Henry Ford set out to build a car which everyone could afford to buy.
It was slow, ugly and difficult to drive, and was nick named the ‘Tin Lizzie’ by the American people.
The Model ‘T’ Ford
The attraction of the Model T Ford was that its price never increased.
Costing $1200 in 1909, the price in 1928 was only $295 .
By 1929 Ford was producing more than one car per minute
Ford was able to sell cars cheaply because they were mass-produced and every part was Standardised (only one colour and one engine size were available).
By producing large numbers of cars on an Assembly Line Ford needed fewer skilled workers , and that cut the cost of paying wages.
Ford invented the idea of using an Assembly Line to speed up production.
Key Quote – Henry Ford How would this have helped to cut production costs? ‘ A customer can have any colour he likes for his car so long as it's black’
Assembly Lines ‘… each man and each machine do only one thing ... the thing is to keep everything in motion and take the work to the man not the man to the work’ Henry Ford 1925
Car Industry Mass productions & Standardisation lead to increased car sales . More Standardised parts are needed More jobs are created in other industries. Steel Glass Rubber Leather More people with jobs means that they can afford to buy a car! Jobs in Diners, Motels & Gas Stations. More Oil is used. More roads are built. The Cycle of Prosperity!
Car Production & Cycle of Prosperity
Car production used up 20% of America's steel , 80% of her rubber , 75% of her plate glass and 65% of her leather .
By the end of the 1920s American cars used seven billion gallons of petrol a year.
This helped to create jobs in the oil industry and made the oil state of Texas rich.
Aerial view of the Rouge plant in 1930
In 1929, there were 81,000 men working in this one factory
position the company for sustained competitiveness, profitability and growth.
satisfy customers based on the design, quality, technology and value of our cars and trucks.
Continue solid growth in global vehicle sales..
Investing dedicated to improving cultural, economic, educational, environmental, and social aspects of our communities.
“ Ford Motor Company describes itself as a company that is “passionately committed to providing personal mobility for people around the world….We anticipate consumer need and deliver outstanding produces and services that improve people’s lives.” ." Mission Statement:
Falling car sales has been a problem for ford due to increased competition from foreign manufacturers & rising oil prices.
The Economic Situation
The combination of the sharp run-up in oil and gas prices, rapid declines in the housing/mortgage/credit sectors, and the lowest levels of
consumer confidence in nearly 30 years have all dramatically reduce both the economic and automobile industry outlooks.
over the past few months, U.S. auto sales have declined by more than 30%.
The automobile industry is highly competitive. The North American automobile industry is dominated by what’s known as the ‘Big Three’: General Motors, DaimlerChrysler,
The two largest foreign competitors include both Toyota and Honda.
Since Toyota’s introduction of the Prius, an innovative gas electric hybrid car, ford has been struggling to keep up with competition.
US auto makers lost 8% of the US auto market last year, while Asian manufacturers gained 5% and European companies gained 3%
The Competitive Situation
Competitive Situation How Does GM compete? 2008 Sales Revenue Employees At 2008 Year-end $182 Billion $230 Billion $177 Billion $172 Billion 266,000 316,000 274,999 245,000
The Competitive Situation 2006 GCC Market Share
Corporate Social Responsibility
Quality improvements and perception thereof.
Cut health-care costs and move production overseas.
Concentrating on smaller more fuel efficient cars
Expansion of their global presence .
The decline of market share.
High pension obligations and health care costs.
Lack of differentiated products.
Unfocused product line
Unresponsive corporate culture.
Too much investment in SUVs and Trucks.
Intensity of rivalry among competitors worldwide.
Weak consumer confidence and tight credit.
The UAW can hurt General Motors if unhappy.
The Volatility in fuel prices.
President and MD, India Head, Asia Pacific Region They have a matrix organizational structure
Corporate Social Responsibility
Setting of Sanjeevi Health Care Centre at a cost of more than Rs. 35 lakhs
Devoting lot of funds for cancer patients and research
Ford has also set up Centre for Vehicle Emission Research at IIT, Chennai and Delhi
In collaboration with CII helped residents of Panayur village after the Tsunami in December 2004
Set up industrial centers in rural areas of Michigan. Set up 30 centre each employing more than 1000 employees.
Corporate Governance at Ford
Succeeds at providing benefits to the society
Internal audit scheduled every quarter
Environmental Management System (EVM) audit is also done. Here detailed analysis of environmental issues are made e.g., air pollution, water pollution etc.. If non compliances are found action is taken
Corporate Governance( contd..)
Aims at increasing the benefit for the shareholders.
Starting from the year 1996 till 2007, the company on an average has distributed dividends almost three times a year, around $0.42 per equity share.
Organization’s Mission Statement Provides a framework or context within which strategies are formulated, including Mission – The reason for existence – what an organization does Vision – A statement of some desired future state Values – A statement of key values that an organization is committed to Major Goals – The measurable desired future state that an organization attempts to
Ford Motor Company describes itself as a company that is “passionately committed to providing personal mobility for people around the world….We anticipate consumer need and deliver outstanding produces and services that improve people’s lives.”
“ he vision of Ford is “to become the world’s leading consumer company for automotive products and services.”
Throughout our history, we've always fostered an inclusive and diverse work environment
The all-new Ford Edge
Inquisitive Spirits, age 30, newly married, no kids.
This audience is in a ‘me’ focused stage of life. Their ‘no kids to tie me down yet’ lifestage affords them the ability to go and try whatever their interest. They are always eager to push themselves to try new experiences. Sometimes that drive is reflected in their physical activities and other times it’s a challenge they’ve never tried before.
They have an appreciation for nature and the outdoors which shows itself in their activities and their sense of style (organic, simple, and unique). They find the joys of the outdoors in both urban and rural adventures. For them, it’s just about getting out there and gathering experiences.
Emotional Benefits Sought:
To be seen as stylish .
To be seen as confident .
To reward themselves.
To feel unique .
To feel good ( smart ) about decisions .
Product Benefits Sought:
Unique Styling – successful, outdoor, sporty
Agile handling – confident, spirited driving.
Adaptable Interior w/o compromising style
Comfortably seats adults
Carries equipment for their active life
Organic – natural objects and settings
Simplicity – modern, clean & uncluttered lines
Unique – present something in a different way
Appealing styles focus on the organic, the simple and the unique.
Ford’s Strategy for Target Customer
Design & Package
Interior and exterior design is stylish and distinctive. Exterior: a bold chrome grill, dual chrome exhaust and sporty, muscular stance. Interior: textured aluminum and chrome accents, contrast seat stitching, two tone door panels.
17” and 18” wheels available
Available panorama roof with dual power sunshades.
Available luxury technology, including navigation system, satellite radio and rear DVD .
Uncompromised rear seat room
Reclining rear seatback, also easily folds flat, using an electronic switch and spring assist. Fold flat front passenger seat.
Compartmentalized Center Console Storage Bin
Independent multilink suspension, based on the Fusion and Mazda 6 design, delivers responsive, sports sedan-like handling.
New "Active" AWD system available – initiates preemptive torque transfer – tuned more for traction and on-road performance than for off-road capability.
New engine-controlled traction assist and Integrated Vehicle Dynamics with Roll Stability Control .
First vehicle to use the all-new Duratec 35, 3.5L V6 , with 250 hp and 240 lb-ft of torque
All-new 6-speed adaptive automatic transmission .
Targeted to be best-in-class 0-60 acceleration performance .
Provide jobs according to the interest & skills
Very much familar envionment
Technology innovation & environmental steuardship
They provide opportunities for students college grads & experienced professionals
Process is personal thorough & efficient
Ford Motor company
Established 1903 in USA by Henry Ford
Is the 4 th largest automobile manufacturer in terms of production volume
Sells vehicles under Ford, Mercury, Volvo & Lincoln brands.
Revenue for 2007 was $ 173.9 billion,2.7 billion loss posted
6,247,506 vehicles made, controlled a 15.6% market share in the US and 8.6% worldwide.
Loosing market shares in US,10% point loss from 1995-2005
Showed profit in BRIC countries
Asia-Pacific/Africa = 2.4% in 2006 and 2.3% in 2007
Problems in U.S.A.
Very high health and retirement obligations
High reliance on trucks, decline by 22 %of sales volumes witnessed during recession months.
Ford reached an agreement with United Autoworkers Union (UAW) that will shift healthcare obligations for Ford's 123,000 retirees to the union in exchange for Ford setting up a healthcare fund of $15.4 billion.
Cut 40,000 job in 3 years
Closed 7 factories in 5 years
Plans to bring six of its fuel efficient models (average fuel economy of over 30 mpg) currently sold in Europe to the U.S. market.
Mitigated public resistance
Region wise distribution
“ World Cars”
Revenue (in millions)
North America -$4,161
South America $1,172
Asia/Pacific/Africa and Mazda- $206
JD Power reports Ford's quality improved faster than industry average .
Strategy at work
So aims at developing fuel efficient cars in Europe, moving it to China and US
Ford Fiesta first car in this class
Aims at closing gap between Japanese competitors
2007-reduced cost, increase revenue
Revenue rose 8.6% to $173.9 billion and net losses declined from $12.6 billion to $2.7 billion.
Deal with UAW
Halved US hourly workforce(99,500- 54,000),closed 14 North American units
Dual pay adapted.
Strategy at work
Ford still lost $1,467 on every vehicle it produced(Honda made $1,641/vehicle, Toyota $922)
Halted truck production as oil prices rose
To launch 6 newer models in 18 months (world cars)
Transmissions with more gears, direct injection turbochargers ("ecoboost"),low resistance tyres.
Region wise profit
Pre-tax profits soared 237% in Europe (from $219 million to $739 million)
Pre-tax profits went up 127% in South America (from $113 million to $257 million).
Pre-tax profit in the Asia/Pacific region was $1 million pre-tax profit in the Asia/Pacific region compared to a $26 million loss last year.
Aggressive fight back!
Ford introduced the Ford Fiesta, an all-new global small car, at the Geneva Motor Show. It’ll be sold in major worldwide markets by 2010.
Mondeo and European version of the Focus, both fuel efficient coming to US
2009 Ford Escape(better mileage than Toyota Rav4 or Honda CRV.)
China 22% ,Brazil 26%, Russia 36% and India 12% increase in car sales.
Ford Transit van,worldwide(from Europe)
Fiesta in India, China
Strategic academic alliance
Strategic academic alliances with two of China's most prestigious universities – Nanjing University of Aeronautics and Astronautics (NUAA) and Shanghai Jiaotong University (SJTU)