COMPARATIVE ANALYSIS:

FORD MOTOR COMPANY

TOYOTA MOTOR CORP
dr Agata Kocia
based on presentation by:
PAWE ORZECHOWSKI, MACIEJ OWIT &
ANDRZEJ BENCZEK

FORD: the beginning

Henry Ford designed his first moving assembly

line in 1913
Wheels for the world-the motto behind
popularization of cars
Each section of the production process was
divided into component parts
Combination of precision, continuity, and fastpaced brought the world mass production
In Highland Park, Model T production reached
record levels, every day a car came of the
assembly line every ten seconds

TOYOTA: the beginning

Toyota's history began at the end of XIX century

Sakichi Toyoda invented Japan's first power
loom which revolutionized the countrys textile
industry
Two years later, he founded the company
Toyoda Automatic Loom Works
Toyody Sakichis son, Kiichiro Toyoda invested
100,000 pounds in the creation of Toyota Motor
Corporation in 1937 (TMC)
Sakichi Toyoda received this money for selling
the patent rights to an automatic loom

FORD

The fourth-largest automotive company in the world in terms of

sales
Sells cars on 6 continents
Car Brands: Ford, Mercury, Lincoln and Volvo

in March of 2010 confirmation of sale of Geely Automobile Holdings Ltd)

Since the mid-90s Ford continually loses significance in the

American market
Over the same period steadily increases its share in the European
market
Reasons for the gap between the development of the brand in the
U.S. and Europe:

high labor costs in the U.S.

high expenditure on healthcare in the U.S.
strong trade unions in the U.S. (high pension commitments)
strong economic growth in lower combustion cars

TOYOTA
The biggest carmaker in the world in 2009

(more than 7.5 million cars)

Main markets are Japan and North
America, but recently we can see a strong
growth in Asian and South America
markets
Toyota has three brands: Toyota, Lexus
and Scion

FORD: more economic

Dominance of large cars: SUVs, Pick ups

Rapid fluctuations in oil prices and legislators
striving to reduce consumption of materials led
to reorganization
Restructuring of the three production lines for
production of more economic models in Europe
(Mondeo, Focus etc.)

in short-run minimization of costs

Ultimately, Ford intends to make engines in all

their models to be more economical
In 2009 to market were introduced four hybrid
models based on technology leased from Toyota

FORD: hybrid technology

Currently, Ford has four hybrid models

In 2010, the company plans to spend an

additional $450 million to develop electric motors
By 2012, Ford wants to produce own hybrid
technology and plug-ins

Ford Focus Hybrid is a direct threat to so far the most

popular Prius (hybrid line of Toyota)

Ford has invested more than $550 million in

restructuring its manufacturing facility in Michigan

What if the market chooses a different path?

TOYOTA: hybrid technology

Toyota as one of the first ones started a hybrid

cars production line (including leasing its
technology to Ford)
At present, hybrid Toyota - Prius line, represents
approximately 73% of all hybrid vehicles sold in
the U.S.
So far in the U.S. Toyota sold the 1,000,000+
hybrid cars
In addition, Toyota announced its intention to
manufacture electric cars with lithium-ion
batteries Toyota Plug-HV

FORD: ONE FORD

Despite the very large amount

of cars produced, so far Ford
has derives small economies
of scale by applying a
separate, independent
technologies and models for
European, US and developing
markets
One Ford changed
approach

Ford moves the emphasis to

universal models for use in
different regions of the world
(the first "world car"-new Ford
Fiesta)

FORD: wrong sales model

From the 90s Ford has created demand

Ford exceptionally strong suffered from a crisis on a real

estate market

sales on installments without interest charged

discounts
promotions combined with a loan

in recent years, sales in the U.S. were strongly associated with

the property market
it is estimated that in California, 30% of car purchases has been
financed with a mortgage

Feeling the effects of this approach, Ford began to

change strategy

less emphasis on creating demand

emphasis on quality and safety

FORD: developing markets

Ford is mainly engaged in the American market,

which slowly begins to lose its attractiveness
Fords task now is to develop a universal line for
use in every country (European Ford Fiesta in
the U.S., Ford Transit Van in Asia)
Whether european car models will be appealing
to clients in India or Brazil depends the future of
Ford in the long term.

TOTOTA: withdrawal of models

Several serious flaws in the models has significantly hurt

Toyotas image

In the short term:

in 2009, the company had to withdraw from the market 3.8 million
vehicles due to the acceleration system flaw
it is estimated that due to defects and withdrawals Toyota models
suffered losses of $ 3 billion in 2010
over the past year, throughout the world over 9 million vehicles
have been withdrawn
for consideration more than 30 lawsuits are waiting

In the long term:

current crisis has significantly hurt the reputation of the company

competition has used well (Chrystler, Ford and Honda
hasorganized the promotions, giving discount on a new car for
customers who got rid of the old Toyota)

TOYOTA: the future

Car Sales in highly developed countries will fall and

remain at low levels

majority of consumers demand is already satisfied

relatively low economic growth

The biggest outlays directed on emerging markets

mainly Brazil, Russia, India, China (BRIC) countries

Toyota earlier than other companies in the sector began to invest

in the development of appropriate infrastructure and brand
awareness in the above countries
in 2009 Toyota announced the beginning of motor vehicle
production in India (the company Toyota Kirloskar)
in 2010 Toyota plans to produce 100,000 cars in the new factory
opened in India

TOYOTA:
trends and expectations (1)

Japan

investing in luxury brands (Lexus)

in 1990 10% of Japan's population was over 65 years, in 2006, the number
suppose to double
older society saves more and raises the demand for more luxury goods

USA

collapse of the real estate market

strength of real estate market has always been related to car market
because consumers often fund the purchase of car with a mortgage owed
stagnation in credit market will reduce demand for new cars

demand for green technologies

oil prices are rising, resulting in increased demand for cars Hybrid (Prius
model)
in December of 2007. U.S. government passed a law requiring the car
manufacturers to reduce the combustion of up to 35 mpg for cars, trucks and
SUVs Toyota,
typically produces small, economical cars and its standards are already
satisfy new requirements

TOYOTA:
trends and expectations (2)

USA

hybrid legislation
USA introduces new law to encourage development of hybrid
technologies
at present, when buying a car you can count on the hybrid
tax relief of up to $ 3,400, depending on the amount of car
sales (the more cars the company sells the smaller the
deduction ) the aim is to support companies desiring to
enter the market with hybrid technology

World Market

demand for cars will depend on the trend in oil, steel

and aluminum prices

FORD

Ford is exposed to various kinds of risk not only to the

market risk

currency risk, commodity price changes, interest rate risk,

financing risk, risk of extraordinary events are just some of the
most important kinds of risk present
risk of loss of liquidity: hedge against it by sale of receivables
(securitization), issue of debt and bank loans
insurable risks: the loss (damage) of property, civil liability
companies insure themselves privately
they use derivatives to hedge currency, interest rate or change
in commodity prices risk by forwards, swaps, options
does not use derivative to speculate

TOYOTA

Toyota is exposed to risks arising from:

Instruments used to protect:

changes in exchange rates

interest rates
availability of materials
changes in prices of materials
forward contracts
currency and interest rate options
swaps

Unfortunately, Toyota does not protect itself from price

changes and changes in supply of materials

only protection is to maintain reserves of some materials

TOYOTA: currency risk

Toyota settles its invoices in Japanese yen which

increases its currency risk
Changes in exchange rates reflect very strongly
on company results

change in the dollar-yen exchange rate of 1% will

change revenues by about $42 million

Toyota protect itself from risk with the help of

swaps and futures
Despite this, the company is unable to protect
itself from a falling demand for exports of
Japanese cars due to a change in exchange
rates

SWOT analysis

FORD

TOYOTA

Thank you for your attention