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FORD MOTOR COMPANY

CASE STUDY

Ford Motor Company

Submitted By
Mahesh Kumar

Submitted to
Prof. Navjot Kaur

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.

Mission statement Evaluation

Components a b c D E F G H i Customers Products Or Services Markets Technology Concern for survival, growth & Profitability Philosophy Self-Concept Concern For Public Image Concern for Employees Yes No Yes No No No No Yes 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
Ford
Critical Success Factors Hybrid/Fuel Efficient Vehicles Product Quality Price Competitiveness Management Financial Position Customer Loyalty Global Expansion Market Share Total Weights 0.15 0.15 0.2 0.05 0.1 0.1 0.1 0.15 1 Ratings 3 4 2 2 2 3 2 2 Weighted Score 0.45 0.6 0.4 0.1 0.2 0.3 0.2 0.3 2.55 Ratings 3 3 2 3 3 3 3 4

G.M
Weighted Score 0.45 0.45 0.2 0.15 0.3 0.3 0.3 0.6 2.75

Toyota
Ratings 2 3 4 3 3 4 3 2 Weighted Score 0.3 0.45 0.8 0.15 0.3 0.4 0.3 0.3 3

Opportunities Demand and trend for hybrid energy vehicles. China, a vibrant market for automotive industry. Reduction of GM sales due to perceived lower quality and fuel efficiency. Demand of fuel efficient cars. Alliance with the British Petroleum to develop hydrogen power. High expectations of consumers. Fords S-Max Car of the year in Europe in 2006.

Threats

e sales to rental car agencies affecting the brand image and resale values. standard of CO emission result in increasing the manufacturing cost to produce engines. entrants i.e.: Honda, Toyota and Nissan result in tough competition. rate fluctuation and increased cost of raw materials effect the production and sales. financing sector facing financial hardship due to increasing mortgage rates. desired vehicles available on the dealers lot. cost of health care and pension will effect the future investment. selling vehicles through E-commerce (Gazoo.com). auto firms gaining strength and soon to enter in the US markets. Strength:

Excessiv Strict New Currency Car Lack of Rising Toyota Chinese

Increase d in revenue to 6% (i.e. $87.62 B) in June 30, 2007. Producti on of hybrid energy vehicles. Fords 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. Effective distribution and manufacturing channels covering 17.5% of market share in the automotive industry. Worlds largest loving roof in Michigan. Running worlds 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. Fords 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. Organizations morale decreased due to downsizing

External Factor Evaluation

Key External Factors Opportunities Demand and trend for hybrid energy vehicles. China, a vibrant market for automotive industry. Reduction of GM sales due to perceived lower quality and fuel efficiency. Demand of fuel efficient cars. Alliance with the British Petroleum to develop hydrogen power. High expectations of consumers. Fords S-Max Car of the year in Europe in 2006. Threats Excessive sales to rental car agencies affecting the brand image and resale values. Strict standard of CO emission result in increasing the manufacturing cost to produce engines. New entrants i.e.: Honda, Toyota and Nissan result in tough competition. Currency 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 dealers 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. Total

Weights Ratings 0.0-1.0 1- 4 0.08 0.07 0.05 0.07 0.07 0.05 0.06 3 3 2 3 3 2 2

Weighted Score 0.24 0.21 0.1 0.21 0.21 0.1 0.12

0.05 0.07 0.08 0.08 0.05 0.06 0.05 0.05 0.06 1

3 2 3 3 2 2 1 2 1

0.15 0.14 0.24 0.24 0.1 0.12 0.05 0.1 0.06 2.39

Internal Factor Evaluation Weights 0.0-1.0


0.06 0.07 0.06 0.07 0.06 0.05 0.05 0.05 0.06 0.05 0.07 0.07 0.06 0.07 0.07 0.06 0.02 1

Key Internal Factors Strengths Increased in revenue to 6% (i.e. $87.62 B) in June 30, 2007. Production of hybrid energy vehicles. Fords 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. Effective distribution and manufacturing channels covering 17.5% of market share in the automotive industry. Worlds largest loving roof in Michigan. Running worlds largest finance company. Opening of research and engineering centre in China. Operate 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. Fords 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. Organizations morale decreased due to downsizing. Total

Ratings 1- 4
3 3 3 3 3 3 4 4 3 3 2 1 1 1 2 2 1

Weighted Score
0.18 0.21 0.18 0.21 0.18 0.15 0.2 0.2 0.18 0.15 0.14 0.07 0.06 0.07 0.14 0.12 0.02 2.46

SPACE MATRIX

Financial Strength Leverage --- 1 Earning Per Share--- 1 Profitability-----1 Retained Earning ----- 2 Total Average

Rating 1 1 1 2 9 1.25

Industrial Strength Profit Potential Growth Potential Financial Stability Ease of Entrance in the Market

Rating 4 5 3 3 15 3.75

Competitive Advantage Brand Image Innovation Customer Loyalty Product Quality Total Average Axis: CA+ IS = (-2.5) + 3.75 1.25 Axis: ES + FS = (-2) + 1.25 (-0.75)

Rating -3 -2 -3 -2 -10 -2.5

Environmental Stability Technological Changes Rate of Inflation Competitive Pressure Demand Variability

Rating -3 -2 -1 -2 -8 -2 X-

Y-

SWOT MATRIX
Strengths 1. Increased in revenue to 6% (i.e. $87.62 B) in June 30, 2007. 2. Production of hybrid energy vehicles. 3. Fords credit division achieved an increase of $16.5B in 2006. 4. Strong brand recognition as affordable and safe vehicle. 5. Increase in PAG division from $ 8.0 8.6 B in 2006. 6. Effective distribution and manufacturing channels covering 17.5% of market share in the automotive industry. Weaknesses 1. Net income of the company was negative $16B in 2006. 2. Revenues decreased by 9% in 2006. 3. Fords revenue from North America decreased by 10% in 2006. 4. EPS of -3.723 reflecting the company is facing huge losses. 5. Profit margin declined from 18% - 7% in 2006.

6. Ford does not provide financial incentive to dealers.

7. Worlds largest loving roof 7. Organizations morale in Michigan. decreased due to downsizing. 8. Running worlds 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 production processes to produce attractive and economical products.(W3,W2,W5,O3,O2,O6) 2. Fulfilling of existing demand through strong brand image and applying retrenchment strategies in production and vehicle cost. ( W1,W3,W4,O1,O4,O6,O7)

1. Produce hybrid energy 1. Demand and trend for hybrid energy vehicles with British vehicles. petroleum.( S2,O1,O5) 2. Produce innovative and economical vehicles through 2. China, a vibrant market for detailed market research. automotive industry. ( S3,S8,O2,O6) 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. Fords S-Max Car of the year in Europe in 2006. Threats ST 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 intervals C) Developing of Ford's Blog (S3,S5,S9,T3,T8,T9) 2. Seek Cost effective strategies utilizing alternative energy in production and use Backward integration technique to overcome high costs.(S6,S8,S9,T2,T4,T6) WT

1. Excessive sales to rental car agencies affecting the brand image and resale values.

1. Alliance with competitors or horizontal integration should be applied. ( W2,W3,W4,W5,T2,T3,T4)

2. Strict standard of CO emission result in increasing the manufacturing cost to produce engines. 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 dealers lot. 7. Rising cost of health care and pension will effect the future investment. 8. Toyota selling vehicles through Ecommerce (Gazoo.com). 9. Chinese auto firms gaining strength and soon to enter in the US markets.

2 Providing monetary packages to dealers or providing some percent of company's share (W6,T6)

BCG Matrix

Revenues USA SA Europe PAG Asia & Africa Credit financing Total 69,425 5,697 30,408 30,028 6,539 16.8 142,113.8

% Revenues 49.00% 4.00% 21.40% 21.00% 4.6% 0.01% 100

Profit (15,992) 661 371 (2,322) (250) 1.966 (17,530.034)

% Profit 91.23 (3.7) (2.2) 13.24 1.46 0.012 100

% Market Share 16% 11.5% 8.5% 1.1/2.1% 2.4% 6%

% Growth Rate 10% 18% 3% 5% 10% 12%

RELATIVE MARKET SHARE (CASH GENERATION) High 1.0 Low 0.0 High +20 Medium 0 Low -20 INDUSTRY GROWTH RATE (CASH USAGE)
USA 49% SA 4% EU 21.4% PAG 21% ASIA 4.6% CREDIT FINANCING 0.01%

Medium .50

The internal-external Matrix

Ford credit Company Volvo Mercury Mazda Land Rover

Astin Martin

Jaguar MotorCraft

VOLVO MOTORCRAFT MERCURY FORD CREDIT COMPANY AUSTIN MARTIN JAGUAR LAND ROVER MAZDA

EFE ( 2.6) 2 2.5 3 3 2.7 2.5 2.9

IFE (3.25) 3.25 3.25 3.25 2.3 2.5 2.8 2.5

Grand strategy Matrix


Rapid Market Growth Quadrant II Quadrant 1 1I

Weak Competitive Position

Strong Competitive

Quadrant III Slow Market Growth

Quadrant IV

Evaluation :
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 consumers 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 strategies globally Key Factors Weight External Opportunities 1. Demand and trend for hybrid energy vehicles. 0.08 2. China, a vibrant market for automotive industry. 0.07 3. Reduction of GM sales due to perceived lower quality and fuel efficiency. 0.05 4. Demand of fuel efficient cars. 0.07 5. Alliance with the British Petroleum to develop hydrogen power. 0.07 6. High expectations of consumers. 0.05 7. Fords S-Max Car of the year in Europe in 2006. 0.06 Threats Excessive sales to rental car agencies affecting the brand image and resale values. 0.05 Strict standard of CO emission result in increasing the manufacturing cost to produce engines. 0.07 New entrants i.e.: Honda, Toyota and Nissan result in tough competition. 0.08 Currency rate fluctuation and increased cost of raw materials effect the production and sales. 0.08 Car financing sector facing financial hardship due to increasing mortgage rates. 0.05 Lack of desired vehicles available on the dealers lot. 0.06 Rising cost of health care and pension will effect the future investment. 0.05 Toyota selling vehicles through E-commerce (Gazoo.com). 0.05 Chinese auto firms gaining strength and soon to enter in the US markets. 0.06 Internal Strengths 1. Increased in revenue to 6% (i.e. $87.62 B) in June 30, 2007. 0.06 2. Production of hybrid energy vehicles. 0.07 3. Fords credit division achieved an increase of $16.5B in 2006. 0.06 3. Strong brand recognition as affordable and safe vehicle. 0.07 4. Increase in PAG division from $ 8.0 8.6 B in 2006. 0.06 5. Effective distribution and manufacturing channels covering 17.5% of market share in the automotive industry. 0.05 AS TAS

2. Production of fuel efficient cars. AS TAS

3. Alliance with the competitor. AS TAS

2 3 3 3 -

0.16 0.21 0.21 0.15 -

3 4

0.24 0.28 0.28 -

1 2 2 2 -

0.08 0.14

0.14

4 -

0.2

0.1

1 4 2 4 3

0.07 0.32 0.16 0.2 0.18

2 3 3 2 4

0.14 0.24 0.24 0.1 0.24

3 2 4 1 2

0.21 0.16 0.32 0.05 0.12

2 4 4

0.14 0.28 0.2

3 3 3

0.21 0.21 0.15

4 1 2

0.28 0.07 0.1

Conclusion
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.

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