Ford Motor Company is a global automaker headquartered in Dearborn, Michigan. It manufactures and distributes vehicles worldwide and includes the Lincoln and Mazda brands. While once the largest US automaker, Ford is now the second largest and focuses on developing new electric vehicles and fuel efficient models to compete with Toyota and General Motors. A key goal is improving its balance sheet and working as one global team to deliver profitable growth.

1. By: Ed Zielonka, Bill McCann,
Matt Gaynor, Zach Metcalfe, and Garrett Hasanbasic

2. INTRODUCTION

3. 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

4. Introduction Cont.
 Competitors GM, Toyota, and Honda
 Products
 Automobiles
 Automotive parts
 Services
 Automotive finance
 Vehicle leasing
 Vehicle service

5. 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.

6. 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

7. Key Executives
 William C. Ford Jr., Executive
Chairman
 Alan R. Mulally, President & CEO
 Lewis Booth, Chief Financial

8. 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.

9. Expected Behaviors

10. SITUATION ANALYSIS

11. 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

12. 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

13. Competitors
 General Motors
 Honda
 Toyota

14. General Motors
 Founded September 27, 1908
 Headquartered in Detroit, Michigan
 Products are automobiles and financial services
 209,00 employees

15. Honda
 One of Ford’s largest competitors
 Founded September 24, 1948
 Headquartered in Tokyo, Japan
 Currently manufacture 13 different products

16. Toyota
 Founded August 28, 1937
 Headquartered in Aichi, Japan
 Products are automobiles and financial
services
 317,734 employees

17. 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

18. 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

19. 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

20. Chart
World Motor Vehicle Rankings by Country (Million Units
Produced)
16
13.8
14
11.95
12 11.6 11.56
10.8 10.78
10
8.88
9.25 Us
8.71
7.93
8
5.71 5.71
China
6
4
Japan
2
0
2005 2007 2008 2009

21. 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

22. Current Status (Europe)
 Has a weak marketing strategy
 Focus on developing more fuel efficient cars
and developing the Focus and Transit vehicles

23. Ford Drive ONE!

24. 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.

25. Porter’s Five Forces
 Threat of New Entry
 Power of Suppliers
 Power of Buyers
 Threat of Substitute
 Intensity of Rivalry

26. 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

27. 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.

28. 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

29. Threat of Substitute
 High
 Other forms of transportation
 Walking
 Riding a bike
 Public Transportation
 Customer Loyalty
 Ample amount of other options in car industry

30. 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

31. P E S T Analysis
 Political
 Economic
 Social
 Technological

32. 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

33. 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

34. Social
 Geographical changes
 Consumer attitude
 Travel habits of consumers
 Cut on personnel and jobs

35. Technological
 Supply chain collaboration
 Ford’s operational capability
 Technological improvements in distribution
 Product development

36. External SWOT Analysis
 Opportunities
 Threats

37. 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

38. 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

39. INTERNAL ANALYSIS

40. 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
company's nonprofit agency partners.

41. Current Mission
1.) “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.”

42. Industry Rankings
Ranking 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

43. Ford Financial Performance
Revenues Gross Margin % Earnings per share
2006 (160,065,000) 2006 (7%) 2006 (-6.72)
2007 (168,884,000) 2007 (16.9%) 2007 (-1.32)
2008 (143,584,000) 2008 (11.8%) 2008 (-6.46)
2009 (116,283,000) 2009 (15.5%) 2009 (0.86)
2010 (128,954,000) 2010 (19%) 2010 (1.66)

44. 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

45. BCG Matrix
Relative Market Share
High Low
Stars Question Marks
Market Growth Rate
Cash Cow Dogs
Low

46. CEO Book
Ford 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%

47. 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

48. Profit Margin
 2006
 5.98 Billion
 2007
 6.23 Billion
 2008
 6.12 Billion
 2009
 6.21 Billion
 2010
 6.56 Billion

49. Effects on Profit Margin…
 Ford started to hire more employees
 Ford must increase prices
 There have been new implications for strategy

50. Cash Flow & Competition
 Increased revenues 48.7%
 Revenues have continued to increase
 Ford is the second largest automotive maker in
the United states

51. Internal SWOT Analysis
 Strengths
 Weaknesses

52. 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

53. Weaknesses
 Weakening North American automotive operations
 Recalls
 Sales in trucks decreasing rapidly
 Firing of Employees

54. 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

55. STRATEGIC
ANALYSIS

56. Key Strategic Issues

57. Strategic Issues of the
Economy
 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

58. Strategic Issues of the
Industry
 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

59. 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

60. 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

61. 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

62. 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

63. 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

64. 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

65. 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

66. 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

67. 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

68. TOWS Charts
Strengths Weaknesses
1. Producing Hybrid vehicles 1. Weakening North American
2. Brand recognition automotive operations
3. Profitable financial services 2. Recalls
division (Ford Motor Credit) 3. Sales in trucks decreasing
4. Manufacturing facilities in more rapidly
than 30 countries 4. Firing of Employees
5. Wide Range of Products targeting
all customer classes

69. TOWS Charts
TOWS Charts
Opportunities Threats
1. Customers demand for 1. Rising new material prices
more fuel efficient cars 2. Increasing competition
2. Ford’s investment in the 3. The “war on terrorism” and its
Solar Power industry overall threat to the world
3. “The Way Forward Plan” market and economy
4. The European and 4. The economy
Chinese markets 5. Rising oil prices
5. Release of the 2011 Ford
Fiesta

70. 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)

71. 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)

72. 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.

73. 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.

74. Identification of Strategic
Alternatives

75. Overarching Strategy
 Expand Globally, while mass producing
hybrid technology (Aggressive)
 Continue to compete in automotive
market, while focusing on core profitable
products (Passive)

76. Expand Globally
 Develop a plan:
 Expand into different market segments
 China
 Europe
 Stronger Marketing campaign
 Brand Awareness in foreign markets

77. 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.

78. RECOMMENDATION
S

79. 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

80. 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

81. Expanding Globally Cons
 Foreign economies are all structured
differently
 Labor in foreign countries
 Lack of brand recognition
 Low customer loyalty
 Higher marketing costs

82. “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

83. “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

84. Preferred Choice
 Expand Globally, while mass producing
hybrid technology (Aggressive)

85. 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 it's possible for China's
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

86. Projections
Globally
Expansion
 Grow customers by
20% annually
 Increase number of
dealerships by 10
per year

87. Market Expansion (China)

88. 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

89. 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

90. 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

91. 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

92. Technology!

93. Trigger/Contingency-1
 Trigger:
 Unstable economy
 Contingency Plan:
 Reduce lower selling models/product lines to maintain
profitability
 Downsize work force to generate operating cash

94. 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)

95. 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.

96. QUESTIONS?