Ford Motor Company

Automotive Industry

BUS 800

Case Analysis

Table of Contents

Introduction .................................................................................................................P2
Analysis .......................................................................................................................P2
Alternatives .................................................................................................................P4
Recommendation ........................................................................................................P4

Appendix
External Assessment ......................................................................................P5
PESTEL Analysis .................................................................................P5
Dominant economic Features .............................................................P6
Porters 5 Force Analysis ....................................................................P7
Driving Forces Analysis ......................................................................P8
Strategic Group Map............................................................................P9
Framework for Competitor Analysis.................................................P10
Key Success Factors .........................................................................P11
External Assessment Summary........................................................P12

Internal Assessment......................................................................................P12
Financial Analysis (Income and Balance sheet) ..............................P12
Financial Analysis Ratios ..................................................................P13
Current Strategy.................................................................................P14
SWOT Analysis...................................................................................P14
Value Chain Analysis .........................................................................P15
Competitive Strength Assessment ...................................................P16
References .....................................................................................................P17

Case Report
Introduction
The Ford Motor Company was founded in 1903 by Henry Ford and has since
established a brand that is instantly recognizable no matter what region you live in. Ford is
also distinguished as one of the Big 3 North American automotive manufacturers and is an
industry leader on a global scale. They are North Americas 2nd largest automotive
manufacturer in the 2nd largest automotive market in the world. The company employs
approximately 224,000 individuals and has nearly 90 manufacturing plants worldwide. Ford
owns and manufactures several well known brands: Lincoln, Volvo, Mercury, Land Rover
and Aston Martin. The organizations belief of what their foundation for success is lies in its
dedication to providing consumers with great products to strengthen their business and
benefiting their communities. Ford is committed to achieving profitable growth by executing
their sustainability strategy, investing in innovative technologies and supporting the
communities that surround them.

Analysis
The One Ford initiative set in place by senior management in 2007 emphasizes that
working collaboratively as a single team and under one plan, will help the company reach a
common goal that will deliver profitable growth for all. Achieving profitable growth for all
employees of the company and its shareholders is guided by the steps outlined under the
One Plan (9.3) objectives. The issues concerning Fords future for profitability growth is
grounded on how the company will maintain strong market share in existing and new
demographic locations, embracing new innovative technologies and remaining competitive in
an industry that is saturated with powerful rivals.
Fords future for profitability growth is dependant on how well the company is able to
increase market share domestically and internationally by cultivating to the dominant
economic features of the industry (2.0). As of 2014, Fords Canadian market share
penetration (5.0) was at 8.3% whereas the majority was held by Honda at 13%. The key
forces that drive the automotive industry (4.0) dictate how Ford must execute and implement
their strategic operations. Increasing globalization (4.1) is a key driving force in the
automotive industry with many industry members competing to seize market share in
developing nations. Automotive industry members are subject to government policies and
regulatory influences (4.6) and may be either limited from or encouraged to expand into
foreign markets. Lower labour costs in developing countries provide incentive for automotive
manufacturing firms to establish plants, provide jobs to local residents and contribute to the
overall economic development of that region. Fords international expansion strategy has
been successful in China (10.1) but has recorded substantially weak performance in
European markets (10.2) due to economic conditions of the region (1.3). Weak European
performance has forced Ford Motors to re-strategize their European market operations by
closing a number of plants down to save on high industrial costs. There are also other
threats associated with international operation and/or expansion such as exchange rate
fluctuations (10.4). The One Ford vision (9.1) promotes the idea that there is only one
family vehicle line-up offered regardless of where the consumer is located. In past years,
Fords strategy had been to develop automobiles that catered to different demographical
regions thereby increasing production costs and minimizing manufacturing process
efficiencies. The automotive industrys long-term growth rate is expected to increase (4.3)
due to increasing demand and population growth. Changing societal concerns, attitudes and

lifestyle (4.5) are also important forces that help navigate how research and development of
new technologies is implemented for future vehicles.
Technology change and manufacturing process innovation (4.2) along with changing
societal attitudes (4.5) are other key driving forces behind the automotive industry that will
dictate how Fords future profitability for growth will take shape. Technological factors (1.5)
pertaining to automotive innovation (2.5) are coupled with environmental impact (1.5). Ford
remains competitive in the market as they have kept up with the pace of technological
change (2.6) and have embraced new innovative technologies with their continuous
investment in research and development (11.1). From the Key Success Factors table (7.0),
Ford obtained a perfect score for product innovation capabilities. Automotive firms face
strong pressure stemming from customer bargaining power (3.5) and are driven to provide
consumers with vehicles that are fuel efficient and are able to meet the requirements of the
buyer (2.3). At the operations (11.3) stage in the Value Chain Analysis (11.0), Ford
strategically implements operational efficiencies that promote quality control, distribution
capabilities (7.0) and that reduce negative externalities to the environment (1.6). A rise in fuel
prices may looked upon as an opportunity to increase market share by utilizing new product
technology and catering towards a more fuel-efficient consumer mindset. Fords efforts
towards reducing the CO2 emission levels of their vehicles and enhanced social
responsibility have earned them 1st place in Interbands 50 Best Global Green Brands
Annual List. Despite their most recent accomplishments and recognition for its sustainability
plan, it is detrimental that their effort towards innovation and environment sustainability are
not diminished.
Another important factor that Ford must heavily consider to prepare itself for a future
with profitability growth is how to remain competitive in a market that is saturated with
competition and become more appealing to consumers. Automotive manufacturers must be
stable enough to withstand strong pressure from competition (2.4, 2.7 and 3.4) by improving
individual capabilities on all key success factors (7.0). Fords highest scored areas include
quality control, brand image/reputation, personalized customer involvement, clever
advertising, distribution capabilities and product innovation capabilities. The Framework for
Competitive Analysis (6.0) portrays the number of recalls performed by certain mainstream
manufacturers and the brand perception of quality that is perceived by the consumer. When
an automotive manufacturer performs a large number of recalls, consumers are sometimes
obliged to believe the notion that the vehicles manufactured by that company are less safe or
of less quality thereby tarnishing that companys brand image and reputation. Due to Fords
historical prowess and resilience during the 2008 economic recession, the companys brand
image and reputation continue to captivate many consumers.
The issues concerning Fords future for profitability growth is dependant on how the
company will maintain strong market share in existing and new demographic locations,
embrace new innovative technologies and remain competitive in an industry that is saturated
by powerful rivals.

Alternative
The alternative presented to Ford that will help promote a future for profitability
growth is to increase investment in new innovative technologies. Gains from increased
investment in research and development will be; a) up-to-date with technological capabilities
leading towards renewable resources to run engines, b) cater to changing societal
concerns/attitudes leading to less pressure from customer bargaining power, c) increased
government subsidies, d) ready to meet more stringent government regulations regarding
emissions standards and e) becoming a more socially responsible firm thereby increasing
brand reputation and image.
The losses associated with increased investment towards new innovative
technologies are; a) opportunity cost of forfeiting certain expansionary projects in emerging
markets, b) potential for fuel prices to decrease causing a consumer shift towards vehicles
that are not fuel-efficient, and c) governments may impose barriers on highly efficient
vehicles from entering the market.

Recommendation
It is recommended that the Ford Motor Company pursue an increase in investment
towards new innovative technologies as it will benefit the company in its future for profitability
growth. Fords brand image and reputation remain solid among mainstream industry
manufacturers. The company strives in many areas corresponding to key success factors
and is equipped to withstand the driving forces behind the automotive industry. Its recent net
profit margin (8.1) for years 2012 and 2013 increasing from 4.24% to 4.87% indicate that the
company is already on a path towards sustainable growth. Net return on assets (8.1) from
2009-2013 also reflect Fords profitability growth. Fords working capital numbers have also
increased within recent years of analyzed data, increasing from 81,302 (millions) in 2010 to
114,317 (millions) in 2014. The Ford Motor Company is in a position that is relatively healthy
with increasing working capital to strategically implement new innovative investment.

Ford Motor Company External Assessment

PESTEL Analysis1.0
Political Factors1.2
Political agendas weigh as a heavy factor for members of the automotive industry as
environmental issues are heavily considered when automotive companies design
new vehicles.
Hybrid vehicles are in high demand and receive more support from government
bodies- firms are charged greater tax rates if vehicles emit higher levels of CO2.
Economic Conditions1.3
Economic cycles such as recessions can severely impact the industry where some
firms are subject to bankruptcy.
Inflation, exchange rates and market prices of fuel are greatly considered by the
automotive industry when projecting future sustainability decisions.
Market prices of fuel may dictate shifts in consumer preferences of automobile
selection and can heavily impact productions decisions made by industry firms.
Socio-cultural Forces1.4
Automotive firms will always face consumer biases on brands or labels.
Industry is subject to changing buyer patterns and consumer demand shifts
pertaining to market forces such as recessions or expansions.
Automotive firms may experience greater incentives in establishing operations in
developing countries where there are emerging markets due to a higher demand for
automobiles.
Technological Factors1.5
Technological advances help automotive companies produce vehicles that are more
fuel efficient, safer and better equipped with more accessories such as driver-assist
systems.
Technology has also enabled the productions of vehicles that can alternate between
fuel systems (gasoline, electricity and hydrogen).
Environmental Forces1.6
There is an increasing need to reduce pollution levels exerted on the environment by
reducing exhaust emission levels produced by motor vehicles.
Motor vehicle producers are obliged to adhere to standards set by government
bodies in regards to acceptable emission levels. These standards also serve to
promote corporate responsibility.
Legal and Regulatory Factors1.7
Automotive firms are subject to changing labour laws and union pressures set in
place to promote adequate compensation to appropriate workers. Automotive
corporations must be in a position to comply with certain pressures to avoid
potentially damaging operational failures and labour strikes.

PESTEL Analysis Summary

The automotive industry is heavily influenced by the six components of the macroenvironment with each component weighing heavily on crucial decisions that must be
executed by all automotive manufacturers. Industry members must consider political
agendas, economy status, societal changes, environmental impact and regulatory
constraints when strategizing company directives. Each automotive firm is bound by these
pressures so that each component of the macro-environment is satisfied in their respective
nature. Each member must conduct their operations in a socially responsible manner to
adhere to adhere to the various stipulations.
Dominant Economic Features2.0
Market Size and Growth Rate2.1
The global automotive industry represents manufacturers and sellers of automotives
and contributes roughly 3% to global GDP.
Increasing demand for vehicles year after year; total number of units sold in North
America increased from 60.82 million in 2011 to 72.12 million in 2014. This
represents a yearly average increase of approximately 3.92% and is forecasted to
increase as population increases.
Number of Buyers2.2
Large number of buyers across various demographic locations. Emerging markets
are opportunities for growth.
Buyer Needs and Requirements2.3
Constantly changing buyer needs and requirements where more emphasis is placed
behind cost efficiency, reliability and safety.
Number of Rivals2.4
Large number of rivals that offer a breadth of vehicle options at significantly varying
price points.
Product Innovation2.5
Members of the automobile industry are obligated to continuously invest in research
and development to innovate new vehicles that embrace a changing consumer
mindset that promote efficiency and reliability.
Pace of Technological Change2.6
Advances in technology enable automotive firms to stay competitive in the market by
providing consumers with diverse options such as driver-assist functions, GPS
navigation and various comfort options.
Scope of Competitive Rivalry2.7
Many rivals in the market making the automotive industry extremely competitive with
large number of options available to consumers.
Some rivals have a stronger brand/reputation perception than others.

Dominant Economic Features Summary

The automotive industry is a pillar in developing the macro-environment by providing
millions of jobs on a global scale; nearly 5.4 million people are employed by the industry in
Japan which translates to about 9% of the total workforce. The industry increases the
standard of living for many countries by enabling mobility to its citizens in a safe and
comfortable manner. Overall, the automotive industry contributes nearly 3% towards global
GDP; in many cases this statistic is higher in emerging markets. Global population is
exponentially increasing with consumer demand for vehicles also on the rise. Automotive
industry members must be able to adapt to a changing consumer needs and embrace new
innovative technology to remain competitive against the large number of rivals.
Porters 5 Forces Analysis3.0
Competition from Rival Sellers3.1 (Strong): Competitive pressures are high in the industry
due to rapidly changing consumer demands. Rivals utilize differentiation strategies to
increase customer traffic and raise brand awareness. Existing corporations in the industry
are looking to expand their market reach by incorporating environmentally friendly
technology and entering into new geographical areas with emerging markets.
Competition from Potential New Entrants3.2 (Moderate): It is relatively difficult for new
potential entrants to enter the market due to heavy industrial and government regulations.
New potential entrants encounter significant competition from existing members due to
established brand reputation however existing companies in foreign markets may become a
threat when entering a new market due to an establishment of strategic alliances.
Competition from Producers of Substitute Products3.3 (Moderate): Comparable
substitutes for automobiles are readily such as public transportation but consumers are
subject to constraints and destination limitations when travelling.
Supplier Bargaining Power3.4 (Weak): Suppliers have low bargaining power due to low
costs associated with industry members switching to different suppliers. There are a vast
majority of firms and facilities available to provide an array metals and vehicle components.
Ultimately, industry members are major customers of suppliers and account for a large
portion of suppliers sales.
Customer Bargaining Power3.5 (Strong): Customer bargaining power is high due to the
large number of buyers in the industry. Customers also have significant bargaining power
due to the vast number of options available in the industry. Consumers are leveraged due to
the amount of information about the sellers quality of products, service, atmosphere and
prices.

Porters 5 Forces Analysis Summary

Porters Five Force Analysis provides an important overview of the various pressures
that industry members are subject to. For instance, the automotive industry experiences
strong pressure from competitive rivalry due to the large number of automotive firms
competing for market share. Each firm provides a various vehicle line-up at different price
points to provide consumers with options that will meet their needs and requirements.
Industry members also receive strong pressure stemming from customer bargaining power.
The market size is immense and customers are not restricted to buying a vehicle from any
one motor company over another. Customers are leveraged about the sellers quality of

products, service, atmosphere and prices. The industry also experiences moderate
pressures arising from competition of new entrants. New entrants face stringent industrial
and governmental regulations that make it relatively difficult for a new member to enter the
market however existing manufacturers in foreign countries may consider strategic alliances
with domestic firms which will in turn facilitate a more competitive advantage. An example of
recent events would be to consider Fiat entering the North American market and merging
with Chrysler. The industry also faces moderate pressure of substitute products as public
transportation is readily available to many citizens of urban locations but may be subject to
limited flexibility concerning destinations, seating, schedules and delays. Supplier bargaining
power is relatively weak as industry members have greater bargaining power than their
suppliers. Many supplier firms compete for large contracts and may include bulk pricing to
make purchase agreements more attractable to automotive manufacturers.
Driving Forces Analysis4.0
Increasing Globalization4.1
Increasing demand in foreign markets and developing countries coupled with
government actions to reduce trade barriers provide incentive for industry members
to expand.
Lower labour costs also provide incentive for automotive firms to establish production
plants which may be essential to supply market demand globally.
Technological Change and Manufacturing Process Innovation4.2
Technological advances can alter industry manufacturing processes such as
harnessing alternative energy sources that eliminate the use of fossil fuels.
Changes in an Industrys Long Term Growth Rate4.3
Industrys long term growth rate is increasing due to increasing global population,
development of better infrastructure and rise of emerging markets.
Changes in Cost and Efficiency4.4
Changes in market costs of fuel and fuel efficient vehicles greatly alter industry
production volumes. Rising costs will drive consumers to seek more fuel efficient
vehicles and may result in surplus volumes of trucks and sport utility vehicles.
Changing Societal Concerns, Attitudes and Lifestyles4.5
Societal concerns have shifted towards a direction for minimizing the carbon footprint
left on the planet and demand industry members to comply with socially responsible
behaviors.
Regulatory Influences and Government Policy Changes4.6
Regulatory influences and government policy changes often mandate significant
industry changes such as government injections in times of economic recessions.
International governments may impose barriers on foreign companies or invite
international presence to accommodate growing demand.

Driving Forces Analysis Summary

The driving forces behind the automotive industry are crucially considered when
industry members formulate new strategies that promote market sustainability. The most
important driving force is increasing globalization. Expansion into emerging markets is a
remarkably important option for automotive firms to consider and capitalize on. Not only do
emerging markets provide an opportunity for the macro-development of that region but
industry members are also able to increase market share penetration, take advantage of
lower tariffs and labour costs associated with production operations. Technological change/
manufacturing process innovation, changes in cost/efficiency and changing societal
concerns, attitudes and lifestyles are all important driving forces behind the industry. Auto
companies are continuously investing in research and development to cultivate new
technologies that are environmentally friendly, more efficient and that meet changing societal
concerns. Automotive manufacturers will in turn benefit from enhanced government
subsides, gain substantial market position and strengthen their reputation.
Strategic Group Map5.0
The strategic group map below represents the position of commonly known industry
members pertaining to two variables; Canadian market share percentage in 2014 and the
number of models available in the 2014 vehicle line-up offered by each respective company.
GM offers Canadian consumers the most number of vehicle models with that number being
38 whereas Subaru offers the least at 7. Honda/ Acura retain the majority of Canadian
market share at nearly 13% and Subarus Canadian market share penetration is
approximately at %1.8. Ford is positioned comfortably around its competitors providing
consumers with 22 different vehicle models and capturing about 8.3% of Canadian market
share in 2014.

16

Chrysler
Ford

14

Canadian Market share in 2014 (%)

BMW-Mini

Strategic Group Map

Hyundai

12

Honda/Acura

GM
Honda/Acura

Toyota
GM

Hyundai

10

Mazda

Ford
8

Nissan

Nissan

Volkwagen

Mercedes-Benz

Mazda

Subaru

Chrysler

Toyota

4
BMW-Mini
2

Volkwagen

Mercedes-Benz
Subaru

0
0

10

15

20

25

30

Number of Models in 2014 Vehicle Lineup

35

40

Framework for Competitor Analysis6.0

Graph A

Number of
Recalls
(Millions)

Number of Recalls from 2011-2014

14
12
10
8
6
4
2
0

Toyota
Ford
GM
Chrysler
Honda
2011

2012

2013

2014

Volkswagen

Year

Graph B

Brand Perception of Quality- Mainstream Manufacturers

Index Points (0-100)

Average
Suzuki
Mazda
Nissan
Volkswagen
Honda
Chrysler
GM
Ford

10

20

30

40

50

60

70

Toyota

Framework for Competitor Analysis Summary

Graph A measures the total number of recalls performed by five of the mainstream
automotive manufacturers from the years 2011-2014. GM experienced the most recalls of all
the manufacturers in 2014 with a number at 14 million whereas Chrysler experienced the
least at 130,000 units in 2014 despite Chryslers much larger volume in 2013 at 4.7 million.
Volkswagen performed the best among its competitors along the 4 year span with values
ranging from a low point of 160,000 units in 2012 to a high point of 710,000 in 2013. Toyota
remained fairly consistent averaging a recall value of 4.375 million units per year from 20132014. Fords average recall value for 2011-2014 was approximately 2.125 million units per
year.
Graph B ranks 8 of the mainstream automotive manufacturers brand perception of
quality (data obtained from ALGs Brand Perception of Quality Rankings- June 2014). The
industry average was calculated at 53.5 index points as a benchmark to compare other
manufacturer scores. The highest scoring automotive firm was Honda with a score of 64.9
and Suzuki scored among the lowest with 45.1. The only other auto manufacturer that

10

scored below the industry average was Chrysler at 50.3 index points. A companys brand
perception is detrimental in predicting future growth and market share acquisition. The
number of recalls a company has to perform affects consumer brand perception of quality.
Strategic quality management processes not only ensure vehicle safety but also improve
brand reputation and thus reflects on the competitor analysis charts above.
Key Success Factors7.0
Rating Scale:
1 = Very Weak
10 = Very Strong
Key Success Importance
Factors
Weight
Quality
.15
control
Direct sales
.05
capabilities
Breadth of
product line
.15
& product
selection
Brand
.20
image/
reputation
Personalized
.05
customer
involvement
Clever
.15
advertising
Distribution
.15
capabilities
Product
.10
innovation
capabilities
Sum of
100
Importance
Weights
Weighted
Overall
Strength
Rating

Ford

GM

Mercedes-Benz

Toyota

Strength
Rating

Score

Strength
Rating

Score

Strength
Rating

Score

Strength
Rating

Score

1.35

1.20

10

1.50

1.20

0.40

0.35

0.40

0.35

1.20

10

1.50

1.35

1.2

1.80

1.40

10

2.0

10

2.0

10

0.50

0.4

10

0.50

0.35

10

1.50

1.05

1.35

1.35

1.35

10

1.50

10

1.35

10

1.50

10

1.0

0.90

0.90

10

1.0

73

9.1

66

8.3

75

9.35

69

8.95

Key Success Factors Summary

The chart above scores Ford, GM, Mercedes-Benz and Toyota along various key
success factors. Mercedes scored the highest overall score at 9.35 and GM scored the
lowest at 8.3. The heaviest weighted factor was brand image/ reputation with a weight of
20% and Mercedes and Toyota both scored a perfect score of 10 in this category. Ford
placed second highest among the other rivals with an overall score of 9.1 proving its wellroundedness in all areas.

11

Summary of External Assessment

The External Assessment highlights the automotive industry in context of the six
macro-economic components, dominant economic features, Porters five forces, driving
forces, framework for competitor analysis and key success factors. All areas of assessment
are critical to determine an industry members position relative to its competitors and how
each one is affected by changing economic conditions.

Ford Motor Company Internal Assessment

Financial Analysis (*all figures are in millions) 8.0

Net Revenues
Cost of Goods
Sold
Gross Profit
Other Income
Operating
Profit
Taxes:
Provisions
for/(benefit
from) inc
taxes
Net Profit

Cash and
Cash
Equivalents
Short Term
Investments
Other Current
Assets
Total Current
Assets
Property and
Equipment
Total Assets

2013
146,917
141,478

Consolidated Income Statement Fiscal Year Ending

2012
2011
2010
2009
133,559
135,605
119,280
103,868
127,678
128,073
113,491
107,220

5,439
1,562
7,001

5,881
1,839
7,720

7,532
1,149
8,681

5,789
1,360
7,149

(3,352)
5,951
2,599

(147)

2,056

(11,541)

592

(113)

7,155

5,665

20,213

6,557

2,712

2013
14,468

Consolidated Balance Sheet Fiscal Year Ending

2012
2011
2010
2009
15,659
17,148
14,805
21,441

22,100

20,284

18,618

20,765

21,387

152,310

141,180

120,211

105,938

148,685

174,410

161,464

155,977

141,508

170,072

27,616

24,942

22,371

23,179

24,778

202,026

186,406

178,348

164,687

194,850

Current
Liabilities
Long-term
Liabilities
Total
Liabilities

59,993

67,567

63,093

60,206

61,193

114,688

105,058

100,184

105,123

140,172

175,279

173,095

163,277

165,329

201,365

Stockholders
Equity
Total
Liabilities and
Equity

26,416

15,989

15,071

202,026

189,406

178,348

(642)
164,687

(6,515)
194,850

12

Profitibality8.1
Gross Profit Margin
In 2009, Ford operated at a gross profit margin of -3.23% as it was still facing the
repercussions of the 2008 recession. From 2010-2011, Ford began to recover from negative
margin percentages and achieved a gross profit margin of 4.85% in 2010 an increased to a
high of 5.56% in 2011. Operating gross profit margins have remained relatively steady since
2011 but have slightly declined to 4.4% in 2012 and then to a slightly lower figure of 3.7% in
2013.

Net profit Margin

Fords net profit margin ranges from a low of 2.61% in 2009 to a high of 14.91% in 2011. The
spike is attributed to benefits received from income taxes in 2011. 2010 reports also
demonstrate Fords ability to recover from the recession by attaining net profit margins of
5.5%. For recent years 2012 and 2013, Ford has demonstrated a more consistent net profit
margin of 4.24% and 4.87% respectively.

Net Return on Assets

Fords net return on assets ranges from a low of 1.39% in 2009 to a high of 11.33% in 2011
(high return attributed to benefits received from income taxes in 2011.) For the years 2010,
2012 and 2013, Fords net return on assets was 3.98%, 3.04 and 3.54% respectively.

Liquidity8.2
Current Ratio
Current ratios for the Ford Motor Company range from a low of 2.35 in 2010 to a high of 2.91
in 2013. Year-to-year average from 2009-2013 for solvency of assets is 2.58. In other words,
Ford holds an average of 2.58 times its current liabilities in current assets if the assets would
have to be liquidated.

Working Capital
Fords working capital has been steadily increasing from 81,302 in 2010 to 114,317 in 2013.
The steady incline represents that current strategic operations are contributing to a future
that holds promise for profit growth and expansionary capabilities.

Leverage8.3
Total Debt-to-Assets Ratio
The Ford Motor Company reported a debt-to-asset ratio high of 1.03 in 2009 to a low of 0.87
in 2013. These figures represent how the company is moving towards a positive direction for
growth by holding onto less debt relative to its assets from the 2009-2013..

13

Current Strategy9.0
Vision9.1
In 2007, Ford embraced a new vision that embraces a One Ford initiative that is built upon
One Team, One Plan and One Goal.
Mission9.2
Our One Ford plan aligns our efforts toward a common definition of success: having One
Team, One Plan and One Goal for an exciting, viable Ford that delivers profitable growth for
all.
Objectives9.3
Fords objectives are outlined under their One Plan directive and are as follows:
1. Aggressively restructure to operate profitability at the current demand and changing
model mix.
2. Accelerate development of new products our customers want and value.
3. Finance our plan and improve our balance sheet.
4. Work together effectively as one team.
SWOT Analysis10.0
Strengths10.1
Strong Brand Recognition and position in North American market- Ford is a globally
known brand and is the second largest automotive manufacturer in North America
which is also the second largest automotive market in the world.
Forward-thinking approach to environmental responsibility- Ford has been awarded
1st place on the annual list of Interbrands 50 Best Global Green Brands,
outperforming last years winner, Toyota.
Resilient Financial Performance- Ford was the only North American automotive
manufacturer that did not opt in for a government bail-out plan that was issued to GM
and Chrysler in 2009.
Significant growth in China- Although not having the majority market share in China,
Ford has still demonstrated significant growth in the worlds largest market by selling
906, 613 vehicles during the first 10 months of 2014 which translates to a %22
increase from October 2013.
One Ford Initiative- A plan that was adopted by Ford in 2007 that emphasizes a
guide to sustainability which embraces a family line-up of vehicles that are available
globally rather than manufacturing specific vehicles per region as they had done in
the past resulting in significant cost reductions.
Weaknesses10.2
Weak performance in Europe- In 2013, Fords full year loss was announced at $1.75
billion however not the only automotive firm that incurred losses in European market,
mainly due to a number of recessions in many European countries. Operating losses
are still predicted in the region until 2015.
High Cost Structure- The One Ford initiative, adopted by the company in 2007, has
resulted in maximizing cost efficiencies but the company still operates with a high
cost structure relative to other automotive firms due to their competitive employee
benefit and pension plans.

14

Opportunities10.3
Increasing fuel prices- An increase in fuel prices will shift consumer demand towards
more eco-friendly vehicles. Fords ECOnetic and ECOboost technology coupled with
flex-fuel or hybrid engines may become an attractive product to meet consumer
demand.
More Strict Emission Standards- Government bodies may introduce more strict
emission standards on automotive manufactures as pollution and environmental
responsibility become of greater importance. Ford hold a positive attitude towards
engineering more fuel-efficient vehicles and may meet new standards with relative
ease.
Strategic Alliances with Other Automotive Manufacturers- Ford has reputable
experience with making strategic partnerships with other automotive firms. Growing
competitive pressure may make alliances an attractive opportunity because there are
opportunities to enter new markets (ie. Fiat entering North American Market via
Chrysler), innovative research costs can be driven down and there is a gain of
experience to all parties.
Threats10.4
Decreasing Fuel Prices- A decrease in fuel prices may shift consumer demand to
less fuel-efficient vehicles which could result in lower sales of fuel-efficient vehicles
that have been manufactured by Ford. This commodity price shift may result in a
surplus of Fords fuel-efficient lineup and a shortage in sport utility vehicle/ pick-up
truck line-up.
Strong Market Competition- The automotive market is saturated with many
automotive companies manufacturing an array of vehicles competing for market
share.
Exchange rate Fluctuations- Fluctuating exchange rates pose as a significant risk
variable that may impact operating profits in foreign or domestic markets. For
instance, an appreciation of the US dollar may make it less attractive for foreign
markets to purchase vehicles from Ford as they would effectively be over-priced.
Increase in Raw Material Prices- An increase in the price of metals, plastics, fabrics
and any other raw material required for the manufacturing of a vehicle will severely
cause costs to become inflated leaving less room for gross margin when pricing
vehicles.
Value Chain Analysis11.0
Product R&D, Technology and Systems Development11.1
Product research and development play integral role as part of Fords Value Chain.
Important decisions are made pertaining to which vehicles should be manufactured,
what kind of new technology should be implemented when manufacturing new
vehicles, maximizing process-efficiency and establishing how and how and where
manufacturing should occur.
Ford spent nearly $6.14 billion on engineering, research and development.
There were 718 U.S utility patents that were issued to Ford and subsidiaries for new
technologies that were developed in 2013.

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Supply Chain Management11.2

Raw material extraction plays a vital role in Fords value chain as it pertains to their
objective in minimizing global environmental impact and surrounding communities.
Value is created for suppliers to Ford.
The Supplier Parts Manufacturing process account for nearly $100 billion that Ford
spent on the 12,100 different production and non-production supplier companies
globally in 2013. As part of Fords Global Terms and Conditions Policy, all direct
suppliers must adhere to their strict requirements on human rights, working
conditions and environmental sustainability.
Operations11.3
Ford plant manufacturing accounts for the majority of where value is added along the
Value Chain. Ford is dedicated to lowering the environmental impact created by its
manufacturing facilities and increasing the social and economic benefit that is added
to surrounding communities (creating jobs and investment opportunities).
Ford employs an estimated 224,000 people globally and plans to add another 11,000
jobs in the U.S. and Asia markets combined.
Ford also invested $37.7 million in local communities through charitable donations in
2013.
Distribution11.4
Logistics/ Transportation include the transport of supplier parts to Ford manufacturing
facilities and finished products from manufacturing plants to dealerships. Value is
created for businesses in the transport industry but impact local communities and
environment (emissions, traffic and road safety.) Ford is working on improving route
efficiencies and opting for lower-emission transport methods.
Sales and Marketing11.5
At this stage of the Value Chain, Ford communicates information about new vehicles
and embraced technologies to the market ensuring that their products can meet the
consumer demand and satisfaction.
In 2013, The Ford Motor Company sold more than 6.33 million vehicles globally and
had 11,722 Ford and Lincoln dealerships.
Service11.6
Value is created through dealership network and their service facilities that are
dedicated to maintaining quality of vehicle performance and sustaining brand
awareness.

Competitive Strength Assessment12.0

From the Key Success Factor Table (7.0), Fords Competitive Strength stems from
their personalized customer involvement, clever advertising and product innovation
capabilities. The Ford Motor Company scored the highest a perfect score of 10 in each of
these categories. Fords commitment to social responsibility and product innovation/
research & development investments coupled with its powerful brand recognition will enable
future growth and sustainability. Fords competitive strengths will also help establish its
presence in emerging markets and further increase market share penetration.

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References:
1. http://www.atkearney.com/documents/10192/2426917/The+Contribution+of+the+Aut
omobile+Industry+to+Technology+and+Value+Creation.pdf/8a5f53b4-4bd2-42cc8e2e-82a0872aa429
2. http://corporate.ford.com/microsites/sustainability-report-2012-13/blueprint-value
3. http://corporate.ford.com/microsites/sustainability-report-2012-13/blueprint-strategy
4. http://corporate.ford.com/microsites/sustainability-report-2012-13/blueprintgovernance
5. http://www.nrcan.gc.ca/energy/publications/efficiency/industrial/cipec/6021
6. http://gatton.uky.edu/faculty/scott/mba603-605fall2009/industrystudy3.pdf
7. https://www.ic.gc.ca/eic/site/smt-gst.nsf/vwapj/dgtp-007-04-ford.pdf/$FILE/dgtp-00704-ford.pdf
8. http://best-management-articles.blogspot.ca/2012/12/ford-motor-company.html
9. http://www.reportlinker.com/ci02294/Automotive.html
10. http://corporate.ford.com/news-center/press-releases-detail/ford-to-drive-growth-in2014-with-additional-jobs--three-new-worldwide-plants
11. http://www.gbm.scotiabank.com/English/bns_econ/bns_auto.pdf
12. http://corporate.ford.com/our-company/investors/investor-news-detail/ir-20141107ford-china-sales
13. http://www.thecarconnection.com/image/100468731_alg039s-brand-perception-ofquality-rankings-june-2014
14. https://www.dbresearch.com/PROD/DBR_INTERNET_ENPROD/PROD0000000000323649/Presentation%3A+Economic+and+regulatory+pro
spects+for+the+global+automotive+industry.PDF

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