Hamill Bassue Owen Hendershot Goran Nagradic. Overview Company Overview – Ford’s brief history...
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Transcript of Hamill Bassue Owen Hendershot Goran Nagradic. Overview Company Overview – Ford’s brief history...
Hamill BassueOwen Hendershot
Goran Nagradic
Overview• Company Overview
– Ford’s brief history– Mission and Vision statement– Current Objectives &
Strategies• New Mission and Vision• External Assessment
– Industry Analysis– Opportunities & Threats– EFE Matrix
• Internal Assessment– Strengths & Weaknesses– Financial ratios– IFE Matrix
• Strategy Formulation– SWOT Matrix– BCG– Space Matrix– IE Matrix– Grand Strategy Matrix– QSPM Matrix
• Strategic Plan for the Future– Objectives– Strategies
• Implementation – EPS/EBIT– Other issues
• Evaluation
• Ford 2008 Update
About the Company
• Manufactures and distributes automobiles on six continents, strong presence in all 50 states.
• Employs approximately 224,000 people and operates 90 plants worldwide.
• Brands include Ford, Lincoln, Mercury, Volvo, Mazda and Ford Motor Credit Company (financial service).
Ford’s Brief History
1903 – Ford Motor Company founded in Michigan1908 – Model T introduced1913 – first moving automobile assembly line in the
world1956 – Ford’s stocks go on sale (10.2 million shares
sold the first day)1987 – beginning of the acquisitions of other
brands1988 – Ford Motor Company reached the peek
Management
Mission & Vision Statement
"To become the world's leading consumer company for automotive products and services.“
- Ford doesn’t have vision statement
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
New Mission & Vision Statement- Both mission and vision are one statement
“Our vision is to become the world's leading consumer manufacturing company for automotive products and services. To achieve this, we the company and all our employees are dedicated to provide all our customers and the community with safe innovative products and services of world class standards. Through our engineering excellence, high quality and the use of our constantly upgrading technology we limit the harm that we cause to the environment while delivering superior value to our customers. Our close knit working environment allows our employees, community and business partner to share in our success, while achieving a substantial return on our shareholders investment. “
External Assessment
Industry Analysis
Global Automobile Industry Value Global Automobile Industry Volume
Industry Segmentation
Industry Segmentation
Industry Market Share
Industry Forecast
CPM
Ford GMDiamlerChrysler
AG Toyota
Critical Success factorsWeigh
tsRating
Weighted Score
Rating
Weighted Score
Rating
Weighted Score
Rating
Weighted Score
0.0 to
1.01 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
Opportunities & Threats
Opportunities• Consumers demand hybrid
and fuel efficient vehicles• Increase in consumer
spending trends• Consumers demand more
innovative vehicles• Global expansion• Industry experiences slow
and steady growth
Threats• Weak USD• Increase in steel and resin
pricing• Increasing gasoline prices• Stricter CO2 emission
standards• Increasing mortgage rates
EFE Matrix
Internal Assessment
Stock performance
Financial Highlights
• Income Statement• Balance Sheet• Cash Flow Statement
Ratios
Strengths & Weaknesses
Strengths• Strong and globally positioned
brand names• Large employee base with
highly educated engineers and good R&D department
• One of the largest automotive manufacturer (along with a long history)
• 1285% increase in net cash• Huge increase in total equity
Weaknesses• A lot of time spent to actually
put the product on the market• Recording continuous losses
(net income) from 2006• Low quality of new products
(recalls – causing losing customers)
• Lack of management of the company
• EPS very bad – in negative numbers (unattractive for the investors)
IFE Matrix
Key Internal Factors Weights RatingWeighted
Score
0.0 to
1.01, 2, 3 or
4 Internal Strengths 3 or 4 Strong and globally positioned brand names 0.13 4 0.52Large employee base with highly educated engineers and good R&D department 0.09 3 0.27One of the largest automotive manufacturer (along with a long history) 0.06 3 0.181285% increase in net cash 0.09 3 0.27Huge increase in total equity 0.11 4 0.44Internal Weaknesses 1 or 2 A lot of time spent to actually put the product on the market 0.1 2 0.2Recording continuous losses (net income) from 2006 0.12 1 0.12Low quality of new products (recalls - causing losing customers) 0.12 1 0.12Bad management of the company 0.08 2 0.16EPS very bad - in negative numbers (unattractive for the investors) 0.1 1 0.1Totals 1 2.38
Strategic Formulation
SWOT MatrixStrengths – S
1.Strong globally positioned brand names2.Large employee base with highly educated engineers and good R&D department3.One of the largest automotive manufacturer (along with a long history)4.1285% increase in net cash5.Huge increase in total equity
Weaknesses – W1.A lot of time spent to actually put the product on the market2.Recording continuous losses (net income) from 20063.Low quality of new products (recalls - causing losing customers)4.Lack of management of the company5.EPS very bad - in negative numbers (unattractive for the investors)
Opportunities – O1. Consumers demand hybrid and fuel efficient vehicles2.Increase in consumer spending trends3.Consumers demand more innovative vehicles4.Global expansion5.Industry experiences slow and steady growth
SO1.Developing new vehicles on alternative fuels (S1, S2, S4, O1, O3. O5)2.Offer new innovative products – increase market share - motorbikes (S1, S2, S3, O2, O3, O5)3.Concentrate on making the best fuel efficient cars (S1, S2, S3, S4, O1, O4, O5)
WO1.Relocate the production to cheaper country with lower taxes (W2, W4, O4, O5)
Threats – T1.Weak USD2.Increase in steel and resin pricing3.Increasing gasoline prices4.Stricter CO2 emission standards5.Increasing mortgage rates
ST1.Build eco-friendly products from alternative materials (S2, S3, S4, T2, T3, T4)2.Produce more cars for foreign market (S1, S2, S4, T1, T4)
WT1.Merge with competitors (W1, W2, W5, T2, T3, T5)2.Manufacture only parts for automobiles (W1, W2, T1, T2)
SPACE Matrix
FS
+6
+1
+5+4+3
+2
-6
-5
-4
-3
-2
-1-6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6IS
Conservative Aggressive
Defensive Competitive28
BCG Matrix
Revenues % Revenues Profit % Profit % Market Share
% Growth Rate
NA 69365 45% -4161 - 61% -0.1
SA 7585 5% 1172 - 30% +33
Europe 36330 24% 744 - 81% -3
PAG 33067 21% -1872 - - +10
Asia 8032 5% 206 - 38% +3
Total 154379 100% -3911 - - -
BCG MatrixRelative market share position in the industry
High 1.0 Medium .50 Low 0.0 High +30 M
edium 0 Low
-3
Industry sales growth rate
SA
APA
NA
IE Matrix
Hold and Maintain
31
Grand Strategy MatrixRapid Market Growth
Quadrant II Quadrant I
Strong Competitive
Position
Slow Market Growth
Weak Competitive
Position
Quadrant III Quadrant IV
Matrix EvaluationAlternative Strategies BCG IE SPACE GRAND COUNT
Forward Integration x 1
Backward Integration x 1
Horizontal Integration x 1
Market Penetration x x x 3
Market Development x x 2
Product Development x x x 3
Concentric Diversification x x 2
Conglomerate Diversification x x 2
Horizontal Diversification x x 2
Joint Venture x 1
Retrenchment x x 2
Divestiture x x 2
Liquidation x 1
Possible Strategies
• Developing new vehicles on alternative fuels (S1, S2, S4, O1, O3, O5) – SO1
• Offer new innovative products – increase market share (S1, S2, S3, O2, O3, O5) – SO2
• Concentrate on making the best fuel efficient cars (S1, S2, S3, S4, O1, O4, O5) – SO3
QSPM
Strategic Plan for the Future
Objectives for the 2008 - 2010
• Reduce manufacturing expenses by 15-20% 2008• Introduce new small fuel efficient vehicles 2009• Enter Latin American and Asian market with
hybrid vehicles 2010• Develop affordable electric car for US market
2009-2010• Increase market share 2009-2010• Build up strong financials (increase net income
and EPS by 15%) 2009-2010
Recommendation
• Manufacturing of new small fuel-efficient vehicle $ 7,000,000,000
• Entering the Latin American and Asian market with hybrids $ 20,000,000,000
• Implementation of electric car in the US market $ 13,000,000,000
Total Cost = $ 40,000,000,000
Implementation
EPS/EBIT
• Amount needed: $40,000,000,000• Stock price: $7.42• Interest rate: 7.5%• Tax rate: 0% (firm is having a loss)• # of shares outstanding: 2,195,000,000• # shares needed: 500,404,312
EPS/EBIT
Common stock financing Debt financing
Recession Normal Boom Recession Normal Boom
EBIT 10 20 40 10 20 40
Interest 0 0 0 1.5 1.5 1.5
EBIT 10 20 40 8.5 18.5 38.5
Taxes 0 0 0 0 0 0
EAT 10 20 40 8.5 18.5 38.5
#shares 2.695 2.695 2.695 2.695 2.695 2.695
EPS 3.71 7.42 14.84 3.15 6.86 14.28
*data in $ billion
Other Issues
• Laws and regulations in foreign countries• Regain lost trust in the Ford’s brand
Evaluation
Ford 2008 Update
Industry Update
Sources
• Ford Motor Company Annual Report 2007• General Motors Annual Report 2007• http://www.ford.com/about-ford/investor-
relations• Datamonitor
– Global Automobile Industry manufacturer 2006
• Pictures taken from Web
Questions???