2008 Case Study

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

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.

Our Vision to become the world's leading Consumer Company for automotive products and services.

case study analysis

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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 Ford s Competitors Objective?

y Maximum Profit y Market share growth y Technological leadership y Service leadership

U.S. Market Share - 2008

Other 17 Co.

25%

15%

11%

22%

16%

11%

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) (Toyota, Lexus, scion, Daihatsu, Hino) (Chrysler, Dodge, Jeep, Mopar)

5 Brands 4 Brands

2 Brand (Honda, Acura)

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SWOT MATRIX
Leave Blank Strengths S
1. 2. 3.

Weaknesses
1. 2. 3.

4. 5. 6. 7. 8. 9.

Customer Loyalty Diversities Total sales have remain strong, over $150 billion European Market share Operate in 6 continents Hybrid Mariner 2007 Targeting all income classes Supportive to Us Govt. Ranked 7 in fortune 500

4.

5.

6.

7. 8.

In efficient marketing in US Closing 14 MF in North America Weak org structure (only white in top mgt) Limited warranty of 30000 miles (competitors 100000) Reported year end 2009 (Loss of $14 billion) Operating with $154 billion debt(2009) GM $42 billion Cut 30,000 jobs Poor operation declerations

Opportunities O
1.

SO

WO
Continue R&D for 1. hybrid automobile, pure battery electric motors Open new production 2. facility in eastern Europe and china Focus on social marketing that will cause more support from the Govt. Restructure to reduce cost of labor and raw material

2. 3. 4.

5. 6. 7.

Ford is American 1. Company, results in Cx trustworthiness Progressive in technology Forces Cx to return to 2. dealer for services European division Expected to become more profitable Sluggish global economy (lower prices of fuel) Cx desires for hybrid and fuel efficient vehicles By 2011 electronics are expected to account for 40% of an average vehicle value China as vibrant market

8.

Threats T
1. 2.

ST
Focus development on cutting edge. Fuel efficient automobiles They should focus on more customer oriented approach rather than other

WT E.E.O, should encourage black people and position them in top management 2. Should offer at least 100,000 miles warranty on all new vehicles (0 meter)
1.

3. 4. 5. 6.

7. 8.

$ devalues against 1. many major currencies GM and Toyota offers great discounts than ford 2. Most Americans prefer foreign brands United Auto Workers (Powerful union) Competing in US automobile market New Toyota manufacturing plants all over High Inventory cost Global recession

Problems associated (FORD)

Minor y Transmission failure y Cracked rare panel y Key wont turn in the ignition y Manufacturing faults (rare cases) y Ford Focus problems Major y Incurred huge costs from its planned series of job cuts and plant closures. y Ford is cutting 30,000 jobs and closing 14 plants by 2012 to reduce its costs. y High Fuel Consumption vehicle brands y Decrease in sales from the past few months

FINANCIAL STRENGTHS (FS) Return on Asset (ROA)

ENVIRONMENTAL STABILITY (ES)

1 1 2 2 1 1.4

Rate of Inflation Technological Changes Price Elasticity of Demand Competitive Pressure Barrier to entry into the Market Environmental Stability (ES)
INDUSTRY STRENGTH (IS)

-4 -3 -3 -6 -2 -3.6

Leverage Net Income Net Asset Return on Equity Financial Strengths (FS)

COMPETITIVE ADVANTAGE (CA)

Market Share Product Quality Customer Loyalty Technological know-how Control over supplier & Distributors Competitive Advantage (CA) X-axis: -2 + 4.2 = 2.2 Y-axis: 1.4+ -3.6 =- 2.2

-3 -2 -2 -1 -2 -2

Growth Potential Financial Stability Ease of entry into the market Resources Utilization Profit Potential Industry Strength (IS)

5 3 6 3 4 4.2

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Financial Strength rating is 1 (worst) to 6 (best) 1 Operating revenue 2 Operating income 3 Net income 4 Debt-asset ratio 5 Cash flows Industry Strength rating is 1 (worst) to 6 (best) 1 Growth Potential 2 International expansion 3 Wages 4 Insurances and benefits Environmental Stability rating is -1 (best) to -6 (worst) 1 Competitive Pressure 2 Increase in Fuel Prices 3 Rate of Inflation 4 Exchange rates 5 Antitrust 6 Increased regulation of working hours for truck drivers 7 Increase in the number of toll road and rates on existing ones 8 Technological advance Competitive advantage rating is -1 (best) to -6 (worst) 1 Large scale of operation 2 #3 ground transport provider 3 #1 single LTL (less-than-truckload) provider 4 Ranked #1 Americas Most Admired Companies by Fortune for 3 consecutive years in early 2000s 5 Joint venture with Chinas conglomerate (Jin Jiang) 6 Cost and purchasing synergies by merger

Ratings 5.0 5.0 5.0 4.0 5.0 24.0 5.0 5.0 3.0 3.0 16.0 -5.0 -5.0 -3.0 -3.0 -3.0 -3.0 -3.0 -2.0 -27.0 -2.0 -2.0 -1.0 -1.0 -2.0 -2.0 -10.0

ES average CA average IS average FS average X Coordinate Y Coordinate

-3.57 -1.67 4.00 4.80 2.33 1.23

Strategy ->>>> Aggressive

BCG MATRIX

Ford motor credit & financing

Genuine parts 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. 2. 3. 4. 5. 6. 7. 8.

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

Alternative Strategies
y X => R&D for Hybrid Cars y Y => Reduce cost of labor and raw material and

increase cost of warranties

y Z => Open production facilities in Eastern Europe,

china and Asia

QSPM
Key Factors X Y Z