Introduction of Ford case
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Introduction of Ford case Introduction of Ford case Presentation Transcript

  • S FORD Motor Company One Ford Group 5 DU Chuhan 10811338D LI Yifan JIN Luchun SHEN Congxiang 10819489D WANG Yuan 10806365D YUE Pujue 09815346D 1
  • Outline S Company and Industry Background S PEST, Five Forces S Resources Based View and Value Chain Analysis S SWOT S How to Compete? S What has been done? Challenges Remain 2
  • Company Background -- Ford S The second-largest U.S.- based automaker and the fifth-largest in the world based on 2010 vehicle sales S Founded in 1903 by Henry Ford S First car produced: Ford Model A 3
  • Company Background -- Ford S History 4
  • Automotive Industry Crisis (2008–2010) S 2009 Financial Crisis severely hurt the industry, especially the American ‗Big Three‘ S Big Three: Originally focus on SUV and Pickup Trucks Higher Fuel Price  Reduced Sales 5
  • Company Background -- Ford S During the Financial Crisis S Corporate bonds had been downgraded to junk status S Declining sales and profit margin, 14.9 billion loss in 2008 S Survived the Financial Crisis S The only one among ―Big Three‖ to survive S Constant revenue growth after the crisis 6
  • Alan Mulally and ―One Ford‖ S Former head of commercial airplanes at Boeing S Elected as president and CEO of Ford in Sept 2006 S Apply ―One Ford‖ to reshape the company 7
  • Q1 What are key forces in the general and industry environments that affect Ford‘s choice of strategy? 8
  • General Environment 9
  • PEST Model S Political S Government‘s new policy S New federal gas mileage standard S 25miles→35.5 miles per gallon in 2016 S New safety standards S New pollution control policy S Eco-friendly automobiles S Government discourage fully automating operations S Provide more local jobs 10
  • PEST Model S Economic S Global economic downturn and financial crisis in 2008 S Weak economy S Volatile financial markets S Lack of liquidity in the market 11
  • 12
  • PEST Model S Social S Pollutions S Oil prices increase A shift in consumer‘s car-buying habits S Fuel-efficient models 13
  • PEST Model S Technological S Intelligence system S Fuel-efficient models S Electrocar 14
  • Industry Environment 15
  • Five Forces Model S Rivalry among existing competitors (Extremely High) 16
  • Auto Manufacturer Market Share in USA November 2011 17
  • Five Forces Model S Threats of New Entrants (Low) S High barrier to entry S Capital intensive business S substantial fixed costs S Influence of brand names upon sales S Dealership model S Threats of Substitutes (Low) S imperfect substitutes S public transportation S motorcycle 18
  • Five Forces Model S Bargaining Power of Suppliers (Low to Moderate) S Metal/ Body part supplier S A good amount of rivalry S 3,300 to 1,600 S IT/ITES suppliers S regular research and development mode depend upon the requirements of the car manufacturer S Engine and auto part suppliers S Critical part S a good amount of leverage over the car manufacturer 19
  • Five Forces Model S Bargaining Power of Buyers (Moderate) S Plenty of options in the market place S High customer loyalty S 47.4% of Ford owners purchase another Ford vehicle * *Data from data from Experian Automotive 20
  • Key Forces S General environment S Law and regulations S Economic factors S Fuel price increases S Industry environment S Competitors in the industry S Similar technology S Customer preferences 21
  • Q2 What internal resources and assets does Ford have that may give it a competitive advantage? 22
  • Internal Resources S Value Chain Analysis S Resource Based View 23
  • Value Chain Analysis 24
  • Resource Based View Core Competencies Key Activities Competitive Advantages Superior Firm Performance Resource s Capabilitie s Reinforce Leverage Orchestrate 25
  • Tangible resources S Physical Resources S Strong Manufacturing capacity S Four manufacturing segments over the world S 10 vehicle assembly plants & 24 powertrain, stamping, and components plants S Standardized Facilities S State-of-the-art machinery and equipment S Flexible engine & transmission plants S modern, numerically controlled machine tools 26
  • Tangible resources S Financial Resources - Strong borrowing capacity for operation - Obtain access to $2.3 billion of Temporary Asset Account during financial crisis. - Borrow $10.1 billion under secured revolving credit facility in 2008 - Receive $2 billion from European Investment Bank over the 2008 to 2012 period 27
  • Intangible Resources S Reputation S The second largest automobile manufacturer in U.S.A and the fifth largest in the world S Build brand power with tradition, trust and safety S Strategic alliance with suppliers and dealers S A heritage of operating responsibly and sustainably S Affordable fuel economy product S Environmentally-friendly facilities 28
  • Intangible Resources S Intellectual /Property Resources S Manufacturing Platforms for different brands of automobiles S Organizational culture S Diverse work force S Open culture S Trust and respect S Human S Experience and capabilities of research fellows S Talent management practices 29
  • Organizational Capabilities S Ability for Talent acquisition and workforce composition S Flexible manufacturing S Quickly response to changing market needs 30
  • VRIS Analysis Physical Resources Reputation with stakeholders 31
  • VRIS Analysis Valuable • Suppliers--eliminate waste • Customers---generate revenue • Dealers---Sustainable dealer profit Rare • Well known brand name --Industry revolution & American Dream • The only automobile company survive from financial crisis in 2008 Costly to imitate • Path dependent Causally ambiguous Socially complex Difficult to substitute 32
  • SWOT Analysis 33
  • Strengths S One of oldest and largest car manufacturer with strong brand S Wide network of distributors and dealers S Profitable financial service division S Invested efforts to go green in order to help the environment S Ford is present in Motorsports like Formula One, Rally, Sports cars, Touring cars & sponsorship of event 34
  • Weaknesses S Product Recall S Lack of diversification (product and geographic) S Low capital spending (R&D) 35
  • Opportunities S Emerging Market (China, Brazil) S Restructuring Plan (One Ford) S Expanding automobile sector in hybrid cars and fuel- efficient cars 36
  • Threats S Competition from major international players (Toyota) S Rising raw material prices and oil prices S Increasing usage of public transport S Production problems in local plants due to labor and similar issues S Economics Slowdowns in the U.S and Europe 37
  • Q3 How should Ford compete? 38
  • Q4 What has Mulally done to implement strategy, and what challenges remain? 39
  • Strategy implementation S ‗One ford‘ strategy S Friendly competition S ‗Less is more‘ new approach S Reduction of complexity S Creating a new corporate culture S A shift toward smaller and more fuel-efficient cars S Globalizing the Ford brand 40
  • One Ford S One team S People working together as a lean, global enterprise for automotive leadership S Measured by customer, employee, dealer, investor, supplier, council and community satisfaction S One goal S An exciting viable Ford delivering profitable growth 41
  • One Ford S One plan S Aggressively restructure to operate profitably at the current demand and changing model mix S Accelerate development of new products customers want and value S Finance plan and improve balance sheet S Work together effectively as one team 42
  • ‗Less is more‘ new approach S The ‗bigger is better‘ worldview defined ford for decades S Replaced with a new approach: less is more S Cut costs S Transform the way it did business than to measure market share 43
  • Controlling the scale ——Reduction of complexity S The vision: have a smaller and more profitable Ford. S Cutback plan S 14 plant closures S 30000 plus job cuts S Increase the plant utilization and production levels in each production unit S Obtain operating profitability at lower volume and with a changing mix of products 44
  • Brand Acquisition year Selling year markets Lincoln 1922 - North America, Middle east Mercury 1939 2011 North America Volvo 1999 2010 Global Land Rover 2000 2008 Global Jaguar 1989 2008 Global Aston Martin 1989 2007 Global Merkur 1985 1989 North America Controlling the scale ——Reduction of complexity 45
  • A New Corporate Culture S Structural and procedural changes S Executives meet with Mulally every week S ‗we are actually committed to hitting the numbers.‘ S Team working S Senior executive reorganization S Report directly to him 46
  • cost advantage through focus ——A shift toward smaller and more fuel-efficient cars S Oil prices persistently increasing over the last few years S A dramatic change in consumer‘s car buying habits, reducing the demand for large vehicles S leased cars are sold for much less than their residual values S A change in products, shifting to smaller and more fuel-efficient cars 47
  • Globalizing the Ford brand S Globalize the Ford brand S All Ford vehicles competing in global segments would be the same in North America, Europe, and Asia within the next five years S Deliver more vehicles worldwide from fewer platforms and maximize the use of common parts and systems S reduction of costs in the purchasing and manufacturing processes 48
  • S Performance? 49
  • 50
  • Stock Price 51 Source: ford.com
  • Bond credit rating Moody Caa1 Moody B3 Moody B2 Moody Ba+ Moody Baa+ Oct,2011 May, 2012 Oct,2010 Nov ,2009 Jul ,2009 52 Source: statistics collected from moody.com
  • Sales 53 Source: statistics collected from Ford‘s annual report 2012
  • Profitability 10 years highest 54 Source: statistics collected from Ford‘s annual report 2012
  • Top Selling Vehicles in U.S.(2012) 55 Source: http://bestsellingcarsblog.com/
  • S Challenges? 56
  • Alan Mulally S Conflict between his management style and the old ―Ford‖ way S His Fearlessness is not suitable to Ford‘s culture S He may be Confidence in the early days, but later… S Senior executives left Ford S Trouble being accepted as an auto guy S Serious clash with Workers Union 57
  • Challenges: European Financial Crisis Europe 29, Jan,2013  Second largest market  2012 is the worst of 20 years  2 billion annual loss in Europe in 2012  Closed three factories in Europe  If recover, still too late!! 58
  • Challenges: Mature Markets S Largest market: North America S Market share: 15.2% (2012) S Intensified competition since 1980s S Highly depend on S General economic situations S Cost of purchasing and operating cars & trucks S The availability of credit & fuel Consumers could wait to replace them! 59
  • Challenges: Emerging markets Ford market share review (2012) Competitive pressure • Chinese own brands • Japanese cars‘ dominant position • All the manufacturers focus on china Limited brands • Focus & Fiesta 60 Source: statistics collected from Ford Annual report 2012
  • Closing points S In the future, S Uncertainty of fuel prices S Fluctuations of foreign exchanges S Increased competition S Economic distress of suppliers S … 61
  • References S Ford Q4 2012 financial results: http://corporate.ford.com/doc/ir_20130129a_financial_results.pdf S Ford 2012 SEC Filing: http://corporate.ford.com/doc/FordMotorCompany_10Q_20120219_2012 Q4.pdf S Top selling vehicles: http://bestsellingcarsblog.com/2012/05/20/world-q1-2012-discover-the-top- 100-best-selling-cars/ 62
  • References S Xinhua.net, 2011 http://news.xinhuanet.com/auto/201109/29/c_122104101.htm S NY times,2013 http://www.nytimes.com/2013/01/30/business/north-american- results-bolster-ford-earnings.html?_r=0 S Moody.com,2012 http://www.moodys.com/Pages/rr003_0.aspx?bd=4294966708 &ed=4294966848&rd=4294966708&tb=0&po=0&sb=&sd=&lan g=en&cy=global&searchfrom=SearchWithin&kw=ford 63
  • Q&A Thank you! 64