Ford Motor Company

International Business Strategies of Company

By
Kiran Toshniwal
PGDM-B
Roll No-62

Submitted To

Prof. C. P. Joshi
Introduction

The Company name: Ford Motor Company

Founded in 1903 by Henry Ford the company has constantly remained under family ownership
since the time of its establishment. Its an American Multinational automaker headquartered in
Dearborn, Michigan, suburb of Detroit. The company manufactures and distributes automobiles
across six continents. It also provides financial services through Ford Motor Credit. The
company's key automotive vehicle brands include Ford and Lincoln. Ford primarily operates in
North America, Europe, Asia Pacific, South America, and the Middle East and Africa.

Company Objectives are:

1
Enable better communication and full engagement on sustainability across the enterprise

Achieve alignment on Fords Integrated Sustainability vision across business units and
functional skill teams, looking for best practices and efficiencies

Inventory sustainability initiatives across business units and functional skill teams and
determine where to go further

Establish a global integrated sustainability operating system.1

Company Strategies are:

The strategic priorities of our One Ford plan are to:

Ensure our company is structured to operate profitably at the current demand and changing
model mix

Accelerate the development of new products, services and experiences that customers want
and value

Finance our plan and maintain a strong balance sheet

Work together effectively as one team, leveraging Fords global assets

Company products and Services:

The company's operating activity consists of two operating sectors: automotive and financial
services. Within the automotive business, the company is engaged in the design, development,
manufacture, sale, and service of cars, trucks, and service parts.

The company's automotive business is organized into four operating segments: North America,
Europe, Asia Pacific, South America, and the Middle East and Africa.

Segment Product/Services
Automotive Cars
Trucks
Buses
SUV
Luxury Vehicles
Financial Renting and Leasing
Services services
Wholesale Financing
Retail Financing

Key Milestones:

Years Milestones
Ford Company Established.
1903 First Model of car Model A
1904 Starts its first International Plant outside U.S. in Canada.
Introduced Model-T, shut down its production in 1927 after selling
15Million units.
1908 Opens First foreign sales branch in Paris.
1917 Introduced first Truck-Model TT
1922 Ford Acquires Lincoln Motor Company
1938 Ford Introduced Medium priced Mercury Brand
1941 Begins Production of Jeeps for U.S. Military
1948 Introduced F-series Line of Trucks
1956 Ford Becomes Publicly traded company
1959 Financial Services arm- Ford Motor credit company LLC was founded
1976 Ford Europe- Introduces Ford Fiesta
Enters SUV Segment with model Explorer
1990 Acquired Jaguar Cars
 1994 Acquired Aston Martin
1995 Started its operation in India through Ford India Limited
1999 Purchased Volvo Car of Sweden
2004 Introduces GT premium Sports car
2007 Sold Aston Martin and retained just 8% stake in the company
2008 Sold Jaguar and Land Rover to Tata Motors
2010 Sold Volvo Car segment
2011 Discontinued Mercury Brand to focus on Ford and Lincoln

Current active brands:

Brand Country of origin Years used/owned Markets

Ford United States 1903present Global

Lincoln United States 1922present North America, Middle East

Troller Brazil 2007present Brazil

Subsidiaries and Joint Ventures of Ford Motor Company

1. Ford Lio Ho Motor Company Ltd. (FLH) a joint venture in Taiwan among Ford
(70% partner), the Lio Ho Group (25% partner), and individual shareholders (5%
ownership in aggregate) that assembles a variety of Ford and Mazda vehicles sourced
from Ford as well as Mazda.

2. Ford Sollers Netherlands B.V. (Ford Sollers) a 50/50 joint venture between Ford
and Sollers OJSC (Sollers), in which Ford has control. The joint venture primarily is
engaged in manufacturing a range of Ford passenger cars and light commercial vehicles
for sale in Russia.
3. Ford Vietnam Limited a joint venture between Ford (75% partner) and Diesel Song
Cong One Member Limited Liability Company (a subsidiary of the Vietnam Engine and
 Agricultural Machinery Corporation, which in turn is owned by the State of Vietnam
represented by the Ministry of Industry and Trade) (25% partner).

4. Auto Alliance (Thailand) Co., Ltd. (AAT) a 50/50 joint venture between Ford and
Mazda that owns and operates a manufacturing plant in Rayong, Thailand.

5. Changan Ford Automobile Corporation, Ltd. (CAF) a 50/50 joint venture between
Ford and Chongqing Changan Automobile Co., Ltd. (Changan). CAF currently
operates five assembly plants, an engine plant, and a transmission plant in China where it
produces and distributes an expanding variety of Ford passenger vehicle models.

6. Ford Otomotiv Sanayi Anonim Sirketi (Ford Otosan) a joint venture in Turkey
among Ford (41% partner), the Koc Group of Turkey (41% partner), and public investors
(18%) that is a major supplier to us of the Transit, Transit Custom, and Transit Courier
commercial vehicles and is our sole distributor of Ford vehicles in Turkey.
7. Getrag Ford Transmissions GmbH (GFT) a 50/50 joint venture with Getrag
International GmbH, a German company. GFT operates plants in Halewood, England;
Cologne, Germany; Bordeaux, France; and Kechnex, Slovakia to produce, among other
things, manual transmissions for our Europe business unit.
8. JMC a publicly-traded company in China with Ford (32% shareholder) and Jiangling
Holdings, Ltd. (41% shareholder) as its controlling shareholders.

Annual Sales and Revenues:

The company recorded revenues of $149,558 million during the financial year ended December
2015 (FY2015), an increase of 3.8% over FY2014. The operating profit of the company was
$10,518 million in FY2015, as compared to an operating profit of $3,336 million in FY2014.
The net profit of the company was $7,373 million in FY2015, as compared to a net profit of
$1,231 million in FY2014.
Country and continent Wise:

Revenue:

Ford's operating activity consists of two sectors, automotive and financial services, which are
further divided into six reportable segments. The automotive sector includes five segments:
North America (61.4% of the total revenues in FY2015), Europe (18.8%), Asia Pacific (7.2%),
South America (3.9%), and Middle East & Africa (2.7%). The financial services segment
contributed 6% of total revenues during FY2015.
 Revenue
$100,000.00 $91,870.00
$90,000.00
$80,000.00
$70,000.00
$60,000.00
$50,000.00
$40,000.00 $28,170.00
$30,000.00
$20,000.00 $10,755.00 $8,992.00
$5,766.00 $4,005.00
$10,000.00
$0.00
North South Europe Middle East Asia Pacific All
America America and Africa
Automotive Automotive Automotive Automotive Automotive Financial
Services

ROI:
Employment Data:

Analysis and conclusion:

From above graphs, it can be seen that company derives most of its revenue from North America
region. Though sales in north America over the last three years has remained same without any
significant increase. Company has lost its sales by 29% is South America region. Ford did not
have really captured Middle east and Africa and ASIA pacific region so it has opportunity to
increase its position in these regions.

Country Entries:

Entry Exit
Region Country Year Year Entry Strategy
South
America Argentina 1913 Wholly owned Subsidiary
Brazil 1967 Assembly
North
America Canada 1904 Wholly owned Subsidiary
Mexico 1964 Assembly
US 1903
Europe Belgium 1964 2014
France 1973 2011
 Germany 1924 Started its operation by setting up an assembly plant.
Romania 2008 Joint Venture
Russia 2011 Joint Venture
Spain 1976 Assembly
Turkey 1982 Joint Venture
UK 1953 Joint Venture
Middle South Africa 1964 Wholly owned Subsidiary
Venezuela 1962 Assembly
Asia Pacific Australia 1926 2016
China 2001 Joint Venture
India 1995 Wholly owned Subsidiary
Japan 1931 Wholly owned Subsidiary
Philippines 1913 Assembly
Taiwan 1972 Joint Venture
Thailand 1976 Joint Venture
Vietnam 1997 Joint Venture

Companys Global Strategy:

Ford through its ONE Ford Plan has tried to implement its growth and renewal strategies.
Growth strategy-Accelerate development of new products to suit customers want and value;
Finance plans and improve balance sheet; and work together effectively as one team, leveraging
the companys global assets are some of the major steps taken by the company in recent years.
Concentration- Ford has delivered consumer friendly, highly fuel efficient and innovative
vehicles, most of the time and concentrated on quality over quantity.
Vertical integration The ford motor credit company provides automobile loans in support
of its parent company. The company offers consumer loans and leases to car buyers, as
well as business loans and lines of credit to dealerships selling Ford Motor Company
products. The firm also issues, commercial paper and other debt instruments on Ford's
behalf. In this way, the company has achieved dual objectives, it has become its own
suppliers as well as distributors, thus achieving forward and backward vertical integration
at the same time.
Horizontal integration- Fords competitors are themselves some of the oldest automobile
companies, like Chrysler and general motors. Hence any kind of collaboration was simply
not possible as these companies know it better to resolve the crisis by other means possible.
Diversification- Ford has combined with Aston Martin, a sports car manufacturer, a
company which is different but related. Hence a related diversification can be seen here.
Stability strategy- Since its inception, one of the most remarkable achievements of ford has been
its constant focus on the production of highly fuel efficient vehicles. Fords global vehicles
showcase their commitment to fuel efficiency. Technologies like Eco Boost, direct injection of
gasoline or diesel fuel, six-speed transmissions, and hybrid and plug-in hybrid powertrains are
some of the innovations in this regard.
Global Competitors:

1. Fiat Chrysler Automobiles N.V.

2. General Motors Company
3. Honda Motor Co., Ltd.
4. Hyundai-Kia Automotive Group
5. Nissan Motor Co., Ltd.
6. PSA Groupe
7. Renault-Nissan B.V.
8. Suzuki Motor Corporation
9. Toyota Motor Corporation
10. Volkswagen AG

Challenges Company Faces:

1. Currency exchange rate Volatility-The interest rate hike by U.S. federal reserves has
resulted in downward pressure on several emerging market currencies. In some cases, that
pressure is aggravated by low commodity prices, high inflation, or unstable policy
environments. Additionally, the weak yen, in particular, adds significant potential
downward pressure on vehicle pricing across many markets globally. In most markets,
exchange rates are market-determined, and all are impacted by many different
macroeconomic and policy factors, and thus likely to remain volatile.
2. Pricing Pressure-Excess capacity, coupled with a proliferation of new products being
introduced in key segments, will keep pressure on manufacturers ability to increase
prices.
3. Increase Sales of Smaller vehicles-the emerging markets like brazil, china and India demand
smaller vehicles. To increase participation in these markets Ford will have to increase production
of small vehicles. This increasing sales will add positively to companys margin but with the
average margin per unit will decrease as small vehicles tend to have lower margins.
4. Strict Standard of Co2 Emission is increasing the manufacturing cost to produce engines.
Recommendations:

Ford motor is the leading US auto motor who tried to sustain its leadership and its market position
with effective strategies to match the market requirements and needs. It updated its products with
latest technology gadgets and equipped its products with the latest ones. After conducting the in-
depth analysis of the companys success factors, revamped processes, following are the
recommendations for the Ford Motors that can help the company to leverage its market position
and sustain profitability:
Short term:
Minimize excess capital, try to reduce debts, cut inventories and reduce days of sales
receivables.
Sell off undeforming assets to increase cash while weathering storm

Long term:
Continue to improve factory flexibility. Continued investment in hybrid technology, R
& D will position Ford better to compete with close competitor such as Honda and
Toyota.
Expansion in ASIAN and Middle East Market
Adopt more aggressive version to current restructuring and cost improvement.
Continue high level of product development into alternative fuel technology. Emerging
markets purchasing synergies.

Learning:

Real life company analysis done to understand how they have expanded in the
International Business.
Country Entry Strategies used by firms from time to time to enter into the market and
expand current business footprint.
Read through Annual Reports of Company and analyzed different business parameters to
determine performance of a company.
Studied business of company country wise, trade block wise, revenue generation and
employee nationality wise.
Analysis different strategies applied by companies like Corporate level strategies,
Genetic Strategies, Market Development and Diversification Strategies.
Analysis of the challenges faced by company today in operating and expanding in
International Markets and suggestions and recommendations to improve upon business
model with changing time.
References:

1. http://corporate.ford.com/content/dam/corporate/en/investors/reports-and-
filings/Annual%20Reports/2015-Annual-Report.pdf

2. http://ophelia.sdsu.edu:8080/ford/12-10-2010/about-ford/global-operations.html

3. http://corporate.ford.com/homepage.html

4. https://en.wikipedia.org/wiki/Ford_Motor_Company