Ford and the World Automobile Industry

Presented By:Shally Rathi

Vijay SangtaniAnuj Jain

Pooja Arora

About The CompanyFounded June 16, 1903Founder – Henry FordHeadquarters Dearborn, Michigan, United

StatesProducts-Mainstream/Performance vehicles

Automotive partsFord is currently the world's fourth largest

automaker

Crisis in Automobile Industry

Effect of 2008 oil price shock Crash of the credit marketsPressure to produce fuel efficient modelOverburdened Health insurance cost

Issues of Ford1) Internal Issues:Lack of DialogueInadequate CooperationWeak accountabilityCross functional Conflicts2) Excess Capacity3) Inflexible Work Practices4) Slow New Product Development5) Erratic Decision Making

SWOTStrengths:1. Strong Ford Asia, Africa and Ford Mazda

operations2. Growing Ford Europe and PAG3. Profitable Financial services division

Weakness:4. Weakening North American automotive

operations5. Tarnished brand image6. Large unfunded pension and other obligations

Opportunities:1. Innovations2. Hybrid vehicles3. Continuing to expand globally

Threats:4. Rising fuel prices5. Growth of competitors6. Rising supply cost

FIRM /BUSINESS UNITFORD

DIRECT CUSTOMERDEALERSHIP, FLEET AND CAR RENTAL COMPANIES

DEALERSHIP, FLEET AND CAR RENTAL

COMAPNIES

ENDUSERS

CUSTOMERS/DRIVERS

OTHER FIRM /BUSINESS UNITS

GM, TOYOTA. CRYSLER,HONDA

INFLUENCER

Car magazine, reviewsCar TV and radio shows

Environmental ActivistGroups, Calcars.org

Governments andgovernment agencies

PURCHASE DECISION MAP

FIVE FORCE ANALYSIS OF AUTOMOBILE INDUSTRY

FORCE THREAT TO PROFIT

INTERNAL RIVALRY STRONG

ENTRY WEAK

SUBSTITUTES AND COMPLEMENTS

WEAK TO MODERATE

BUYER POWER WEAK

SUPPLIER POWER STRONG

SUPPLIER POWER :• Differentiation of inputs • Presence of substitute inputs • Supplier concentration

•THREAT OF THREAT OF SUBSTITUTES Switching costs Buyer inclination to substitute Price-performance trade-off of substitutes

BARRIERS TO ENTRY• Absolute cost advantages• Economies of scale• Brand Identity

DEGREE OF RIVALRYProduct differences -Switching costs -Brand identity

BUYER POWERBuyer information Brand identity Price sensitivity

Rivalry

Automotive Segments

SEGMENTS 2008 2007

FORD NORTH AMERICA 2329 2890

FORD SOUTH AMERICA 435 438

FORD EUROPE 1820 1918

VOLVO 359 482

FORD ASIA PACIFIC AND AFRICA 464 535

JAGUAR LAND ROVER AND ASTON MARTIN

125 292

Competitive Analysis

TQMJapan Westdeals with quality of

people customer-oriented upstream process-oriented, aimed

at improving  the total performance

company-wide, everybody's responsibility

deals with quality of products

manufacturer-oriented downstream product-oriented, aimed

at detecting and eliminating defective parts

responsibility of quality control managers

Measures for Revival

RestructuringCancellation of bonuses for management

employeesAmerica firstGoing green for real at a realistic price80% funding for hybrid or full electrical

vehicleSlimming and trimming

Current Outlook Early signs of stabilizing in the US market share

Uses cash from its global automotive operations

Enough liquidity without additional funding

S&P gives CCC+ credit rating

Tender offer to reduce its debt by 38%

contract with UAW leading to insourcing

Ford FOCUS and ESCAPE - two of the top eight in Cash for Clunkers program

Competitive access to capital at Ford Capital

 

Recommendations

Continued salaries cutSteady execution of company’s product

introductionsContinued discipline in the company’s

production/inventory strategyOutsourcing

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