more fuel efficient
vehicles (ie. Hybrid and Electric vehicles)
Separating themselves from competitors
through the use of marketing and new
innovations
59. Strategic issues for Industry
Auto industry has faced shortages of engineers
U.S. industry must add thousands of carmakers
to build fuel-efficient vehicles to meet more
stringent federal regulations and growing
consumer demand.
The nations auto sector has added a total of
32,000 employees 1,000 of which are engineers
Threat of industry wide bankruptcies
Fuel efficiency standards are placed on 2012
models
60. Competitors - Toyota
In January 2010 Toyota announced it would
temporarily stop building and selling eight
models in the North American market
Toyota recalled more than 11 million vehicles
globally because of floor mats and sticky
accelerator pedals in late 2010
Toyota was issued three fines totaling $48.8
million because the Transportation Department
said Toyota had not reacted appropriately to
reports of problems
61. Competitors - GM
GM was forced into bankruptcy court in March
2009
In July of 2009 GM sold off its assets to a
government owned company and the US
government now owns 61% of the new
company
This creates an opportunity for Ford to capitalize
on a company that is not financially stable
62. Competitors - Honda
Recalls on 2,800 Odyssey mini-vans due to
defect in front windows coming off the tracks
New Odyssey mini-vans re-called 33,000
models due to faulty windshield wipers
Third highest automaker involved in recalls in
the U.S. last year – second highest in
Japanese market
Struggles through the effects of the
earthquake, tsunami, and nuclear meltdown
63. Competitors – Honda Cont.
Increased pressure from U.S., South
Korea, and European competitors
Honda lagged 12 points behind industry
average of J.D. Power APEAL (Automotive
Performance, Execution and Layout)
Introduction of new line of cars will be delayed
due to March 11, natural disaster
64. Ford Strategies in the Past
Ford used to have a very corporate orientated
strategy, but now focus on specialized product
production and meeting specific needs of the
consumer
Ford used to imply a mobility strategy that
worked to determine the long term profitability
of the company but has altered that strategy
since the recession
65. Ford Strategies Now
Ford is making more hybrid vehicles through
the increase use of renewable and recyclable
materials
Ford is developing natural-fiber composites as
a potential substitute for the glass fibers
traditionally used in plastic car parts to make
them stronger while reducing vehicle weight
Ford has developed a very strong
sustainability strategy
66. Ford Strategies Now Cont.
Ford is beginning to use Solar energy to power
their manufacturing plants
Global Electrification strategy
Ford has a strategy on new key design
Ford has a very strong marketing strategy as
they market all of their vehicles differently
67. TOWS Chart
Uses the SWOT matrix to develop specific
strategic options for your company
The components of the SWOT are
matched, and strategies are developed to
address them
SO , WO, ST, AND WT
68. TOWS Charts
Strengths Weaknesses
1. Producing Hybrid vehicles 1. Weakening North American
2. Brand recognition automotive operations
3. Profitable financial services 2. Recalls
division (Ford Motor Credit) 3. Sales in trucks decreasing
4. Manufacturing facilities in more rapidly
than 30 countries 4. Firing of Employees
5. Wide Range of Products targeting
all customer classes
69. TOWS Charts
TOWS Charts
Opportunities Threats
1. Customers demand for 1. Rising new material prices
more fuel efficient cars 2. Increasing competition
2. Ford’s investment in the 3. The “war on terrorism” and its
Solar Power industry overall threat to the world
3. “The Way Forward Plan” market and economy
4. The European and 4. The economy
Chinese markets 5. Rising oil prices
5. Release of the 2011 Ford
Fiesta
70. TOWS Combinational
SO Strategy ST Strategy
Focuses: Focuses:
1. Continue 1. Continue
marketing and marketing and
research & research &
development of development of
hybrid hybrid cars
cars(S1,O1, O2) (S1,T4,T5)
2. Consolidate more 2. Improve fuel
in European and consumption
Chinese markets (S1,T4,T5 )
(S4, O4)
71. TOWS Combinational
WO Strategy WT Strategy
Focuses: Focuses:
1. Continue Research 1. Increase incentives
and Development for customers.
of Hybrid Cars Examples: mileage
(S1,W2) warranties (T2,W1)
2. Reduce recalls in 2. Reduce threat of
newer products competition by
(W2, O2) developing flexible
product
line(T2,W3)
72. Ansoff Matrix
Purpose is to use this matrix to increase sales
of a company’s current products without
adjusting it in the existing market.
The four main quadrants are market
penetration, market development, product
development and diversification.
These four major classifications are in the new
markets and existing markets.
73. Ansoff Matrix
Existing Product New Product
Market
Penetration Product
Existin
Discount vehicles Development
g
and focus and New range
Market
advertise for the development.
company.
Market
Development
Diversification
New Target the
Develop new
Market internet as prime
line of cars.
source for
marketing.
75. Overarching Strategy
Expand Globally, while mass producing
hybrid technology (Aggressive)
Continue to compete in automotive
market, while focusing on core profitable
products (Passive)
76. Expand Globally
Develop a plan:
Expand into different market segments
China
Europe
Stronger Marketing campaign
Brand Awareness in foreign markets
77. Focusing On Core Products
Develop a plan:
“Slim down to grow”
Getting
rid of weakest brands and using that money to invest into
new product development and marketing
Separate the company’s slow-selling secondary brands, and
concentrate on shoring up its core business.
79. Strategic Intent (Goals)
Increase total sales in European Auto Industry.
Become industry leader in the Chinese
market.
Pass General Motors and become the highest
ranked company in the US automobile market
80. Expanding Globally Pros
Larger market potential, increase in sales
Better brand recognition
Access to different economies of scale
Extend product life cycle by reaching larger
markets
Operational flexibility
81. Expanding Globally Cons
Foreign economies are all structured
differently
Labor in foreign countries
Lack of brand recognition
Low customer loyalty
Higher marketing costs
82. “Slim Down to Grow” Pros
More room to focus on specific products
Easier to market to certain economies
Less costs associated with product
development
Better chance of financial safety
83. “Slim Down to Grow” Cons
Loss of highly-skilled and reliable workers and the
added expense of finding new workers
An increase in overtime wages
A decline in customer service because workers
feel they lack job security after layoffs
Restructuring programs sometimes take years to
complete because of ensuing employee confusion
and the amount of time it takes for employees to
adjust to their new roles and responsibilities
84. Preferred Choice
Expand Globally, while mass producing
hybrid technology (Aggressive)
85. Arguments for Preferred Choice
Car ownership in China has more than
doubled in the last five years, from 12% of
households in 2004 to 28% in 2009
Report show that it's possible for China's
percentage to top 50% by around 2015.
Chinese have become less sure about their
preferences, leaving a large group of
undecided customers
European market has increased demand for
fuel efficient compact cars
88. Annual Objectives - Year 1
Total Cost: 1.2 billion (China)
Franchise: $500,000+
Technology Investment: 750 million
Operating Cost: 400 million
Unforeseen Cost:1.5 million
Total Earnings: 3.5 billion
89. Annual Objectives - Year 2
Total Cost: 1.2 billion (Europe)
Franchise: $500,000+
Technology Investment: 750 million
Operating Cost: 400 million
Unforeseen Cost:1.5 million
Total Earnings: 3 billion
90. Annual Objectives - Year 3
Total Cost: 1.7 billion
Technology Investment: 750 million
Operating Cost: 800 million (400 China/Europe)
Unforeseen Cost:1.5 million
Total Earnings: 7.5 billion
Europe Market: 3 billion
China Market: 3.5 billion
91. Implementation
Increase Research and Development of
Hybrid energy
Joint venture with energy companies
Help to develop longer lasting fuel supplies
Increase Foreign market share
China
Europe
93. Trigger/Contingency-1
Trigger:
Unstable economy
Contingency Plan:
Reduce lower selling models/product lines to maintain
profitability
Downsize work force to generate operating cash
94. Trigger/Contingency-2
Trigger:
Natural disaster
Affects gas prices
Affects production in foreign sectors
Contingency Plan:
Develop partnership with relief organizations
Donate F150s (help brand awareness)
95. Mission Statement – Revision
ONE FORD MISSION:
ONE TEAM:
People working together as a lean, global enterprise for automotive
leadership, as measured by:
Customer, Employee, Dealer, Investor, Supplier, Union/Council, and
Community Satisfaction
ONE PLAN:
Aggressively restructure to operate profitably at the current demand and
changing model mix throughout the world
Accelerate development of new products our customers want and value
Finance our plan and improve our balance sheet
Work together effectively as one team to manufacturer the safest possible
vehicle
ONE GOAL:
An exciting viable Ford delivering profitable
ONE WORLD:
Strive to be the safest automobile manufacturer in the world along with
providing consumers with eco friendly vehicles.
Not only did Ford revolutionize the development of the automobile as a product, he is also the visionary behind the idea of mass production. Ford's ability to make automobiles affordable for the masses is cited as a driving force behind both the automobile industry creation of a middle class in America.The Highland Park plant in Michigan begins operations as the first moving assembly line and making Model T production 8 times faster.
* Ford Explorer it has become the nation’s best-selling SUV model.
2012 models have to meet government emissions standards. For example state regulations by 2016 will require at least mpg of 35.5 mpg.
Can easily switch manufactures
Low switching cost for buyers.
In regards to the size of potential target markets, if a market has a high GDP, consumers will be more likely to buy high-end or luxury cars Sales in Eastern Europe have increased by 9.4% over the last year while sales in Russia have increased by 50% and sales in Turkey by 110%
Consumer habits are different in different geographical areas. Ex) American consumers tend to drive much larger cars than European consumers Ford now designs cars around the travel habits of its consumers
Ford has a very strong supply chain collaboration as they have manufacturing plants in more than 30 countries Ford’s high level of product development allow them to meet the needs of all of their customers
Hybrid and electric cars are becoming increasingly popular and as of 2010 Ford had made more than half of their products available as hybrids Ford’s Michigan assembly plant is now powered by Solar energy and this saves them money and will help them as they begin building plug-in hybrid vehicles The Ford Fiesta sedan is Ford’s number one selling car in Europe for the past two years
- In 2006 had to lay off one third of the work force to remain profitable, – Constantly producing new models and redesigning existing modelsSustainability strategy (more fuel efficient cars, pilot program in Toronto encourages public transit, tackles short and long term sustainability challenges)3. Only company that did not receive government bailout during the steepest economic downturn in decades,Put up company assets including Ford logo as collateral to raise 26.2 billion in loans for North America,Eliminate as much as 10.4 billion dollars in debt by giving cash and stock to debt holders 4. -Committed to diversity in the workplace -Sells vehicles in 200 markets and employs 345,000 employees in 6 continents -Transformation to a team based workplace
WASHINGTON/DETROIT | Thu Apr 14, 2011 11:11am EDT WASHINGTON/DETROIT (Reuters) - Ford Motor Co and U.S. safety regulators have agreed to a greatly expanded recall of the best-selling vehicle in North America, the Ford F-150 pickup truck, the regulators said on Thursday.The expanded recall is for a possible short-circuit that could cause airbags to deploy unexpectedly, and involves nearly 1.2 million F-150 pickup trucks and 16,000 Lincoln Mark LT vehicles, said the U.S. National Highway Traffic Safety Administration.This is in addition to a previous recall of 144,000 Ford F-150 trucks, bringing the total for this issue to 1.33 million vehicles, NHTSA said.
In this economy most people will only purchase a new or second car if they are in a stable financial situation which most aren’t during a recession, this is where better marketing strategies must be implemented The fuel efficiency plan will set rules and regulations on cars built between the years of 2012 and 2016 Rising fuel prices have a direct effect on the economy and consumer spending habits which have recently been hurting the automobile industry Because of the environmental issues surrounding automobiles powered by gas, there has been an increasing demand for cars with lower emissions
Ford is producing more hybrid and electric vehicles as part of their strategy to save fuelFord sustainability strategy is based off of three separate components. 1.) Hard Science 2.) It tackles both long and short term sustainability challenges 3.) Its heretical Source: http://blogs.hbr.org/winston/2011/01/fords-impressive-sustainabilit.html
In March 2011 Ford’s main US manufacturing plant in Michigan became completely operated through the use of solar powerFord's global electrification strategy will deliver a suite of five new electrified vehicles in North America and Europe by 2013 and builds on the company's overall vision of offering the widest possible range of fuel-efficient, low-emission technological solutions. Ford is committed to working with technology leaders, the energy industry and government to prepare consumers for a future with electric vehicles.The global key is a proven design that has been used very successfully in Europe for some timenow. The increased security of this global lock & key system meets global securityrequirements and has better security protection vs. the previous North American lock & keysystem
(Talk about mass producing cars and be able to sell them fast and cheap like first did with model T)
For example, U.S. automobile manufacturers had approximately a $1,000 cost disadvantage for their cars compared to similar classes of Japanese cars.Read more: Downsizing and Rightsizing - strategy, organization, levels, system, advantages, type, company, hierarchy, businesshttp://www.referenceforbusiness.com/management/De-Ele/Downsizing-and-Rightsizing.html#ixzz1K0jPzASo
We were the first to mass produce automobiles affordable for the middle class and now we need to continue our tradition and mass produce hybrid that are affordable and reliable.
Based on North America 425 in operating cost and 500 million in technology. $6.6 billion earnings