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2008 Case Study

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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The Dream Becomes a BusinessFord 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 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.

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Our Vision to become the world's leading Consumer Company for

automotive products and services.

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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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• Market Structure:Market Structure: Perfect Competition Perfect Competition

• Largest auto market:Largest auto market: U.S. U.S.

• 1616 million vehicle in year, 22 firms million vehicle in year, 22 firms

• Big Five:Big Five: GM, Ford, Toyota, Chrysler and Honda GM, Ford, Toyota, Chrysler and Honda

Automobile IndustryAutomobile Industry

What is The Ford’s Competitors What is The Ford’s Competitors Objective?Objective?Maximum ProfitMaximum ProfitMarket share growthMarket share growthTechnological leadershipTechnological leadershipService leadershipService leadership

U.S. Market Share - 2008U.S. Market Share - 200815%

22%11%

11%16%

25%Other Other 17 Co.17 Co.

Source: http://www.usnews.com

SubsidiariesSubsidiaries

8 Brands 8 Brands (Ford, Lincoln, Mercury, Mazda, Volvo, Jaguar, Land (Ford, Lincoln, Mercury, Mazda, Volvo, Jaguar, Land Rover, Aston Martin)Rover, Aston Martin)

13 Brands 13 Brands (Buick, Cadillac, Chevrolet, GM Daewoo, GMC, (Buick, Cadillac, Chevrolet, GM Daewoo, GMC, Holden, Hummer, Pontiac, Opel, Saab, Saturn, Vauxhall, and Holden, Hummer, Pontiac, Opel, Saab, Saturn, Vauxhall, and Wuling)Wuling)

5 Brands5 Brands (Toyota, Lexus, scion, Daihatsu, Hino)(Toyota, Lexus, scion, Daihatsu, Hino)

4 Brands4 Brands (Chrysler, Dodge, Jeep, Mopar)(Chrysler, Dodge, Jeep, Mopar)

2 Brand2 Brand (Honda, Acura) (Honda, Acura)

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SWOT MATRIXLeave Blank Strengths S

1. Customer Loyalty2. Diversities 3. Total sales have

remain strong, over $150 billion

4. European Market share

5. Operate in 6 continents

6. Hybrid Mariner 2007

7. Targeting all income classes

8. Supportive to Us Govt.

9. Ranked 7 in fortune 500

Weaknesses1. In efficient

marketing in US2. Closing 14 MF in

North America3. Weak org

structure (only white in top mgt)

4. Limited warranty of 30000 miles (competitors 100000)

5. Reported year end 2009 (Loss of $14 billion)

6. Operating with $154 billion debt(2009) GM $42 billion

7. Cut 30,000 jobs8. Poor operation

declerations

Opportunities O

1. Ford is American Company, results in Cx trustworthiness

2. Progressive in technology

3. Forces Cx to return to dealer for services

4. European division Expected to become more profitable

5. Sluggish global economy (lower prices of fuel)

6. Cx desires for hybrid and fuel efficient vehicles

7. By 2011 electronics are expected to account for 40% of an average vehicle value

8. China as vibrant market

SO

1. Continue R&D for hybrid automobile, pure battery electric motors

2. Open new production facility in eastern Europe and china

WO

1. Focus on social marketing that will cause more support from the Govt.

2. Restructure to reduce cost of labor and raw material

Threats T

1. $ devalues against many major currencies

2. GM and Toyota offers great discounts than ford

3. Most Americans prefer foreign brands

4. United Auto Workers (Powerful union)

5. Competing in US automobile market

6. New Toyota manufacturing plants all over

7. High Inventory cost

8. Global recession

ST

1. Focus development on cutting edge. Fuel efficient automobiles

2. They should focus on more customer oriented approach rather than other

WT

1. E.E.O, should encourage black people and position them in top management

2. Should offer at least 100,000 miles warranty on all new vehicles (0 meter)

Problems associated (FORD)MinorTransmission failureCracked rare panelKey wont turn in the ignitionManufacturing faults (rare cases)Ford Focus problemsMajorIncurred huge costs from its planned series of job cuts

and plant closures. Ford is cutting 30,000 jobs and closing 14 plants by

2012 to reduce its costs. High Fuel Consumption vehicle brandsDecrease in sales from the past few months

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FINANCIAL STRENGTHS (FS) ENVIRONMENTAL STABILITY (ES)

Return on Asset (ROA) 1 Rate of Inflation -4

Leverage 1 Technological Changes -3

Net Income 2 Price Elasticity of Demand -3

Net Asset 2 Competitive Pressure -6

Return on Equity 1 Barrier to entry into the Market -2

Financial Strengths (FS) 1.4 Environmental Stability (ES) -3.6

COMPETITIVE ADVANTAGE (CA) INDUSTRY STRENGTH (IS)

Market Share -3 Growth Potential 5

Product Quality -2 Financial Stability 3

Customer Loyalty -2 Ease of entry into the market 6

Technological know-how -1 Resources Utilization 3

Control over supplier & Distributors -2 Profit Potential 4

Competitive Advantage (CA) -2 Industry Strength (IS) 4.2

X-axis: -2 + 4.2 = 2.2Y-axis: 1.4+ -3.6 =- 2.2

Financial Strength rating is 1 (worst) to 6 (best) Ratings1 Operating revenue 5.02 Operating income 5.03 Net income 5.04 Debt-asset ratio 4.05 Cash flows 5.0

Industry Strength rating is 1 (worst) to 6 (best) 24.01 Growth Potential 5.02 International expansion 5.03 Wages 3.04 Insurances and benefits 3.0

Environmental Stability rating is -1 (best) to -6 (worst) 16.01 Competitive Pressure -5.02 Increase in Fuel Prices -5.03 Rate of Inflation -3.04 Exchange rates -3.05 Antitrust -3.06 Increased regulation of working hours for truck drivers -3.07 Increase in the number of toll road and rates on existing ones -3.08 Technological advance -2.0

Competitive advantage rating is -1 (best) to -6 (worst) -27.01 Large scale of operation -2.02 #3 ground transport provider -2.03 #1 single LTL (less-than-truckload) provider -1.04 Ranked #1 “America’s Most Admired Companies” by Fortune for

3 consecutive years in early 2000s -1.05 Joint venture with China’s conglomerate (Jin Jiang) -2.06 Cost and purchasing synergies by merger -2.0

-10.0

ES average -3.57CA average -1.67IS average 4.00FS average 4.80

X Coordinate 2.33Y Coordinate 1.23

Strategy ->>>>Aggressive

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Ford motor credit & financingVehicle Brands

Genuine parts and

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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.

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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’s electrifications strategy

• Pure battery electric vehicles

• Affordability

• Fuel economy solution

Planning to invest in new, smaller, fuel efficient vehicles

Blue ocean strategy

Reducing salary personnel and achieving additional efficiency

Reducing inventory cost

Long-term restructuring action

Developing incremental source funding, including sale of non core assets

Increase warranty cost

Recommendations

Developed Strategies1. Continue R&D for hybrid automobile, pure battery electric

motors2. Open new production facility in eastern Europe and china3. Focus on social marketing that will cause more support from

the Govt.4. Restructure to reduce cost of labor and raw material5. Focus development on cutting edge. Fuel efficient

automobiles6. They should focus on more customer oriented approach

rather than other7. E.E.O, should encourage black people and position them in

top management8. Should offer at least 100,000 miles warranty on all new

vehicles (0 meter)

Alternative StrategiesX => 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

QSPMKey Factors X Y Z