STRATEGIC

MANAGEMENT

CASE ANALYSIS
FORD MOTOR COMPANY
-2007

)
 ABSTRACT
Ford Motor Company is a family company founded in 1903 by
Henry Ford. His idea was to combine mass production with mass
consumption to produce sustained economic growth on socially just
grounds. Through a century of significant change, especially in
recent years, Ford has maintained a commitment to social justice
and human rights within its corporate culture and, as an employer,
affords its workers fair and just working conditions from a moral as
well as a business point of view.

Today, Ford Motor Company, based in Dearborn, Michigan,

manufactures and distributes automobiles across six continents.
The company has about 205,000 employees and runs 90 plants
worldwide. The company’s automotive brands include Ford, Lincoln,
Mercury and Volvo. Besides those companies it owns and operates,
Ford has relationships with over 2,000 production suppliers that
operate at over 5,500 manufacturing sites and that produce
130,000 parts for inclusion in the vehicles the company sells.
Overall, the company spends over $90 billion globally per year on
production and non production purchases.

General motors’(GM),Toyota motors(TM) and Daimler Chrysler

AG(DCX) are Ford’s major competitors.Autodata of 2006,which
reveals that Ford ranked # 2 after GM. Among the 3
competitors.GM annual revenues are $207 billion as compared to
DCX and TM that is $200.1 billion and $179 billion respectively.GM
operates globally and has approximately 7350 dealerships in
US,750 in Canada,300 in Mexico along with 15,600 distribution
outlets overseas.GM held an industry leading that is 24.6% of the
US market. Toyota ranked #3, have a market share of 15.4%of US
market. Its operates in 3 segments automotive operations, financial
service and other operations. Toyota models include the Corolla
and RAV4 .It also operates on e-commerce marketplace known as
gazoo.com and sells vehicles in Japan, North America, Europe and
Asia.AG market share is of 14.4% of US market. Their product lines
include both jeep and dodge. They sell parts and vehicles under a
brand name called MOPAR.Their profitable segment is Mercedes
Benz.

According to the auto data, Ford annual revenues are below to the
industry average that is $166.13 billion of Ford as compared to
$187.84 billion i.e. of industry. it shows that ford have a market
share that is very close to the industry but still it has to face some
threats such as rising cost of fuels, interest rates, rising costs of
health care and pensions of auto makers. Limited supplier
inventory also are the reasons of lower sales. Ford had bringing its
Taurus model back to production by cutting down its production
capacity which decreases the overall morale within the company.
Mortgage rates also badly affected, the Americans faced challenges
in financing cars by automobiles manufacturers. The biggest threat
is that Toyota, GM and Chrysler are offering similar incentives as
compared to one another on the purchase of their particular brands
model.
CURRENT VISION, MISSION, OBJECTIVES,
STRATEGIES:
Vision:

“To become the world's leading consumer company for

automotive products and services. “
Mission:

“We are a global family with a proud heritage passionately

committed to providing personal mobility for people around
the world.
We anticipate consumer need and deliver outstanding
products and services that improve people's lives.”
Values
our business is driven by our consumer focus, creativity,
resourcefulness, and entrepreneurial spirit.
We are an inspired, diverse team. We respect and value
everyone's contribution. The health and safety of our people
are paramount.
We are a leader in environmental responsibility. Our integrity
is never compromised and we make a positive contribution to
society.
Objective:

To sell vehicles and make a profit for the stockholders, thus

providing jobs for thousands of workers. One of their major
goals is to contribute to stabilizing the climate by considering
reducing long-term emission.

Strategy:
Ford launched a major revitalization strategic plan with three
key elements:
- A strong focus on products.
- An emphasis on cost reductions.
- A commitment to right-sizing the business.

Components of Yes/No
Mission Statement
Customer oriented yes
Concern for employees no
Public concern no
Self concept no

Market yes

Product no
Technology no
Philosophy yes
Concern for survival no
and growth

-Develop new improved vision and

mission statements:

Vision:

To be the ultimate choice for your transportation preference

with customized services

Or
Our vision :Is to make you mobilize in every part of the world.

Mission:

“We are a team of enthusiastic and keen people working

together as a lean and a global enterprise for automotive
leadership and to make life of our prestigious customers easy
by providing them safe and luxurious driving experience,
adapting the rapid change in technology and maintaining the
balance of ecosystem and environment is our manifesto with
the stand of making our organization and employees
profitable which is achieved through continuous creativity,
belief in integrity and team work.”

- Identify external opportunities and

threats and construct EFE matrix:
KEY EXTERNAL FACTORS

OPPORTUNITIES weight Rating Weighte

d score
1.New Research and development 0.06 4 0.24
projects in China and Australia will
produce excess units.i.e 410,000 and
establishing dealer ships and so the
vehicles will eventually sold to some
80 countries.
2.China market is a two-tier: demand 0.08 4 0.32
exist at both high and low end price
ranges& model and FORD have 5.7%
market share over there.
3.Online shopping of cars with 0.15 1 0.15
customization without
intermediaries.
4.FORD company can offer 0.05 2 0.1
incentives as others do in the
industry to entice customers like
Toyota and Chrysler.
5.As customers want highly fuel 0.10 2 0.2
efficient vehicles, FORD can enter
into such a new product line
featuring this quality specifically.
THREATS
1.Global financial crisis, especially in 0.10 3 0.3
U.S, backed by the disastrous
condition in mortgage industry.
2.Fluctuation in currency exchanges. 0.06 2 0.18
3.Increasing fuel prices. 0.10 2 0.2
4.Strict regulations regarding 0.06 4 0.24
engines effecting environment due
to CO2 emission from vehicles.
5.Increasing raw material prices. 0.10 1 0.1
6.The distinction of views that rises 0.05 2 0.1
between dealers and manufacturers
due to the overall environment.
7.Toyota motor was expected to 0.09 3 0.27
replace Ford as a number 2 auto
maker after GM in united states.
Total 1.00 2.4

-Construct Competitive profile Matrix

(CPM):
 FORD G.M Toyota
Critical Weigh
Factor t R R R
W.S W.S W.S

Market
Share 0.15 3 0.45 4 0.6 2 0.3

Advertisin 0.08 3 0.2 2 0.16 3 0.24

g 4
Global
Expansion 0.08 2 0.16 3 0.24 3 0.24

Productio
n 0.06 2 0.12 4 0.24 3 0.18
Capacity
Price
Competiti 0.10 3 0.3 3 0.3 3 0.3
ve
Consumer
Services 0.10 3 0.3 3 0.3 3 0.3

Financial
Position 0.13 3 0.39 2 0.26 4 0.52
Distributi
on 0.10 2 0.20 4 0.40 3 0.3
Channel

Innovatio 0.10 3 0.30 3 0.30 4 0.40

n
Consumer
Loyalty 0.10 2 0.20 3 0.3 4 0.4

Total 1.00 2.36 3.10 3.18

- Identify internal strengths and
weaknesses and construct IFE matrix:
Key internal factors

STRENGTHS weight rating Weighted

score
1.Operating in 6 continents, 300,000 0.15 4 0.6
employees, and 108 plants globally.
2.South America and Europe divisions 0.05 4 0.2
increased profits in 2006 as compared to the
prior year 2005 ($1.7B from $1.3B)
3.The company produces hybrid energy 0.05 4 0.2
vehicles and has joined forces with British
petroleum to develop hydrogen power in
concern to the environment.
4.Ford GM, Chrysler owns 91% of the full size 0.05 3 0.15
truck segment compared to 5.5% for Toyota.
5.For the six months ended in June 30, 2007, 0.07 3 0.21
Ford revenues increased 6% to $87.26
billion.
6.Recently introduced R&D services in China, 0.08 3 0.24
and designing a global light commercial
vehicle in Australia.
7.Increase in automotive sales and higher 0.08 3 0.24
financial services revenues ($16.5B from
$15.3B).
WEAKNESS
1.Inventory turnover ratio decreased in 2006 0.06 2 0.12
as compared to the prior year 2005, from
17.22 to 13.829.
2.The debt-to-total asset ratio increased in 0.06 2 0.12
the year 2006 than in 2005, from 0.95 to
1.012.
3.Reduced market share and consumer 0.12 1 0.12
desire in competition with Toyota and
Honda.
4.Operations in north America were not 0.05 1 0.05
performing well.
5.Net income was reduced to $1.6B in 2006 0.10 1 0.10
by 9%.
6.Ford is no longer selling the old Taurus and 0.03 2 0.06
its new Taurus can not make up the lost
volume.
7.Total assets turnover is also declining. 0.05 1 0.05
Total 1.00 2.49

MATCHING STAGE

-SWOT ANALSIS

Strength Opportunity strategies (SO):

• Focus more on producing hybrid fuel efficient cars in

the next 2 years.(S3, O5)

• Use other forms of energy like solar to increase the

efficiency by investing more in research and
development (S1, O1).

• Emphasize more on emerging technologies mainly in

China to introduce greener and innovative product line
through R&D facility (S6, O2).

Weakness and Opportunity (WO):

• Can increase turnover through market penetration in

China, Australia and Asia by considering the needs and
want of the locals. (W1, O2, O1)

• More acquisitions of the local brand of china to increase

the market share sustaining the brand image.(O2,W3)
 • Taurus could be introduced in Asian market with new
design or shift the resources to develop more SUVs of
low price range models (W6, O2).

Strengths and Threats (ST):

• More consumer benefits by introducing financing

schemes to easily lease the car at low cost (S7, T1)

• Can gain competitive edge to become an

environmentally friendly firm (S3, T4)

• Joint venture with the construction firms to maintain the

share of ford trucks in the market (S4, T1).

• Increase in automotive sales by going online and it will

also cut the cost of intermediaries.(S7, T5)

• Weakness and Threats (WT)

• Divestiture north America division and uses its cash

in introducing other product line for innovation (W4,
T7).

• Pursue forward integration by buying the dealers

facilities. (W3,T6)

-BOSTON CONSULTING GROUP MATRIX:

fig (2)
INDUSTRY GROWTH%:

USA: http://www.clevelandfed.org/research/trends/2009/0309/02ecoact.cfm

The industry trend has been assigned on the basis of the

trends in the 2006 and past few years in the US market. One
big reason of the decline of the rate was the economic
downturn and its effect on their sales. According to the data
that makes three consecutive years in which light vehicle
DIVISION REVENUE( PERCENT PERCENT INDUSTRY
M) REVENUE MARKET GROWTH
SHARE
USA 75,122 47.27% 16 10
EUROPE 30,048 19.13 8.5 15
PAG 30,029 18.9 3.2 13
ASIA 6539 4.1 2.4 18
/AFRICA
FINANCIAL 16800 10.6 5 12
SERVICES
TOTAL 15889 100 - -
sales have declined, after declines of roughly 2.5 percent in
both 2006 and 2007. Sales at Ford, GM, and Chrysler (the big
three) have been declining steadily since 2000.

EUROPE:
http://www.acea.be/index.php/news/news_detail/slight_upturn_in_2
006_sales_stems_from_growth_recovery_in_main_eu_markets/print

The European automotive industry ended 2006 with a slight

upward trend in new vehicle registrations (+1.4%) compared
to 2005. Positive developments, notably a better overall
economic performance in the EU, contrasted with challenging
factors such as high interest rates, overall fiscal tightening, a
firm Euro weighing heavily on exports, a slowing of global
economic growth and oil prices fluctuation.

ASIA AND AFRICA:The automotive market in Asia remained

favorable, fueled by vigorous demand in China and Thailand. China
is developing into one of the world’s major vehicle manufacturing
nations. In Other Regions, solid demand in the markets of Central
and South America and Africa demonstrated that the global auto
market continues to grow.

FINANCIAL SERVICES: there is an increase in the reliability

of automotive industry to operate finance sector due to the
growing demand. For ford it has really proved to be the
milestone in increasing the profits. Daimler Chrysler had
annual revenue of 200.1 billion in 2006.

EVALUATION:

The entire divisions lie in the 1st quadrant of the matrix called
Question mark, this means it has low market share yet they
are competing in the high growth industry. They are in high
growth markets so the potential to make money is there.
Generally theses divisions needs high amount of cash to
sustain them in the highly competitive market so that large
amount of cash can be generated through strengthening of
their competitive advantage. The strategies that could be
applied are intensive which includes market penetration,
Market development or product development. But if the
conditions of one the division become worsen divestiture can
also be pursued.
Fig 2:

RELATIVE MARKET SHARE

1.0 0.5
0.0

HIGH 20
LOW STARS QUESTION MARK
-20

• RED: USA
(47.27%)

• PURPLE: CASH COWS DOGS

EUROPE
(19.13%)

• BLUE:
FINANCIAL
SERVICE (10.6%)

• GREEN: PAG (18.9%)

• SEA GREEN: ASIA AFRICA (4.1%)

-IE MATRIX:
Divisions of FORD motor company according to product line:

EFE

Lincoln/mercury:

Opportunity weight rating Weighted

score
As the cars fall in this division are 0.50 3 1.5
luxurious, so it can adjusted the
customers who want special
options.
Threat
Limited market appeal 0.50 1 0.50
total 1 2

IFE

Strengths
Having prestigious customers, like 0.40 3 1.2
presidents and head of the states.
Weakness
Lack of new models till 2006 0.60 2 1.2
total 1 2.4

2. Mazda

EFE

Opportunity
Amidst the world financial crisis, 0.30 3 0.9
reports emerged that Ford was
contemplating a sale of its stake in
Mazda as a way
of streamlining its asset base
Mazda plans to introduce its 0.30 3 0.9
innovations – bio plastic internal
consoles and bio-fabric seats -
Threat
Declining net profits in 2006 0.40 2 0.84
total 1 2.64
IFE:
Strengths
Mazda has conducted research in 0.50 4 2
hydrogen-powered vehicles for
several decades. Mazda has
developed a hybrid version of
its Premacy compact minivan using
a version of its signature rotary
engine that can run on hydrogen or
gasoline
Weakness
The diversification stressed the 0.50 2 1
product development groups at
Mazda past their limits. Dozens of
different models confused the
customers as well as there is the
explosion of similar new models.
total 1 3

3. Volvo

EFE

Opportunity
As the environment of overall world is 0.70 4 2.8
getting scary day by day,it is the
opportunity for Volvo as it is known for
its high safety standards
Threat
Rapid changing in technology can create 0.30 1 0.30
confusions in consumers.
total 1 3.1

IFE

Strengths
Volvo Car Corporation was part of 0.70 3 2.1
Ford Motor Company's Premier
Automotive Group (PAG). Since its
acquisition by the PAG, the
company has grown in its range of
vehicles.
Weakness
Driven by a single owner as a non- 0.30 1 0.30
commercial vehicle.
total 1 2.4

4. Jaguar and land rover

EFE

Opportunity
Can have mutual benefits. 0.60 3 1.8
threat
Complexities in dealing the sales and 0.40 2 0.8
acquisitions of this division.
total 1 2.6

IFE

Strengths
Since Land Rover's May 2000 0. 40 4 1.6
purchase by Ford, it has been
closely associated with Jaguar. In
many countries they share a
common sales and distribution
network (including shared
dealerships), and some models
now share components.
Weakness
Between Fords purchasing Jaguar 0.60 1 0.60
in 1989 and selling it in 2008 it did
not earn any profit for
the Dearborn-based auto
manufacturer.
total 1 2.2

5. Aston martin

EFE:
Opportunity
Allow the company to enter in a larger 0.5 3 1.5
market. 0
threat
High competition in larger markets. 0.5 2 1
0
total 1 2.5

Strengths
Aston Martin has also boosted its 0.70 4 2.8
worldwide appeal by opening more
dealers in Europe, as well as
branches in China for the first time
in its 93 year history
in Beijing and Shang
Weakness
So much of innovation would 0.30 2 0.6
increases the costs of production.
TOTAL 1 3.4

6. Ford motor credit

Opportunity
Offers competitive financing rates with 0.6 3 1.8
flexible terms as it is the biggest need of 0
time due to global financial crisis.
Threat
Threats of getting back the finances in 0.4 3 1.2
case of leasing services. 0
total 1 3

Strengths
World’s largest finance company, 0.60 4 2.4
gained increased profits.
Weakness
Ford financial service factor Hertz 0.40 1 0.4
was divested in 2006 despite
giving profits in prior year.
total 1 2.8
7. Genuine parts & services

Opportunity
Offers the know how about parts, and the 0.70 4 2.8
beginners in this field providing repair
and maintenance of the Lincoln and
mercury, which can benefit the large
people of masses who are unaware of
this.
Threat
It basically deals with the part of 0.30 2 0.6
LINCOLN AND MERCURY, which are very
expensive.
total 1 3.
4

Strengths
Attract customers of LINCOLN AND 0.50 3 1.5
MERCURY, and support one owns’s
division.
weakness
Only offers the part of Lincoln and 0.50 2 1
mercury not the other ones.
total 1 2.5

8. Motor craft

Opportunity
As if the ford is innovating this segment 0.70 3 2.1
provides part by the vehicle make,
model, and year and identification
number.
threat
Decreased innovation can produce 0.30 2 0.6
decreased results in this sector.
total 1 2.
7
strengths
This segment provides parts of 0.50 3 1.5
Lincoln and mercury by the vehicle
make, model, and year and
identification number.
weakness
Only offers the part of Lincoln and 0.50 2 1
mercury not the other ones.
total 1 2.5

Division EFE IFE

Lincoln/mer 2 2.4
cury
Mazda 2.64 3
Volvo 3.1 2.4
Jaguar and 2.6 2.2
land rover
Aston 2.5 3.4
martin
Ford motor 3 2.8
credit
Genuine 3.4 2.5
parts and
services
Motor craft 2.7 2.5

The The IFE total weighted score of

EFE divisions.
total STRONG AVERAGE WEAK
WS 3.0 TO 4.0 2.0 TO 2.99 1.0 TO 1.99
4
3 2 1
HIGH 4 1 2 3
3.0 TO (3.4,2.5)
4.0 (3.1,2.
3 4)
(3,2.8)
 4 5 6
MEDIU (2.7,2.5)
M (2.6
2.0 TO 2 (2.64,3) ,2.2)
2.99
(2.5,3.4) (2,2.
4)
1
7 8 9
LOW
1.0 TO
1.99

SPACE MATRIX:

INTERNAL STRATEGIC EXTERNAL STRATEGIC

POSITION POSITION
FINANCIAL RAN ENVIRONMENTAL RAN
STRENGHT(FS) K STABILITY(ES) K
1. South America and 5 1.Currency fluctuation -3
Europe profits increased
from 1.3billion to 1.7
billion.
2.Inventory turnover 4 2.Inflation -5
3.Net income is low as 1 3.Customer demands of -4
compared to industry new and innovative
I:e: -6.82 b as 6.32b models
4. In USA, market share 4 4.Technological changes -3
decreased from 17%to
16%.
5.High mortgage rates -5
 6.Fuel prices changes -4
COMPETITIVE INDUSTRY
ADVANTAGE(CA) STRENGHT(IS)
1.Product quality -2 1.technological know 5
how
2.Credit service division -1 2.ease of entry into 3
achieved $16.5b in market
2006 from 15.9 b in
2005
3.ford,gm and Chryslers -3 3.financial stability 4
owns 91%of the truck
segment.
4.hybrid energy -1 4.profit potential 4
vehicles.
5.market share was -2 5.growth potential 4
17.5%and inventory of
624,754.

AVERAGES:

FINANCIAL STRENGTH=3.5

COMPETITIVE ADVANTAGE=-1.8

ENVIRONMENTAL STABILITY=-4

INDUSTRY STRENGHT=4

ON X-AXIS:

CA+IS=-1.8+4=2.2

ON Y-AXIS:

FS+ES=3.5-4=-0.5

SPACE Matrix Graph

Conservativ Aggressive
e
+
6

+
4

+
2

+ + + + + +
-6 -5 -4 -3 -2 -1
1 2 3 4 5 6
-2

(2.2,-0.5)
-4

-6 Competitive
Defensive

GRAND STRATEGY MATRIX:

Rap
id
Mark
et
 Grow
th

Weak
Competi Strong
tive competitiv
Position e Position

Slow
Market
Growth
 MODIFICATION CUTTING COST
AND THROUGH
DIVERSIFICATI FORWARD
ON OF INTEGRATION
PRODUCT LINE
Key factors weight AS TAS AS TAS
OPPORTUNITIES
1.New Research 0.06 4 0.24 1 0.06
and development
projects in China
and Australia will
produce excess
units.i.e 410,000
and establishing
dealer ships and
so the vehicles will
eventually sold to
some 80
countries.
2.China market is 0.08 3 0.24 2 0.16
a two-tier:
demand exist at
both high and low
end price ranges&
model and FORD
have 5.7% market
share over there.
3.Online shopping 0.15 2 0.30 4 0.60
of cars with
customization
without
intermediaries.
4.FORD company 0.05 - - - -
can offer
incentives as
others do in the
industry to entice
customers like
Toyota and
Chrysler.
5.As customers 0.10 4 0.4 2 0.2
want highly fuel
efficient vehicles,
FORD can enter
into such a new
product line
featuring this
quality
specifically.
THREATS
1.Global financial 0.10 - - - -
crisis, especially in
U.S, backed by the
disastrous
condition in
mortgage
industry.
2.Fluctuation in 0.06 2 0.12 3 0.18
currency
exchanges.
3.Increasing fuel 0.10 4 0.4 3 0.3
prices.
4.Strict 0.06 4 0.24 1 0.06
regulations
regarding engines
effecting
environment due
to CO2 emission
from vehicles.
5.Increasing raw 0.10 2 0.2 4 0.4
material prices.
6.The distinction 0.05 1 0.05 4 0.20
of views that rises
between dealers
and
manufacturers
due to the overall
environment.
7.Toyota motor 0.09 3 0.27 2 0.18
was expected to
replace Ford as a
number 2 auto
maker after GM in
united states.
TOTAL 1.00
Key factors weight AS TAS AS TAS

STRENGTHS

1.Operating in 6 0.15 3 0.45 2 0.30

continents, 300,000
employees, and 108
plants globally.
2.South America 0.05 - - - -
and Europe divisions
increased profits in
2006 as compared
to the prior year
2005 ($1.7B from
$1.3B)
3.The company 0.05 4 0.2 1 0.05
produces hybrid
energy vehicles and
has joined forces
with British
petroleum to
develop hydrogen
power in concern to
the environment.
4.Ford GM, Chrysler 0.05 3 0.15 2 0.10
owns 91% of the full
size truck segment
compared to 5.5%
for Toyota.
5.For the six months 0.07 1 0.07 2 0.14
ended in June 30,
2007, Ford revenues
increased 6% to
$87.26 billion.
6.Recently 0.08 3 0.24 1 0.08
introduced R&D
services in China,
and designing a
global light
commercial vehicle
in Australia.
7.Increase in 0.08 4 0.32 3 0.24
automotive sales
and higher financial
services revenues
($16.5B from
$15.3B).
WEAKNESS

1.Inventory turnover 0.06 2 0.12 1 0.06

ratio decreased in
2006 as compared
to the prior year
2005, from 17.22 to
13.829.
2.The debt-to-total 0.06 - - - -
asset ratio
increased in the
year 2006 than in
2005, from 0.95 to
1.012.
3.Reduced market 0.12 4 0.48 3 0.36
share and consumer
desire in
competition with
Toyota and Honda.
4. Operations in 0.05 - - - -
north America were
not performing well.
5. Net income was 0.10 - - - -
reduced to $1.6B in
2006 by 9%.
6.Ford is no longer 0.03 4 0.12 3 0.09
selling the old
Taurus and its new
Taurus cannot make
up the lost volume.
7.Total assets 0.05 3 0.15 1 0.05
turnover is also
declining.
Total 1.00 4.76 3.81

RECOMMENDATION:
According to the ford case analysis and final decision of
QSPM, we proposed two strategies which include modification
and diversification and other one is cutting cost through
forward integration .the scores of QSPM is 4.76 for the first
one and 3.81 for the second. Therefore we conclude that
diversification and modification strategy is the best one and it
should be pursued by Ford motors.