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Strategy Management of Ford Motor Company.

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A formal presentation of the strategy management of Ford Motor.

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Strategy Management of Ford Motor Company.

  1. 1. Ford Motor Company1
  2. 2. Presented by: Institute of Information Technology, University of Dhaka MIT 11th Batch Hafsa Akter Sonia (141116) Zahra Rezwana (141120) Faria Hasan (141115) Protitee Yasmine (141150) 2
  3. 3. Outline  History  Vision, Mission ,Values & objectives  SWOT Analysis  Internal Analysis 3
  4. 4. History of ford  Henry Ford invented Ford in 1903  The company started making the Model – T in 1908  Started in Dearborn, Michigan 4 4
  5. 5. Ford Motor Company – at a glance The Ford Motor Company is an American multinational automaker headquartered in Dearborn, Michigan, a suburb of Detroit. It was founded by Henry Ford and incorporated on June 16, 1903. Type Public company Headquarter Dearborn, Michigan, U.S. Area served Worldwide Products Automobiles Luxury Vehicles Commercial Vehicles Automotive parts 5 5
  6. 6. 6
  7. 7. Car Evolution Old model vehicles 7 7
  8. 8. 8
  9. 9. 9 Logo 9
  10. 10. Organizational Structure 10  Very Complex structure fairly mechanistic in nature  Rigid departmentalization  Low span of control  High Centralization CHAIRMAN CEO Executive V.P and CFO Executive V.P and CTO Executive V.P. of America Executive V.P. of Europe Group Vice Presidents and president of Asia Pacific
  11. 11. William Clay Ford, Jr., great grandson of Henry Ford, serves as the executive chairman at the board of Ford Motor Company. Key Person 1111
  12. 12. Vision, Mission, Values & objectives 12 12
  13. 13. 13 13
  14. 14. Mission 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.” 14 14
  15. 15. Values  People  Products  Profit  Organizational culture 15
  16. 16. Objectives  stabilizing the climate by considering reducing long-term emission.  development of infrastructure that expand the use of bio-fuels and reduce dependence on oil  cut the usage of global energy by 27% and the usage of water by 25% 16
  17. 17. SWOT Analysis Strengths Weaknesses 1. US market position 2. Financial performance 3. ECOnetic approach 4. ONE Ford approach 5. Growth in china 1. High cost structure 2. Unprofitable Europe operation 3. Low exposure to Asia Pacific Opportunities Threats 1. Green vehicles 2. Increasing fuel prices 3. New emission standards 4. Strategic partnership 1. Decreasing fuel prices 2. Rising raw material prices 3. Instances competitions 4. Fluctuating exchange rates 17
  18. 18. Internal Analysis  Strengths  Weaknesses  IFE matrix 18 18
  19. 19. 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 19
  20. 20. Weaknesses  Weakening North American automotive operations  Sales in trucks decreasing rapidly  Firing of Employees 20
  21. 21. IFE Matrix 21
  22. 22. Internal Analysis 22
  23. 23. Outline 23  External Analysis  Opportunities & Threats  Industry Analysis: o Porter’s Five Forces Model o EFE Matrix o CPM  Environmental Analysis  Competitive Analysis  Competitive Advantage  Product Life Cycle
  24. 24. 24 Opportunities for Ford  Global expansion.  Brand Building o Better Quality Vehicles o Better Safety Rating o Convenience features  Consumers demand hybrid and fuel efficient vehicles.  Increase in consumer spending trends.  Consumers demand more innovative vehicles.  Industry experiences slow and steady growth.  Exploring new alternative fuels.
  25. 25. 25 Threats for Ford  Low-cost manufacturers o Chinese Auto Makers (Greely, SAIC)  Public Transportation o Bus o Railway (Metro)  Weak USD  Increase in steel and resin prices.  Increase gasoline prices.  Stricter CO2 emission standards.  Increasing mortgage rates.  Loss of market share.
  26. 26. 26 Porter’s Five Forces Model Threat of Substitutes Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers High: • Chinese Auto Industry High: • To many models and options High: • Alternative Fuels • Modes of Transportation • Customer Loyalty Low: • Option for Outsourcing to low-cost destinations • Forward Integration Industry Rivalry High: • Numerous competitors • Low switching costs
  27. 27. 27 Industry Analysis: EFE Matrix
  28. 28. 28 Industry Analysis: CPM Ford GM DiamlerChrysler AG Toyota Critical Success factors Weight s Rati ng Weighted Score Rati ng Weighted Score Rati ng Weighted Score Ratin g Weighted Score 0.0 to 1.0 1 to 4 1 to 4 1 to 4 1 to 4 Global Expansion 0.14 2 0.28 3 0.42 2 0.28 3 0.42 Financial Position 0.10 2 0.2 4 0.4 3 0.3 3 0.3 Growth 0.16 1 0.16 3 0.48 1 0.16 4 0.64 US Market Share 0.20 3 0.6 4 0.8 2 0.4 2 0.4 Customer Loyalty 0.15 4 0.6 3 0.45 4 0.6 3 0.45 Hybrid/Fuel Efficient Vehicles 0.18 3 0.54 3 0.54 2 0.36 2 0.36 Management Experience 0.07 3 0.21 4 0.28 3 0.21 3 0.21 Totals 1 2.59 3.37 2.31 2.78
  29. 29. 29 Environmental Analysis • Reduce CO2 Emissions • Clean diesel fuel technology – BLUETEC – reduce nitrogen oxide levels • Reuse of car components
  30. 30. 30  Toyota, Honda, and Nissan have grown in market share largely as a result of their ability to deliver better products at lower prices, particularly for more fuel efficient smaller vehicles.  Toyota has  High Quality, High Safety Ratings (NHTSA)-5 star ratings  Streamlined operations with similar models globally  Hybrid models across all segments  Ford has been more successful than both GM and Chrysler in reducing legacy costs. Competitive Analysis
  31. 31. 31  General Motors (GM):  Focusing on emerging markets  Researching Alternative Fuels:  Chevy Equinox Fuel Cell  Plans to develop 12 hybrid models  Implementing the new “Tru-Flex system” Competitive Analysis (cont.)
  32. 32. 32 Competitive Advantage  Cost Advantages:  low production cost  cut down of huge expenditure on raw materials  the online manufacturing process  Differentiate Advantages  production of smart cars with fuel efficiency  centralized decision making system.  increased market share.  Ford SYNC - fully integrated communication and entertainment system
  33. 33. 33 Product Life Cycle CARS TRUCKS COMER-TRUCKS SUVs E- CARS PINTO
  34. 34. Outline Outline  Value Chain Analysis  Strategy implementation  Organizational Culture  Products, Sales and Revenue 34
  35. 35. Value Chain Analysis General Administration –It should use high level of information system to make strategic and routine decisions. HR Management – Strong management with continuous evaluation process. Healthy relation with labor union. Technology and Systems – use the high-tech information technology to integrate suppliers. Procurement – Minimize dependence on a single supplier. Leveraged strong buyer power into timely, low-cost, and high quality of raw materials. Strong long lasting relationships with suppliers and efficient inventory management. Inbound Logistics •Efficient inbound warehousing system •Quality inspection at supplier level Operations High level of automation. Outbound Logistics •Reduce delivery time •Increase efficiency of finished product warehousing Marketing and Sales •Develop Quality •Increase brand loyalty •Increase demand creation Service High level of service to after sales customers Primary Activities35
  36. 36. Strategy implementation  ‘One ford’ strategy  Friendly competition  ‘Less is more’ new approach  Reduction of complexity  Creating a new corporate culture  A shift toward smaller and more fuel-efficient cars  Globalizing the Ford brand 36
  37. 37. ‘One Ford’ approach  One team  People working together as a lean, global enterprise for automotive leadership  Measured by customer, employee, dealer, investor, supplier, council and community satisfaction  One goal  An exciting viable Ford delivering profitable growth  One plan  Aggressively restructure to operate profitably at the current demand and changing model mix  Accelerate development of new products customers want and value  Finance plan and improve balance sheet  Work together effectively as one team 37
  38. 38. ‘Less is more’ new approach  The ‘bigger is better’ worldview defined ford for decades  Replaced with a new approach: less is more  Cut costs  Transform the way it did business than to measure market share 38
  39. 39. A New Corporate Culture  Structural and procedural changes  Executives meet with Mulally every week  ‘we are actually committed to hitting the numbers.’  Team working  Senior executive reorganization  Report directly to him 39
  40. 40. Cost Advantage Through Focus (A shift toward smaller and more fuel-efficient cars)  Oil prices persistently increasing over the last few years  A dramatic change in consumer’s car buying habits, reducing the demand for large vehicles  leased cars are sold for much less than their residual values  A change in products, shifting to smaller and more fuel-efficient cars 40
  41. 41. Globalizing the Ford brand  Globalize the Ford brand  All Ford vehicles competing in global segments would be the same in North America, Europe, and Asia within the next five years  Deliver more vehicles worldwide from fewer platforms and maximize the use of common parts and systems  reduction of costs in the purchasing and manufacturing processes 41
  42. 42. 42 Products, Sales and Revenue  Sells broad range of automobiles under different brand names.  Strong growth in sales all over the world.  14 straight quarters of operating profit in 2012  Tough competition from other brands like GM and Chrysler.
  43. 43. Outline Outline  Profit Margin  Market Segmentation  Current Strategies  Future Strategies  Recommendation  Future Product  Conclusion 43
  44. 44. Profit Margin Profit margin represents the percentage of revenue that a company keeps as profit after accounting for fixed and variable costs. 44
  45. 45. Profit Margin  2008  5.98 Billion  2009  6.23 Billion  2010  6.12 Billion  2011  6.21 Billion  2012  6.56 Billion 45
  46. 46. Effects on Profit Margin  Ford started to hire more employees  Ford must increase prices  There have been new implications for strategy 46
  47. 47. Market Segments Market Market Segment Market Sub segment FORD Motor Sports Cars Economic vehicles Trucks Buses Cars Racing cars Rally cars 47
  48. 48. Jari-Matti Latvala driving the Ford Focus RS WRC 09 in 2010. Ford Mustang GT (racing GT car) Ford Performance Racing Ford Falcon V8 Supercar at Eastern Creek in Australia in 2008. 48 Ford racing cars 48
  49. 49. Market Segments Market segmentation approaches- 49 Geographic Segmentation -ford aims to grab the market of UK as well as India, China, Malaysia Physiographic Segmentation -FORD FIESTA comes at reasonable price Demographic Segmentation -FORD FOCUS aims for young people, ladies and average income consumer Behavioral Segmentation -with the benefit for safety and fuel efficiency
  50. 50. Ford Current Strategies 50
  51. 51. Ford Current Strategies Cont(..)  Ford has a strategy on new key design  Ford is beginning to use Solar energy to power their manufacturing plants  Global Electrification strategy  Ford has a very strong marketing strategy as they market all of their vehicles differently  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 51
  52. 52. Future Strategy 52
  53. 53. Future Strategy  Reduce manufacturing expenses by 15-20%  Introduce new small fuel efficient vehicles  Enter Latin American and Asian market with hybrid vehicles  Develop affordable electric car for US market  Increase market share  Manufacturing of new small fuel-efficient vehicle  Entering the Latin American and Asian market with hybrids $ 20 billion  Implementation of electric car in the US market $ 13 billon  Total Cost = $ 40 billion 53
  54. 54. Recommendation 54 Increase total sales in European Auto Industry Become industry leader in the Chinese market Pass General Motors and become the highest
  55. 55. Future Product 55
  56. 56. Conclusion In spite of having strong competition in market, Ford is still dominating the motor industry as well as their business strategies are quite strong for sustaining in this market. 56
  57. 57. References  www.ford.com  https://ycharts.com/companies/F/profit_margin  http://www.slideshare.net/Harrisa011/fords-strat  https://corporate.ford.com/innovation/innovation-ideas  http://www.ford.com/cars/fiesta  http://www.advfn.com/stockmarket/NYSE/F/financials  http://www.at.ford.com/news  http://www.1000ventures.com/business_guide/marketing _main.html 57
  58. 58. 58 QUESTIONS? 58

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