Ford Motors

The Model ‘T’ Ford

• Henry Ford set out to build a car which everyone could afford to buy.

• It was slow, ugly and difficult to drive, and was nick named the ‘Tin Lizzie’ by the American people.

The Model ‘T’ Ford

• The attraction of the Model T Ford was that its price never increased.

• Costing $1200 in 1909, the price in 1928 was only $295.

• By 1929 Ford was producing more than one car per minute

Mass Production

• Ford was able to sell cars cheaply because they were mass-produced and every part was Standardised (only one colour and one engine size were available).

• By producing large numbers of cars on an Assembly Line Ford needed fewer skilled workers, and that cut the cost of paying wages.

Mass Production

Ford invented the idea of using an Assembly Line to speed up production.

Key Quote – Henry Ford

How would this have helped to cut production costs?

‘A customer can have any colour he likes for his car so long as it's black’

Assembly Lines ‘… each man and each

machine do only one thing ... the thing is to keep everything in motion and take the work to the man not the man to the work’

Henry Ford 1925

Car Industry

Mass productions & Standardisation lead to

increased car sales.

More Standardised parts are needed

More jobs are created in other

industries.

Steel

Glass

Rubber

Leather

More people with jobs means that

they can afford to buy a car!

Jobs in Diners, Motels & Gas

Stations.

More Oil is used.

More roads are built.

The Cycle of

Prosperity!

Car Production & Cycle of Prosperity

• Car production used up 20% of America's steel, 80% of her rubber, 75% of her plate glass and 65% of her leather.

• By the end of the 1920s American cars used seven billion gallons of petrol a year.

• This helped to create jobs in the oil industry and made the oil state of Texas rich.

Aerial view of the Rouge plant in 1930

In 1929, there were 81,000 men working in this one factory

ford objectives

position the company for sustained competitiveness, profitability and growth.

satisfy customers based on the design, quality, technology and value of our cars and trucks.

Continue solid growth in global vehicle sales..

Investing dedicated to improving cultural, economic, educational, environmental, and social aspects of our communities.

“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.”

."

Mission Statement:

Identified Problem

Falling car sales has been a problem for ford due to increased competition from foreign manufacturers & rising oil prices.

The Economic Situation

• The combination of the sharp run-up in oil and gas prices, rapid declines in the housing/mortgage/credit sectors, and the lowest levels of

consumer confidence in nearly 30 years have all dramatically reduce both the economic and automobile industry outlooks.

• over the past few months, U.S. auto sales have declined by more than 30%.

• The automobile industry is highly competitive. The North American automobile industry is dominated by what’s known as the ‘Big Three’: General Motors, DaimlerChrysler,

• The two largest foreign competitors include both Toyota and Honda.

• Since Toyota’s introduction of the Prius, an innovative gas electric hybrid car, ford has been struggling to keep up with competition.

• US auto makers lost 8% of the US auto market last year, while Asian manufacturers gained 5% and European companies gained 3%

The Competitive Situation

Competitive Situation How Does GM compete?

$182

Billion

$230

Billion

$177

Billion

$172

Billion

266,000 316,000 274,999 245,000

2008 Sales

Revenue

EmployeesAt 2008

Year-end

GM13%

PAG1%

Other Know n6%

Chrysler1%

Mazda1%

BMW1%

Unknow n10%

Mercedes1%

KIA & Hyundai9%

Mitsubishi10%

Nissan11%

Toyota36%

The Competitive Situation

2006 GCC Market Share

S.W.O.T. analysis

Strengths Name recognition Corporate Social Responsibility Quality improvements and

perception thereof.

Opportunities Cut health-care costs and

move production overseas. Concentrating on smaller

more fuel efficient cars Expansion of their global

presence .

Weaknesses The decline of market share. High pension obligations and

health care costs. Lack of differentiated products. Unfocused product line Unresponsive corporate culture. Too much investment in SUVs

and Trucks.

Threats Intensity of rivalry among

competitors worldwide. Weak consumer confidence

and tight credit. The UAW can hurt General

Motors if unhappy. The Volatility in fuel prices. Government legislation.

President and MD, IndiaHead, Asia Pacific Region

They have a matrix organizational structure

Corporate Social Responsibility

• Setting of Sanjeevi Health Care Centre at a cost of more than Rs. 35 lakhs

• Devoting lot of funds for cancer patients and research

• Ford has also set up Centre for Vehicle Emission Research at IIT, Chennai and Delhi

• In collaboration with CII helped residents of Panayur village after the Tsunami in December 2004

• Set up industrial centers in rural areas of Michigan. Set up 30 centre each employing more than 1000 employees.

Corporate Governance at Ford

• Succeeds at providing benefits to the society

• Internal audit scheduled every quarter• Environmental Management System

(EVM) audit is also done. Here detailed analysis of environmental issues are made e.g., air pollution, water pollution etc.. If non compliances are found action is taken

Corporate Governance( contd..)

• Aims at increasing the benefit for the shareholders.

• Starting from the year 1996 till 2007, the company on an average has distributed dividends almost three times a year, around $0.42 per equity share.

Organization’s Mission Statement

Provides a framework or context within which strategies are formulated, including

Mission –

The reason for existence – what an organization does

Vision – A statement of some desired future state

Values – A statement of key values that an organization

is committed to Major Goals –

The measurable desired future state that an organization attempts to

The 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.”

The Vision

•“he vision of Ford is “to become the world’s leading consumer company for automotive products and services.”

Values

• Throughout our history, we've always fostered an inclusive and diverse work environment

The all-new Ford Edge

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Target CustomerInquisitive Spirits, age 30, newly married, no kids.

This audience is in a ‘me’ focused stage of life. Their ‘no kids to tie me down yet’ lifestage affords them the ability to go and try whatever their interest. They are always eager to push themselves to try new experiences. Sometimes that drive is reflected in their physical activities and other times it’s a challenge they’ve never tried before.

They have an appreciation for nature and the outdoors which shows itself in their activities and their sense of style (organic, simple, and unique). They find the joys of the outdoors in both urban and rural adventures. For them, it’s just about getting out there and gathering experiences.

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Emotional Benefits Sought: To be seen as stylish .

To be seen as confident.

To reward themselves.

To feel unique.

To feel good (smart) about decisions.

Product Benefits Sought:Unique Styling – successful, outdoor,

sporty

Agile handling – confident, spirited

driving.

Adaptable Interior w/o compromising

style

Comfortably seats adultsCarries equipment for their active life

Assured Safety

Appealing Style

Organic – natural objects and settingsSimplicity – modern, clean & uncluttered linesUnique – present something in a different way

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Appealing styles focus on the organic, the simple and the unique.

Ford’s Strategy for Target CustomerDesign & Package- Interior and exterior design is stylish and distinctive. Exterior: a bold chrome grill, dual

chrome exhaust and sporty, muscular stance. Interior: textured aluminum and chrome accents, contrast seat stitching, two tone door panels.

- 17” and 18” wheels available- Available panorama roof with dual power sunshades.- Available luxury technology, including navigation system, satellite radio and rear DVD.- Uncompromised rear seat room- Reclining rear seatback, also easily folds flat, using an electronic switch and spring

assist. Fold flat front passenger seat.- Compartmentalized Center Console Storage Bin

Driving Dynamics- Independent multilink suspension, based on the Fusion and Mazda 6 design, delivers

responsive, sports sedan-like handling.- New "Active" AWD system available – initiates preemptive torque transfer – tuned more

for traction and on-road performance than for off-road capability. - New engine-controlled traction assist and Integrated Vehicle Dynamics with Roll

Stability Control.

Performance- First vehicle to use the all-new Duratec 35, 3.5L V6, with 250 hp and 240 lb-ft of torque- All-new 6-speed adaptive automatic transmission.- Targeted to be best-in-class 0-60 acceleration performance.

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Job openings

Provide jobs according to the interest & skills

Work environment

• Very much familar envionment

Company culture

•Technology innovation & environmental steuardship 

Career programs

• They provide opportunities for students college grads & experienced professionals

Hiring process

• Process is personal thorough & efficient

Ford Motor company

Established 1903 in USA by Henry Ford

• Is the 4th largest automobile manufacturer in terms of production volume

• Sells vehicles under Ford, Mercury, Volvo & Lincoln brands.

• Revenue for 2007 was $ 173.9 billion,2.7 billion loss posted

• 6,247,506 vehicles made, controlled a 15.6% market share in the US and 8.6% worldwide.

Smiles &Tears

• Loosing market shares in US,10% point loss from 1995-2005

• Showed profit in BRIC countries

• Asia-Pacific/Africa = 2.4% in 2006 and 2.3% in 2007

Problems in U.S.A.

• Expensive labor

• Very high health and retirement obligations

• High reliance on trucks, decline by 22 %of sales volumes witnessed during recession months.

Strategy?

• Ford reached an agreement with United Autoworkers Union (UAW) that will shift healthcare obligations for Ford's 123,000 retirees to the union in exchange for Ford setting up a healthcare fund of $15.4 billion.

• Cut 40,000 job in 3 years

• Closed 7 factories in 5 years

For U.S

• Plans to bring six of its fuel efficient models (average fuel economy of over 30 mpg) currently sold in Europe to the U.S. market.

• Mitigated public resistance

Region wise distribution

“World Cars”

Revenue (in millions)

• North America -$4,161

• South America $1,172

• Europe $744

• Asia/Pacific/Africa and Mazda- $206

• JD Power reports Ford's quality improved faster than industry average .

Strategy at work

• So aims at developing fuel efficient cars in Europe, moving it to China and US

• Ford Fiesta first car in this class

• Aims at closing gap between Japanese competitors

Relative status

Market Shares

Competitive strategy

• 2007-reduced cost, increase revenue

• Revenue rose 8.6% to $173.9 billion and net losses declined from $12.6 billion to $2.7 billion.

• Deal with UAW

• Halved US hourly workforce(99,500- 54,000),closed 14 North American units

• Dual pay adapted.

Strategy at work

• Ford still lost $1,467 on every vehicle it produced(Honda made $1,641/vehicle, Toyota $922)

• Halted truck production as oil prices rose• To launch 6 newer models in 18 months

(world cars)• Transmissions with more gears, direct

injection turbochargers ("ecoboost"),low resistance tyres.

Region wise profit

• Pre-tax profits soared 237% in Europe (from $219 million to $739 million)

• Pre-tax profits went up 127% in South America (from $113 million to $257 million).

• Pre-tax profit in the Asia/Pacific region was $1 million pre-tax profit in the Asia/Pacific region compared to a $26 million loss last year.

Aggressive fight back!

• Ford introduced the Ford Fiesta, an all-new global small car, at the Geneva Motor Show. It’ll be sold in major worldwide markets by 2010.

• Mondeo and European version of the Focus, both fuel efficient coming to US

• 2009 Ford Escape(better mileage than Toyota Rav4 or Honda CRV.)

Sales volume

International strategy

• China 22% ,Brazil 26%, Russia 36% and India 12% increase in car sales.

• Targeting BRIC

• Ford Transit van,worldwide(from Europe)

• Fiesta in India, China

Strategic academic alliance

• Strategic academic alliances with two of China's most prestigious universities – Nanjing University of Aeronautics and Astronautics (NUAA) and Shanghai Jiaotong University (SJTU)

Benefits

• Cheap labor in research department

• Getting rid of apprehensions

• Fuel efficiency enhanced in China

• Broad base for R&D

• Penetrating China

Future expectations

• Working on efficiency of fuel

• Working on cost cutting

• Off shoring

• Entering less saturated markets

• Expansion rather than divestment

Thank you?