UNIVERSITY OF MANAGEMENT AND TECHNOLOGY LAHORE

School Of Business And Economics

Submitted to:

SIR MOHSIN RAUF

Submitted BY:

Group Members:

MUHAMMAD SHAHZAD12050032005

HURRIAH TARIK130540320015

SYED MUHAMMAD AWAIS SHAH13054032022

SARA MINHAS13054032008

HIRA ATTAULLAH 12050032010

SAIMA JAVED 13052032023

TITLE

PRESCRIBED ANALYSIS OF FORD MOTOR COMPANY!

Acknowledgements:

First of all, we would thank Allah Almighty, the most Beneficent and Merciful for giving us the opportunity and strength to work on this report and to generalize our results successfully.

We would like to acknowledge our respected Sir Mohsin Rauf as he provided us an opportunity to research on a diverse topic like this. He is the one who guided us always in the right way to do this project and gave us courage and important precautions regarding compiling and understanding the core prospect of this strategic project.

Without the co-operation of our instructor it was hard to compile this research so, we all are thankful to him as we have worked on this research by putting equal effort by co-coordinating with each other to generalize the results under his supervision.

Regards,

Muhammad Shahzad

Syed Muhammad Awais Shah

Sara Minhas

Hurriah Tarik

Saima Javed

Hira Attaullah

Introduction of Project:

We are assigned with project of understanding Ford motor company and its business policies in depth. We have analyzed the ford motor company in depth and is explained in detail later on in our project but now, we have brief introduction of Ford motor company.

Henry Ford, the founder of the Ford Motor Company, was born on a farm near Dearborn, Michigan, in 1863. He had a talent for engineering, which he pursued as a hobby from boyhood, but it was not until 1890 that he commenced his engineering career as an employee of the Detroit Edison Company. In his spare time, Ford constructed experimental gasoline engines and in 1892 completed his first gasoline buggy. Dissatisfied with the buggy's weight, he sold it in 1896 to help fund the construction of a new car. Ford's superiors at the electric company felt his hobby distracted him from his regular occupation and, despite his promotion to chief engineer, he was forced to quit in 1899.

Shortly afterwards, with financial backing from private investors, Ford established the Detroit Automobile Company. He later withdrew from the venture after a disagreement with business associates over the numbers and prices of cars to be produced. Ford advocated a business strategy which combined a lower profit margin on each car with greater production volumes. In this way, he hoped to gain a larger market share and maintain profitability and afterwards, Ford has been established into a big giant and now it has several product lines like, Trucks, cars, Hybrid & EVs, SUVs.

Ford has strong brand recognition and is enjoying customer loyalty due to its high quality features as compared to its competitors like Toyota, Chrysler etc.

Furthermore, details are explained later on in our project.

Current Situation:

Ford Motor Company started out with Henry Fords passion of engineering and mechanics. Fords first leap into the world of automotive mechanics was in 1899 when he founded the Detroit Automobile Company, in Dearborn Michigan. It was not long after the Detroit Automobile Company failed that Ford founded the Ford Motor Company on June 16, 1903. What made Fords vision different from the other 87 car companies in the United States at the time was Fords understanding of the cultural impact automobiles will have on the society.

Ford envisioned cars being an affordable item rather than a luxury in the near future by transforming the manufacturing process. The success of Ford Motor Company was because its strategy encompassed a new way of manufacturing called mass production, advancements in technology, the supply chain and most of all changes in lifestyle. Fords personal motto, Help the Other Fellow, affected his goals, work environment and the corporate strategy of the Ford Motor Company.

Current Situation

2006: borrowed $24 billion

Gave Ford enough resources to prevent bankruptcies similar to GM and Chrysler

Fewer jobs and factories to better align production with demand

Changes are starting to show in Fords bottom line

Ford reported $1 billion in earnings in the 3rd quarter of 2009

First profitable quarter in almost two years

Strategic Focus and PlanMission

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

Objectives

To contribute to stabilizing the climate by considering reducing long-term emission

To promote the development of an infrastructure that will expand the use of bio-fuels and help reduce our dependence on oil.

To cut the usage of global energy by 27% and the usage of water by 25%.

Strategies

Utilizing their advance technology

Building of smaller vehicle

Cost reduction

Market expansion through joint venture and strategic alliance

VisionFord Functional and Technical Excellence

(1) Know and have a passion for our business and our customers.

(2) Demonstrate and build functional and technical excellence.

(3) Ensure process discipline.

(4) Have a continuous improvement philosophy and practice.

Own Working Together

(1) Believe in skilled and motivated people working together

(2) Include everyone; respect, listen to, help and appreciate others

(3) Build strong relationships; be a team player; develop ourselves and others

(4) Communicate clearly, concisely and candidly

Role Model Ford Values

(1) Show initiative, courage, integrity and good corporate citizenship

(2) Improve quality, safety and sustainability

(3) Have a can do, find a way attitude and emotional resilience

(4) Enjoy the journey and each other; have fun never at others expense

Deliver Results

(1) Deal positively with our business realities; develop compelling and comprehensive plans, while keeping an enterprise view

(2) Set high expectations and inspire others

(3) Make sound decisions using facts and data

(4) Hold ourselves and others responsible and accountable for delivering results and satisfying our customers

Organizational Culture:

Ford is second largest car manufacturer worldwide and widely known for vehicle service for its customers. Large emphasis on customer first and customer satisfaction. Areas served are worldwide. Currently Fords organizational structure is based upon the following points:

Aggressively restructured firm to operate profitably at current demand changing model mix.

Plans implementation:

Finance their plan to effectively improve their balance sheet and work cohesively for its implementation.

Automotive leadership:

Work together as one team which emphasizes the importance of working together to achieve automotive leadership, which is measured by their customers satisfaction level, employees and other essential business partners.

People orientation:

Ford exhibits a culture that is adaptive in nature and the managers in company show care for their clients, employees and stockholders.

Attention to detail:

Being a leading manufacturer, precision and reliability are the hallmark of fords products from its employees.

Stability:

Low degree of stability as status quo has been put to stake many times in the past in favor of innovations and boosting employees morale.

Innovation & risk taking:

Employees views are valued and frequent launch of new products exhibiting innovative features depicts high degree of risk taking but Ford tries to go over it.

Organization structure:

There is clear chain of president to vice presidents of different branches in different states which is shown below in Fords organizational structure:

External Analysis:PEST Analysis-

Pest analysis represents Political, Economical, Social and Technical factors of an organization.

Political factors explain about taxation, employment laws, internal trade regulations and competitor trade regulations.

Economical Factors explains about economic growth by industry, policy towards unemployment, inflation and influence of exchange rates

Social Factors explains about income distribution, labour, life style changes, health & welfare, attitude to work and living conditions.

Technical Factors explain about Technological efficiency, technological transfers, rate of spending in R&D, Energy use cost and New Inventions.

Ford Pest Analysis:

Political Factors:

Exchange rates, oil prices & free trade flows which influence the consumer to invest on the vehicles.

Foreign ownership regulations and technological cooperations between countries helping the ford in raising the funds and building the advanced models which can cope with the current scenario.

Introduction of new business laws Impacts the ford to change its rules and regulations which are necessary to producing a quality vehicle.

Forced Groups (Labour unions) who plays a major role in the production of a vehicle in a ford manufacturing organization. The labour unions should work according to the rules and regulations amended by the business laws.

Investors climate- In most of the companys investors had a premier role to play in the growth and development of the company.

Economical Factors:

Growth potential of target market:

The growth potential of target market will determine the purchasing power of the buyer. That is the major reason ford is operating in the countries like America, India and Brazil where the growth potential is high when compared to the other markets.

Based on the above geography of demand for vehicles, we can state that ford is operating its business in the potential target markets.

Target Market Size

Again the sales of the ford was influenced by the Market size where it is operating its business. When the target market GDP growth is high the consumers will show more interest to have a premium or luxury vehicle.

Economic Development:

Economic development is the major part which will determines the development of a particular economy as a whole and which will influence on individual GDP.

Oil Price Fluctuations- The oil fluctuations influence the sales of the ford company. If the oil prices are more it will difficult to sell the premium and luxury cars. Cost conscious customers may not show interest to buy the cars which provides low mileage.

Altogether the mentioned economical factors will determines the growth of the potential markets, margin cost of the operations, return rate on the investment, and strategy to provide the price of the vehicle.

Social Factors:

Social factors plays a role in trend in demand based on the various factors like attitudes, demographical, beliefs of the consumers in that particular market region Some of social factors of Ford are given below

Geographical Changes:

The consumers of ford had changed from one geographical region to another geographical region

Eg- The US for consumers will use the cars or commercial vehicles which have large engines. But the Brittan consumers are habituated to use the cars or commercial vehicles which are designed by small engines.

Consumer Attitude:

Consumer attitude plays a role in selecting car model and design, If the consumers are favour about sport they will select the sports model car for their usage. But if the consumers are cost and safety concerned them probably will choose a normal car which will provide mileage and better safety.

Travel Habits:

The ford company is designing the cars based on the travel habits of the consumers. Ford is a medium cost car which can be affordable by the medium class people. It is providing the facilities based on the travel habits of the whole family.

Technological Factors:

Technological factors of the ford motor company are very advanced when compared with their competitors. The technological factors of the automobile company will influence on most of the things like sales percentage of the cars, consumer satisfaction which leads to the automatic growth in the sales figure.

Supply chain collaboration:

It is the Initial and too crucial factor in the ford motor company, because the consumers of car are more concerned about the ordering and when the company is going to deliver the car. The Ford Company is having strong supply chain collaboration which is in more than thirty countries.

Operations Capability:

Ford Operation are more capable to provide the better service to consumers. Ford motor company is operating its manufacturing in more than 30 countries, so Ford operations are very efficient so it is able to providing quality vehicles at right time.

Technological Improvements in distribution:

Ford motor company is one of the automobile companies which are providing the car view and specification in online through its website named a www.ford.co.uk. One more advanced technological thing is consumer can customize the materials what he requires inside as well as outside of the car. The Customer will get the delivery after min 1 month and max 2 months. If the ford is having the booked car in the assess they will deliver within one or two weeks.

Product Development:

Ford Motor Company is providing the consumer to customize the car and its needs. So ford had gained a chance to innovate a new car based on the most of the customers selection and preferences. The ford company cars manufacturing will be influenced based on the consumer customization needs.

Porter 5 Forces AnalysisThreats of new entrants:

As this term refers to the possibility of new entrants that probably be entering into an industry. The threat of new entrant is low in this industry because first of all it is not all about making a toffee, its all about cars that worth too much. It requires a huge investment in terms of establishing a plant for cars and secondly, this industry right now, is in crises. The industry is not growing properly. The market share of the big three is also decreasing so if there are some new entrants for hybrid technology manufacturing, they will need a huge market research to be done which will be requiring dollars more in millions. Threat of new entrant is also low because the entry barriers are high as the US Government policies are not up to the mark or the interest rate is high.

Threat of Substitute products:

As the threat of substitute products refers to a particular thing or a product that satisfies the same need of a particular product. I think this threat for big three is high in the US because there is a well-mannered and timely bus and train system across the US. The whole economy is under recession. The buying power of the consumers is low so they could not afford high fuel/energy consuming cars. They are preferring transport buses or trains to get to the offices and other destinations. Meanwhile, people were having enough buying power like in Brazil, Russia, India and China (BRIC) The threat of substitute products is moderate. The possible reason is having enough money that they can afford trucks and SUVs whether or not their fuel/energy consumption is high.

Bargaining power of Buyers:

The term refers to the buyers choice. The buyer power in this case/situation is high. The major possible reason is the availability of substitute products that is intense and secondly the buyer is not ready to afford cars which are having high fuel consumption and the poor after sales services that Ford is serving at this time. So these reasons are also have become apart in driving down the prices of Ford vehicles.

Bargaining Power of Suppliers:

Bargaining power of suppliers is moderate. Big three no doubt are big players but the unexpected slump in the US economy and also in automobile industry has forced down the big three to knee-down. They are hoping to expect lower margins being provided to the suppliers and they are focusing on cost reduction and building strategies for joint ventures like Chrysler. They are focusing on the reducing labor-costs and doing all efforts in developing cost saving strategies.

Rivalry:

We have been arrived at a certain point and have been discussed so far that the industry is in a complete disaster or we can say that this industry is highly unattractive. There is an intensive competition that has been taken place among existing players mainly among Ford, General Motors and Toyota. According to exhibit-3 in the case, each of the three car manufacturing companies has dropped their market shares. Ford has drooped down the worth of its share by 3.7 percent from year 2007 to year 2009. General Motors was leading in market share price by 18.8 percent in 2009 which also bearing a decrease in sales by 53 percent. Similarly, Chrysler is expecting the maximum money supply from the US treasury in order to avoid from bankruptcy. So this this situation of all the big three is pointing out one major thing and that is the industry gets unattractive which means that buyer has completely lost the interest in SUVs and other high fuel consumption vehicles. They need smart cars with low price and efficient fuel consumption. Ford could compete or gain the highest market share if they start focusing on bringing innovations and better features in their cars with lowest price rates among rivals. Just like Ford has been awarded in its F-150, it is the time for the CEO Allen to increase the production of this unit not just in North America but in Europe and China where the worth of the currency (Pound and Yen) is kept on increasing.

EFAS OF FORD MOTORS

A table that organizes external factors into opportunities (0) & Threats (T) and how well management is responding to these factors of a company.

EFAS OF FORD MOTORS

Weight

Ratings

Weighted Score

Opportunity

R & D Technology

0.1

4.5

0.45

Eco friendly vehicles

0.1

4.75

0.47

Demand for dual fuel

0.15

3.8

0.57

Foreign Markets

0.15

3.5

0.52

Threats

Sluggish Production

0.25

3.8

0.8

Technology

0.15

3

0.45

Imports

0.1

2.75

0.27

Total Score

1

3.53

Industry Matrix:

Industry Information

Ford Motors

General Motors

Toyota Motors

Daimler Chrysler

Key success factors

Weights

rating

Weighted score

rating

Weighted score

rating

Weighted score

rating

Weighted score

Global Expansion

0.13

2

0.26

3

0.39

3

0.39

2

0.26

Financial Position

0.11

3

0.33

4

0.44

3

0.33

3

0.33

Growth

0.13

2

0.26

3

0.39

4

0.52

1

0.13

Market Share

0.15

3

0.45

4

0.6

2

0.3

2

0.3

Product Quality

0.13

4

0.52

3

0.39

3

0.39

3

0.39

Customer Loyalty

0.12

4

0.48

3

0.36

3

0.36

4

0.48

Models

0.11

3

0.33

4

0.44

3

0.33

3

0.33

Management Experience

0.12

3

0.36

4

0.48

3

0.36

3

0.36

Total

1

2.99

3.49

2.98

2.58

Internal AnalysisCORE COMPETENCIES

Competencies is what a firm doesbetter than anyone else. Ford has several core competencies which they could utilise to further gain advantage over their competitors, and if possible, overtake General Motors in its market leadership in the automotive industry. Ford MotorCompany Cars has several core competencies which are as follows:

High Quality:

Fords product lines are much better quality than its competitors which is giving it competitive edge over its competitors.

Innovation design:

Designs of products are more innovative and attractive along with durable life which can be said as long lasting vehicles with much better advertising.

Brand management:

The strength of their automotive marketing has been such that their brand is known even in the parts of the world where cars are not the common medium of transportation. Supply chain management:

It links to their ability to maintain a steady stream of raw materials coming in for production because of their long-term good standing with their steel, glass, plastic and other raw materials supplier. Their highly coordinated logistics system handled by outsourced firms also form part of their core competencies, leading to excellent inventory management and always on schedule production activities.

Ability to move assembly line:

Being the pioneer of such mass production system, they were able to get ahead of the competitors manufacturing processes-wise and were also able to save on costs and time.

Product development technology:

Under a single product-information-management program through standardising and incorporating them. If sustainable development is to achieve its potential, it must be integrated into the planning and measurement systems of business enterprises. And for that to happen, the concept must be articulated in terms that are familiar to business leaders.

Resource Capabilities assessment RESOURCE AUDIT

A resource is a basic element that a firm controls in order to best organise its operational processes. A resource, or set of resources, can be used to create competitive advantage, which is why an audit of the resources of a firm is a must if it is to utilise them to create the latter. The sustainability of a companys competitive advantage depends upon the ease with which the resources can be imitated or substituted. When resources are combined they can lead to the formation of competencies and capabilities.

Financial Resources:Aim of Finance:

The automotive sectors revenue, income and cash are generated primarily from sales of vehicles to Ford dealers and distributors, while their financial services sectors revenue is generated primarily from interest on finance receivables, net of certain deferred origination costs that are included as a reduction of financing revenue. To improve the business and its profitability, Ford plans to reduce their costs through material cost actions, health care cost reductions and capacity and personnel reductions.

Faced Loss:

Although Ford Motors 2006 financial results showed a full-year net loss of $12.7 billion, their track record during the 100 years that they have been operating shows that they are the type of firm who is able to rebound from such downturn in profits.

Reason behind Decline in Financials:

The decline in results reflected losses at the Ford North America business unit, an impairment charge for long-lived assets of Jaguar/Land Rover operations, and higher charges for personnel reduction programs, offset partially by more favourable market performance at Land Rover and improved results of Ford South America business unit, Other Automotive, and Ford Asia Pacific and Africa/Mazda segment. The automotive sectors revenue, income and cash are generated primarily from sales of vehicles to Ford dealers and distributors, while their financial services sectors revenue is generated primarily from interest on finance receivables, net of certain deferred origination costs that are included as a reduction of financing revenue. To improve the business and its profitability, Ford plans to reduce their costs through material cost actions, health care cost reductions and capacity and personnel reductions.

Current situation of Finance:

Human Resources:Aim of HR:

Fords human resources are involved in managing recruiting and hiring employees, coordinating employee benefits and suggesting employee training and development strategies.

Currently HR Working:

The approximate number of individuals employed by Ford and their consolidated entities as of 2006 is at 300,000. There is a marked decrease approximately at 8% from December 31, 2004 to December 31, 2005.

Marketing:

Ford has integrated social media into its marketing mix through a hub-and-spoke model, wiping out silos as it goes. That means employees throughout the company can be part of the process by becoming informed about the message, then going back out to their specialty areas and communicating with consumers in their own voices.

Ford's Marketing Message:

Ford stays consistent in free social networking venues, in paid digital efforts and in other forms of public communication. Then consumers see the same Ford in everything from Facebook pages to ads, from Twitter profiles to promoted tweets and trends, and from banner ads to rich media.

BCG Matrix

BCG (Boston consulting Group) is based on market growth in portfolio analysis. BCG matrix is use to prioritize opportunities and get the best return or company effort. Under this model. Ford motor companys brand can be measured and valued properly. This helps to know the actual position of the company.

Relative market share:

One of the dimensions used to evaluate business portfolio is relative market share. Higher corporates market share results in higher cash returns. This is because a firm that produces more, benefits from higher economies of scale and experience curve, which results in higher profits. Nonetheless, it is worth to note that some firms may experience the same benefits with lower production outputs and lower market share.

Market growth rate:

High market growth rate means higher earnings and sometimes profits but it also consumes lots of cash, which is used as investment to stimulate further growth. Therefore, business units that operate in rapid growth industries are cash users and are worth investing in only when they are expected to grow or maintain market share in the future.

There are four quadrants into which firms brands are classified:

Star

According to the BCG model the ford motor company is investing in the product line of cars as it lies under the stars and its characteristics are as follows:

Cash Flow:

Neutral flows relatively proceeding towards growth.

Earnings:

Low and possibility of growing in future.

Strategy:

For growth of cars in future, strategy should be to invest by firm.

Cash cow

Cash cow shows the high market share and low market growth rate. Here, ford motor company is carrying SUVs in this segment of BCG matrix and its characteristics are as follows;

Earnings:

Earnings are high and stable as this product line is old and relatively more profit carrying.

Cash Flows:

Cash flows of SUVs are also high and stable.

Strategy:

For SUVs fords strategy should be to maintain the stability of earnings and cash flows.

Question Marks

Ford motor company have the low market share and high mix growth rate. Ford has super line of trucks which is profit generating product line and hybrid EVs which is newly launched product line and its characteristics are as follows:

Earnings:

Earnings are low and could grow in future if products sales increases.

Cash flow:

Cash flows are negative as these are the new product lines and for their growth ford has to invest instead of generating profit from it right now.

Strategy:

As sale of trucks are increasing so, it needs to invest for its further growth and for hybrid and EVs ford also needs to invest and if in case of some negative sales in future, fords strategy should be to sell instead of investing in it.

Dogs

In these characteristics the market share and market growth rate is low. The product in this characters market is existing for doing competition to the competitors products. Ford motor company brand Jaguar and land Rover had faced the problem and connate generated profit at 2006, to early at 2008 but finally the Ford motor company sale the brand to Tata company on 2008 march. Ford motor company sales its brand or liquidate too solve the financial difficulties.

Competitive Advantage

Return on equity shows how much profit a company generates from shareholders' money. The return on equity standout among the automakers is Ford.The other automakers are not as effective in converting shareholder money into profit. Return on equity is a measure of management's effectiveness, so I see this as an important metric and competitive advantage for Ford's continued success. The return on equity is calculated by taking net income and dividing it by the shareholder's equity.

General Motors

Toyota

Honda

Volkswagen

Ford

ROE

13.27%

11.11%

8.39%

10.14%

28.5%

Product line is satisfactory:

Product line is respected by industry experts and is qualitatively seen to be a step above many of its competitors. Recent surveys place Ford in a tie with Toyota for greatest customer satisfaction, a significant improvement from five years ago.

Fuel Efficient cars:

Ford has recognized the importance of small, fuel efficient vehicles and is actively transitioning into this market. Of particular interest is Fords Eco Boost technology, which the company claims will result in 20% greater fuel efficiency and 15% fewer CO2 emissions.

Truck line:

Fords truck line is still much profitable than others so, by increasing its production line ford can increase its profitability.

Lowest Cost Production Efficiency:

Ford motors adopted the strategy that allowed it low production cost by cutting all the excessive cost involved in this operations. The huge expenditure on raw materials was cut down and the online manufacturing process was introduced that focus on the development of cars on one process rather than having different segments of engineering and production. This strategy was establishes cost advantage and give the company advantage over its competitors in terms of lower cost, in the mean while company focused on producing smart cars that were not price sensitive and offered the functionality of traditional ford cars.

Fully Integrated Communication System:

Ford SYNC is a company fitted, fully integrated communication and entertainment system that connects the users with internet, through his smart phone and allows them to make telephone calls and control music and other functions using voice commands. This system is the integrated interface developed by ford and Microsoft that operates on Microsoft Windows Embedded Automotive operating system which is also the competitive advantage of ford.

IFAS:

Internal Factors

Weight (0.0-1.0)

Rating (1-5)

Weighted Score

Comments

Strengths

Brand Recognition

0.10

4

0.40

Ford has enough brand appreciation.

Producing Hybrid Vehicles

0.10

3

0.30

Ford is producing hybrid vehicles.

Fuel Efficient Vehicles

0.15

4

0.60

Fuel efficiency is the most demandable component.

Quality & safety

0.05

3

0.15

Quality is not comprisable feature.

Customer loyalty

0.03

2

0.06

Customers dont switch because of companys products.

Effective distribution & Manufacturing channels

0.07

2

0.14

Distribution channels are the important component for selling products.

Weaknesses

Sales are decreasing

0.15

3

0.45

Overall economic recession has burdened upon sales.

Firing of employees

0.06

3

0.18

Downsizing is the end result of economic recession.

Increase in over-time wages

0.05

2

0.10

Labor cost has been increased in this recession.

Decline in customer service

0.10

2

0.20

Customer services leads to decrease in empowerment.

Firms morale

0.05

3

0.15

Economic recession or decrease in revenues has bad impact upon firms morale.

Decrease in revenues

0.09

3

0.27

Decrease in sales leads to lowering revenues.

Total

1.00

3.00

SFAS Matrix:

Strategic Factors

Weight

Rating

Weighted Score

Comments

Strengths

(0.00-1.00)

(1-5)

S1: Brand recognition

0.15

4

0.60

Ford has enough brand appreciation.

S3: Fuel efficient vehicles

0.1

3

0.30

Fuel efficiency is the most demandable component.

Weaknesses

W1: Sales are decreasing

0.15

4

0.60

Overall economic recession has burdened upon sales.

W4: Decline in customer service

0.10

3

0.30

Customer services leads to decrease in empowerment.

Threats

T1: Sluggish Production

0.15

2

0.30

T2: Technology

0.1

4

0.40

Opportunities

O4: Foreign Markets

0.10

3

0.30

O3: Demand for dual fuel

0.15

4

0.60

Total Scores

1.00

3.40

TOWS Matrix:

Strengths:

S1:Brand recognition

S3:Fuel efficient vehicles

Weaknesses

W1:Sales are decreasing

W4:Decline in customer service

Opportunities

O4:Foreign Markets

O3:Demand for dual fuel

SO Strategies:

For the development of Fords brand name, It needs to produce products with the use of technology and spread in world-wide market.

WO Strategies:

For overcoming weaknesses, Ford needs to fulfill the customers demand and spread itself globally through retrenchment strategy.

Threats

T1:Sluggish Production

T2:Technology

ST Strategies:

To overcome threats, Ford needs to develop long term strategies where the industry is in severe crises with some innovative features.

TW Strategies:

Ford needs to develop innovative products for enhancing sales and identified product lines in order to retain better customer services.

SWOT: Strategic Factors Analysis:

Swot analysis of Ford motor company is briefly explained below:

Strengths:

1. Strong position in US market.Ford is the second largest automaker in US, the second largest vehicle market in the world. Ford has great reputation in its home market and strong commercial vehicle sales that are the most profitable Fords vehicles.

2. Sound financial performance.Ford was the only big US car business that didnt need the government bailout and was the first to get investment status back. The firms profit margin is high compared to competitors with the highest liquidity ratio.

3. One Ford approaches.Ford has decided to produce single, streamlined global lineup of its models. The carmaker no longer produces customized vehicles for different regions but focus on designing and engineering the car that fits different regional tastes and regulations. It significantly decreases costs for Ford and drives record profitability.

Weaknesses:

1. Poor environmental record.Ford has been criticized for poor efforts to decrease environment pollution. University of Massachusetts Amherst have rated Ford as the seventh worst air polluter due to its manufacturing plants. The US Environmental Protection Agency also linked Ford to 42 toxic waste sites.

2. High cost structure.Although One Ford initiative led to substantial cost reduction, Ford still has a high cost structure, compared to other automobiles manufacturers. Fords costs are driven by its generous employee compensation and pension plans.

3. Unprofitable Europe operations.In 2012, Ford lost $1.75 billion in Europe and plans to experience losses in the region until 2015.

Opportunities:

1. Positive attitude towards green vehicles.Cars that are fuel inefficient and emit large quantities of CO2 heavily pollute air and negatively affect the environment. Consumers are aware of this negative impact and are more likely to buy green vehicles that emit much less CO2 and are fuel-efficient.

2. Increasing fuel Prices.Fords strong emphasis on engineering fuel-efficient vehicles with flexible fuel and hybrid engines will pay off due to increasing fuel prices in the world.

3. New Emission Standards.A new wave for stricter regulations on vehicle emission standards would positively affect Ford position in automotive industry. Ford invests large amounts of money to produce fuel-efficient engines and reaped some success with its ford Fiesta and Ford Focus Eco friendly models.

4. Strategic Partnerships.Ford has great experience in creating strategic alliances and partnerships with other automotive companies. Due to current competitive pressure, all companies are more likely to enter into such partnerships to drive R&D costs down, access new markets and gain some new skills.

Threats:

Decreasing fuel Prices.Some analysts forecast that future fuel prices will drop due to extraction of shale gas. This would negatively affect Ford as it focus on compact fuel-efficient hybrid and flexible fuel cars that are less attractive when the fuel price is low.

1. Rising raw material Prices.Rising prices for raw metals will lift the costs for auto manufacturers and result in squeezed profits for the companies.

2. Intense competition.Ford faces more intense competition from other auto manufacturers more than ever, especially in small cars segment with hybrid engines.

3. Fluctuating exchange Rates.Ford, including other largest automotive companies, may negatively be affected by fluctuating exchange rates as it earns more than half of its profits outside the US. The profits may be lower due appreciating dollar against other currencies.

STRATEGIC RECOMMENDATIONS

Company needs to avoid from cash burn and needs to sustain the cash in order to avoid bankruptcy in future. Frequent loss can make Company weaker in the market and in reputation as well.

The bailout or money supply has made GM and Chrysler tough in front of Ford while Ford is strategically stronger. These bailouts and treasury funds provided to the GM and Chrysler can create a huge impact strategically on Ford. It will be getting easier to mitigate the overall progress of the Ford. It can also create an impact on the overall supply chain of the Ford.

Now Ford must trigger its 'One Ford' vision and continue to discriminate itself from its rival firms that are GM, Chrysler and Toyota even as the economic recession goes away. In recent years, Ford has redeveloped a rational corporate strategy. Ford has been rejected to take the Government funding and other treasury money supply just because the Company has gained the financial confidence. Whether to exploit the weaknesses of GM and Chrysler, Ford needs to provoke some sound strategies for the company and look for the bigger picture not on tiny picture that was of gaining maximum market share in this industry. The reason behind this recommendation is that if Ford starts focusing on customers needs they would gain maximum share price rather on focusing on rivals weaknesses.

There are some steps that Company needs to follow immediately. We believe that Company should be focusing on the short term objectives in order to survive for the year 2009 instead proposed years. We believe that Ford's management is on the right track, but recent progress is uncertain and could easily degenerate given current market and industry conditions.

Ford should deprive Volvo:

In order to be truly operative and competitive, Ford should merge its Volvo into Fords organizational structure and strategically from Fords other lines. Volvo is quite less expensive than BMW and Mercedes and it targets upper-middle class consumers. The brand had potential to provide Fords premium line of vehicles. According to the statistics, Volvo does not belong to the one Ford strategy and the given conditions; we believe that the sale of Volvo should be high priority of Ford. It can be predicted that the brand can generate at least 5 billion dollars and this amount of money is on hand and Ford can satisfy some debt out of this sale.

In addition, Ford need to specifically target Volvo group which was Swedish parent Company sold Volvo cars to Ford in 1999. Volvo did extra ordinary in Sweden regarding its sales, employees along with its some subsidiaries. So we believe that Volvo should pursue Sweden Government to support the repurchase of Volvo cars by Volvo Group. It would be possible for the Swedish Government to provide some significant support for deal.

Volvos overall progress and worldwide makes the brand worthy and on the basis of this reputation; Volvo would be welcoming by the consumers of US and Europe consumers. There are several car manufacturing firms for the Volvo cars but people like Volvo on the basis of its goodwill and image that have been created in the minds of the customers. So we believe that Volvo should take the advantage right now and jump in to the market with potential and expected growth.

Supply chain management processes and Fords Factories

There is so much tilt that had been seen in shutting down the current plants including the factories in the United States and Europe. We believe that instead of focusing on shut down these factories, there is a need to improve the restructuring plants and factories in terms of management and supply chain processes. Meanwhile Ford has to disconnect with the suppliers which they have been contracted with more than 15, 00 suppliers. Ford must examine all of its suppliers and identify those which are critical to the supply chain. These companies should be prioritized above all others in the distribution of contracts.

Particularly Visteon was the major partner whom with Ford did 4 billion dollars business in 2008. Oasis Consulting is prepared to step in and undergo a complete evaluation of all 1,600 suppliers and present recommendations for specific reallocations of contracts. With access to Ford's proprietary data and through an evaluation of the sources of these companies' contracts, Oasis Consulting can ensure supply chain stability for Ford even in the direst of circumstances.

Prepare for Liquidation of Chrysler and/or Bankruptcy of GM

Ford should develop strategies for its rival firms (GM, Chrysler) if they will be going for bankruptcy. Chrysler is going to deal with Nissan and Fiat. What if the deal would be cancelled and what if Ford can make deal with Nissan for a joint venture. It can be done and it would be more efficient for Nissan to deal with Ford rather Chrysler which is already in a very bad situation. So we believe that Ford can break easily the deal of Chrysler with paying some a little extra and can make a decent deal on the basis of current sustainable performance that Ford has yet.

It is in an interest of the Government to avoid bankruptcy proceedings because the condition of the Chrysler will definitely create such a great impact on GM. We cannot predict the future of GM at this time. Whether GM reports a file of bankruptcy or not Ford needs to ensure that GM is not made the national champion implicitly and explicitly. Part of Ford's strategy moving forward must be to extensively lobby both Congress and the American people. Ford should increase marketing its vehicles in order to gain the competitive advantage until a decision regarding GMs future is reached. We recommend Ford to develop a consistency in consumer queries regarding warrantees.

Product Differentiation

As we have been discussed so far that it may be difficult for Ford to develop long term strategies where the industry is in severe crises and people have less buying power due to unemployment and inflation so we recommend Ford to just concentrate and develop short term strategies as Oasis consulting also believes that it is critical for Ford to continue preparing long term strategies. One of the valuable short term recommendations, we believe that Ford needs to bring some innovation in its vehicles. On the contrary, Ford should gain the ability to successfully differentiate itself from its competitors through price and quality. One Ford strategy is viable and efficient but we believe that it has some risks involved. First but not least risk is that we believe that it may be over-pursued. Another major risk is that while we recognize management was under pressure to affect change, Ford should not invest its future on one line of vehicles.

We appreciate for Fords investments in fuel efficient technologies and its recent development of Ford Fusion hybrid. Unfortunately the arrival of Ford in this particular segment was late but the company has succeeded in delivering a vehicle which is instantly competitive because of the price and its quality. But in comparison with Toyota, Ford is at a disadvantage in this sector. It has been exceeded its product variety that has a chance to redefine the competitive background.

Ford should be migrated its production to Mexico and Eastern Europe

According to the current situation, Ford is bearing too much labor cost in United States and Europe for manufacturing its vehicles. Furthermore the currency of Dollar and European Pound is kept on decreasing so we believe that Ford should be migrate its majority of production of vehicles towards Mexico and Eastern Europe where the labor and production costs are quite cheap. We can see the production of vehicles in different areas currently Ford has been involved in production of its vehicles. Given below is the graph with a variable on y-axis for the number of vehicles and the vehicles produced by region on x-axis.

But this strategy should be implemented slowly in years so that Ford would be able to avoid from negative public relations and branding which may be surfaced. Ford should take care of the sign that they have currently for its vehicles as American Car. These non-operational plants that have been shut from 2006-2008 in North America now will be working well and there is a chance to grow after taking place in Mexico. In 2007, Ford invested $88 million to acquire a car manufacturing plant owned by the Romanian government and has also announced plans to invest some $3 billion in manufacturing facilities in Mexico. We are hoping that these are the first steps in a broader move in production towards lower cost labors.

By Expanding Market share in China and India

China automobile market has experienced a consistent growth in the past ten years. It is stated that over 9 million vehicles have been manufactured in the last year that was 2008. This industry and market has a sound profitability. Ford did a joint venture in 2008 with Changan Automotive of China. It is manufacturing some pretentious brands of Ford like Ford Focus, Fiesta and Mondeo lines. It is estimated that this joint venture has been produced more than 200,000 vehicles in the past year. There is expecting a twenty percent increase in demand as the Chinese Government has passed an incentive package. So we believe that there is a room for Ford to increase the production of its units. We believe that this type of magnitude can increase the market share of Ford motor Company and as a result when there are chances of bankruptcy and liquidation, Company can expect to decrease down a fierce debt. Yet Ford has only gained a two percent market share in China so by fulfilling the demand of Chinese consumers, Ford can gear up the revenues from this particular market.

Ford Fiesta is the most likable brand by the audience in China and we believe that it can boost up Fords market share. According to the past statistical data of sales, this brand has been experienced a strong sales in China in year 2008. We hope that Fiesta should surpass the 100,000 units mark and boost Fords overall 2009 China sales. As the incentive provided by the Chinese Government and ongoing difficulties of GM, Ford we believe can easily capture the market and this is the best time to avail this opportunity for Ford to steal the market share and establish itself as the dominant American brand in China.

Unlike China, India has a little growth opportunity for this automobile industry. It has been stated that sales of vehicles were holding at two million over the past two years in India. So like China, there is less chances for Ford to regain its strength in terms of gaining a huge market share and price. Furthermore, Ford was needed a huge capital investment in India to setup several plants if it wished to rise up production. According to the statistics, the monthly sales are exceeded 2000 units and Ford has its dealership in just approximately 80 Cities of India. Due to the magnitude of uncertainty, we do not recommend Ford to invest in India market at this time. But we recommend that Ford should never ignore India market because of its intensive area and this opportunity should be kept in Companys pocket or it can be used in defensive manner.

Policies for Implementation and Control:Implementation

Get the finished product to the market as soon as possible. Manufacturing plant in China and India will help tremendously.

Create a program that makes it easier and affordable for customers to take home a ford vehicle. Can be determined at the dealer level. Although provide overall guidelines as to what the dealer can and cannot do in terms of contracts.

Improve customer service

Make sure that the unhappy customers feel warm and comfortable about their purchase. Increase support team in all regions of business.

We will offer manufacturer's rebates as a matter of policy; customer service will be executed at the dealer level within corporate guidelines.

Tailor specific features to regional markets

Manufacturing plants in India and China will have slightly different processes for a slightly different car model.

Regional suppliers

Look for specific government programs supporting car purchases.

China subsidizes fuel costs on a massive scale. This drives the costs down and makes cars affordable for consumers with less money.

Most European countries have high taxes on petroleum, and have strong transportation systems. Find a way to get around this.

Press releases and future hype. Talent and outreach team to increase Word of Mouth about the new and upcoming Ford Edge Hybrid.

Tailoring specific marketing campaigns to different regions

Partnering with local advertising agencies to deliver a relevant message and media vehicle to the target market of that specific region.

Allocate advertisement budget based on the projected regional sales.

Use Global pricing. One price around the world. Most viable way to obtain the most customers. This will help us learn the elasticity of the demand in different cultures and target markets, which will ultimately provide us with a better insight on the level of brand equity in each region.

Acquire facilitators

Financial institutions

Insurance companies

Car rebates. Managed at a dealer level but overlooked by Corporate.

Warranty services and financing. Managed at a dealer level but overlooked by Corporate.

IMC scheduling, Promotion timing, event planning

Media scheduling

Evaluation Control

Sustain great communication with the intermediaries in the supply chain. Weekly video conferences from major players in the process. This will provide feedback at a quicker rate, giving Ford the opportunity to capitalize early and effectively on resolving the problem.

Low cost means lower price for customers. Manager in control of lean production, making sure that costs are as low as possible, if not providing insight to new low cost and efficient equipment.

Monitor weekly reports to make sure we are on track to hit our monthly goal of sales and profit.

Stay in line with government regulations.

Quality control facilities. Crucial testing are:-

(1)Crash rating

(2)Break testing

(3)Steering testing

(4)Fuel efficiency testing

Secure manufacturing plants. Strategically place manufacturing plants in convenient areas of distribution, cost, and regulations.

Obtain licenses and permits. Governmental, environmental, economical, business, manufacturing, engineering.

Strict Recruiting & Hiring Process

(1) Let the applicants know that Ford takes pride in everything they do. Quality workmanship and loyalty is a must.

(2)Provide training at the dealer and corporate level.

Staff motivation

(1)Create a Ford exclusive club which hosts all Ford employees from the dealer and corporate level to attend large parties.

(2)Generous benefits and stocks offered to all Ford employees.

Inventory control and organization of firms resources

(1)Acquire and Enterprise Resource Planning system which enables the company to integrate all the functions of the business from accounting to distribution. Costly although the system provides a quicker and more efficient business. This system allows all company information to be revealed in real time.

(2)RFID (Radio Frequency Identification Tags) will be placed on all sizeable unfinished products. Provides a tracking report that allows us to make sure we know where all our materials are at all times.

(3)Ford dealers can access the ERP system creating requests for parts.

(4)Storage warehouses can be strategically placed and used for organizational purposes and convenience.

(5)Collaboration with UPS, or FEDEX.

(6)Provide varying lead times depending on demand for the product in that specific region.

Bibliographic:

Strategic Management & Business Policy by Wheelen & Hunger.

https://corporate.ford.com/company.html

http://corporate.ford.com/microsites/sustainability-report-2013-14/default.html

http://www.scribd.com/doc/94283089/Ford-motor#scribd

http://www.slideshare.net/pandu5mohan/ford-motor-company-27951180