2008

Case Study
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American multinational corporation based in Dearborn,
Michigan, a suburb of Detroit.

Distributes automobiles across six continents.

About 213,000 employees and about 90 plants

Worldwide

Wide variety of product line

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The Dream Becomes a Business
Ford Motor Company entered the business world on June
16, 1903, when Henry Ford and 11 business associates
signed the company's articles of incorporation.

With $28,000 in cash, the pioneering industrialists gave

birth to what was to become one of the world's largest
corporations.

Ford Motor Company's beginnings were modest. The

earliest record of a shipment is July 20, 1903, approximately
one month after incorporation, to a Detroit physician. With the
company's first sale came hope young Ford Motor Company
had taken its first steps.
Ford Motor Company offers a wealth of variety
to the automotive consumer. As they start their
second century of business, they are in a
position to appeal to the widest range of
potential customers. Each of their automotive
brands has a unique personality and holds a
distinct place in the Ford Motor Company
family.
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 Our Vision to become the world's leading
Consumer Company for automotive products
and services.

case study analysis 11 1/14/10

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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.
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. We constantly strive to improve in
everything we do. Guided by these values, we provide superior
returns to our shareholders.
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Automobile Industry
Market Structure: Perfect Competition

Largest auto market: U.S.

16 million vehicle in year, 22 firms

Big Five: GM, Ford, Toyota, Chrysler and Honda

What is The Fords Competitors
Objective?
Maximum Profit
Market share growth
Technological leadership
Service leadership
 U.S. Market Share - 2008
Other 15%
25%
17 Co.

11% 22%

11%
16%

Source: http://www.usnews.com
Subsidiaries
8 Brands (Ford, Lincoln, Mercury, Mazda, Volvo, Jaguar, Land Rover, Aston
Martin)

13 Brands (Buick, Cadillac, Chevrolet, GM Daewoo, GMC, Holden,

Hummer, Pontiac, Opel, Saab, Saturn, Vauxhall, and Wuling)

5 Brands (Toyota, Lexus, scion, Daihatsu, Hino)

4 Brands (Chrysler, Dodge, Jeep, Mopar)

2 Brand (Honda, Acura)

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 SWOT MATRIX
Leave Blank Strengths S Weaknesses
1. Customer Loyalty 1. In efficient
2. Diversities marketing in US
3. Total sales have 2. Closing 14 MF in
remain strong, over North America
$150 billion 3. Weak org structure
4. European Market (only white in top
share mgt)
5. Operate in 6 4. Limited warranty of
continents 30000 miles
6. Hybrid Mariner 2007 (competitors 100000)
7. Targeting all income 5. Reported year end
classes 2009 (Loss of $14
billion)
8. Supportive to Us
Govt. 6. Operating with $154
billion debt(2009)
9. Ranked 7 in fortune GM $42 billion
500
7. Cut 30,000 jobs
8. Poor operation
declerations
Opportunities O SO WO

1. Ford is American 1. Continue R&D for 1. Focus on social

Company, results in Cx hybrid automobile, marketing that will
trustworthiness pure battery electric cause more support
2. Progressive in technology motors from the Govt.
3. Forces Cx to return to
2. Open new production 2. Restructure to reduce
dealer for services
facility in eastern cost of labor and raw
4. European division
Europe and china material
Expected to become more
profitable
5. Sluggish global economy
(lower prices of fuel)
6. Cx desires for hybrid and
fuel efficient vehicles
7. By 2011 electronics are
expected to account for
40% of an average vehicle
value
8. China as vibrant market
Threats T ST WT

1. $ devalues against 1. Focus development 1. E.E.O, should

many major currencies on cutting edge. encourage black
2. GM and Toyota offers Fuel efficient people and
great discounts than automobiles
ford position them in
2. They should focus top management
3. Most Americans prefer
on more customer
foreign brands 2. Should offer at
oriented approach
4. United Auto Workers least 100,000 miles
rather than other
(Powerful union)
warranty on all
5. Competing in US
new vehicles (0
automobile market
meter)
6. New Toyota
manufacturing plants
all over
7. High Inventory cost
8. Global recession
Problems associated (FORD)
Minor
Transmission failure
Cracked rare panel
Key wont turn in the ignition
Manufacturing faults (rare cases)
Ford Focus problems
Major
Incurred huge costs from its planned series of job cuts and plant
closures.
Ford is cutting 30,000 jobs and closing 14 plants by 2012 to
reduce its costs.
High Fuel Consumption vehicle brands
Decrease in sales from the past few months
FINANCIAL STRENGTHS (FS) ENVIRONMENTAL STABILITY (ES)

Return on Asset (ROA) 1 Rate of Inflation -4

Leverage 1 Technological Changes -3

Net Income 2 Price Elasticity of Demand -3

Net Asset 2 Competitive Pressure -6

Return on Equity 1 Barrier to entry into the Market -2

Financial Strengths (FS) 1.4 Environmental Stability (ES) -3.6

COMPETITIVE ADVANTAGE (CA) INDUSTRY STRENGTH (IS)

Market Share -3 Growth Potential 5

Product Quality -2 Financial Stability 3

Customer Loyalty -2 Ease of entry into the market 6

Technological know-how -1 Resources Utilization 3

Control over supplier & Distributors -2 Profit Potential 4

Competitive Advantage (CA) -2 Industry Strength (IS) 4.2

X-axis: -2 + 4.2 = 2.2

Y-axis: 1.4+ -3.6 =- 2.2

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Financial Strength rating is 1 (worst) to 6 (best) Ratings
1 Operating revenue 5.0
2 Operating income 5.0
3 Net income 5.0
4 Debt-asset ratio 4.0
5 Cash flows 5.0
Industry Strength rating is 1 (worst) to 6 (best) 24.0
ES average -3.57
1 Growth Potential 5.0
CA average -1.67
2 International expansion 5.0
3 Wages 3.0 IS average 4.00
4 Insurances and benefits 3.0 FS average 4.80
Environmental Stability rating is -1 (best) to -6 (worst) 16.0
1 Competitive Pressure -5.0 X Coordinate 2.33
2 Increase in Fuel Prices -5.0 Y Coordinate 1.23
3 Rate of Inflation -3.0
4 Exchange rates -3.0 Strategy ->>>>
5 Antitrust -3.0
6 Increased regulation of working hours for truck drivers -3.0 Aggressive
7 Increase in the number of toll road and rates on existing ones -3.0
8 Technological advance -2.0
Competitive advantage rating is -1 (best) to -6 (worst) -27.0
1 Large scale of operation -2.0
2 #3 ground transport provider -2.0
3 #1 single LTL (less-than-truckload) provider -1.0
4 Ranked #1 Americas Most Admired Companies by Fortune for
3 consecutive years in early 2000s -1.0
5 Joint venture with Chinas conglomerate (Jin Jiang) -2.0
6 Cost and purchasing synergies by merger -2.0
-10.0
 BCG MATRIX

Genuine parts
Ford motor credit & financing and
Vehicle Brands

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1.FINANCIAL
Ford company is continuously facing loss
Ford has high debt ratios.
Low return on investment.

2. CUSTOMER
Customers loyalty with ford
Strong customer service
Comparatively low market share.

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3.PROCESS
Focusing on product approach rather than customer
approach
Efficient supply chain management
Ineffective employment policy

4. LEARNING AND GROWTH

Focusing on new technology
Innovate their products
Strong in learning hybrid products

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 Blue ocean strategy

Fords electrifications strategy

Pure battery electric vehicles

Affordability

Fuel economy solution

Planning to invest in new, smaller, fuel

efficient vehicles
 Recommendations
Reducing salary personnel and achieving additional
efficiency

Reducing inventory cost

Long-term restructuring action

Developing incremental source funding, including sale

of non core assets

Increase warranty cost

 Developed Strategies
1. Continue R&D for hybrid automobile, pure battery electric motors
2. Open new production facility in eastern Europe and china
3. Focus on social marketing that will cause more support from the
Govt.
4. Restructure to reduce cost of labor and raw material
5. Focus development on cutting edge. Fuel efficient automobiles
6. They should focus on more customer oriented approach rather than
other
7. E.E.O, should encourage black people and position them in top
management
8. Should offer at least 100,000 miles warranty on all new vehicles (0
meter)
Alternative Strategies
X => R&D for Hybrid Cars

Y => Reduce cost of labor and raw material and

increase cost of warranties

Z => Open production facilities in Eastern Europe,

china and Asia
QSPM
Key Factors X Y Z