Professional Documents
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CASE STUDY
“Ford Motor Company”
Submitted By
MUHAMMAD EBAD
MAHEEN IFTEKHAR
RABIA IQBAL
SHAMA NASEEM
Submitted to
MAM SAIRA IBRAHIM
Introduction
U.S. automotive corporation Ford motor company. Founded in Detroit, Michigan in 1903 by
Henry Ford and a group of investors, the company introduced the hugely successful Model T
in 1908 and by 1923 was producing more than half of all U.S. automotive vehicles.
Through the Lincoln Motor Co. (acquired in 1922), Ford produced luxury Lincolns and
Continentals. After years of declining sales, the Model T was succeeded by the Model A in
1927; other companies such as General Motors took the opportunity to make serious inroads
into Ford's dominance. The company was reincorporated in 1919, with Ford and his family
acquiring full ownership. Henry's son Edsel served as president 1919 – 43, and Henry's
grandson Henry Ford II led the company 1945 – 79, reviving its fortunes considerably.
Its stock was first publicly traded in 1956. Ford acquired the British automaker Jaguar in 1989
– 90, bought the rental car company Hertz Corp. in 1994, and purchased the automobile
division of Volvo in 1999. Later acquisitions included Aston Martin and the Land Rover brand
of sport utility vehicles. Ford also owns a significant share of the Mazda Motor Corp. Because
of financial struggles at the beginning of the 21st century, the company sold off Aston Martin
in 2007 and both Jaguar and Land Rover in 2008. Ford manufactures passenger cars, trucks,
and tractors as well as parts and accessories.
One of the world's largest auto makers, Ford brands includes Ford, Lincoln, and Mercury.
Finance unit Ford Motor Credit is one of the US's leading auto finance companies. Ford owns
a small stake in Mazda but has sold Volvo to Zhejiang Geely Holding, parent of Geely
Automobile, for about $1.3 billion cash and other monetary consideration.
Currently William Ford is performing the duty of executive chairman of the board in the
orgnization.
Ford Motors Analysis
Our Vision
To become the world's leading Consumer Company for automotive products and services.
Our 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.
Vision Evaluation
The vision statement is quite well organized as it highlights the products and offerings made
by the company. It also highlights that the company is growth oriented and wants to be the
leading company in automotive industry.
Components
a Customers Yes
b Products Or Services No
c Markets Yes
D Technology No
E Concern for survival, growth & Profitability No
F Philosophy No
G Self-Concept No
H Concern For Public Image Yes
i Concern for Employees No
We are a global family with a proud heritage passionately committed to providing personal
mobility for people around the world (c).
We anticipate consumer need (a) and deliver outstanding products and services that improve
people's lives (h)
Proposed Vision
“Ford – Inspire the way you drive! “
Proposed Mission
“Providing the global customers (a) with the premium quality and the state of art technology
catering their automotive needs (b) as well as covering the aspects of comfort and style.
Along with the team of professionals (i) pursuing the continuous innovation (d) and growth
(e) globally (c) - And creating the value for our customers’ (f) through making positive
contribution to the society considering their health and safety issues (h).”
CPM
Opportunities
Threats
Excessiv
e sales to rental car agencies affecting the brand image and resale values.
Strict
standard of CO² emission result in increasing the manufacturing cost to produce engines.
New
entrants i.e.: Honda, Toyota and Nissan result in tough competition.
Currenc
y rate fluctuation and increased cost of raw materials effect the production and sales.
Car
financing sector facing financial hardship due to increasing mortgage rates.
Lack of
desired vehicles available on the dealer’s lot.
Rising
cost of health care and pension will effect the future investment.
Toyota
selling vehicles through E-commerce (Gazoo.com).
Chinese
auto firms gaining strength and soon to enter in the US markets.
Strength:
Increase
d in revenue to 6% (i.e. $87.62 B) in June 30, 2007.
Producti
on of hybrid energy vehicles.
Ford’s
credit division achieved an increase of $16.5B in 2006.
Strong
brand recognition as affordable and safe vehicle.
Increase
in PAG division from $ 8.0 – 8.6 B in 2006.
Effectiv
e distribution and manufacturing channels covering 17.5% of market share in the automotive industry.
World’s
largest loving roof in Michigan.
Running
world’s largest finance company.
Opening
of research and engineering centre in China.
Op
erate throughout the 6 continents with 108 plants globally.
Weaknesses:
Net income of the company was negative $16B in 2006.
Revenues decreased by 9% in 2006.
Ford’s revenue from North America decreased by 10% in 2006.
EPS of -3.723 reflecting the company is facing huge losses.
Profit margin declined from 18% - 7% in 2006.
Ford does not provide financial incentive to dealers.
Organization’s morale decreased due to downsizing
Opportunities
Demand and trend for hybrid energy vehicles. 0.08 3 0.24
China, a vibrant market for automotive industry. 0.07 3 0.21
Reduction of GM sales due to perceived lower quality and fuel efficiency. 0.05 2 0.1
Demand of fuel efficient cars. 0.07 3 0.21
Alliance with the British Petroleum to develop hydrogen power. 0.07 3 0.21
High expectations of consumers. 0.05 2 0.1
Ford’s “S-Max” Car of the year in Europe in 2006. 0.06 2 0.12
Threats
Excessive sales to rental car agencies affecting the brand image and
resale values. 0.05 3 0.15
Strict standard of CO² emission result in increasing the manufacturing
cost to produce engines. 0.07 2 0.14
New entrants i.e.: Honda, Toyota and Nissan result in tough competition. 0.08 3 0.24
Currency rate fluctuation and increased cost of raw materials effect the
production and sales. 0.08 3 0.24
Car financing sector facing financial hardship due to increasing mortgage
rates. 0.05 2 0.1
Lack of desired vehicles available on the dealer’s lot. 0.06 2 0.12
Rising cost of health care and pension will effect the future investment. 0.05 1 0.05
Toyota selling vehicles through E-commerce (Gazoo.com). 0.05 2 0.1
Chinese auto firms gaining strength and soon to enter in the US markets. 0.06 1 0.06
Total 1 2.39
Internal Factor Evaluation
X-
Axis:
Y-
Axis:
Strengths Weaknesses
1. Increased in revenue to 6%
(i.e. $87.62 B) in June 30, 1. Net income of the company
2007. was negative $16B in 2006.
2. Production of hybrid 2. Revenues decreased by 9% in
energy vehicles. 2006.
3. Ford’s credit division 3. Ford’s revenue from North
achieved an increase of America decreased by 10% in
$16.5B in 2006. 2006.
4. Strong brand recognition as 4. EPS of -3.723 reflecting the
affordable and safe vehicle. company is facing huge losses.
5. Increase in PAG division 5. Profit margin declined from
from $ 8.0 – 8.6 B in 2006. 18% - 7% in 2006.
6. Effective distribution and
manufacturing channels
covering 17.5% of market
share in the automotive 6. Ford does not provide
industry. financial incentive to dealers.
7. World’s largest loving roof 7. Organization’s morale
in Michigan. decreased due to downsizing.
8. Running world’s largest
finance company.
9. Opening of research and
engineering centre in China.
10. Operate throughout the 6
continents with 108 plants
globally.
Opportunities SO WO
1.Use of competitive intelligence
information for restructuring of
1. Produce hybrid energy production processes to produce
1. Demand and trend for hybrid energy vehicles with British attractive and economical
vehicles. petroleum.( S2,O1,O5) products.(W3,W2,W5,O3,O2,O6)
2. Fulfilling of existing demand
2. Produce innovative and through strong brand image and
economical vehicles through applying retrenchment strategies
2. China, a vibrant market for detailed market research. in production and vehicle cost.
automotive industry. ( S3,S8,O2,O6) ( W1,W3,W4,O1,O4,O6,O7)
3. Reduction of GM sales due to
perceived lower quality and fuel 3. Production of fuel efficient
efficiency. Cars ( S5,S9,O4,O6,O3)
4.Demand of fuel efficient cars.
5. Alliance with the British Petroleum
to develop hydrogen power.
6. High expectations of consumers.
7. Ford’s “S-Max” Car of the year in
Europe in 2006.
Threats ST WT
1. Apply market penetration
strategies globally A) sponsor
events related to sports,
entertainment etc B)
Partnership with a television
channel that will display ads
of ford motors in different 1. Alliance with competitors or
1. Excessive sales to rental car intervals C) Developing of horizontal integration should be
agencies affecting the brand image and Ford's Blog applied.
resale values. (S3,S5,S9,T3,T8,T9) ( W2,W3,W4,W5,T2,T3,T4)
2. Seek Cost effective
strategies utilizing alternative
energy in production and use
2. Strict standard of CO² emission Backward integration 2 Providing monetary packages to
result in increasing the manufacturing technique to overcome high dealers or providing some percent
cost to produce engines. costs.(S6,S8,S9,T2,T4,T6) of company's share (W6,T6)
3. New entrants i.e.: Honda, Toyota
and Nissan result in tough competition.
4. Currency rate fluctuation and
increased cost of raw materials effect
the production and sales.
5. Car financing sector facing financial
hardship due to increasing mortgage
rates.
6. Lack of desired vehicles available
on the dealer’s lot.
7. Rising cost of health care and
pension will effect the future
investment.
8. Toyota selling vehicles through E-
commerce (Gazoo.com).
9. Chinese auto firms gaining strength
and soon to enter in the US markets.
BCG Matrix
Revenues % Revenues Profit % Profit % Market % Growth
Share Rate
Medium 0
USA 49%
SA 4%
EU 21.4%
PAG 21%
ASIA 4.6%
CREDIT FINANCING 0.01%
The internal-external Matrix
Volvo Mazda
Land Rover
Mercury
Jaguar
MotorCraft
Quadrant II Quadrant 1
1I
Weak Strong
Competitive Competitive
Position
Ford falls in the second quadrant of grand strategy matrix as its facing huge losses and its
competitive position has also been affected by new entrants in the automotive industry so it has
weak competitive position and the market growth is rapid. Increasing consumer’s expectations had
made the environment more competitive as on one hand it had provide a room for innovations but
due to continuous rising prices of raw material and gas prices and also the currency rate fluctuation,
it has been difficult for the firms to manufacture new models frequently.
As far as this current scenario is concerned appropriate strategies would be:
Market Penetration:
Apply market penetration strategies globally.
A) sponsor events related to sports, entertainment etc.
B) Partnership with a television channel that will display ads of ford motors in different
intervals. C) Developing of Ford's Blog.
Pr
oduct Development:
A) Production of fuel efficient cars.
B) Production of Hybrid energy vehicles.
Ho
rizontal Integration:
Alliance with the competitors can be helpful to achieve competitive advantage by combining the
distinctive competencies of both the firms.
QSPM
1.Apply market
penetration 2. Production 3. Alliance
strategies of fuel with the
globally efficient cars. competitor.
From the above analysis of all the matrices we suggest three alternatives but the analysis of QSPM
matrix one best alternative has been selected. As in grand strategy ford motors fall on second quadrant
it means that the firm should first go for intensive strategy. Hence the best selected alternative is
production of fuel efficient car, which is an intensive strategy.