FORD MOTOR COMPANY

CASE STUDY
“Ford Motor Company”

Submitted By

MONIL PANCHAMIA

Submitted to
SIR GAURAV ASHISH
Introduction

U.S. automotive corporation Ford motor company. Founded in Detroit, Michigan in 1903 by
Henry Ford and a group of investors, the company introduced the hugely successful Model T
in 1908 and by 1923 was producing more than half of all U.S. automotive vehicles.

Through the Lincoln Motor Co. (acquired in 1922), Ford produced luxury Lincolns and
Continentals. After years of declining sales, the Model T was succeeded by the Model A in
1927; other companies such as General Motors took the opportunity to make serious inroads
into Ford's dominance. The company was reincorporated in 1919, with Ford and his family
acquiring full ownership. Henry's son Edsel served as president 1919 – 43, and Henry's
grandson Henry Ford II led the company 1945 – 79, reviving its fortunes considerably.

Its stock was first publicly traded in 1956. Ford acquired the British automaker Jaguar in 1989
– 90, bought the rental car company Hertz Corp. in 1994, and purchased the automobile
division of Volvo in 1999. Later acquisitions included Aston Martin and the Land Rover brand
of sport utility vehicles. Ford also owns a significant share of the Mazda Motor Corp. Because
of financial struggles at the beginning of the 21st century, the company sold off Aston Martin
in 2007 and both Jaguar and Land Rover in 2008. Ford manufactures passenger cars, trucks,
and tractors as well as parts and accessories.

One of the world's largest auto makers, Ford brands includes Ford, Lincoln, and Mercury.
Finance unit Ford Motor is US's leading auto finance companies. Ford owns a small stake in
Mazda but has sold Volvo to Zhejiang Geely Holding, parent of Geely Automobile, for about
$1.3 billion cash and other monetary consideration.

Currently William Ford is performing duty of executive chairman of the board in the
orgnization.
Ford Motors Analysis

Our Vision
To become the world's leading Consumer Company for automotive products and services.

Our Mission
We are a global family with a proud heritage passionately committed to providing personal
mobility for people around the world.

We always anticipate consumer need and deliver outstanding products and services that will
surely improve people's lives.

Vision Evaluation

The vision statement is quite well organized as it highlights the products and offerings made by
the company. It also highlights that the company is growth oriented and wants to be the leading
company in automotive industry.

Mission statement Evaluation

Components
a Customers Yes
b Products Or Services No
c Markets Yes
D Technology No
E Concern for survival, growth & Profitability No
F Philosophy No
G Self-Concept No
H Concern For Public Image Yes
i Concern for Employees No

We are a global family with a proud heritage passionately committed to providing personal
mobility for people around the world
We anticipate consumer need
(a) and deliver outstanding products and services that improve people's lives
 Proposed Vision

“Ford – Inspire the way you drive! “

Proposed Mission

“Providing the global customers (a) with the premium quality and the state of art technology
catering their automotive needs (b) as well as covering the aspects of comfort and style.
Along with the team of professionals (i) pursuing the continuous innovation (d) and growth
(e) globally (c) - And creating the value for our customers’ (f) through making positive
contribution to the society considering their health and safety issues (h).”

Opportunities

 Demand and trend for hybrid energy vehicles.

 China, a vibrant market for automotive industry.
 Fall in the sales of GM due to perceived lower quality and fuel efficiency.
 Demand of fuel efficient cars.
 Alliance with the British Petroleum to develop hydrogen power.
 High expectations of consumers.
 Ford’s “S-Max” Car of the year in Europe in 2006.

 Excessive sales to rental car agencies affecting the brand image and resale values.
 Strict standard of CO² emission result in increasing the manufacturing cost to produce engines.
 New entrants i.e.: Honda, Toyota and Nissan result in tough competition.
 Currency rate fluctuation and increased cost of raw materials effect the production and sales.
 Car financing sector facing financial hardship due to increasing mortgage rates.
 Lack of desired vehicles available on the dealer’s lot.
 Rising cost of health care and pension will surely effect the future investment.
 Toyota selling vehicles through E-commerce (Gazoo.com).
 Chinese auto firms gaining strength and soon to enter in the US markets.

Strength:

 Increased in revenue to 6% (i.e. $87.62 B) in June 30, 2007.

 Production of hybrid energy vehicles.
 Ford’s credit division achieved an increase of $16.5B in 2006.
 Strong brand recognition as affordable and safe vehicle.
 Increase in the PAG division : $ 8.1 – 8.6 B in 2006.
  Effective distribution and manufacturing channels covering 17.5% of market share in the automotive
industry.
 World’s largest loving roof in Michigan.
 Running world’s largest finance company.
 Opening of research and engineering centre in China.
 Operate throughout the 6 continents with 108 plants globally.

Weaknesses:

 Net income of the company was negative $16B in 2006.

 Revenues decreased by 9% in 2006.
 It’s revenue from North America decreased by 10% in 2006.
 EPS of -3.723 reflecting the company is facing huge losses.
 Profit margin declined from 18% - 7% in 2006.
 Ford does not provide financial incentive to dealers.
 Organization’s morale decreased due to downsizing

External Factor Evaluation(EFE)

Weights Ratings Weighted

Key External Factors 0.0-1.0 1- 4 Score

Opportunities
Demand and trend for hybrid energy vehicles. 0.08 3 0.24
China, a vibrant market for automotive industry. 0.07 3 0.21

Reduction of GM sales due to perceived lower quality and fuel efficiency. 0.05 2 0.1
Demand of fuel efficient cars. 0.07 3 0.21
Alliance with the British Petroleum to develop hydrogen power. 0.07 3 0.21
High expectations of consumers. 0.05 2 0.1
Ford’s “S-Max” Car of the year in Europe in 2006. 0.06 2 0.12

Threats
more sales to rental car agencies affecting the brand image and resale
values. 0.05 3 0.15
Strict standard of CO² emission result in increasing the manufacturing
cost to produce engines. 0.07 2 0.14
New entrants i.e.: Honda, Toyota and Nissan result in tough competition. 0.08 3 0.24
Currency rate fluctuation and increased cost of raw materials effect the
production and sales. 0.08 3 0.24
Car financing sector facing financial hardship due to increasing mortgage
rates. 0.05 2 0.1
Lack of desired vehicles available on the dealer’s lot. 0.06 2 0.12
Rising cost of health care and pension will effect the future investment. 0.05 1 0.05
Toyota selling vehicles through E-commerce (Gazoo.com). 0.05 2 0.1
Chinese auto firms gaining power and soon to enter in the US markets. 0.06 1 0.06
Total 1 2.39
 Internal Factor Evaluation(IFE

Weights Ratings Weighted

Key Internal Factors 0.0-1.0 1- 4 Score
Strengths
Increased in revenue to 6% (i.e. $87.62 B) in June 30, 2007. 0.06 3 0.18
Production of hybrid energy vehicles. 0.07 3 0.21
Ford’s credit division achieved an increase of $16.5B in 2006. 0.06 3 0.18
Strong brand recognition as affordable and safe vehicle. 0.07 3 0.21
Increase in PAG division from $ 8.0 – 8.6 B in 2006. 0.06 3 0.18
Effective distribution and manufacturing channels covering 17.5%
of market share in the automotive industry. 0.05 3 0.15
World’s largest loving roof in Michigan. 0.05 4 0.2
Running world’s largest finance company. 0.05 4 0.2
Opening of research and engineering centre in China. 0.06 3 0.18
Operate throughout the 6 continents with 108 plants globally. 0.05 3 0.15
Weaknesses
Net income of the company was negative $16B in 2006. 0.07 2 0.14
Revenues decreased by 9% in 2006. 0.07 1 0.07
Ford’s revenue from North America decreased by 10% in 2006. 0.06 1 0.06
EPS of -3.723 reflecting the company is facing huge losses. 0.07 1 0.07
Profit margin declined from 18% - 7% in 2006. 0.07 2 0.14
Ford does not provide financial incentive to dealers. 0.06 2 0.12
Organization’s morale decreased due to downsizing. 0.02 1 0.02
Total 1 2.46
 SWOT MATRIX
Strengths
1. Increased in revenue to 6%
(i.e. $87.62 B) in June 30,
2007.
2. Production of hybrid
energy vehicles.
3. Ford’s credit division
achieved an increase of
$16.5B in 2006.
4. Strong brand recognition as
affordable and safe vehicle.
5. Increase in PAG division
from $ 8.0 – 8.6 B in 2006.
6. Effective distribution and
manufacturing channels
covering 17.5% of market
share in the automotive
industry.
7. World’s largest loving roof 7.
in Michigan.
8. Running world’s largest
finance company.
9. Opening of research and
engineering centre in China.
10. Operate throughout the 6
continents with 108 plants
globally.
Opportunities SO
1. Produce hybrid energy
1. Demand and trend for hybrid energy vehicles with British
vehicles. petroleum.( S2,O1,O5)
2. Produce innovative and
economical vehicles through
2. China, a vibrant market for detailed market research. (
automotive industry. S3,S8,O2,O6)
Weaknesses
1. Net income of the company
was negative $16B in 2006.
2. Revenues decreased by 9% in
2006.
3. Ford’s revenue from North
America decreased by 10% in
2006.
4. EPS of -3.723 reflecting the
company is facing huge losses.
5. Profit margin declined from
18% - 7% in 2006.
6. Ford does not provide
financial incentive to dealers.
Organization’s morale
decreased due to downsizing.
WO
1.Use of competitive intelligence
information for restructuring of
production processes to produce
attractive and economical
products.(W3,W2,W5,O3,O2,O6)
2. Fulfilling of existing demand
through strong brand image and
applying retrenchment strategies
in production and vehicle cost.(
W1,W3,W4,O1,O4,O6,O7)
3. Reduction of GM sales due to
perceived lower quality and fuel 3. Production of fuel efficient
efficiency. Cars ( S5,S9,O4,O6,O3)
4.Demand of fuel efficient cars.
5. Alliance with the British Petroleum
to develop hydrogen power.
6. High expectations of consumers.
7. Ford’s “S-Max” Car of the year in
Europe in 2006.
Threats ST WT
1. Apply market penetration
strategies globally A) sponsor
events related to sports,
entertainment etc B)
Partnership with a television
channel that will display ads
of ford motors in different 1. Alliance with competitors or
1. More sales to the rental car agencies intervals C) Developing of horizontal integration should be
affecting the brand image and re sale Ford's Blog applied. (
values. (S3,S5,S9,T3,T8,T9) W2,W3,W4,W5,T2,T3,T4)
2. Seek Cost effective
strategies utilizing alternative
energy in production and use 2 Providing monetary packages
2. Strict standard of CO² emission Backward integration to dealers or providing some
result in increasing the manufacturing technique to overcome high percent of company's share
cost to produce engines. costs.(S6,S8,S9,T2,T4,T6) (W6,T6)
3.There were new entrants i.e.: Honda,
Toyota and Nissan result in tough
competition.
4. Currency rate fluctuation and
increased cost of raw materials effect
the production and sales.
5. Car sector facing financial tough
times due to increasing mortgage rates.
6. Lack of desired vehicles available
on the dealer’s lot.
7. Rising cost of health care and
pension will effect the future
investment.
8. Toyota selling vehicles through E-
commerce (Gazoo.com).
9. Chinese auto firms gaining strength
and soon to enter in the US markets.
 RELATIVE MARKET SHARE (CASH GENERATION)

High 1.0 Medium .50 Low 0.0

High +20
INDUSTRY GROWTH RATE
(CASH USAGE)

Medium 0
Low -20

USA 49%
SA 4%
EU 21.4%
PAG 21%
ASIA 4.6%
CREDIT FINANCING 0.01%
 The internal-external Matrix

Ford credit Company Aston Martin

Volvo Mazda
Land Rover
Mercury

Jaguar
MotorCraft

VOLVO EFE ( 2.6) IFE (3.25)

MOTORCRAFT 2 3.25
MERCURY 2.5 3.25
FORD CREDIT COMPANY 3 3.25
AUSTIN MARTIN 3 2.3
JAGUAR 2.7 2.5
LAND ROVER 2.5 2.8
MAZDA 2.9 2.5
 Product Evaluation :
The company falls in 2nd quadrant of grand strategy matrix as its facing losses and its competitive
position has also been affected by new entrants in the automotive industry so it has weak competitive
position and the market growth is rapid. Consumer’s expectations had made the environment
competitive as on one hand it had provide a room for innovations but due to continuous rising prices
of raw material and gas prices and also the currency rate fluctuation, it has been difficult for the
firms to manufacture new models frequently.
As far as this current scenario is concerned appropriate strategies would be:

 Market Penetration:
Apply market penetration strategies globally.
A) sponsor events related to sports, entertainment etc.
B) Partnership with a television channel that will display ads of ford motors in different intervals.
C) Developing of Ford's Blog.

 Product Development:
A) Production of fuel efficient cars.
B) Production of Hybrid energy vehicles.

 Horizontal Integration:
Alliance with the competitors can be helpful to achieve competitive advantage by combining the
distinctive competencies of both the firms.
 CONSUMER SEGMENTATION AND CONSUMER
NEED

There are a variety of ways of segmenting the market for cars. Remember that market
segmentation should be focused on consumer groups and their needs, not on the class of car. It
means that classifying various types of cars such as sedans, people movers, convertibles, and
so on is NOT an acceptable approach to market segmentation. These types of cars are product
solutions designed to meet the needs of specific consumer segments.
In this market segmentation eq, seven different market segments have been identified.

 Just getting around

 Family needs
 I’ve made it
 Environmentally aware
 Second family car
 Quality matters
 Off roaders
  JUST GETTING AROUND

So Consumers in this particular market segment view cars as having a functional benefit only.
They do not perceive cars to be status symbols and do not see the value in paying extra for
quality inclusions, a bigger motor, or other surplus options. In their mind, car simply is a
transportation device they get you from point A to point B.
These consumers are highly interested in lower priced cars that represent good value for
money. Usually they attracted smaller vehicles without many additional options. They
generally quit price sensitive and attracted to special deals. They are likely to switch between
brands, as opposed to the other consumer segments.

 FAMILY NEEDS

This market segment consists of an established family with children still in the household. So
they need a larger, more comfortable car so that they can move their family.They attracted to
product features that benefit their family needs – such as, larger seating, drink holders,
entertainment units. Safety is also another important factor, as is reliability, and a brand of car
that is acceptable to the whole family.

 ENVIRONMENTALLY AWARE

So the emerging market segment consists of consumers who have taken environmental factors
into account in their purchase decision of a vehicle. They are concerned with the impact that
their car has on the natural environment.
This is the market that is attracted to hybrid or electric cars, or even smaller cars with a lower
level of fuel consumption. It is important that the brand of car has a reputation for being
environmentally concerned.

 SECOND FAMILY CAR

The second family car segment is a subset of the family needs market segment. This is for
families with both parents working, or with teenagers who are now driving.
They have similar needs to the other family segment, but because this is a second car primarily
for shorter travel, they are less interested in the comfort features. They are seeking a lower-
priced alternative for a larger vehicle without the added extras of options like entertainment
units.

 QUALITY MATTERS
This group of consumers will typically spend a little bit more on their motor vehicle purchase.
So they were looking for technically advanced cars that have the latest features, as well as
higher quality finishes throughout.
They differ from the “I’ve made it” market segment because they are less interested in the
status symbol of the brand, and are more focused on the product quality and features.

 OFF ROADERS

The final market segment in this example are those consumers seeking a vehicle for a
particular purpose, such as taking their vehicle off-road into difficult driving situations.So
these consumers enjoy off-road driving often as a social activity.
They are clearly looking for functional benefits to undertake this style of driving, as well as
safety and reliability benefits.
 COMPETITORS

 GENERAL MOTARS

 HONDA

 TOYOTA

GENERAL MOTARS
 Founded September 27, 1908
 Headquartered in Detroit

Conclusion
From the above analysis of all the matrices we suggest three alternatives but the analysis of QSPM
matrix one best alternative has been selected. As in grand strategy ford motors fall on second quadrant
it means that the firm should first go for intensive strategy. Hence the best selected alternative is
production of fuel efficient car, which is an intensive strategy.