Table of Contents

Contents

Page No.

Introduction

History

General Environment Analysis

S.T.E.E.P Framework
Industry Analysis
Porters Five Forces
The Competitor Environment
3 I Analysis
Internal Company Analysis
Capabilities
Core Competencies

4
4
6
6
9
9
10
10
11

SWOT Analysis

13

Value Chain Analysis

14

Financial Analysis

25

Corporate Level Strategy

27

Business Level Strategy

29

Functional Level Strategy

32

Strategic Analysis
4P Framework

37
37

Recommendation

40

Conclusion

41

Page 1 of 41

Introduction
The Ford Motor Company is an American multinational automaker headquartered in Dearborn,
Michigan, a suburb of Detroit. It was founded by Henry Ford and incorporated on June 16, 1903.
The company sells automobiles and commercial vehicles under the Ford brand and most luxury
cars under the Lincoln brand. Ford owns a 2.1% stake in Mazda of Japan, an 8% stake in Aston
Martin of the United Kingdom, and a 49% stake in Jiangling of China. It also has a number of
joint-ventures, two in China (Changan Ford Mazdaand Ford Lio Ho), one in Thailand (Auto
Alliance Thailand), one in Turkey (Ford Otosan), and one in Russia (Ford Sollers). It is listed on
the New York Stock Exchange and is controlled by the Ford family, although they have minority
ownership. It is described by Forbes as "the most important industrial company in the history of
the United States."
Ford introduced methods for large-scale manufacturing of cars and large-scale management of an
industrial workforce using elaborately engineered manufacturing sequences typified by
moving assembly lines; by 1914 these methods were known around the world as Fordism. Ford's
former UK subsidiaries Jaguar and Land Rover, acquired in 1989 and 2000 respectively, were
sold to Tata Motors in March 2008. Ford owned the Swedish automaker Volvo from 1999 to
2010. In 2011, Ford discontinued the Mercury brand, under which it had marketed entry-level
luxury cars in the United States, Canada, Mexico, and the Middle East since 1938.
Ford is the second-largest U.S.-based automaker (preceded by General Motors) and the fifthlargest in the world based on 2010 vehicle sales. At the end of 2010, Ford was the fifth largest
automaker in Europe. Ford is the eighth-ranked overall American-based company in the
2010 Fortune 500 list, based on global revenues in 2009 of $118.3 billion. The company went
public in 1956 but the Ford family, through special Class B shares, still retains 40 percent voting
rights.

Page 2 of 41

History
Ford Motor Company was established by a visionary and revolutionary entrepreneur named
Henry Ford in 1903. The initial operation of Ford was in Dearborn, Michigan, USA. Henry Ford
is popular for his practices that were unique in those days as he believed in revolutionary ideas
and building revolutionary leadership. He practiced worker friendly policies, innovative methods
of large scale car manufacturing and management of huge workforces. He designed a unique
mechanism of flexible assembly lines with interchangeable parts that ensured that same parts can
be fitted in multiple models of the products. In 1911, the first production unit outside the USA
was established in the UK by Henry Ford. In the UK itself the famous Dagenham facility was
established in 1920 that formed the base for launch of Ford Motor Company Limited (UK) in
1929.

In 1971 Ford consolidated the operations in entire North America by combining the operations of
United States, Canadian and Mexican operations together. Ford has been known f or their world
famous Model T and the innovation of interchangeable parts in moving assembly lines that
make it possible to use same parts in multiple models while assembling cars.

Ford owned the Lincoln, Volvo, Mercury, Mazda and Aston-Martin brands in the US and the
world famous British motor brands Jaguar and Land Rover in the UK. Later on, a centralized
system was established which did achieve cost cutting in many ways but narrowed down the
focus of Ford to the US and European markets that already were in the process of stagnation.

Page 3 of 41

General Environment Analysis

S.T.E.E.P Framework:

Criteria

Impact

Description
1. Cars are viewed as a status symbol. The brand
choice of a car influences the way a person is apparent
by the public.

Social

Positive

2. Women drivers and cars for women attract many

conventional view points. Ford has stated that a man
cannot be expected to design a car for a woman, since
a man will not fully understand their needs and wants.
For this reason we have women designers to design
cars for women (Ford, 2005). This provides Ford with
a competitive edge in attracting women drivers to
purchase their cars.

1. Ford are said to be pioneers in force-controlled

robots for their transmission assemblies, allowing
them to have a competitive edge and to reduce costs
incurred per vehicle.

Technological

Moderate

2. According to environmental studies, petrol in the

world is anticipated to finish within the next 50 years
(BBC, June 2004). Firms in the automotive industry
must develop cars that use other means of energy in
order to survive in the future.
3. Many of the famous car manufacturers have had
problems with the servicing of their cars. Ford has
recently been involved in a tires scandal costing $2
billion, Chrysler recalled cars due to faulty locks and
Toyota in November had to recall cars due to corrosion
of car parts (BBC, November 2005). Technology is
necessary to ensure the quality of finished vehicles.

Page 4 of 41

1.Hurricanes in the US have caused the oil prices to

rise

Environmental

Negative

2. Due to global warming and the carbon dioxide

gasses emitted from vehicles the public may seek
public transport in an attempt to protect the
environment.
3. Petrol is estimated to finish within the next 50 years.

1. Rising petrol prices make it more expensive for

consumers to drive petrol fuelled cars.

Economical

Negative

2. Fords SUVs (Sport Utility Vehicle) sales declined

due to rising gasoline prices, in turn their share prices
also declined (Reuters, 2005)
3. The rise in the demand for Japanese cars which
consume less petrol than most American cars. So the
companies have had a negative impact of this as the
demand for their cars decreased.

1. The 9/11 terrorist attack had decreased the sales of

many car manufacturing companies; specially Fords
sales went down 10% due to this incident.

Political/
Governmental

Negative

2. The economic recession in Argentina in 2002

adversely affected car sales in Argentina, production
volume fell from 57,200 units to 31,000 units.
3. The Iraqi war affected Ford negatively as their US
sales declined by 7% (Ford Annual Report, 2003). The
war has had a similar affect on other firms operating in
the industry also.
4. The United Nations World Forum for Harmonization
of Vehicle regulations introduced a global technical
regulation in 2004 regarding door locks for vehicle
safety, which manufacturers must abide by.
Page 5 of 41

S.T.E.E.P Framework at a glance:

Social

Positive

Political

Technological

Negative

Moderate

Economical
Negative

Environmental
Negative

Industry Analysis
Porters Five Forces:
Porters 5 forces framework is used for strategic industry analysis. It was developed in 1979 by
Michael Porter, Harvard Business School professor. Michael Porters five competitive forces can
be used to examine and analyze the competitive structure of an industry by looking at 5 forces of
competition that influence and shape profit potential. Porters five forces of competition have
become a central concept to business theory.

Page 6 of 41

Analyzing Competitive Structure of Ford using this tool:

Bargaining power of buyers High:
Comparatively smaller number of buyers because of the current economic
condition compared to the number of car manufacturers.
Consumers keeping their automobiles for longer period of times.
High competition in the industry with companies offering similar products
with minority differences.
Consumers are getting more interested in cars that are cheaper to run in
the long term.
Bargaining power of suppliers- Low:
Supplier bargaining power is relatively low for the industry as suppliers
provide certain components necessary for the production of vehicles and
also spare parts for future repairs.
Firms are now reducing their number of suppliers and increasing their
orders from the existing suppliers; thus the competition among the
suppliers is increasing and suppliers are reducing their prices as well as
offering financial incentives.
Threat of rivalry High:
The competition is extremely big in the industry. The order of the industry
leaders is frequently changeable depending on the demands of the
companys products and services.
Different companies are now providing different types of incentives to
attract new customers and to hold back their existing customers.
The number of companies is increasing and this increase is relatively
higher than the increase in cars demand, so a large number of companies
are now fighting for the existing demand.
Due to the price incentives provided by the Japanese car manufacturers,
US car sales declined by 14% in the year 2005 and this is going on till
now.
Page 7 of 41

Threat of substitutes- Low:

Threat of substitute is still low for the car industry. Though people are
now using bicycles and other eco friendly options, car is the first choice
when it comes to private vehicles.
If the future companies invent any formula of using other forms of energy,
then that may possess a future threat for the existing manufacturers.
Again the rise of online modalities reduces the need for extra vehicles.
Barriers to entry- High:
As the existing firms are already very much reputed, there is a significant
barrier to entry in this industry.
Most of the companies already have a very well set up distribution channel
posing a huge barrier to the new entrants.
Due to environmental and technological factors, the car manufactures have
to invest a huge sum of money in R&D which is considerably difficult for
the new comers.
Many of the existing companies in the industry are joining forces which
double the difficulty to enter this industry. For example: The profitable
components of Rover were purchased by BMW and Ford and thus, later
on in the year 2005, Rover became bankrupted.

An overview of Porters five forces:

Market Forces

Degree of threats

Condition

Bargaining power of buyer

High

Unfavorable

Bargaining power of supplier

Low

Favorable

Threat of rivalry

High

Unfavorable

Threat of substitute

Low

Favorable

Barriers to entry

High

Favorable

Page 8 of 41

The Competitor Environment

3 I Analysis
Immediate competitors:
Ford Motor Company is one of the US's leading automobile companies. Ford owns a small stake
in Mazda and operates about 65 plants worldwide. The company gets more than half of its
sales from North America. The immediate competitors of this company are the ones having the
closest market share compared to Ford. The main competitors of Ford motor company are:

Chrysler group LLC

General Motors Company

Toyota

Impending competitors:
Impending competitors are the ones who do not potentially possess any threat to them but they
may possess a huge threat to them in the near future if they can assure more market share for
themselves. As Japanese automobiles have recently entered the automobile industry, they can
posses a huge threat in future because of their sleek design and low cost. Some of the impending
competitors of Ford motor company are:

DAIHATSU

Subaru

Hino

Invisible competitors:
Invisible competitors are the ones who do not posses any direct or indirect threat to the company;
rather they may possess threats in future. For example: the rise in online transactions, online
marketing and e commerce has made it easy to do a lot of works from home which can decrease
the demand of extra private vehicles in the near future.
In the other hand, Google Corp. is trying to launch their very own robot cars which are yet being
tested for safety and security. If such cars get permission of being launched, that may possess a
threat for the existing companies.
Page 9 of 41

Internal Company Analysis

Capabilities:
Leadership development: Ford has been standardizing, simplifying and integrating
talent-management processes; implementing global competency frameworks; and
enhancing leadership development programs for experienced managers. They have
fostered a flexible and safe working environment in which people are respected and
valued for the work that they do.
All employees at Ford are encouraged to invest in their own professional development by
developing an Individual Development Plan, or IDP, to help them meet current and future
goals while maximizing performance in their current assignments. Using the IDP,
employees work with their managers to help them identify strengths and areas for
improvement, and then create customized plans for their individual developmental needs.
Developing future talent: Through partnerships with the Ford Fund and the community,
ford actively supports programs that build STEM skills. They are also developing their
own programs targeted at students along the education pipeline. For example:

Ford PAS (partnership for advanced studies: The Ford PAS program mobilizes educators,
employers and community leaders to create a new generation of young people who will
graduate from high school to be both college- and career-ready.

Ford HSSTP (high school science and technology program) : The HSSTP is designed to
raise awareness among high school students about technical careers and demonstrate the
importance of science and math in industry.

Supply chain sustainability: Fords suppliers are critical allies in helping the Company
to achieve success in the marketplace and meet sustainability goals. Within Ford's
Purchasing organization, the Supply Chain Sustainability Department may develop and
implement strategy for engaging with suppliers on sustainability issues in the future.

Page 10 of 41

 Business integration: As part of its mandate to integrate sustainability considerations to

the business, the Supply Chain Sustainability Department coordinates training on supply
chain sustainability. This includes e-learning for the entire global Purchasing
organization as well as in-person workshops for Ford Purchasing personnel and quality
engineers that work directly with all-risk markets.
Strategic suppliers: Since 2005, Ford has been taking steps to rationalize and streamline
their supply base through a strategic supplier strategy called the Aligned Business
Framework (ABF). The strategy is designed to create a sustainable business model to
increase mutual profitability, improve quality and drive innovation.
Extended Supply Chain and Sustainable Raw Materials: Ford has a long history of
seeking to use sustainable materials in our products and source from suppliers that
demonstrate sustainable business practices, including respect for human rights and the
environment. The majority of what they buy is parts and assemblies directly used in
vehicles.

Core competencies:

Innovation in technology and procedures like virtual assembly line, single supplier
method, centralized global risk management etc.

One of the top leaders of CSR in the whole world.

Repeatability of technologies as some of the spares and parts can be used for multiple
models. These are termed as virtual assembly lines.

Excellent engineering and production workforce possessing global competencies as

well as capabilities of localization of products in respective countries.

The ECOnetic initiative: Fords ECOnetic initiative is an effort to produce highly fuelefficient engines by improving existing engines rather than new hybrid engines. The
result of this initiative is the Ford Fiesta, currently the lowest emitting mass-produced
car in Europe and Ford Focus ECOnetic that has better fuel consumption that Toyota
Prius.
Page 11 of 41

Ford produces 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.

Successful restructuring plan named The Way Forward which was basically designed
to reverse their $1.6 billion loss.

Increased profitability by improving its cost structure, introducing new products,

strengthening its balance sheet and operating as a single global team.

Huge investment to design, engineer, manufacture key components for its hybrid, plug
in hybrid and battery electric vehicles which brings battery and hybrid transmission
production in house and creates a huge number of jobs every year.

Another core competency of Ford motor company is that it focuses on its product
development technology under a single product-information-management program
through standardizing and incorporating them.

They have a highly coordinated logistics system handled by outsourced firms leading to
excellent inventory management and on schedule production activities.

Fords business is driven by their consumer focus, creativity, resourcefulness and

entrepreneurial spirit.

Page 12 of 41

SWOT Analysis of Ford Motor Company

Strengths

First company having specialized large

scale management system
one of the largest automaker in US and
the whole world
Strong presence in the global market
Huge investments in R&D
Significant growth in Chinese market
Massive and successful Restructuring
plan ( The way forward)
Strong executive leadership team
High employee productivity
ECOnetic initiative
One FORD approach

Weaknesses

Opportunities

Positive attitude towards Green

vehicles
Engineering of fuel efficient Vehicles
like FORD Fiesta and Ford ECOnetic
models
Strategic partnership opportunities to
lower R&D cost
Changing of the industry structure and
emergence of new opportunities
Demand for cars is increasing as the
number of women drivers across the
world is increasing

Poor environmental record given by US

environmental protection agency and
linked with the emission of 42 toxic
chemicals
Unprofitable Europe operations
High cost structure compared to other
automobile manufacturers in the world
Decrease in stock prices in the last few
years
Struggled a lot to achieve a sustainable
growth in Chinese market
In an attempt to attract young
generation, Ford introduced baby
Jag. The effects of such an action
proved to be negative in damaging
Jaguars reputation, and is a weakness
for Ford
In 2002, Ford and Bridgestone
experienced a faulty tire scandal
resulting in a loss of 2 billion dollars

Threats

Emergence of Japanese and European

manufacturers
Rise in the prices of raw materials
Intense competition
Fluctuating exchange rate
Increase of Invisible competitors
Increase in the price of oil and the
possibility of the finishing of world
supply of fuels

Page 13 of 41

Value Chain Analysis

Value chain analysis (VCA) is a process where a firm identifies its primary and support
activities that add value to its final product and then analyze these activities to reduce costs or
increase differentiation. It looks at every step a business goes through, from raw materials to the
eventual end-user. The goal is to deliver maximum value for the least possible total cost.
VCA is a strategy tool used to analyze internal firm activities. Its goal is to recognize, which
activities are the most valuable to the firm and which ones could be improved to
provide competitive advantage. In other words, by looking into internal activities, the analysis
reveals where a firms competitive advantages or disadvantages are. The firm that competes
through differentiation advantage will try to perform its activities better than competitors would
do. If it competes through cost advantage, it will try to perform internal activities at lower costs
than competitors would do. When a company is capable of producing goods at lower costs than
the market price or to provide superior products, it earns profits.
VCA of Ford Motor Company:

Page 14 of 41

A. Product Planning & Design: This stage has far-reaching impacts throughout its value
chain, as it includes all major decisions about which products the company will make,
what technologies they will develop and implement, and how and where the products will
be made. Innovation and R&D play a key role in the companys ability to enhance
positive impacts and reduce negative impacts of their products and operations. They also
add indirect value and have indirect impacts at this stage based on the decisions they
make about products, manufacturing processes, manufacturing volumes, suppliers, etc.
Key Issues/Impacts:
Greenhouse gas (GHG)/fuel economy and other environmental regulations
Sustainability vision, governance and management
Waste generation and management
End-of-life management
Sustainable materials
Emerging market products and services strategy
Alignment of production with demand
Product competitiveness
Risk and cost management
Vehicle safety

Key Stakeholders:

Ford
Employees
Suppliers
Communities

B. Raw Materials Extraction: This stage can have significant impacts on the communities
where extraction occurs. Extraction creates value for raw material suppliers and local
communities through employment and other benefits. However, it also has significant
environmental and social impacts on local communities. Ford is working to reduce
negative impacts from extraction, including addressing issues relating to Conflict
Minerals, human trafficking and rare earth elements.

Page 15 of 41

Key Issues/Impacts:

Water strategy
Supply chain environmental sustainability
Sustainable materials
Global environmental regulation
Low-carbon strategy
Emerging market products and services strategy

Key Stakeholders:
Suppliers
Communities
Ford
C. Logistics/Transportation: This stage includes the transport of parts from Fords suppliers
to its manufacturing plants and of finished vehicles from the factories to dealerships. The
company creates value at this stage by providing business and jobs in the transportation
and packaging industries. They also work to reduce emissions and waste associated with
parts transportation and packaging. However, transportation causes impacts to local
communities and the environment, especially in the areas of emissions, waste, traffic and
road safety.
Key Issues/Impacts:
Low-carbon strategy
GHG emissions
Sustainability vision, governance and management
Key Stakeholders:

Suppliers
Ford
Employees
Communities

Page 16 of 41

D. Supplier Parts Manufacturing: Supplier parts manufacturing includes the companys

direct suppliers as well as multiple levels of suppliers who provide components to direct
suppliers. They add value at this stage by providing business to suppliers, which in turn
creates jobs, income and investment in communities. They also add value through
extensive efforts to improve the sustainability of the suppliers operations. The company
also generates indirect impacts at this stage, primarily in the form of environmental
impacts of parts manufacturing and social and economic impacts to local communities
based on changes in supplier base and production levels.
Key Issues/Impacts:

Supply chain environmental sustainability

Ethical business practices
Human rights in the supply chain
Environmental management
Supplier relationships
Water strategy
Supplier viability

Key Stakeholders:

Suppliers
Ford
Communities
Employees

E. Ford Manufacturing: Manufacturing at their own facilities is the heart of the business
and it is the value chain stage where they create the most direct value and impacts. They
create value at this stage through employment and investment in the communities where
they operate, and through continual efforts to improve the environmental performance of
their operations and to ensure human rights and excellent working conditions for their
own employees. The major impacts at this stage include the environmental impacts of the
manufacturing facilities, as well as the social and economic impacts of the plant
operations.

Page 17 of 41

Key Issues/Impacts:

Emerging market products and services strategy

Environmental management
Brand reputation/value
Innovation management
Emissions and pollutants
Sustainable mobility
Energy use/oil consumption
Health and safety

Key Stakeholders:
Ford
Employees
Communities

F. Sales: The sales stage includes the companys communications with customers about
their products and the work of their global dealer network. They add value at this stage
by providing customers with products that meet their needs and exceed their
expectations, and through the employment and investment generated by their dealerships.
Key Issues/Impacts:

Alignment of production with demand

Product competitiveness
Emerging market products and services strategy
Electrification strategy
Sustainable mobility
Low-carbon strategy
Cleaner vehicle technologies

Key Stakeholders:

Dealers
Ford
Customers
Investors

Page 18 of 41

G. Use: Most of the direct value and impacts of their products occur during the use stage,
when they are being driven by the customers. They add value at this stage by delivering
high-quality, fuel-efficient products. They generate indirect value by supporting the vast
network of businesses that benefit from vehicle use from fuel providers and road
builders to less-obvious beneficiaries such as the travel and tourism industry. They
generate impacts through the environmental and social impacts of their vehicles,
including tailpipe emissions and vehicle and road safety.
Key Issues/Impacts:

Vehicle GHG and other emissions

Global environmental regulation
Low-carbon strategy
Electrification strategy
Fuel efficiency/economy
Sustainable mobility
Cleaner vehicle technologies and fuels
Public policy engagement
Emerging market products and services strategy
Alignment of production with demand
Product competitiveness
Brand reputation/value

Key Stakeholders:
Customers
Ford
Communities

H. Service: Fords dealer network creates value and impacts through their network of
vehicle service centers. They generate direct value at this stage through the employment
and investment of dealership service centers, and by working to reduce the environmental
impacts of their service processes, such as recycling used parts. They add indirect value
by generating demand for replacement parts and other support services, which in turn
provide employment and economic benefits.

Page 19 of 41

Key Issues/Impacts:

Sustainable mobility
Quality
Brand reputation/value
Dealership network viability

Key Stakeholders:
Dealers
Ford
Customers

I. End of Life: Fords vehicles have impacts and value even after they are done with their
useful driving life. They generate indirect value at this stage by supporting the vehicle
dismantling, recycling and disposal industries. 95% of the materials in their vehicles can
be recycled or reused. These vehicles also have impacts at end of life primarily in the
form of waste production.
Key Issues/Impacts:

Hazardous pollutants
Emerging market products and services strategy
Risk and cost management
Waste generation and management
Sustainable materials
End-of-life management

Key Stakeholders:
Recyclers
Ford
Communities

Page 20 of 41

Primary Activities:
i.
Research & Development (R&D): Ford targets to get competitive advantage by
investing vastly in R&D. By the end of 2007, Fords R&D budget was second biggest
in the world. In 2012, Ford announced plan to open a R&D center in Californias
Silicon Valley, the heart of the IT industry. Ford Motor Company hopes to build
partnerships with Silicon Valley companies in order to exploit new technologies
including seamless connectivity and cloud computing. The Dunton Technical
Center, owned and operated by Ford, is the largest automotive R&D facility in UK.
Its also expanding its R&D operations in China which would help Ford anticipate
and react faster to consumer and market changes in China.

ii.

Production: At first, the components supplied by more than 4,000 outside suppliers,
including company-owned parts suppliers, are brought together for assembly, usually
by truck or railroad. Those parts that will be used in the chassis are delivered to one
area, while those that will comprise the body are unloaded at another. The typical car
or truck is constructed from the ground up (and out). The frame forms the base on
which the body rests and from which all subsequent assembly components follow.
The frame is placed on the assembly line and clamped to the conveyer to prevent
shifting as it moves down the line. From here the automobile frame moves to
component assembly areas where complete front and rear suspensions, gas tanks, rear
axles and drive shafts, gear boxes, steering box components, wheel drums, and
braking systems are sequentially installed. Then an off-line operation at this stage of
production mates the vehicle's engine with its transmission. Workers use robotic arms
to install these heavy components inside the engine compartment of the frame. On
automobile assembly lines, much of the work is now done by robots rather than
humans. In the first stages of automobile manufacture, robots weld the floor pan
pieces together and assist workers in placing components such as the suspension onto
the chassis. Generally, the floor pan is the largest body component to which a
multitude of panels and braces will subsequently be either welded or bolted. As it
moves down the assembly line, held in place by clamping fixtures, the shell of the
vehicle is built. The front and rear door pillars, roof, and body side panels are
assembled in the same fashion.
Page 21 of 41

The shell of the automobile assembled in this section of the process lends itself to the
use of robots because articulating arms can easily introduce various component
braces and panels to the floor pan and perform a high number of weld operations in a
time frame and with a degree of accuracy no human workers could ever approach. As
the body moves from the isolated weld area of the assembly line, subsequent body
components including fully assembled doors, deck lids, hood panel, fenders, trunk lid,
and bumper reinforcements are installed. Although robots help workers place these
components onto the body shell, the workers provide the proper fit for most of the
bolt-on functional parts using pneumatically assisted tools.

iii.

Marketing & Sales: One important goal of Fords marketing and communications
activities is to increase consumers knowledge of their products and their corporate
performance. The company particularly focused on improving consumers awareness
of the companys quality, safety, environmental and social performance. They use a
wide range of communication methods to share information about Ford with potential
customers and to get feedback from drivers. Ford was the first automaker to reveal
vehicles via social media. They have been an innovator in this space by launching and
publicizing vehicles through programs like Escape Routes, a campaign that combined
social media and a primetime television reality show, and Fiesta Movement, an
ongoing campaign using real Fiesta drivers as agents who fulfill special missions
with their Fiestas each month and report on those missions through social media
channels. They continued the Fiesta Movement program to support the launch of the
2014 Fiesta. Through this program, social advocates created over 14,000 pieces of
content, delivering information to more than 3 billion potential users.
The sales stage includes the companys communications with customers about their
products and the work of their global dealer network. They add value at this stage by
providing customers with products that meet their needs and exceed their
expectations, and through the employment and investment generated by their
dealerships.

Page 22 of 41

iv.

Customer Service: Fords dealer network creates value and impacts through their
network of vehicle service centers. They generate direct value at this stage through
the employment and investment of dealership service centers, and by working to
reduce the environmental impacts of their service processes, such as recycling used
parts. They add indirect value by generating demand for replacement parts and other
support services, which in turn provide employment and economic benefits.
According to a study conducted by TrueCar.com, younger buyers are more satisfied
with the customer service of Asian Brands compared to the US manufacturers. So
Ford is seeking to significantly increase their customer bases by providing better
customer service.

Support Activities:
Human Resource: Ford Motor Companys HR function ensures that the company has

the right combination of skilled people to perform its value creation activities
effectively. Its goal is to build a team of people who possess strong consumer
instincts and innovative ideas, who draw strength from diversity and who can deliver
the performance needed to compete in global marketplace. The HR team acts as an
advocate of the employees to motivate them and create a happy working
environment. For the organizational changing situation, HR executes the strategic
needs of the organization with minimum employee dissatisfaction and resistance to
change. HR of Ford offers opportunities in labor relations, business operations,
compensations, benefits, workforce planning and recruiting and personnel relations.
Last year the company won the 2013 China Best Human Resource Management
(HRM) Companies award, bringing much-deserved recognition to the team who has
worked diligently to develop an integrated approach to talent management.
Information Technology: At Ford Motor Company, its Information Technology team

enables manufacturing facilities to receive parts just-in-time, customers to check the

status of their vehicles online, and empowers employees to facilitate the sale of
millions of vehicles. IT has a renewed focus on leveraging technology for the benefit
of Ford and its consumers. Critical to Fords success is the transformation of Fords
IT capabilities into an in-house knowledge base from which to build the companys
strength.
Page 23 of 41

The IT team of Ford is organized by:

Application Development

IT Security & Strategy

Global Information Technology Operations

Americas IT Business Operations and Enterprise Programs

Global Product Creation Systems

Ford Motor Credit Company IT Operations

Ford of Europe IT Business Operations

Asia Pacific and Africa IT Operations

Materials Management: For many years, Ford has had a Restricted Substance
Management Standard (RSMS), which was developed to reduce and eliminate the use
of substances of concern in our vehicles and plants. The first of its kind in the
industry, this standard was originally developed to address both regulated substances
and materials Ford voluntarily chose to eliminate from our vehicles and plants. The
RSMS process is embedded in Fords Global Product Development System, our
company-wide vehicle design and production system. We use a set of processes and
tools to assist us in communicating materials- and substance-related requirements to
suppliers, and in tracking the materials and substances that they use in the parts they
manufacture. These tools include the Global Material Approval Process (GMAP),
which handles all materials processed in Fords plants; Global Material Integration
and Reporting (GMIR), a materials tracking tool for our engineers and suppliers; and
the International Material Data System (IMDS), a reporting system used by multiple
automakers and all tiers of suppliers. To further help our suppliers manage their
materials and substance data Ford developed and launched the GMIR. Through the
GMIR Supplier Portal, Ford lists all the parts that require reporting by suppliers; we
also list suppliers reporting and certification status. Thus the system allows every
supplier to monitor its reporting status and understand which parts are required to be
reported. This two-way communication helps clarify a very complex materials
management task and saves time and money for Ford and our suppliers.

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Financial Analysis
Financial analysis represents the profitability, liquidity and overall financial conditions of a
company. Here, we have represented the key ratios that analyze the financial situation of Ford
Motor Company. Some of the ratios focus on the companys performance whereas the others
help understand Fords position comparing to its competitors. Here, only the financial datas that
are represented in the case have been used.
Revenue and Net profit:

If we look at the revenue of Ford motor company, we can see that the Revenue was rising
consistently in the initial years, later on; it faced a decrease in 2006 and again increased in 2007.
From then on, the revenue decreased gradually till 2009 Due to the failure of certain operations.
Afterwards, the revenue again started increasing from the year 2010.

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The net profit margin started to increase till 2004 and then again it decreased gradually from
2004 to 2006. From the year 2006 to 2008, the net profit margin was zero for the company for
the huge losses it incurred during the failure of certain operations. From 2009, the ratio again
started increasing at a massive rate.
Sales and Market share:

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The sales figure of the USA market shows that Ford Motors is currently at the second position in
term of sales which means it is among the market leaders. The difference between the Ford and
the market leader GM is also considerably low which again indicates fierce competition between
these two giants.

The Market share graph indicates that Ford had the second highest market share in the USA
automotive industry and is considerably close to the highest shareholder General Motors in 2011.
The percentage of shares of this company also indicates its strong financial condition in the US.

Corporate Level Strategy

Market Development: As the demand for vehicles fell in the US, Ford and other automakers
took steps to increase their presence in the international markets. Ford has been trying to
expand its business throughout the emerging markets of China and India. It has
manufacturing plants located in India and China and according to Alan Mulally, Former
President and CEO of Ford, their recently announced aggressive plan to increase its presence
in these markets will deliver profitable growth in the future.

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 Product Development: After becoming the CEO of Ford in 2006, Alan Mulally emphasized
greatly on product design, research and development. Alan realized that if Ford had fewer
models, they could put more focus into improving the quality of engineering. So Ford
reduced its lineup to as few as 20 models by 2010. To reduce cost and improve quality,
component specifications for each product is simplified and standardized. Because of Fords
successful R&D, the Ford F Series pickup truck was the best selling truck in USA in 2010.
It launched 24 new or redesigned vehicles in 2010 in key markets around the world.
Single Business Strategy: Ford is solely engaged in producing automobiles. All their
revenue comes from this one line of business. So its apparent that they are following single
business strategy.
Vertical Integration: Henry Ford, the founder of Ford Motor Company, believed he could
manage the entire supply chain more efficiently within his own organization. So he
implemented assembly line manufacturing process and vertically integrated supply chain
which resulted in increase in sales and decrease in price from 1910 to 1916. For the
production of Model T cars, they mined iron ore from the company-owned pits. Ore was
transported using Ford ships and tractors and also unloaded using Ford cranes. Then they
made steel plates in Ford steel mills from which Model T was built in Ford factories. All
these show that they have been following backward vertical integration since its humble
beginning. Moreover, the Ford motor credit company provides automobile loans and offers
leases to car buyers, as well as business loans and lines of credit to dealerships selling Ford
products in support of its parent company. It also issues commercial papers and other debt
instruments on behalf of Ford. So basically Ford Motor Company has become its own
supplier as well as distributor, thus achieving Forward and Backward Vertical Integration
at the same time.

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Business Level Strategy

When Henry Ford thought of starting a business of manufacturing automobiles, cars were
considered luxury items that only the wealthy could afford. But he believed that if he could make
these vehicles affordable to the general public, they had the potential to transform the society. So
he had the idea in his mind right from the beginning of manufacturing cars at the lowest possible
cost but by maintaining highest standard. As the company began to expand, the people who ran
(or still running) the business didnt forget to offer unique value to their customers by producing
differentiated products. So the two main sources of competitive advantage for Ford have been
cost

and

differentiation.

Hence

the

company

is

following

Integrated

Cost

Leadership/Differentiation Strategy.

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3 things which are providing flexibility that are useful for this strategy are: FMS, Information
Network and TQM.
(i)

Flexible Manufacturing System (FMS): In the manufacturing plants of Ford,

computer-controlled processes are used to produce a variety of products in flexible
quantities with a minimum of manual intervention. This system has allowed the
company to simplify and standardize component specifications which has resulted in
reduced cost and better quality.

(ii)

Information Networks: Ford has a well-established network with their suppliers,

distributors and customers. They try to satisfy customer expectations in terms of
product quality and delivery speed through their strong information network. It also
helps to improve flow of work among their employees. During 2007, Fords
innovative Customer Relations Programs increased owner satisfaction and provided
20% growth in annual savings. For example: their self-service websites with
intelligent Q&A provide real time answers to customers and dealer questions.
Analysis of car-related blogs helps Ford gather customer feedback and assess
customer satisfaction.

(iii)

Total Quality Management (TQM): According to ISO, TQM is a management

approach of an organization centered on quality, based on the participation of all its
members and aiming at long term success through customer satisfaction and benefits
to all members of the organization and society. TQM techniques that Ford Motor
Company has been using are Six Sigma, Quality Operating System, 5S and DMAIC
(Define, Measure, Analyze, Improve and Control) process.

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Competitive Positioning and Value Creation Frontier:

As Ford Motor Company is following the integrated cost leadership/differentiation strategy,

its in the middle portion of the value creation frontier. By providing quality products which
have gained reliability of the customers, the company has successfully positioned itself into
Responsiveness to Customers segment.

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Functional Level Strategies

Strategies for
Efficiency

Strategies for
Innovation

Strategies for
Quality

Strategies for
Customer
Responsiveness

Sophisticated Management System

Implementing Restructuring Plan
Change in Geographic Mix of
Volume
Change in Product Segmentation

ECOnatic Initiative
Huge Investment in R&D
Usage of force-controlled robot
Development of Intelligent Vehicle
Technology
Focusing on Safety Innovations

ONE Ford Approach

Simplification and Standardization
of Component Specifications
Managing the entire supply chain to
maintain high quality

Value is created
through
Differentiation and
Low Cost which lead
to Superior
Profitability

Designing Self-Service Website for

Customers
Analyzing car-related blogs
Responding towards women
drivers needs

An overview of Fords Functional Level Strategies

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Strategies for Efficiency:

i.

Sophisticated Management System: Right from the beginning, Ford Motor Company
has been choosing its management team very carefully. After the 2 nd World War, a
sophisticated management system was created by hiring a group of ten former US
Army Air Force officers. This group was known as the Whiz Kids and they brought
quantitative analysis and the science of modern management to Ford Motor
Company. This type of management strategies helped Ford to recapture the 2nd
position in US market in 1950.

ii.

Change in Geographic Mix of Volume: To operate more efficiently in the

international market, the company keeps changing geographic mix of volume. The
company expects that the market of Asia Pacific and Africa would exceed overall
industry growth in the near future.

iii.

Change in Product Segmentation: Ford keeps changing its product segmentation to

make sure they are meeting the customer needs all over the world. According to their
strategy, the small vehicle mix will continue to grow, while large vehicles including
trucks remain important.

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Strategies for Innovation:

ECOnetic Initiative: Fords ECOnetic initiative is an effort to produce highly fuelefficient engines by improving existing engines rather than new hybrid engines.
The result of this initiative is the Ford Fiesta, currently the lowest emitting massproduced car in Europe and Ford Focus ECOnetic that has better fuel
consumption that Toyota Prius.

Huge Investment in R&D: Ford is one of those companies which believe huge
investment in R&D can give them an exclusive competitive advantage. By the
end of 2007, Fords R&D budget was second biggest in the world. In 2012, Ford
announced plan to open a R&D center in Californias Silicon Valley, the heart of
the IT industry. Ford Motor Company hopes to build partnerships with Silicon
Valley companies in order to exploit new technologies including seamless
connectivity and cloud computing.

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Ford's research and development expenditures from 2007 to 2012 (in billion U.S.
dollars):

Usage of force-controlled robot: Ford are said to be pioneers in force-controlled

robots for their transmission assemblies, allowing them to have a competitive
edge and to reduce costs incurred per vehicle.

Development of Intelligent Vehicle Technology: Ford has invested heavily in the

development of premium technology to better serve its customers. For example:
Ford Work Solutions is a collection of affordable technologies that provide
connectivity, flexibility, visibility and security for truck and van customers.
Another technology is Tool Link which is an asset tracking system for customers
to maintain real-time inventory of tools and equipment in the vehicles.

Focusing on Safety Innovations: Ford continues to focus on safety innovations

such as inflatable seat belts and Curve Control. Curve Control is a technology that
rapidly reduces engine torque and applies four-wheel braking to slow the vehicle
by up to 10 mph per second when it senses a driver is entering a curve too
quickly.

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Strategies for Quality:

i.

ONE Ford Approach: After taking over as President and CEO of Ford, Alan Mulally
developed the ONE Ford business transformation plan designed to create a leaner,
more efficient global enterprise by delivering high quality products and services. An
overview of the ONE Ford plan is given below:

ii.

Simplification and Standardization of Component Specifications: Alan Mulally

believed that the company could improve the quality of engineering if component
specifications for each product were simplified and standardized. By following this
strategy, the Ford Fiesta model had standardized an average of 65% of its parts in by
2010. Within 4 years of working as the CEO, Alan Mulally reduced the number of
models from 97 to 20. He said, Fewer brands means you can put more focus into
improving the quality.

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iii.

Managing the entire supply chain to maintain high quality: Henry Ford, founder of
Ford Motor Company, believed that the entire supply chain could be managed more
efficiently within the organization. Thats what Ford has been doing since its startup
and it has given the company a competitive advantage.

Strategies for Customer Responsiveness:

i.

Designing Self-Service Website for Customers: Ford has taken steps to streamline
and improve customer care using Web-based tools and other high-tech devices that its
customers expect from a leading-edge car manufacturer. With the help of Cisco, Ford
has come up with Self-service Websites with intelligent Q&A that provide real-time
answers to customer and dealer questions.

ii.

Analyzing car-related blogs: To gather customer feedback and assess customer

satisfaction, the company carefully analyzes different car-related blogs on a regular
basis.

iii.

Responding towards women drivers needs: According to Ford, A man cannot be

expected to design a car for a woman, since a man will not fully understand their
needs and wants. For this reason we have women designers to design cars for
women. This provides Ford with a competitive edge in attracting women drivers to
purchase their cars.

Strategic Analysis
4P Framework:
Position
Mission Statement: ONE Ford, ONE Team, ONE Plan, ONE Goal

ONE Ford: ONE Ford expands on the companys four-point business plan for
achieving success globally. It encourages focus, teamwork, and a single global
approach, aligning employee efforts toward a common definition of success and
optimizing their collective strengths worldwide.

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ONE Team: ONE Ford emphasizes the importance of working together as one
team to achieve automotive leadership, which is measured by the satisfaction of
our customers, employees, and essential business partners such as dealer,
investors, suppliers, and unions/council. And communities.

ONE Plan: The Companys four point plan consists of balancing our cost
structure with our revenue and market share; accelerating development of new
vehicles that customers want and value; financing our plan and rebuilding our
balance sheet; and working together to leverage our resources around the world.

ONE Goal: The goal of ONE Ford is to create an exciting and viable company
with profitable growth for all.

Values: Our business is driven by our consumer focus, creativity, resourcefulness, and
entrepreneurial spirit. We are an inspired, diverse team. We respect and value everyone's
contribution. The health and safety of our people are paramount. We are a leader in
environmental responsibility. Our integrity is never compromised and we make a positive
contribution to society. We constantly strive to improve in everything we do. Guided by
these values, we provide superior returns to our shareholders.
Vision: To become the world's leading consumer Company for automotive products and
services.
Priorities

Aggressively restructure to operate profitably at the current demand and the changing
model mix.

Accelerate the development of high quality, fuel efficient, safe new products that
customers want and value.

Finance the plan and improve the balance sheet.

Work together as one team to leverage Fords global assets.

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Payments

Ford reduced its number of suppliers to create the Aligned Business Framework
(ABF) and entered into long-term agreement

Ford invested $135million to design, engineer, and manufacture key components for
Hybrid, plug in hybrid, and battery electric vehicles.

Heavy investment in R&D

Ford heavily invested in development of premium technology.

Performance

In 2009, Ford had 2,717 million of net income, and 6,557 million in 2010 after an
extensive level loss in 2008.

In US market, Fords market share was 17.4% in June, 2010 and 18.4% in June, 2010
which was a steady upward growth and positioned as second after GM.

Recently in the year 2013, generated $146.9 billion in revenues and $1.76 per share in
net income, up from last year's $133.6 billion in revenues and $1.42 per share in net
income. It still holds one of the leading positions in USA automobile market.

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Recommendation

There is lot of scope for Ford to take advantage of the growing needs of public transports,
utility vehicles as well as other vehicles that may find their use in some other industries.
For example: Manufacturing public transports like buses and trucks to refrain from the
future threat of public vehicles that may outcast the demand of private vehicles. It can
also capture market by producing oil tankers for oil producing countries like Middle East
where it has not yet been recognized well.

The Middle East is a very big market where Ford has not yet established its presence. It
can start planning on expanding its sales in the Middle East.

The company in order to gain public favor in Asia and China may try to reduce its cost
structure for these countries as the customer base of these countries often look for low
price cars with longevity. Though Ford has already started launching low price cars like:
Ford Figo, Ford Fiesta, and Ford Fiesta classic, it still has not been able to go near Toyota
in the Asian region. So low cost can considerably increase its demand in these areas.

As fuel price continuously fluctuate hampering the general demand and growth of
automotive industry, Ford like other automobile manufacturing companies ( example:
Mitsubishi) can try to gain some share in the major oil manufacturing companies to tackle
uncertain fluctuation in oil price in the future.

According to environmental studies, petrol in the world is anticipated to finish within the
next 50 years (BBC, June 2004). So Ford should try to develop cars that use other means
of energy in order to survive in the future.

They should focus on the production of cheaper motor vehicles in masses for mass sales
rather than emphasizing more on luxury cars to offer a large market and to ensure safety
in the numbers.

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Conclusion
Ford is still facing formidable foreign competition in US including new entrants from China and
India. In addition, the economy remains weak and vehicle sales in the US and Europe remains
well below their historic highs. But the incident which has had the biggest impact on the
company is the resignation of Alan Mulally, who worked as the President of CEO of Ford from
2006 to 2014. Successful innovation in manufacturing process, product design, marketing
approach and business structure were all attained under Alan Mulallys leadership. But as he has
left the company and joined Googles Board of Directors, Mark Fields has been serving as the
CEO of Ford since July, 2014. Given the numerous challenges facing the auto industry and the
current global economic environment, Fords ability to survive without Mulally at this point is
viewed by many as questionable. So its a great challenge for Mark Fields, former chief
operating officer of Ford, to maintain quality standards while bringing new, innovative, energyefficient products to market.

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