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Ford Motor Strategic Management

Ford Motor Company is the largest industrial company in US history. Henry Ford founded the company in 1903 and pioneered mass production techniques, including the moving assembly line. By 1924, Ford produced the 10 millionth Model T car. Currently, Ford faces competition from Toyota, GM, Honda, and others but has maintained a strong brand and market share in North America through innovation. Ford aims to deliver profitable growth through its "One Ford" strategy of having one team, plan, and goal.

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“the most important industrial company in the history of United State” Forbes F: Foster Functional and Technical Excellence O: Own Working Together R: Role Model Ford Values D: Deliver Results Ford Motor Company presented by Mohamad Basreen Bin Ahmad Ahmad Hanif Bin Mohamad Khidzir Mohamad Nur Izzat Mohamad Faidzuan Bin Shazli Mohamad Hanif Bin Musa
HISTORY • Misconception : Henry Ford invented the automobile. • He makes automobile available to mass. • Henry Ford was born in 1863 in Michigan. • His father hopes him to be a farmer. • When he was 12 he dreamed about a lighter smaller version of steam powered train to relieve farmers. • He studied engineering and then work at Detroit Edison lighting company. • 1893 he started focusing on developing his dream car in his garage. • 1896 he open the door of his garage and first attempt of his automobile the quadrocycle.
HISTORY • After that, New Detroit automobile company hired him. • He invest his time and energy on race cars. • In 1903 he startup his car manufacturing ford motor company. • Rolls out model A. • 1906 he buys out all the shares. • 10 Thousand model T was sold the first year. • Initial price $850.
HISTORY • 1913 henry ford broke the 200000 cars per year mark. • He pioneered the moving assembly line. • Production time 90 minutes per car. • 1914 the price drops to 450. rolls out 300000 cars annually. • January 5th Ford implemented the $5 day. Existing minimum wage $2.34. • He cuts from working hours from 10 to 8 hours per day. • 1924 Ford was 61 and Model T was 16. • June 15th the 10th millionth model T rolls out. • With the price of 290 dollars.
CORPORATE OFFICER
COMPANY BRANDS • Consist five brands generally being an affordable brand name catering to a variety of consumer need and want. • Sell broad range of automobiles such as vehicle span cars, trucks and super utility vehicle (SUVs).
COMPANY BRANDS
United State’s Automobile Industry Leader Company 2015 2009 • Toyota Motor Corp 11.60% 16.9% • Volkswagen AG 11.10% - • General Motor Co 8.20% 18.8% • Ford Motor Co 7.60% 13.8% • Honda Motor Co Limited 5.90% 10.6%
ISSUES • Ford still has $33 billion in debt including obligation to retirees during 2006. • Facing $12.6 billion annual loss • Ford revenue decreased from $172.5 billion in 2007 to $146.3 billion in 2008. • 40000 workers been layoff and almost 17 plant closed.
Ford Motor Company External Assessment : PESTEL Analysis  Political Factors - Political agendas weigh as a heavy factor for Ford as environmental issues are heavily considered when Ford design new vehicles.  Economic conditions - Recessions, Inflation can severely impact the automotive industry which can lead to bankruptcy.  Socio-cultural forces – Automotive firms will always face customer biases on brands or labels.  Technological factors - Technological advances help automotive companies produce vehicles that are more fuel efficient, safer and better equipped with more accessories such as driver-assist systems.  Environmental forces - There is an increasing need to reduce pollution levels exerted on the environment by reducing exhaust emission level produced by motor vehicles.  Legal and regulatory forces - Automotive firms are subject to changing labour laws and union pressures set in place to promote adequate compensation to appropriate workers.
Ford Motor Company External Assessment : Porter’s 5 Forces Analysis  Competition from Rival Sellers (Strong) - Competitive pressures are high in the industry due to rapidly changing consumer demands.  Competition from Potential New Entrants (Moderate) - It is relatively difficult for new potential entrants to enter the market due to heavy industrial and government regulations.  Competition from Producers of Substitute Products (Moderate) – Comparable substitutes for automobiles are readily such as public transportation  Supplier Bargaining Power (Weak) - Suppliers have low bargaining power due to low costs associated with industry members switching to different suppliers  Customer Bargaining Power (Strong) - Customer bargaining power is high due to the large number of buyers in the industry.
• Market structure: Oligopoly • Largest auto market: United states – 11 million vehicle in year, 22 firms (2013) • Big Five: GM ,Toyota ,Chrysler ,Honda, Ford COMPETITOR ANALYSIS
CHRYSLER • Founded by Walter Chrysler on June 6, 1925 • No of employees: 74,700 (2014) • It sells vehicles worldwide under its flagship Chrysler brand as well dodge, jeep etc. • In 2014, FCA US LLC is the seventh biggest automaker in the world by production.
GM • Founded on September 16, 1908 by William C. Durant • No of employees: 216,000 (2015) • GM led global sales for 77 consecutive years from 1931 through 2007, longer than any other automaker. • GM filed for Chapter 11 bankruptcy in June 2009. • In 2008, 2009 and 2010, GM has ranked as the second largest global automaker by sales.
TOYOTA • Started in 1933 as a division of Toyoda Automatic Loom Works by Kiichiro Toyoda • No of employees : 338,875 • In 2008, Toyota's sales surpassed General Motors, making Toyota number one in the world. • Focused on emphasizing the positive experiences of ownership and vehicle quality.
HONDA • Founded on 1946 by Soichiro Honda • No of employees: 198,561 (2014) • Honda is Japanese public multinational corporation primarily known as a manufacturer of automobiles, motorcycles and power equipment. • Honda became the second-largest Japanese automobile manufacturer in 2001. • Honda was the eighth largest automobile manufacturer in the world behind General Motors, Volkswagen Group, Toyota, Hyundai Motor Group, Ford and Nissan in 2011.
Big 5 Market Share sources : edmunds.com GM 16% FORD 15% TOYOTA 15% CHRYSLER 13% HONDA 8% OTHERS 33% Sales
Top 5 Sales March 2014 & March 2015 0 50000 100000 150000 200000 250000 300000 GM FORD HONDA TOYOTA CHRYSLE 14-Mar 15-Mar
Subsidiaries FORD: 8 Brands • Lincoln, Mercury, Mazda, Volvo, Jaguar, Mazda, Land Rover, Aston Martin GM :13 Brands • Buick, Cadillac, Chevrolet, GMC, Holden, Hummer, Pontiac, Opel, Saab, Saturn, Vauxhall, and Wuling Toyota : 5 Brands • Toyota, Lexus, Scion, Daihatsu, Hino Honda : 2 Brands ( Honda , Acura) CHRYSLER : 4 Brands (Dodge, Jeep, Mopar , Chrysler)
• Mercedes scored the highest overall score at 9.35 and GM scored the lowest at 8.3. • The heaviest weighted factor was brand image/ reputation with a weight of 20% • Ford placed second highest among the other rivals with an overall score of 9.1 proving its wellroundedness in all areas.
Core Competence Innovation in technology, safety, design Innovation in service and technology TQM (Total Quality Management) High valued, technically advanced cars, and focuses in development of engine car Designing and manufacturing engines
Ford Motor Company Internal Assessment : Current Strategy Vision - In 2007, Ford embraced a new vision that embraces a “One Ford” initiative that is built upon “One Team, One Plan and One Goal.” Mission - “Our One Ford plan aligns our efforts toward a common definition of success: having One Team, One Plan and One Goal for an exciting, viable Ford that delivers profitable growth for all.”
Business 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. Main Goal • Great Products, a full family of vehicles – small, medium and large; cars, utilities and trucks – with best-in-class quality, fuel efficiency, safety and smart design. • Strong Business, based on a balanced portfolio of products and global presence. • Better World, accomplished through our sustainability strategy.
PROFITABILITY 1) Gross Profit Margin • (Revenue- COGS) / Revenue • 2009 : -3.23% because of recession on 2008 • 2010 : 4.85% • 2011 : 5.56% • 2012 : 4.4% • 2013 : 3.7%
2) Net Profit Margin • Net Income / Sales Revenue • 2.61% in 2009 • 5.5% in 2010 • 14.91% in 2011 • 4.24% in 2012 • 4.87% in 2013
3) Net Return On Asset • Net Income / Average Total Asset • 1.39% in 2009 • 3.8% in 2010 • 11.33% in 2011 • 3.04% in 2012 • 3.54% in 2013
LIQUIDITY 1) Current Ratio • Current Asset / Current Liabilities • Current ratios for the Ford Motor Company range from a low of 2.35 in 2010 to a high of 2.91 in 2013. • Year-to-year average from 2009-2013 for solvency of assets is 2.58. Means, Ford holds an average of 2.58 times its current liabilities in current assets if the assets would have to be liquidated.
2) Working Capital • Current Asset – Current Liabilities • Ford’s working capital has been steadily increasing from 81,302 in 2010 to 114,317 in 2013. • The steady incline represents that current strategic operations are contributing to a future that holds promise for profit growth and expansionary capabilities.
LEVERAGE 1) Total Debt-To-Asset Ratio • Total Liabilities / Total Asset • The Ford Motor Company reported a debt-to- asset ratio high of 1.03 in 2009 to a low of 0.87 in 2013. • These figures represent how the company is moving towards a positive direction for growth by holding onto less debt relative to its assets from the 2009-2013
Ford Motor Company Internal Assessment : SWOT Analysis  Strengths - Strong Brand Recognition and position in North American market - Forward-thinking approach to environmental responsibility - Significant growth in China - One Ford initiative  Weaknesses - Weak performance in Europe - High Cost Structure  Opportunities - Increasing fuel prices - More Strict Emission Standards - Strategic Alliances with Other Automotive Manufacturers  Threats - Decreasing Fuel Prices - Strong Market Competition - Exchange rate Fluctuations - Increase in Raw Material Prices
Ford Motor Company Internal Assessment : Value Chain Analysis  Product R&D, technology and systems development - Product research and development play integral role as part of Ford’s Value Chain  Supply chain management - Raw material extraction plays a vital role in Ford’s value chain as it pertains to their objective in minimizing global environmental impact and surrounding communities.  Operations - Ford plant manufacturing accounts for the majority of where value is added along the Value Chain  Distribution - Logistics/ Transportation include the transport of supplier parts to Ford manufacturing facilities and finished products from manufacturing plants to dealerships  Sales and marketing - In 2013, The Ford Motor Company sold more than 6.33 million vehicles globally and had 11,722 Ford and Lincoln dealerships.
Ford Motor Company : PERFORMANCE PROGRESS • It is reported that in 2013 full-year pre-tax profit of $8.6 billion, driven by the highest Automotive pre-tax profit in more than a decade and continued solid profit from Ford Credit. • To support their aggressive growth strategy and meet demand for the vehicles, Ford is adding jobs in several key regions – 11,000 in the U.S. and Asia combined in 2014 – and building new facilities. • In 2015, Ford will launch 23 new or significantly refreshed vehicles to customers around the world – the most in a single year in more than a century.