Business Strategy FORD Motor Company PDF

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Business Strategy FORD Motor Company...

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BUSINESS STRATEGY FORD MOTOR COMPANY INTRODUCTION • FORD MOTORS is a company would go on to become one of the largest and most profitable companies in the world, as well as being one of the few to survive the great depression. • Establish on June 16, 1903 • First owned by Henry Ford • It is a wide spread company expanded over all the four region • It has a wide range of vehicle types • The first company which self-insured in Michigan on September 15, 1912 • Core business area is design and manufacture of automobile • It produced 5.53 billion automobiles in 2008 and generates an annual revenue of 118.3 billion in 2009

MISSION & VISION  VISSION  To become the world’s leading consumer company for automotive products and services.  MISSION  People working together as a learn, global enterprise for automotive leadership, as measured by customer, employee, dealer, investor, supplier, union/council and community.  Strive to become the worlds largest manufacturer, distributor, and servicer.

PORTER’S FIVE FORCES Buyer Powers -Large on demand -Over capacity -Large purchase

Thread of subtitutes -Being a public transportation -Travelling door to door must use car

Competitive - Mature market -Price war - Large number of competitors

Thread of new entrants - Labor -Technology -Supplier

Supplier Powers -Suppliers become independent -Switching cost

SWOT ANALYSIS 1. STRENGTH

2. 1. US market position 3. 2. Financial performance 4. 3. ECO-netic approach 5. 4. Growth in China

6. WEAKNESSES

1. High cost structure 2. Unprofitable Europe operation 3. Low exposure to Asia Pacific

7. OPPORTUNITIES

1. Green vehicles 2. Increasing fuel prices

2

3. New emission standards 4. Strategic partnership 8. THREATS

9. Decreasing fuel price 10.

Rising raw materials prices

11.

Instances competitions

12.

Fluctuating exchange rates

STRENGTH • Producing hybrid vehicle • Brand recognition • Profitable financial services division (Ford Motor Credit) • Manufacturing facilities in more 30 countries • Wide range of products targeting all customer classes WEAKNESS • Weakening North American automotive operations • Sales in trucks decreasing rapidly • Firing of Employees

3

CPM

EFE  KEY EXTERNAL FACTORS

 WEIGHTS 0.0 TO 1.0

 RATING 1 TO 4

 WEIGHTED SCORE

 0.15

 3

 0.45

 0.09

 2

 0.18

 0.12

 3

 0.36

 0.14

 2

 0.28

 0.08

 1

 0.08

 Opportunities • Consumers demand hybrid and fuel efficient vehicles • Increase in consumer spending trends • Consumers demand more innovative vehicles • Global expansion • Industry experiences slow

4

and steady growth  Threats • Weak USD

 0.06

 2

 0.12

• Increased in steel and resin pricing

 0.08

 2

 0.16

 0.13

 3

 0.39

• Increasing gasoline price

 0.10

 3

 0.30

 0.05

 2

 0.10

• Stricter CO2 emission standards • Increasing mortgage rates  TOTALS

 1

OPPORTUNITIES • Global expansion • Brand building • Consumer demand hybrid and fuel efficient vehicles • Exploring new alternative fuels • Industry experiences slow and steady growth • Demand more innovative vehicles THREAT • Low cost manufacturer • Public transportation • Weak USD

5

 2.42

• Increase in steel and raising price • Increase gasoline • Stricter CO2 emission standard • Increase mortgage • Loss market share IFE  Key Internal Factors

 Weights 0.0 to 1.0

 Internal strengths • Strong and globally positioned brand names • Large employee base with highly educated engineers and good R&D department

 Rating  Weighted 1,2,3, score or 4  3 or 4

 0.13

 4

 0.52

 0.09

 3

 0.27

 0.06

 3

 0.18

 0.09

 3

 0.27

 0.11

 4

 0.44

• One of the largest automotive manufacturer (along with a long history) • 1285% increase in net cash • Huge increase in total equity  Internal weaknesses

6

 1 or 2

• A lot of time spent to actually put the product on the market • Recording continuous losses (net income) from 2006

 0.1

 2

 0.2

 0.12

 1

 0.12

 0.12

 1

 0.12

 0.08

 2

 0.16

 0.1

 1

 0.1

• Low quality of new products (recallscausing losing customers) • Bad management of the company • EPS very bad- in negative numbers ( unattractive for the investors)  TOTALS

 1

 2.38

SPACE Matrix

7



FINANCIAL STRENGTH (FS) 



Return on Asset



1



Leverage



1



Net Income



2



Net Asset



2



Return on Equity



1



FINANCIAL STRENGTH



1.4

Ratings

8



ENVIRONMENTAL STABILITY (ES)



Ratings



Rate of Inflation



-4



Technological Changes



-3



Price Elasticity of Demand



-3



Competitive Pressure



-6



Barrier to entry into the Market



-2



ENVIRONMENTAL STABILITY (ES)



-3.6



COMPETITIVE ADVANTAGES (CA)



Ratings



Market Share



-3



Product Quality



-2



Customer Loyalty



-2



Technological Know-How



-1



Control Over Supplier and Distributor



-2



COMPETITIVE ADVANTAGES (CA)



-2



INDUSTRY STRENGTH (IS)



Ratings



Growth Potential



5

9



Financial Stability



3



Ease of entry into the Market



6



Resources Utilization



3



Profit Potential



4



INDUSTRY STRENGTH (IS)



4.2



X – axis (CA + IS) 

(-2) + 4.2 =



2.2



Y – axis (ES + FS)



(-3.6) + 1.4 =



-2.2

BCG Matrix



Reven ue



% Reven ue



Pro fit



% Pro fit



% Mar ket Shar e



% Gro wth Rate



NA



69 365



45%



-4 161



-



61%



-0.1



SA



7 585



5%



1 172



-



30%



+33



EUR O



36 330



24%



744



-



81%



-3

10



PAG



33 067



21%



-1 872



-



-



+10



ASI A



8 032



5%



206



-



38%



+3



TOT AL



154 379



100%



-3 911



-



-



-

BCG Matrix

IE Matrix  Hold & Maintain Strategy • Market Development

11

• Product Development • Market Penetration  Internal Factor Evaluation (IFE) – 2.79  External Factor Evaluation (EFE) – 2.93

Grand Strategy Matrix

12



Market Development



Market Penetration



Weight



AS



TAS



AS



TAS

1. Increasing demand of hybrid market



0.09



4



0.36



4



0.36



2. Alternative energy movement



0.08



-



-



2



0.16



3. Continuing to expand globally



0.07



3



0.21



2



0.14



4. Low interest rates



0.06



-



-



-



-



5. Develop new



0.09



-



-



2



0.18



Key Factors



OPPORTUNITIES



13

vehicle styles and models 

6, Opportunities in emerging market



0.07



4



0.28



-



-



7. Growing economy of car



0.07



3



0.21



3



0.14



THREATS



1. Declining demand for light vehicle in US



0.08



2



0.16



3



0.24



2. Rising raw material prices



0.05



2



0.10



2



0.10



3. Stringent emission standards



0.04



1



0.04



2



0.08



4. Competitive offerings from foreign manufactures



0.06



2



0.12



1



0.06



5. Rising fuel prices



0.05



3



0.15



2



0.10



6. Growth of competitors



0.07



2



0.14



2



0.14



7. Increased health care costs



0.05



2



0.20



3



0.15

14



8. Rising supply cost



0.07



SUB-TOTAL



1.00



Key Factors



STRENGTH





3



0.21



2.18



0.14



1.99

AS 

TAS



Weight



AS 

1. Global presence



0.09



4



0.36 

4



0.36



2. New vision and strategy



0.05



2



0.10 

3



0.15



3. Largest manufacture in the market



0.06



2



0.12 

3



0.18



4. Strong management team



0.07



-



-



2



0.14



5. Strong brand portfolio



0.05



3



0.15 

-



-



6. Strong presence in China



0.04



2



0.08 

3



0.12



7. Knowledge of home market



0.04



-



-



2



0.08



8. Well performing brand



0.05



2



0.10 

-



-



 9. Large employee base with highly educated engineers

0.05



-



-



-



-

15

TAS





2

and good R&D department 

10. Huge increase in total equity



0.6



-



-



-



-



11. Minimal service complains



0.5



1



0.05 

2



0.10



WEAKNESESS



1. High cost structure



0.05



3



0.15 

2



0.10



2. Brand dilution



0.03



-



-



1



0.03



3. Sensitive to oil prices



0.04



3



0.12 

3



0.12



4. Saturated market



0.05



2



0.10 

2



0.10



5. Little diversification



0.04



2



0.08 

-



-



6. Bureaucratic culture



0.03



-



-



-



-



7. Car recall



0.04



-



-



-



-



8. Economic inventions



0.05



-



-



2



0.10



9. Green car development



0.06



3



0.18 

3



0.18



SUB-TOTAL



1.00



1.59



1.66

16

Conclusion • Embrace new management in the leadership of its CEO Alan Mullaly • Focus on general motor strategy and enabled to gain competitive advantages in industry

17...