CASE STUDY

On
FORD
 2008
Case Study
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 INTRODUCTION

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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 Brief History
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 AS A BRAND

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.
Ford and its Competitors

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 FORD’s Vision

Our Vision to become the world's leading

Consumer Company for automotive products
and services.

c a s e s t u d y a n a ly s is 11 1/14 /10
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 FORD’s 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. 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

 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)

 Ford’s Objective

• Maximum Profit
• Market share growth
• Technological leadership
• Service leadership
 STP-Methodology

• STP includes market strategy; target markets;

positioning; market segmentation and target
markets; market segmentation and
demographics(positioning)
 Methodology Adopted
• Target
– Different segments based on
• Age
• Personality
• Gender
• Economic standard
• Eg: Ford Mustang-Middle Aged
Ford Trucks-Rugged men
Ford Taurus-Family
 Innovation
• Technical Research
• Design planning
• Financial Analysis
• Intelligent vehicle
– Voice enabled
– Net connected
 CSR
• Motto to better the community and safety
by educating the customers:
 Safety seats (children)
 Seat Belts
 Environmental Cleaniness
 (Recyclable components,cleaner opr veh)
• Product Mix
– Options available for the customer.
– Customize the vehicle.
• Eg: explorer
• Services Offered
– Reminders for servicing
– Veh Maint
– Safety Tips
– Online manuals
– ESP( Extended service plans)
• Protects consumer from future price rise(inflation)
– Various assitance centers
– Warranty guides, offers,discounts
• Promotional Strategy
– Free servicing of the radiators, brakes, battery
– Extended warranty of battery
– Aiding convenience to customers in cold weather
• Pricing strategy
– Financing the vehicle-Under Red carpet Lease
– EMI policies fitting the needs
– Flexibility in payment-Under Mobility Financing
– Offering whole line of pre-owned cars

Ford credit earned top ranking place in the world

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

1. Ford is American Company, results 1. Continue R&D 1. Focus on social

in Cx trustworthiness for hybrid marketing that will
2. Progressive in technology automobile, pure cause more support
3. Forces Cx to return to dealer for battery electric from the Govt.
services motors 2. Restructure to
4. European division Expected to 2. Open new reduce cost of labor
become more profitable
production and raw material
5. Sluggish global economy (lower facility in eastern
prices of fuel)
Europe and
6. Cx desires for hybrid and fuel
efficient vehicles
china
7. By 2011 electronics are expected to
account for 40% of an average
vehicle value
8. China as vibrant market
*Cx=Customer
SO=strength (oppurtunities)
WO=weakness(oppurtunities)
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
oriented approach 2. Should offer at
4. United Auto Workers least 100,000 miles
(Powerful union) rather than other
warranty on all
5. Competing in US new vehicles (0
automobile market
6. New Toyota
meter)
manufacturing plants
all over
7. High Inventory cost
8. Global recession
 BCG MATRIX

Genuine parts
Ford motor credit & financing and
Vehicle Brands

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Areas Need to be Addressed

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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.
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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 Ford Adapted Blue ocean strategy

 Ford’s electrifications strategy

 Pure battery electric vehicles

 Affordability

 Fuel economy solution

Planning to invest in new, smaller, fuel efficient

vehicles
 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
 Clout on the world economy
• Ford Motor Co. is marketing bonds backed by auto loans at half the relative yield it paid six
months ago and Nordstrom Inc. sold notes at its lowest rate ever as investors gain confidence
that consumer spending is strengthening.

Corporate borrowers that serve US consumers are selling debt as returns on their bonds
accelerate. Retailers, which lost 0.35% in March, have gained 0.83% this month through
yesterday, according to Bank of America Merrill Lynch index data. Retail sales increased 1.6%
last month, more than anticipated and the biggest gain in four months, raising the odds of an
economic recovery.

“There is no question that the consumer is back,” said James C. Camp, managing director of
fixed income at Eagle Asset Management Inc. in St. Petersburg, Florida, with $17 billion in
assets under management.
•
Retailers’ sales, which declined every month from September 2008 to August 2009, have
rebounded as employment and consumer confidence have improved. The US economy
added 162,000 jobs in March, the most in three years. The Conference Board’s confidence
index rose to 52.5 last month from 46.4 in February.
• Standard & Poor’s raised its ratings on consumer cyclical companies such as retailers by a 2-to-1
margin this year, compared with 0.8-to-1 for corporate America overall, according to data compiled
by Bloomberg.
Nordstrom’s 10-year senior unsecured notes priced to yield 100 basis points more than similar-
maturity Treasuries, Bloomberg data show. The chain initially planned to sell $350 million of the
debt. In November 2007, Nordstrom sold $650 million of notes due in January 2018 at a spread of
230 basis points, Bloomberg data show. A basis point is 0.01%age point.

The largest portion of Ford’s offering of auto-loan debt is expected to pay a spread of 20 basis
points to 25 basis points more than benchmark interest rates, according to a person familiar with
the transaction. In its last sale of similar debt in November, Ford paid 45 basis points over
benchmarks.

‘Punch Bowl’

With the US jobless rate at 9.7%, the recovery in consumer confidence become fragile, put
forward by Scott MacDonald, head of credit and economics research at Stamford, Connecticut
• “There is no way the consumer can have the same dynamic impact on the US economy it did
before 2008,” he said. “Unemployment is still an issue and there are still housing foreclosures. The
consumer binge pre-2008 was based on borrowed money, the punch bowl is gone.”

The performance of retailers’ bonds compares with a gain of 0.86% this month through yesterday
for US investment- grade debt, following a 0.35% return in March, according to Bank of America
Merrill Lynch index data.
Questions