Not only did Ford revolutionize the development of the automobile as a product, he is also the visionary behind the idea of mass production. Ford's ability to make automobiles affordable for the masses is cited as a driving force behind both the automobile industry creation of a middle class in America.The Highland Park plant in Michigan begins operations as the first moving assembly line and making Model T production 8 times faster.
* Ford Explorer it has become the nation’s best-selling SUV model.
2012 models have to meet government emissions standards. For example state regulations by 2016 will require at least mpg of 35.5 mpg.
Can easily switch manufactures
Low switching cost for buyers.
In regards to the size of potential target markets, if a market has a high GDP, consumers will be more likely to buy high-end or luxury cars Sales in Eastern Europe have increased by 9.4% over the last year while sales in Russia have increased by 50% and sales in Turkey by 110%
Consumer habits are different in different geographical areas. Ex) American consumers tend to drive much larger cars than European consumers Ford now designs cars around the travel habits of its consumers
Ford has a very strong supply chain collaboration as they have manufacturing plants in more than 30 countries Ford’s high level of product development allow them to meet the needs of all of their customers
Hybrid and electric cars are becoming increasingly popular and as of 2010 Ford had made more than half of their products available as hybrids Ford’s Michigan assembly plant is now powered by Solar energy and this saves them money and will help them as they begin building plug-in hybrid vehicles The Ford Fiesta sedan is Ford’s number one selling car in Europe for the past two years
- In 2006 had to lay off one third of the work force to remain profitable, – Constantly producing new models and redesigning existing modelsSustainability strategy (more fuel efficient cars, pilot program in Toronto encourages public transit, tackles short and long term sustainability challenges)3. Only company that did not receive government bailout during the steepest economic downturn in decades,Put up company assets including Ford logo as collateral to raise 26.2 billion in loans for North America,Eliminate as much as 10.4 billion dollars in debt by giving cash and stock to debt holders 4. -Committed to diversity in the workplace -Sells vehicles in 200 markets and employs 345,000 employees in 6 continents -Transformation to a team based workplace
WASHINGTON/DETROIT | Thu Apr 14, 2011 11:11am EDT WASHINGTON/DETROIT (Reuters) - Ford Motor Co and U.S. safety regulators have agreed to a greatly expanded recall of the best-selling vehicle in North America, the Ford F-150 pickup truck, the regulators said on Thursday.The expanded recall is for a possible short-circuit that could cause airbags to deploy unexpectedly, and involves nearly 1.2 million F-150 pickup trucks and 16,000 Lincoln Mark LT vehicles, said the U.S. National Highway Traffic Safety Administration.This is in addition to a previous recall of 144,000 Ford F-150 trucks, bringing the total for this issue to 1.33 million vehicles, NHTSA said.
In this economy most people will only purchase a new or second car if they are in a stable financial situation which most aren’t during a recession, this is where better marketing strategies must be implemented The fuel efficiency plan will set rules and regulations on cars built between the years of 2012 and 2016 Rising fuel prices have a direct effect on the economy and consumer spending habits which have recently been hurting the automobile industry Because of the environmental issues surrounding automobiles powered by gas, there has been an increasing demand for cars with lower emissions
Ford is producing more hybrid and electric vehicles as part of their strategy to save fuelFord sustainability strategy is based off of three separate components. 1.) Hard Science 2.) It tackles both long and short term sustainability challenges 3.) Its heretical Source: http://blogs.hbr.org/winston/2011/01/fords-impressive-sustainabilit.html
In March 2011 Ford’s main US manufacturing plant in Michigan became completely operated through the use of solar powerFord's global electrification strategy will deliver a suite of five new electrified vehicles in North America and Europe by 2013 and builds on the company's overall vision of offering the widest possible range of fuel-efficient, low-emission technological solutions. Ford is committed to working with technology leaders, the energy industry and government to prepare consumers for a future with electric vehicles.The global key is a proven design that has been used very successfully in Europe for some timenow. The increased security of this global lock & key system meets global securityrequirements and has better security protection vs. the previous North American lock & keysystem
(Talk about mass producing cars and be able to sell them fast and cheap like first did with model T)
For example, U.S. automobile manufacturers had approximately a $1,000 cost disadvantage for their cars compared to similar classes of Japanese cars.Read more: Downsizing and Rightsizing - strategy, organization, levels, system, advantages, type, company, hierarchy, businesshttp://www.referenceforbusiness.com/management/De-Ele/Downsizing-and-Rightsizing.html#ixzz1K0jPzASo
We were the first to mass produce automobiles affordable for the middle class and now we need to continue our tradition and mass produce hybrid that are affordable and reliable.
Based on North America 425 in operating cost and 500 million in technology. $6.6 billion earnings
By: Ed Zielonka, Bill McCann,Matt Gaynor, Zach Metcalfe, and Garrett Hasanbasic
Introduction Ford Motor Company is a global automotive industry leader based in Dearborn, Michigan Manufactures and distributes automobiles across six continents Includes Lincoln & Mazda 2nd largest automaker in the U.S. 5th largest in the world based on annual vehicle sales in 2010 118,308,000 in Revenues & 2,717,000 in Profit 2010
History Founded by Henry Ford 1903: Ford Motor Company was incorporated 1908: Ford introduces the Model T 1913: First moving assembly line and making Model T production 8 times faster. 1964: Ford Mustang and Ford GT40 was introduced as super cars. 1975: The famous Ford F150 was introduced.
History Cont. 1990: Ford Explorer was introduced as sport utility vehicle 1993: Ford opens its first dealerships in China. Its brand sales in China increased 46 percent in 2005. 2001: Ford Motor Company recalls 13 million tires and Bridgestone/Firestone dumps Ford as a customer 2006: Alan Mulally hired as new CEO to try to revive the company
Key Executives William C. Ford Jr., Executive Chairman Alan R. Mulally, President & CEO Lewis Booth, Chief Financial
Ford’s Mission Statement ONE FORD MISSION: ONE TEAM: People working together as a lean, global enterprise for automotive leadership, as measured by: Customer, Employee, Dealer, Investor, Supplier, Union/Council, and Community Satisfaction ONE PLAN: Aggressively restructure to operate profitably at the current demand and changing model mix Accelerate development of new products our customers want and value Finance our plan and improve our balance sheet Work together effectively as one team ONE GOAL: An exciting viable Ford delivering profitable growth for all.
Industry Analysis U.S. consists of 13 international automakers together produce 5.7 million cars and commercial vehicles (9% of global output) China surpassed North America in 2009 with 13.8 million units Laws and government regulations have affected the automotive industry Emissions Safety MPG
Industry Analysis New Marketing Demand from consumers Technology Advances Different Age Focus Automotive industry one of the largest employers in the country Represents 4% of GDP in the nation
General Motors Founded September 27, 1908 Headquartered in Detroit, Michigan Products are automobiles and financial services 209,00 employees
Honda One of Ford’s largest competitors Founded September 24, 1948 Headquartered in Tokyo, Japan Currently manufacture 13 different products
Toyota Founded August 28, 1937 Headquartered in Aichi, Japan Products are automobiles and financial services 317,734 employees
Market Analysis China Top auto market with 1.37 billion people and growing affluence This market is growing at a rate of 30.45% year on year growth to 7.18 million units during the first six months of 2010 Europe Electric and hybrid cars are really taking over this market About 10% of new cars sold globally are either hybrids or electric cars
Market Analysis Electric cars Automakers are looking to develop newer electric cars powered by batteries, the sun, or hydrogen fuel cells Automakers are also looking for new ways to secure the power to “refuel” these newer cars on a national scale
Current Status (China) Over the first half of 2010 Ford sold 301,524 units Resulted in a 53% growth in sales The Ford Fiesta was a popular model with the younger generation in China Also helped Ford gain market share
Chart World Motor Vehicle Rankings by Country (Million Units Produced)16 13.814 11.9512 11.6 11.56 10.8 10.7810 8.88 9.25 Us 8.71 7.93 8 5.71 5.71 China 6 4 Japan 2 0 2005 2007 2008 2009
Current Status (Electric Cars) Plans to launch a new electric Ford Focus sedan and the Ford Transit Connect commercial van Retooling North American truck plants to be used to produce
Current Status (Europe) Has a weak marketing strategy Focus on developing more fuel efficient cars and developing the Focus and Transit vehicles
Porter’s Five Forces Used for industry analysis and business strategy. Developed by Michael Porter of the Harvard Business School in 1979. Used to develop a competitive edge over rival competitors.
Porter’s Five Forces Threat of New Entry Power of Suppliers Power of Buyers Threat of Substitute Intensity of Rivalry
Threat of New Entry Low Manufacturers must be able to mass produce automobiles so they can be affordable for every consumer Extreme amount of capital is needed in order to manufacture automobiles keep up on research and development Difficult entering into established industry
Power of Suppliers Relatively Low It takes several suppliers to manufacture an automobile because there are so many different parts used. When there are a large number of suppliers in an industry, they do not have much power.
Power of Buyers Fairly high All of the manufacturers will depend on the consumers because they purchase most of the output Most of the revenue comes from the buyer If Ford cannot keep the consumer happy, they will lose them to another competitor
Threat of Substitute High Other forms of transportation Walking Riding a bike Public Transportation Customer Loyalty Ample amount of other options in car industry
Intensity of Rivalry Very High Most competitors have the same general focus so it makes the rivalry intense All competitors are trying to achieve same common goal Price, quality, and durability are factors that are taken into consideration to become superior to other competitors
P E S T Analysis Political Economic Social Technological
Political Exchange rates of the US dollar compared to other countries Oil prices and free trade flows Foreign ownership regulations Foreign laws and regulations Labor unions
Economic The growth potential of foreign target markets The size of potential target markets Economic development Oil price fluctuations The sales increase of Eastern European countries (Turkey, Hungary) Ford is the market leader in the UK, Hungary and Turkey
Social Geographical changes Consumer attitude Travel habits of consumers Cut on personnel and jobs
Technological Supply chain collaboration Ford’s operational capability Technological improvements in distribution Product development
Opportunities Customers demand for more fuel efficient cars Ford’s investment in the Solar Power industry “The Way Forward Plan” The European and Chinese markets Release of the 2011 Ford Fiesta
Threats Rising new material prices Increasing competition The “war on terrorism” and its overall threat to the world market and economy The economy Rising oil prices Housing market decline
Corporate Culture Second largest car manufacturer in the world Widely know for its vehicle service for its customers Large emphasis on customer first and customer satisfaction Areas served are worldwide Ford has invested $50,000 to help hundreds of Ford volunteers complete urgent projects identified by the companys nonprofit agency partners.
Current Mission1.) “Aggressively restructure to operate profitably at current demand changing model mix.”2.) “Accelerate the development of new products our customers want and value.”3.) “Finance their plan and improve their balance sheet.”4.) “Work together effectively as one team which emphasizes the importance of working together as one team to achieve automotive leadership , which is measured by the satisfaction of our customers, employees and other essential business partners, such as our dealers, investors, suppliers, unions/councils and communities.”
Industry RankingsRanking Automake Jan. Jan. 2009 Year to Year to Jan. 2010 r 2010 Sales Year % Year % Market Sales Change Change Share (unadjust (adjusted ed) )1 GM 146,825 129,227 +13.6 +23.1 20.9%2 Ford 112,406 90,596 +24.1 +34.4 16.7%3 Toyota 98,796 117,287 -15.8 -8.7 14.1%4 Honda 67,479 71,081 -5.0 +2.9 9.6%5 Nissan 62,572 53,884 +16.1 +25.8 9.0%6 Chrysler 57,143 62,157 -8.1 -0.4 8.1%7 Hyundai 52,626 46,608 +22.3 +12.9 7.6% Group
BCG Matrix In the matrix there are four quadrants. These quadrants are the Dogs, Question Marks, Stars, and Cash Cows. The Dog quadrant describes parts of the company that are not doing well The Question Mark quadrant deals with the parts of the company that have low market share but are growing Stars are the part of the matrix where there is high relative market share and high market growth Cash Cows are the most desirable market segment. These divisions have a high relative market share and low market growth
BCG Matrix Relative Market Share High Low Stars Question Marks Market Growth Rate Cash Cow DogsLow
CEO BookFord sales during the last year Recorded revenue of $128.954 billion in fiscal year 2010 Net Income of $6.561 Billion Operating Income of $7.149 Billion Total sales grew by 15.2 % Increased market share for 2nd consecutive year Inventory Velocity is 21 Return on assets is 4%
Ford and their competitors As of 2010, Ford’s net profit margin was 6.56 Billion Honda net profit margin=3.8 Billion Toyota net profit margin=5.2 Billion General Motors net profit margin=4.7 Billion
Strengths Producing Hybrid vehicles Brand recognition Profitable financial services division (Ford Motor Credit) Manufacturing facilities in more than 30 countries Wide Range of Products targeting all customer classes
Weaknesses Weakening North American automotive operations Recalls Sales in trucks decreasing rapidly Firing of Employees
Current Strategy Use free cash flow to pay off significant amounts of debt Truck/car sales mix transitioned to 48%/52% from 54%/46% Sell off preferred securities to reduce $2.98 billion in outstanding principal, and decrease interest on debt by 190 million a year Reduce debt, generate free cash flow Sold off Jaguar, Land Rover, Mercury, and Volvo
Strategic Issues of theEconomy Fuel Prices Better marketing strategies for automobiles Finding ways to lower emissions The US government and automobile companies have agreed on a long term fuel efficiency plan Better quality and safety
Strategic Issues of theIndustry Finding ways to attract customers in a struggling industry Expanding into other markets that offer a greater potential (ie. China and Europe) Finding a way to build more fuel efficient vehicles (ie. Hybrid and Electric vehicles) Separating themselves from competitors through the use of marketing and new innovations
Strategic issues for Industry Auto industry has faced shortages of engineers U.S. industry must add thousands of carmakers to build fuel-efficient vehicles to meet more stringent federal regulations and growing consumer demand. The nations auto sector has added a total of 32,000 employees 1,000 of which are engineers Threat of industry wide bankruptcies Fuel efficiency standards are placed on 2012 models
Competitors - Toyota In January 2010 Toyota announced it would temporarily stop building and selling eight models in the North American market Toyota recalled more than 11 million vehicles globally because of floor mats and sticky accelerator pedals in late 2010 Toyota was issued three fines totaling $48.8 million because the Transportation Department said Toyota had not reacted appropriately to reports of problems
Competitors - GM GM was forced into bankruptcy court in March 2009 In July of 2009 GM sold off its assets to a government owned company and the US government now owns 61% of the new company This creates an opportunity for Ford to capitalize on a company that is not financially stable
Competitors - Honda Recalls on 2,800 Odyssey mini-vans due to defect in front windows coming off the tracks New Odyssey mini-vans re-called 33,000 models due to faulty windshield wipers Third highest automaker involved in recalls in the U.S. last year – second highest in Japanese market Struggles through the effects of the earthquake, tsunami, and nuclear meltdown
Competitors – Honda Cont. Increased pressure from U.S., South Korea, and European competitors Honda lagged 12 points behind industry average of J.D. Power APEAL (Automotive Performance, Execution and Layout) Introduction of new line of cars will be delayed due to March 11, natural disaster
Ford Strategies in the Past Ford used to have a very corporate orientated strategy, but now focus on specialized product production and meeting specific needs of the consumer Ford used to imply a mobility strategy that worked to determine the long term profitability of the company but has altered that strategy since the recession
Ford Strategies Now Ford is making more hybrid vehicles through the increase use of renewable and recyclable materials Ford is developing natural-fiber composites as a potential substitute for the glass fibers traditionally used in plastic car parts to make them stronger while reducing vehicle weight Ford has developed a very strong sustainability strategy
Ford Strategies Now Cont. Ford is beginning to use Solar energy to power their manufacturing plants Global Electrification strategy Ford has a strategy on new key design Ford has a very strong marketing strategy as they market all of their vehicles differently
TOWS Chart Uses the SWOT matrix to develop specific strategic options for your company The components of the SWOT are matched, and strategies are developed to address them SO , WO, ST, AND WT
TOWS ChartsStrengths Weaknesses1. Producing Hybrid vehicles 1. Weakening North American2. Brand recognition automotive operations3. Profitable financial services 2. Recalls division (Ford Motor Credit) 3. Sales in trucks decreasing4. Manufacturing facilities in more rapidly than 30 countries 4. Firing of Employees5. Wide Range of Products targeting all customer classes
TOWS Charts TOWS ChartsOpportunities Threats1. Customers demand for 1. Rising new material prices more fuel efficient cars 2. Increasing competition2. Ford’s investment in the 3. The “war on terrorism” and its Solar Power industry overall threat to the world3. “The Way Forward Plan” market and economy4. The European and 4. The economy Chinese markets 5. Rising oil prices5. Release of the 2011 Ford Fiesta
TOWS Combinational SO Strategy ST Strategy Focuses: Focuses:1. Continue 1. Continue marketing and marketing and research & research & development of development of hybrid hybrid cars cars(S1,O1, O2) (S1,T4,T5)2. Consolidate more 2. Improve fuel in European and consumption Chinese markets (S1,T4,T5 ) (S4, O4)
TOWS Combinational WO Strategy WT Strategy Focuses: Focuses:1. Continue Research 1. Increase incentives and Development for customers. of Hybrid Cars Examples: mileage (S1,W2) warranties (T2,W1)2. Reduce recalls in 2. Reduce threat of newer products competition by (W2, O2) developing flexible product line(T2,W3)
Ansoff Matrix Purpose is to use this matrix to increase sales of a company’s current products without adjusting it in the existing market. The four main quadrants are market penetration, market development, product development and diversification. These four major classifications are in the new markets and existing markets.
Ansoff Matrix Existing Product New Product Market Penetration Product Existin Discount vehicles Development g and focus and New range Market advertise for the development. company. Market Development Diversification New Target the Develop new Market internet as prime line of cars. source for marketing.
Overarching Strategy Expand Globally, while mass producing hybrid technology (Aggressive) Continue to compete in automotive market, while focusing on core profitable products (Passive)
Expand Globally Develop a plan: Expand into different market segments China Europe Stronger Marketing campaign Brand Awareness in foreign markets
Focusing On Core Products Develop a plan: “Slim down to grow” Getting rid of weakest brands and using that money to invest into new product development and marketing Separate the company’s slow-selling secondary brands, and concentrate on shoring up its core business.
Strategic Intent (Goals) Increase total sales in European Auto Industry. Become industry leader in the Chinese market. Pass General Motors and become the highest ranked company in the US automobile market
Expanding Globally Pros Larger market potential, increase in sales Better brand recognition Access to different economies of scale Extend product life cycle by reaching larger markets Operational flexibility
Expanding Globally Cons Foreign economies are all structured differently Labor in foreign countries Lack of brand recognition Low customer loyalty Higher marketing costs
“Slim Down to Grow” Pros More room to focus on specific products Easier to market to certain economies Less costs associated with product development Better chance of financial safety
“Slim Down to Grow” Cons Loss of highly-skilled and reliable workers and the added expense of finding new workers An increase in overtime wages A decline in customer service because workers feel they lack job security after layoffs Restructuring programs sometimes take years to complete because of ensuing employee confusion and the amount of time it takes for employees to adjust to their new roles and responsibilities
Preferred Choice Expand Globally, while mass producing hybrid technology (Aggressive)
Arguments for Preferred Choice Car ownership in China has more than doubled in the last five years, from 12% of households in 2004 to 28% in 2009 Report show that its possible for Chinas percentage to top 50% by around 2015. Chinese have become less sure about their preferences, leaving a large group of undecided customers European market has increased demand for fuel efficient compact cars
ProjectionsGloballyExpansion Grow customers by 20% annually Increase number of dealerships by 10 per year
Annual Objectives - Year 1 Total Cost: 1.2 billion (China) Franchise: $500,000+ Technology Investment: 750 million Operating Cost: 400 million Unforeseen Cost:1.5 million Total Earnings: 3.5 billion
Annual Objectives - Year 2 Total Cost: 1.2 billion (Europe) Franchise: $500,000+ Technology Investment: 750 million Operating Cost: 400 million Unforeseen Cost:1.5 million Total Earnings: 3 billion
Annual Objectives - Year 3 Total Cost: 1.7 billion Technology Investment: 750 million Operating Cost: 800 million (400 China/Europe) Unforeseen Cost:1.5 million Total Earnings: 7.5 billion Europe Market: 3 billion China Market: 3.5 billion
Implementation Increase Research and Development of Hybrid energy Joint venture with energy companies Help to develop longer lasting fuel supplies Increase Foreign market share China Europe
Trigger/Contingency-1 Trigger: Unstable economy Contingency Plan: Reduce lower selling models/product lines to maintain profitability Downsize work force to generate operating cash
Trigger/Contingency-2 Trigger: Natural disaster Affects gas prices Affects production in foreign sectors Contingency Plan: Develop partnership with relief organizations Donate F150s (help brand awareness)
Mission Statement – Revision ONE FORD MISSION: ONE TEAM: People working together as a lean, global enterprise for automotive leadership, as measured by: Customer, Employee, Dealer, Investor, Supplier, Union/Council, and Community Satisfaction ONE PLAN: Aggressively restructure to operate profitably at the current demand and changing model mix throughout the world Accelerate development of new products our customers want and value Finance our plan and improve our balance sheet Work together effectively as one team to manufacturer the safest possible vehicle ONE GOAL: An exciting viable Ford delivering profitable ONE WORLD: Strive to be the safest automobile manufacturer in the world along with providing consumers with eco friendly vehicles.