FORD MOTOR COPANY

• FEI  XIAO 3741353• WENBIN SONG 2875057• TRAN KHANH HUNG 3580785• YUNQI ZHANG 3508321• PHAM TUAN DUONG 3580800

• Background

• Financial performance review

• Internal analysis

• External analysis

• SWOT analysis

• Suggested strategies

• Conclusion

Introduction

• The second largest automaker in the U.S. and the fifth-largest in the world

• Founded by Henry Ford and incorporated on June 16, 1903

• Based in Dearborn, Michigan, a suburb of Detroit

• Owns a small stake in Mazda in Japan and Aston Martin in the UK

• Former UK subsidiaries Jaguar and Land Rover were sold to Tata Motors of India in 2008.

• Over 164,000 employees world-wide

• Feel the difference

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

Background

• Revenue decreased after 2007

• Net Profit floating situation

•Positive profit 2009

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

2005 2006 2007 2008 2009 2005 2006 2007 2008 2009

Net profit (billion)

2 -12.4 -2.8 -14.8 2.7

Revenue (billion)

177.1 160.1 169 143.6 116.3

-15

-5

5

15

25

-125

-75

-25

25

75

125

175

Revenue and net profit 2005 - 2009Profit Revenue

Revenue & Profit

• 2005-2009 : revenue decreased 34.3%profit increased 35%

Cost control program (start from 2006) has been effective

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

Cost control

High gearing (>40%)•High financial risk•High interest payable

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

Gearing and Liquidity

2005 2006 2007 2008 20090.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

Gearing ratios

FORDTOYOTA

Strong liquidity•Cash balance of $21,804 million in

2009 suggests no liquidity problems

• Share price is recovering at around $10 (12/2009) from around $2 (12/2008)

Increasing shareholder wealth

• No dividend paid out during 2006-2008

potential conflict between managers and shareholders

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

Shareholder Information

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

Value Chain

Firminfrastructure

HRM

Technology development

Procurement

Big Three in the US. Just-in-time scheduling. Shifting manufacturing to lower-cost locations. Collaboration.

Leading managers, recruitment and training cheap labour . Cut off staff due to excess capacity – laid off paid

Working closely with suppliers to eliminate waste and thereby lower costs for both (win-win)

Using information technology to improve logistic processes, designing, manufacturing, marketing and sales

Inbound logistics

Operation Outbound logistics

Sales and marketing

Servicing

•Design phase•C1 platform system using for producing range of new products•Adopting Lean Manufacturing practices

•Creating together marketing strategies with dealers•CRM &SAS* provides powerful based information analysis

•Caterpillar Logistics &SAP* to improve warehousing

•Daily Parts Advantage network with dealers->speed up time to market ->optimize each location inventories

*SAS: Statistical Analysis System *SAP: Systems Applications and Products

•After sale service•Financial services

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

VRIO Model

Valuable

• The Loan 23.6$b in 2006 makes Ford survive

• Electronic-cars production plan

Rare

• “Fordism” was the first major revolution in process technology

• Efficiency managers

Imitability

• Design phase• Economies of Scale• Brand Loyalty• Network of dealer.

Organization

• Ford exploit cheap market’s labor and invest for advertising in China market

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

Resource Audit Analysis

Human• Number of skillful employees• “Encourages fresh new thinking

and breakthrough ideas” culture• Be trained before working --(S)--

Physical• The biggest problem is excess

capacity (W)• Elimination of stockholders’

equity (W)• Low cost location of factories (S)

Financial• Change short-term financial to

long-term finance (W)• Unfunded pension, health care

and life insurance obligations negatively impact the cash flow position. (W)

• Strong operational and financial performance – making profit ( S)

Intangible• Relationship with suppliers

displaced from “first-tier” to “contract-based”. Number of suppliers reduce ( W)

• Good after sales service (S)• Brand name (S)

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

PEST - Political & Economic Factors

Political Factors Economic Factors

Support from governments Excess Capacity lead to spending heavily on marketing and new product design

Some policies control the discharge (Road tax in UK)

Economic recession and financial crisis –> the auto industry has to restructure , M&A

Unleaded petrol tax Fuel price has been increasing instantly

Forced Groups (Labour unions) will have strong reaction if Ford start cutting the number of labour

The growth potential markets (BRIC markets - Brazil, Russia, India, China)

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

PEST – Social & Technological Factors

Social Factors Technological Factors

Car culture E-commerce

Fashion design( meet customer requirement) Rapid development of technology (new energy systems)

Travel habit, the rising demand of family cars

Global warming issue

Ford Honda

Big space Small space

Heavy Light

Fuel consumption high

Fuel consumption low

• Substitutes: public transportation

• Travelling door to door must use car

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

Porter’s 5 forces Analysis

•Mature market•Price wars•Large number of competitors

Buyers’ Power

High

Threat of Substitutes

Threat of new

entrants

Suppliers’ Power

High entry and exit barriers• Labour• High investment• Technology• Supplier alliance• Brand

Asian companies globalization

•Large number of substitutes

•Over capacity•Large purchase•Second hand market

•Switching cost (high & low)

•BMW engine support some manufacturers

•Suppliers’ becoming independent

Competitive

Low

Low

Medium

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

BCG Matrix

High

Low

High Low

Mar

ket G

row

th

Competitive Position

CARS

SUVs

TRUCKS

COMER-TRUCKS PINTO

E-CARS

LAND ROVER

JAGUAR

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

Product Life Cycle

CARS TRUCKSCOMER-TRUCKSSUVs

E-CARSPINTO

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

Portfolio Analysis

Summary

Revenue unlikely continue growing up Future revenue could be come from Cars Some types of trucks, SUVs could change to dogs

Too many cash cows

• AdvantagesFord still receives revenue from SBUs of cash cows

• DisadvantagesThe future growth of cars might not cover enough

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

Strategic groups

•BMW

•MITSUBISHI

• HONDA

• NISSAN

• FIAT

• MAZDA

• GM

• TOYOTA

• VOLKSWAGEN

• FORD

• DAIMLER CHRYSLER

Pric

e

Companies’ Size

high

small

low

big

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

SWOT

Strengths

• Strong financial performance• Good financial services• Effective operation process

(R&D, logistic, HRM..)• Good relationship with dealers• Strong brand name

Weakness

• Overcapacity• Unprofitable areas• Adopted long-term debt

strategy• Huge unfunded pensions and

other obligations• Reduction in equity, good-will

and other intangible assets

Opportunities

• The growth of new markets (BRIC)

• New type of cars required (e-cars, fuel - affection cars)• The whole industry is

restructuring

Threats

• Government regulation• Long-lasting of economic

recession • Car demand is declining due

to fuel price rising• Competitors is more power

by M&A• Suppliers have more power

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

SWOT in Action

Use of S to take advantage of O• Developing new type of cars (family cars & electronic cars)• Developing new market s in Asia and Africa • Investing money for marketing in rasing markets

Use of S to avoid T• Continuing control cost -> low car price (with popular cars)• Remaining relationship with good dealers• Making alliances with other automakers

Overcoming W by take advantage from O• Change to produce small cars and family cars• Funding salary and pension alternatively (share, preferred share)

Minimize W to avoid T- Remove unprofitable areas

SO

ST

WO

WT

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

Corporate Strategies Model

Growth Retrenchment

Indu

stry

Att

racti

vene

ss

H

L

Competitive PositionWeakStrong

1. Diversification • Develop rank of product,

highlighting in family car and small cars

2. Turn around strategy• Improving efficiency by

tracking market demand • Reduce staff cost• Remove Pinto, Land

Rover and Jaguar

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

Ansoff’s Model

Present Products/Services

New Products/Services

Present Markets

Product development

• Improving fuel – efficiency energy system

• Improving car’s design

Pushing up develop electronic cars

New Markets

Market development

• African Market

Diversification

• Cars

• Services (insurance)

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

Bowman’s Strategy Clock

Perceived Added Value

Price

High

HighLow

Low

Hybrid strategy• Providing low

prices, small engines high pickup andmileage cars

Pure battery electric vehicles• Coming with bio-fuel and

electronic cars

3

2

1

4

5

6

7

8

Conclusion

• Auto industry was engulfed by the financial crisis

• Auto Industry has been evaluating in term of new market

demand and manufacturing technology

• Ford has been undergone the crisis, the accurate business

adopted could help Ford achieve long term success

Conclusion & Recommendation

Recommendation

Continuing Cost control program

Pushing up bio-fuel and electronic cars

Background

Finance

Internal

External

SWOT

Strategies

Conclusion

Contact

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Thank you for listening !