1.

0 INTRODUCTION

Ford Motor Company was initiated in 1903 by Henry Ford who was passionate
with engineering and mechanics. Ford's first leap into the world of automotive
mechanics was in 1899 when he founded the Detroit Automobile Company. The
failure of Detroit Automobile Company led to the foundation of Ford Motor
Company on June 16. 1903.
Ford operates in two segments: Automotive and Financing. Products
offered include: Ford, Mercury, Lincoln, Volvo and Jaguar. The company is led by
CEO William Ford Jr. and employs over 246,000 people. It is headquartered in
Dearbon, Michigan and has a 13.8 percent market share of the auto industry as
of February 2009, as compared to 17.5 percent in 2007. The firms major
competitor in the United States is General Motors and Toyota.
Ford manufactures and distributes automobiles across six continents. The
company operates about 108 plants globally and produces such models as Ford,
Lincoln, Mazda, Mercury and Volvo. It has sold its Jaguar, Land Rover, and Aston
Martin businesses.
The company developed and implemented assembly line production by
the release of the Model T in 1909, and produced planes and vehicles for the
Allies in World War II. Ford has operated internationally since 1904, when it
opened a branch in Canada to gain access to Commonwealth markets. For the
first half of the 21st Century, Ford remained the dominant car manufacturer
within the market it had effectively created.
However, in 2006, Ford posted its biggest operating loss to date $12.6
billion. This coincided with continued decline in market share, with the majority
of these losses being captured by Toyota and General Motors. From 1997 to
2007, Fords United States market share plummeted from 25% to 15%. In 2006,
Alan Mulally was hired as CEO and took over a company at the precipice of
failure. Mulally announced a new restructuring plan in 2006 entitled The Way
Forward, designed to better align capacity to demand. At its core, this plan
involved the closure of seven assembly plants and strategic reorientation
towards One Ford. Championed by Mulally, this strategy focuses on creating a

standard Ford personality which is seen and felt within every automobile
produced by the company.

In addition, the plan entails standardizing chassis worldwide and a greater

focus on the core Ford nameplate. As a part of this plan, Ford mortgaged all of its
assets involving both physical and intellectual property in December 2006 for a
$23.4 billion line of credit. While originally seen as a risky and potentially
desperate move, this timely acquisition of capital has made Ford the most stable
of the Big Three carmakers. The company also divested some of its non-Ford
brands during this time, selling Jaguar and Land Rover to Tata Motors for $2.3
billion in 2008. Ford is also currently attempting to sell Volvo, which it purchased
in 1999 for $6.5 billion.
Since 2009, Ford Motor Company received $5.9 billion in Energy
Department loans to helps retools its plants in Illinois, Kentucky, Michigan, and
Ohio to produce 13-fuel efficient models, including 5000 to 10 000 electric cars
per year starting in 2011.
The success of Ford Motor Company was because of its strategy which
encompassed

new

way

of

manufacturing

called

mass

production,

advancements in technology, the supply chain and most of all changes in

lifestyle. Ford's personal motto, Help the Other Fellow affected the goals, work
environment and the corporate strategy of the Ford Motor Company.
In this report, we have come up with a strategic plan of action for Ford
for the next three years from 2010 to 2012 as the company is in financial
trouble. This is because of the global economic recession as consumer demand
for new autos has plummeted. Unavailability of credit and high unemployment
rate are among the factors that create the needs of a new strategic plan of
action for Ford to improve its financial performance.

2.0 FINANCIAL RATIO ANALYSIS

Growth per year over year
Years
Revenue
(%)
Operating
Income
(%)
Net
Income
(%)
EPS (%)

2005
3.17

2006
-9.58

2007
7.70

2008
-15.18

2009
-19.12

-29.85

N/A

N/A

N/A

N/A

-41.96

N/A

N/A

N/A

N/A

-39.31

N/A

N/A

N/A

N/A

The overall growth performance of the company does not handled easy. The
company suffers a huge decline of growth over the period of 2008-2009, and still
struggling after that, with a raise of minimum growth and suffer quite
considerable loss.
For the Fords growth ratio, the company plummeted to a declining rate, from
7.7% growth in revenue during the year 2007 to the loss of 15% in 2008 and
further loss in 19% over the year 2009. The severe loss may due to the global
recession of 2007-2009 that hit this United Stated-based automobile company.
Profitability Ratio
Margins %
of Sales
Revenue
COGS
Gross
Margin
SG&A
Operating
Margin
Net Int Inc

2005

2006

2007

2008

2009

100
81.85

100
92.97

100
83.07

100
88.17

100
84.54

18.15
13.92

7.03
11.98

16.93
12.28

11.83
14.65

15.46
11.21

4.23
-3.10

-4.95
-4.45

4.66
-6.83

-2.82
-7.02

-2.39
4.94

& Other
EBT
Margin

1.13

-9.40

-2.17

-9.85

2.56

For the profitability ratio, the company shows a stable yet fluctuate numbers on
the Earning before Tax Margin (EBT Margin).
25
20
15
10
5
0
2005
-5

2006

2007

2008

2009

2010

2011

2012

2013

2014

-10
-15
Gross Margin

Operating Margin

EBT Margin

From the graph depicted above in contrast between Gross Margin, Operating
Margin and EBT Margin, we see a mirroring pattern between them, fluctuates and
rises with mirroring image. We conclude that although the company suffer most
severe loss, the is no clear gap between this margin, and thus predicted that the
company is mostly stable, in performance alone and not economically.
Profitability
Tax Rate %
Net Margin %
Asset
Turnover
Return on
Asset %
Financial
Leverage
Return on
Equity %
Return on
Invested
Capital
Interest
Coverage

2005
N/A
1.14
0.63

2006
N/A
-7.88
0.58

2007
N/A
-1.58
0.62

2008
N/A
-10.03
0.59

2009
2.28
2.30
0.57

0.72

-4.60

-0.98

-5.90

1.32

20.80

N/A

49.62

N/A

N/A

13.96

-265.76

-251.78

N/A

N/A

4.33

-2.96

2.58

N/A

N/A

N/A

N/A

N/A

N/A

N/A

While most of the data are not available for analysis, the companys asset
turnover shown a little decline from 2007 to 2009, due to the problem of global
recession and its impact on entrepreneurship on US soil. Problems of foreclosure,
inflation and production problems may reduce the number of people buying
automobiles or using Fords services, thus reducing the profit that the asset can
generate.
As you can also see, the Return on Asset has also fluctuates during the period of
global recession, from a loss of 0.9% declining to a loss of 5.9%, and finally gain
by 1.32% during the period of 2007-2008-2009 respectively. With the loss
suffered from the previous two years (2007-2008), and the inactive state of the
assets, it is thought that the company incur a loss to the investor and the
stakeholder of the company during the period.
Financial Health
Balance Sheet Item
Total Current Asset
(%)
Total Assets (%)
Total Current
Liabilities (%)
Total Liabilities (%)
Total Stockholders
Equity

2005

2006

2007

2008

74.27
100

65.64
100

35.55
95.19

28.80
101.24

27.49
97.98

50.76
107.93

26.06
104.01

4.81

-1.24

2.02

-7.93

-4.01

63.80
100

2009
67.62

100

77.05
100

From the table above, we can observe the method of financing does the Ford
Company hold true. The main method of financing used by the company mostly
came from liabilities, such as loans. Since the company mainly operates on
liabilities, it is easily influenced by the condition of the market, reflected by the
amount of financing in 2007-2009 period, where they maxed out their financing
not only to cover for the operation of the company, but the equity of the
shareholders.
Liquidity / Financial
Health
Current Ratio
Quick Ratio
Debt/Equity

2005
2.09
1.64
11.91

2006
2.28
2.13
N/A

2007

2008

2.32
2.19
24.92

2009
1.33
1.25
N/A

2.96
2.85
N/A

The liquidity ratio of the company is surprisingly stable for a company that
fluctuates on the earning. Mainly due to the nature of the business as a producer
of American automobile, the company may have numbers of assets available to
be liquefied to cover for the short-term obligation.
Source: http://financials.morningstar.com/ratios/r.html?t=F
5

3.0 STRATEGIC POSTURE

Vision- To become the world's leading consumer company for automotive
products and services.
Mission- to be relevant and profitable for the future.
One team, one plan, one goal
One Team
People working together as a lean, global enterprise for automotive leadership,
as measured by:
Customer, Employee, Dealer Investor, Supplier, Union/Council, and Community
Satisfaction
One Plan
I.
II.
III.
IV.

Aggressively restructure to operate profitably at the current demand and

changing model mix
Accelerate development of new product our customers want and value
Finance our plan and improve our balance sheet
Work together effectively as one team
One Goal

An exciting viable Ford delivering profitable growth for all

Expected behaviours
Ford functional and technical excellence

Know and have passion for our business and our customers
6

Demonstrate and build functional and technical excellence

Ensure process discipline
Have a continuous improvement philosophy and practice

Own working together

Believe in skilled and motivated people working together

Include everyone; respect, listen to, help and appreciate others
Build strong relationship; be a team player, develop ourselves and

others
Communicate clearly, concisely and candidly

Role model Ford values

Show initiative, courage, integrity and good corporate citizenship

Improve quality, safety and sustainability
Have a can do, find a way attitude and emotional resilience
Enjoy the journey and each other; have fun never at others
expense

Delivery results

Deal positively with our business realities; develop compelling

and comprehensive plans, while keeping an enterprise view

Set high expectation and inspire others
Make sound decisions using fact and data
Help ourselves and account responsible and accountable for
delivering result and satisfying our customers

Goals
Nonfinancial Goals
Retain spot as global market leader with over 100 plants and 280
000 employees worldwide
Sustain probability and rank 1 US auto company
Enter and increase manufacturing in India to lower plant cost
Build efficiency through better logistics, distribution and control
Succeed at all implementation factors
Build awareness and increase sales of all Ford Hybrid automobiles
7

Financial Goal

Push industry hybrid sales to increase 10% annually

Current Strategy
Fords business strategy is embodied in the One Ford plan, which was adopted in
2007 and has guided the company ever since. One Ford expands on the
companys four-point business plan for achieving success globally. The four-point
business plan consists of the following:
I.

Aggressively restructure to operate profitably at the current demand and

changing model mix
Accelerate development of new products the customers want and value
Finance the plan and improve the balance sheet
Work together effectively as one team

II.
III.
IV.

Building on this plan, One Ford encourages focus, teamwork and a single
global approach, aligning employee efforts toward a common definition of
success. It emphasizes the importance of working together as one team to
achieve automotive leadership, which is measured by the satisfaction of all
customers, employees and essential business partners, such as the dealers,
investors, suppliers, unions/councils and the communities in which the company
operate. Ford has defined a set of behaviours that are expected of all employees
to support the One Ford plan.
The goal of One Ford is to create an exciting and viable company delivering
profitable growth for all. They are focused on building:

Great Products, a full family of vehicles small, medium and large; cars,
utilities and trucks with best-in-class quality, fuel efficiency, safety and

smart design;
Strong Business, based on a balanced portfolio of products and global

presence; and
Better World, accomplished through our sustainability strategy.

The company aims to have profitable growth across geographies and product
types.

One Ford has been implemented through the consistent use of processes at
the highest levels of the company for risk assessment, strategy development,
business planning and performance review.

The financial turnaround has been based largely on the companys ability to
deliver high-quality, innovative and desirable products everywhere it operates, in
both mature and rapidly growing markets. Ford had aligned their product
development, manufacturing and marketing organizations worldwide to deliver
the right products to the right markets as efficiently as possible.
In all vehicles and regions, Fords global vehicles showcase its commitment
to sustainability. Technologies like EcoBoost, direct injection of gasoline or
diesel fuel, six-speed transmissions, and hybrid and plug-in hybrid powertrains
deliver choice to drivers everywhere.
Ford is continuing to implement the One Ford plan. But it also Go Further
to deliver ingenious products, make them available to everyone, and serve each
other, our customers and our communities. Go Further is Fords d global brand
promise and their approach as it accelerates ahead.
Current Policy
Ford company policies
1. Human Rights
This is the basic working conditions and corporate responsibility, which forms the
foundation for work within the operations and Ford supply chain. This code
articulates our commitments on key human and labor rights issues.
2. Diversity
This policy are about to increase the diversity in work force. In Ford, all
opportunity are equal in all aspect in business. Provide a broad work
environment in which different ideas, perspectives and beliefs are respected.

3. Bribery and Corruption

Ford Company are fully comply with the law in the company that they do
business. Which there are no bribery and corruption in the whole organization.
4. Political Contributions
Ford is committed to help the government to covers the issue relating the public
policy.
5. Customer Satisfaction and Safety
Ford has several policy statements aimed at increasing the quality of their
products and promoting the safety of their customers.
6. Environment and Employee Health and Safety
Ford are focus on employee health and safety and the global environment to
make it clear that sustainable economic development is important to the future
welfare of Ford and society in general.
7. Privacy
Privacy policy is to gain trust and confidence of ford customers are important to
Ford Company and essential to building long-term relationships and delivering
excellent products and personalized services.

Ford New Vision

The new vision that we would like to propose to Ford is to become automotive
industry leader in fuel efficient and other fueled vehicles at an affordable cost
with better quality to global customers. People will think of quality and
innovation, when they think about Ford.
Ford New Mission Statement
The new proposed mission statement for Ford will be: Ford Co is going to be an
industry leader by anticipating consumer needs and provide safe, quality, and
innovative products and services to consumers worldwide. To recover lost market
share that was lost to local and foreign competition. Take back the position as the
auto industry leader in sales, market share and profit by maximizing return by
10

meeting and exceeding customers expectations for great quality, advanced

technology, and world class customer service. Ford is committed to save the
environment, to help the society and making sure that the employees welfare is
taken care of, which is going to help improving Ford's name in the entire world.

4.0 EXTERNAL ENVIRONMENT ANALYSIS (EFAS)

Opportunities
1. Further concessions from the United Auto Workers regarding labour costs,
in times of hardship
2. The few consumers purchasing vehicles focus on fuel efficiency, durability,
and carmakers sustainability
3. Light vehicle production exceeded the production of cars and trucks in
North America and Europe by an estimated 16 percent and 14 percent,
respectively
4. In 2008, the Big Three began offering lowered interest rates or zero
percent financing to lure buyers
5. The auto industry has experienced a shift from trucks and SUVs to hybrid
and small fuel-efficient vehicles
6. Consumers/dealers willingness to improve brand/sales

Threats
1. The auto manufacturing industry has been crushed of late by the global

economic recession as consumer demand for new autos has plummeted.

2. Unemployment rates exceed 10 percent in many areas in the United

States and is expected to remain high for part of 2010

3. Automakers have faced rising health care and pension costs
4. The government bailout money is diminishing, and Ford has exhausted its

credit lines
5. Consumers are concerned about voided Warranties if the Big Three go out

of business
11

6. Many banks are not making car loan which has been detrimental to auto

firms.

12

Key External Factors

Weigh
t

Ratin
g

Weighte
d Score

0.08

0.32

2. Few consumers purchasing vehicles focus on fuel

efficiency, durability and carmakers sustainability
3. Light vehicle production exceeded production of car
and trucks in north America and Europe estimated
by 16% and 14%

0.08

0.24

0.07

0.14

4. The Big Three offering lowered interest rates or zero

percent financing to lure buyers
5. The auto industry experienced a shift trucks and
SUVs to hybrid and small efficient vehicles.
6. Consumers/ dealers willingness to improve sales/
brand
Threat
1. Due to global economic recession, consumer
demand for new autos has plummeted
2. Unemployment rate exceed 10% in many areas in
United States and expected to remain high for part
of 2010
3. Automakers faced rising health care and pension
costs
4. Government bailout money is diminishing and Ford
has exhausted its credit lines
5. Consumer are concerned about voided warranties
6. Many banks are not making car loans
Total

0.08

0.24

0.07

0.21

0.08

0.32

0.09

0.27

0.10

0.4

0.08

0.24

0.09

0.18

0.09
0.09
1.00

2
2

0.18
0.18
2.92

Opportunities
1. Further concession regarding labour costs

5.0 INTERNAL ENVIRONMENT ANALYSIS (IFAS)

Strengths
1. The brand is well-known in automobile industry and global markets
2. Huge marketing and advertising
3. Greater amount of customer loyalty

13

4. Individual brands have been enjoying the benefits of the good reputation
that they have through the quality makes and services
5. Providing the consumer more variety of car and commercial vehicle
6. Quality to ensure Ford to be more complete and must be consistently
monitored with permit standard
7. Good relation with the employees
8. Safety and better work environment
9. Competitive wages that are assert to recruits a qualified and skilled
employee in all its functions
10.ONE Ford approach
11.Always develops cars on standardized procedure and invested heavily in
alternate fuel source
12.ECOnetic initiative
Weaknesses
1. Brand image was harmed and cause a large cost
2. Lack of design phase and innovative design structures on their new paddle
of cars
3. Management is missing focus on some lines performance
4. Does not have an effective cost management system
5. Ford will manufacture the standard cars which are not able to cope up with
current
market automobile.
6. Has a small market share therefore the sale will decline the sales

Internal Factors Evaluation Matrix for Ford Motor Company

FORD MOTOR COMPANY SWOT ANALYSIS

Key internal factors
Strengths
1. The brand is well-known in automobile industry and
global markets
2. Huge marketing and advertising
3. Greater amount of customer loyalty
14

Weigh
t

Ratin
g

Weighte
d score

0.04

0.12

0.02
0.05

3
4

0.06
0.20

4. Individual brands have been enjoying the benefits of

the good reputation that they have through the
quality makes and services
5. Providing the consumer more variety of car and
commercial vehicle
6. Quality to ensure Ford to be more complete and
must be consistently monitored with permit
standard
7. Good relation with the employees
8. Safety and better work environment
9. Competitive wages that are assert to recruits a
qualified and skilled employee in all its functions
10.Always develops cars on standardized procedure
and invested heavily in alternate fuel source
11.ECOnetic initiative
12.ONE Ford approach
Weaknesses
1. Brand image was harmed and cause a large cost
2. Lack of design phase and innovative design
structures on their new paddle of cars
3. Management is missing focus on some lines
performance
4. Does not have an effective cost management
system
5. Ford will manufacture the standard cars which are
not able to cope up with current market automobile.
6. Has a small market share therefore the sale will
decline the sales
Total

6.0 ANALYSIS OF STRATEGIC FACTORS (SFAS)

1. SWOT Matrix

15

0.04

0.12

0.04

0.16

0.05

0.15

0.11
0.10
0.05

3
3
3

0.33
0.30
0.15

0.03

0.12

0.06
0.06

3
4

0.18
0.24

0.03
0.04

1
2

0.03
0.08

0.10

0.10

0.07

0.07

0.05

0.10

0.06

0.12

1.00

2.63

Strengths
1. The brand is wellknown
in
automobile
industry
and
global
markets
2. Huge marketing and
advertising
3. Greater amount of
customer loyalty
4. Individual brands have
been
enjoying
the
benefits of the good
reputation that they have
through
the
quality
makes and services
5.
Providing
the
consumer more variety of
car
and
commercial
vehicle
6. Quality to ensure Ford
to be more complete and
must
be
consistently
monitored with permit
standard
7. Good relation with the
employees
8. Safety and better work
environment
9. Competitive wages
that are assert to recruits
a qualified and skilled
employee
in
all
its
functions
10. ONE Ford approach
11. Always develops cars
on
standardized
procedure and invested
heavily in alternate fuel
source
12. ECOnetic initiative

Weaknesses
1. Brand image was
harmed and cause a
large cost
2. Lack of design phase
and innovative design
structures on their new
paddle of cars
3.
Management
is
missing focus on some
lines performance
4. Does not have an
effective
cost
management system
5. Ford will manufacture
the standard cars which
are not able to cope up
with current
market automobile.
6. Has a small market
share therefore the sale
will decline the sales

Opportunities

S-O Strategies

W-O Strategies

1. Further concessions
from the United Auto
Workers regarding labour
costs,
in
times
of
hardship

1.
Expand
into
S.
American and European
countries
by
offering
better incentives and
financing (S1, S4, O3, O4

1. Improve operations by
being more lean and
cutting back excessive
executive spending (W3,
W4, W5, O1)

16

2. The few consumers

purchasing vehicles focus
on
fuel
efficiency,
durability,
and
carmakers sustainability
3.
Light
vehicle
production exceeded the
production of cars and
trucks in North America
and
Europe
by
an
estimated 16 percent and
14 percent, respectively
4. The Big Three began
offering lowered interest
rates or zero percent
financing to lure buyers
5. The auto industry has
experienced a shift from
trucks and SUVs to
hybrid and small fuelefficient vehicles
6.Consumers/dealers
willingness to improve
brand/sales
Threats
1.
The
auto
manufacturing
industry
has been crushed of late
by the global economic
recession as consumer
demand for new autos
has plummeted.
2. Unemployment rates
exceed 10 percent in
many areas in the United
States and is expected to
remain high for part of
2010
3.
Automakers
have
faced rising health care
and pension costs
4.
The
government
bailout
money
is
diminishing, and Ford has
exhausted its credit lines
5.
Consumers
are
concerned about voided

O5),
2. Produce more fuel
efficient
and
smaller
models
and
promote
them
with
lower
financing options (S1, S3,
S4, O2, O3, O5)

2. Sell off business units

to improve cash infusion
to the company (W2, W3,
W4, W5, O6)

S-T Strategies

W-T Strategies
1. Improve promotion on 1. Since dealers are not
selected lower priced
models with zero or very
low rate financing to
younger
generation
through Internet using
Facebook, Twitter, and
other
networking
channels (S2, S3, S4, S6,
T1, T4, T6)
2. Offer Free extended
warranty for additional 2
years to gain customer
loyalty and brand image
(S4, S5, T1)

17

able to turn around their

inventory fast enough,
offer advertising with
more
incentives
for
moving the cars faster
(W1, W3, T4, T6)

Warranties if the Big

Three go out of business
6. Many banks are not
making car loans.

2. The Strategic Position and Action Evaluation (SPACE) Matrix

18

FP
Conservative

Aggressive

7
6
5
4
3
2
1

CP

IP
-7

-6

-5

-4

-3

-2

-1

-1
-2
-3
-4
-5
-6
-7

Defensive

Competitive

SP
Financial Position (FP)
Return on Investment
Leverage
Liquidity
Working Capital
Cash Flow

1
1
1
1
1

Financial Position (FP) Average

Competitive Position (CP)

Market Share
Product Quality
Customer Loyalty
Capacity Utilization
Technological Know-How

-2
-3
-2
-3
-2

Competitive Position (CP)

Average

-2.4

Environmental Position (EP)

Unemployment
Technological Changes
Price Elasticity of Demand
Competitive Pressure
Barriers to Entry into Market
Environmental Position (EP)
Average
Industry Position (IP)
Growth Potential
Financial Stability
Ease of Entry into Market
Resource Utilization
Profit Potential
Industry Position (IP) Average

Y-axis: FP + EP = 1.0 + (-3.8) = -2.8

X-axis: CP + IP = (-2.4) + (3.2) = 0.8
Conclusion: Vector points in Competitive quadrant
Ford is competing fairly well in an unstable automotive industry.
19

-5
-3
-2
-4
-5
-3.8

4
2
4
3
3
3.2

3. The Boston Consulting Group (BCG) Matrix

Relative Market Share Position

High

Medium

1.0

Low

0.5

0.0

High +20

Stars
Question Marks

II

Industry
Sales
Growth
Rate
Percent
(percent)
Medium
0

Cash Cows

Dogs

III

IV

Low -20

The U.S. Market Share of Top 11 Auto Firms (February 2009)

Company
General Motors Corp
Toyota Motor Sales USA Inc.
Ford Motor Company
Chrysler LLC
American Honda Motor Co. Inc.
Nissan North America Inc.
Hyundai Motor America
Kia Motors America Inc.
Mazda Motor of America Inc.
Subaru of America Inc.
Mitsubishi Motors N A Inc.

% of Market Share
18.8
16.9
13.8 (RMSP=0.73)
10.9
10.6
8.0
4.1
3.3
2.4
1.9
0.7

Source: Based on http://online.wsj.com/mdc/public/page/2_3022-autosales.html#autosalesD.

4. The Internal-External (IE) Matrix

20

The IFE Total Weighted Score

Strong
3.0 to 4.0
I

Average
2.0 to 2.99
II

Weak
1.0 to 1.99
III

IV

VI

High
3.0 to
3.99

The EFE
Total
Weighted
Score

Ford Motor
Company

Medium
2.0 to
2.99
VII

VIII

Low
1.0 to
1.99

21

IX

5. Grand Strategy Matrix

Rapid Market Growth
Quadrant I

Quadrant II

Strong
Competitive
Position

Weak Competitive Position

Quadrant III

1.
2.
3.
4.
5.
6.
7.

Slow Market Growth

Market development
Market penetration
Product development
Forward integration
Backward integration
Horizontal integration
Related diversification

22

Quadrant IV

7.0 ALTERNATIVE & RECOMMENDATION

Quantity Strategic Planning Matrix (QSPM)
Expand
the
business
Produce

into other

more

continent

different car

models to

automotiv

cater

e market

distinct

as to

global

increase

preferences

the
market
share
value

Key Factors

Weight

AS

TAS

AS

TAS

0.08

0.24

0.32

0.08

0.24

0.16

0.07

0.14

0.28

0.08

shift from trucks and SUVs to hybrid

0.07

0.28

0.21

and small fuel-efficient vehicles

Consumers/dealers willingness to

0.08

0.32

0.24

Opportunities
1

Further concessions from the United

Auto Workers regarding labor costs

Few consumers purchasing vehicles
focus on fuel efficiency, durability, and

carmaker's sustainability
Light vehicle production exceeded the
production of cars and trucks in North
America and Europe by an estimated
16 percent and 14 percent,

respectively
The Big Three began offering lowered
interest rates or zero percent

financing to lure buyers

The auto industry has experienced a

23

improve brand/sales
Threats
1

Due to global economic recession,

consumer demand for new autos has

States and is expected to remain high

3

for part of 2010

Automakers have faced rising health

care and pension costs

The government bailout money is
diminishing, and Ford has exhausted

0.27

0.36

0.10

0.20

0.40

0.08

0.09

0.09

0.09

its credit lines

Consumers are concerned about
voided Warranties if the Big Three go

plummeted
Unemployment rates exceed 10
percent in many areas in the United

0.09

out of business
Many banks are just not making car

loans
TOTAL
Strengths

1.00

The brand is well-known in automobile

2
3
4

industry and global markets

Huge marketing and advertising
Greater amount of customer loyalty
Individual brands have been enjoying

1.69

1.97

0.04

0.16

0.16

0.02
0.05

3
4

0.06
0.20

4
4

0.08
0.20

0.04

0.12

0.12

0.04

0.16

0.12

complete and must be consistently

0.05

0.10

0.15

monitored with permit standard

Good relation with the employees
Safety and better work environment
Competitive wages that are assert to

0.11
0.10

1
1

0.11
0.10

1
1

0.11
0.10

recruits

skilled

0.05

0.10

0.20

employee in all its functions

10 Always develops cars on standardized

0.03

0.12

0.09

the benefits of the good reputation

that they have through the quality
5

makes and services

Providing the consumer more variety

of car and commercial vehicle

Quality to ensure Ford to be more

7
8
9

qualified

and

procedure and invested heavily in

24

alternate fuel source

11 ECOnetic initiative
12 ONE Ford approach
Weaknesses
1

Brand image was harmed and cause a

large cost
Lack of design phase and innovative
design structures on their new paddle

of cars
Management is missing focus on some

lines performance
Does not have an

management system
Ford will manufacture the standard

effective

cost

cars which are not able to cope up

6

with current market automobile.

Has a small market share therefore

the sale will decline the sales

SUBTOTAL

0.06
0.06

3
4

0.18
0.24

3
4

0.18
0.24

0.03

0.12

0.09

0.04

0.16

0.12

0.10

0.20

0.30

0.07

0.14

0.14

0.05

0.15

0.05

0.06

0.18

0.24

1.00

SUM TOTAL ATTRACTIVENESS SCORE

2.60

2.69

4.29

4.66

Strategic Recommendations
The following strategic recommendations are designed to address short run and
long run problems faced by the company. Fords management seems to be on
the right track, but recent progress is uncertain and could easily decadent as the
current market and industry conditions was not in the good condition. Thus, the
strategic recommendation would be as follows according to the QSPM analysis.
1 Market share expansion

25

Through an agreement with a China automotive firm which is Changan

Automotive, Ford is able to access market in China. This joint venture had
sold approximately 204,000 vehicles, comprises the manufactures of Ford
Focus, Fiesta and Mondeo lines. As the production was progressing
positively, Chinese demand for vehicles is expected to rise approximately
20% by the year of 2009. However, despite of the increase demand on
Fords cars, Ford only held a meager two percent of Chinas market share.
The Ford Fiesta was observed as it has high demand in China
automotive market as it experiencing strong sales and we believe that
Ford Fiesta is the key to enhance Fords market share in China. Sales of the
sedan and hatchback Fiesta models combined should surpass the 100,000
unit mark and significantly boost Fords overall 2009 China sales. Given
the economic incentives provided by the Chinese government and GMs
ongoing difficulties, we believe now is the opportune time for Ford to make
a full push to steal market share in China and establish itself as the
dominant American brand. While there is inherent risk to this strategy, we
believe that a narrow window of opportunity exists for the company to
overcome its poor start in the Chinese market.
Other than that, we also recommend Ford to divest Volvo division, produce more
different car models to cater distinct global preferences and reconstruct their
factory and supply chain management. The explanations are as follows.

Divest Volvo division

Volvo seems befitting with its brand name as it has an excellent reputation
whereby the main market target are the upper middle class consumers
who seeks for an ultra-safe luxury vehicle but with an affordable price
which are significantly lower than other luxury brand such as Mercedes
and BMW. Thus, this make Volvo had the potential to serve within Fords
premium line of vehicle.
However, Volvo does not fit into the One Ford strategy that being
pursued by the company. Given the current conditions of economy, it is
best to sale Volvo as it is seen as the best alternative to increase the
capital of the company. We would like to suggest Ford to sell Volvo division
back to the Volvo Group, a Swedish parent company which sold Volvo to
26

Ford in 1999. Volvo Group continues to manufacture trucks, buses,

construction equipment and boats within Sweden. Ford held over 15,000
jobs position in Sweden, through the Volvo Cars Subsidiary. In 2008, the
Swedish government issued a $3.5 billion bailout of Volvo Cars and one
other brand. We believe that Ford should use this opportunity to pressure
the Swedish government to support the repurchase of Volvo Cars by Volvo
Group by providing significant support for the deal. However, if the Volvo
Group was not interested in repurchasing Volvo Cars, it would affect Ford
as Ford will be exposed to a long term strategic risk.
There are three firms were bidding for the acquisition of Volvo which
are Geely Holding Group, Beijing Automotive Industry Holding, whereby
both firms are China-based automotive firms and the other firm is a
Europe-based group of investors. Ford should not hesitate to execute the
sale of Volvo if any of these three firms are able to procure the necessary
funds.

Product differentiation
Regional product differentiation is necessary for Ford to ensure that
products are suitably geared towards distinct global preferences. As we
recognize management was under substantial pressure to affect change,
Ford should never again stake so much of its future on one line of vehicles.
The Ford Fiesta World Car will determine the future of Ford, and while
early reactions and sales are positive Ford should create a high end
equivalent to the Fiesta to capitalize on similar cost savings measures.
Ford has joined the growing hybrid market by introducing Ford
Fusion which is a hybrid model car. Although being late in joining to the
growing hybrid market, Ford has succeeded in manufacturing a vehicle
that compete with the existed hybrid cars as it has similar quality and
price if to be compared with the competitors such as Toyota and Honda.
Despite being still at a disadvantage compared to Toyota in this market, it
has launched a new lineup of vehicles that has an opportunity to redefine
27

the competitive landscape. Thus, investment towards new innovative

technologies will benefit the company in its future for profitability growth.
Factory and supply chain management
Ford must continue its aggressive drive to confine and passive factories,
emphasizing on factories situated in the European and US regions.
Additionally, Ford must reconstruct its supply chain after executing these
closures as this helps to accomplish the results faster than anticipated.
Previously Ford entertained approximately 1600 supplier with an expected
reduction leaving only 750 active.
Current instability within the market, particularly the potential
bankruptcy of a competitor, heightens the importance of this reduction
and leads us to recommend deeper cuts in the number of suppliers Ford
contracts with. All the suppliers must be carefully examined, in order to
identify those that are vital to the Ford supply chain.

8.0 IMPLEMENTATION
For

the

implementation

part

of

the

Ford

Company,

there

are

several

implementations that can be done to ensure the Ford Company sustainability in

the market. Most of the implementations are more toward the customers in order
for

the

company

to

grab

customers

loyalty

to

stay

with

them.

The

implementations are as follow:

1. Get to market the finished product as soon as possible.

In the manufacturing plant, the faster the end product produced means faster
the product can be market. In China and India, the manufacture plant in both
countries will help to the tremendously market the Ford product as that countries

28

have enough raw material and huge plant site that can produce more and even
faster than other countries.

2. Customers easy and affordable take home a Ford vehicle by providing

them special programs.
This programs can be determine at dealer level, the Ford Company can provide
overall guidelines as to what the dealer can and cannot do to the customers in
terms of contracts that provided. By this program, the customers can easily own
the Ford product as it can gives benefit for both customers and the company
itself.

3. Customer services improvement.

In the customer service, it becomes necessary to make sure unhappy customer
to feel warm and comfortable about their purchase. This can be done by provide
them with the suitable solution based on their problems. The improvement also
gives the huge impact that depict how the company care about their customers
Besides that, Ford should offer manufacturers rebates as a matter of their
policy. By included in the policy, it protect customer because customers feel save
about their products.

4. Specific features based on regional markets.

Manufacture plants in India are not as same as manufacture pants in China.
There will little bit different processes for a slightly different car model in both
countries. This is due to different countries have different kind of features which
is suit for certain countries.
In the regional suppliers, the customers may choose their features based
on their needs in the region. This is to ensure that Ford Company can give
customers with the features that match with the function and uses in that region.

29

5. Aware specific government programs that support car purchasing.

Different countries have different kind of government regulations. Like in China,
government are subsidizing the fuel cost in huge scale, making the customers
affordable to own cars with less money.

6. Press release.
On the press release, the Ford Company may have to create the good word of
mouth to attract more customers to use Ford products. A good press not only
attract, but can bring a huge impact to customers by bring the new technology
into Fords products such as implementation the hybrid into Ford product.

7. Make a specific market campaign for different regions.

Ford Company should partner with the local advertising company in different
regions. This step to ensure Ford delivers the suitable messages and media for
the target market in different regions and grab the attention of customers.
Besides that, it should be based on the projection of target markets so that
the advertisement cost can be covered with the demand in the regions. If not,
the Ford Company will end with larger cost of advertisement from getting selling
profit.

8. Global pricing standardizing.

The use of price standardizing is most suitable way to obtain the customers. By
the standardizing, it can depict how elastic the demand of certain product in
different culture and markets. This can help to provide company to better insight
about that product in different regions.

30

9. Facilitators acquire.
The Ford Company cannot moving forward successfully without the help from the
financial institutions and the insurance companies. Both of the institutions and
the companies helps in term of giving the choice to customers, best rate of
financing and even the best kind of protection package that suit to the
customers needed. It actually brings back to the company because it increasing
their products sales.

10.Car rebates and services warranty.

On the rebates of the Ford product, the rebates are managed by the dealer level
with the supervision of the company. The rebates given to ensure the all the
stock of the product can be cycle and finished based on the target of the
company.
In additions, services warranty that provides by Ford Company attracts the
customers to come again and maintain their Ford product in the authorized Ford
service centre. This not only gives benefit and easier to the customers, but also
to the company because the company still can provides extra sales and services
even after the customers purchase their products.

9.0 EVALUATION AND CONTROL

Companies are investing enormous amount in make sure that managers and
directors work in the best interest of their shareholders, beyond this fact they are
also expected to the decision that are strategic and beneficial , both in the short
and long term. Currently some managers take decision that seek their own
31

interest and as a result put the company, shareholder and stakeholder at risk. It
is extremely important that these managers work with some code of ethic, which
is enforceable by law to protect stakeholder interest.
The Ford motor company was founded June 16, 1903, when Henry ford and
11 others signed the company articles of incorporation. Their first sale was a
month after they commenced operation. Fords moving assembly line proved
tremendously efficient and this increased the production levels, which outwitted
that of their competitors and making the vehicles more affordable. Henry Ford
competitive strategy focused on the production of cars for the masses, and after
19 years, ford motor company was a force to reckon with in the car industry.
1925 saw the acquisition of Lincoln motor company thus moving into a different
competitor group more luxurious segment, ford motors also created the mercury
division,
Companies are investing enormous amount in make sure that managers
and directors work in the best interest of their shareholders, beyond this fact
they are also expected to the decision that are strategic and beneficial , both in
the short and long term. Currently some managers take decision that seek their
own interest and as a result put the company, shareholder and stakeholder at
risk. It is extremely important that these managers work with some code of ethic,
which is enforceable by law to protect stakeholder interest.
Some macro environmental factor and globalization have driven companies
to pursue growth strategies such as integrating both vertically and horizontally.
Clearly is important to spell out the role of the board, evaluate the logic behind
their corporate strategy evaluate their performance against industry benchmarks
and guidelines. Some general board duties are to ensure that the company
survives continuously, profitable. Maximizes shareholders interest , also the
board must ensure control, be entrepreneurial as they decide the corporate
strategy, define the purpose and scope of business activities they should be
sensitive to short term issue as they plan long term. The board also must
evaluate the performance of the chief executive against goals and strategies,
they should also nominate key personal, structure remuneration, and also ensure
that the company is effectively managed and not to run it.
As a result of the various corporate scandal internationally, Investors
currently focus on two key areas, the reliability of audited account and the factor
32

that drive corporate strategy its effect on their wealth. The element of corporate
governance and area of accountability are to set and review purpose. Strategy,
communicate this to shareholders and to conduct current and future activities in
compliance with legislature, also to give true financial position of the company.
Ford growth and global strategy has been by horizontal integration and in
becoming a global player competing within different competitor groups. Ford
motors are faced with challenges of managing their current financial crisis, which
has caused the sale of Aston martin and force them to shut down their factories
in North America and made 45,000 workers redundant.
An extensive analysis of fords corporate strategy and logic behind the
strategy will be evaluated to determine its effectiveness and whether or not have
really worked in the interest of shareholders, or their strategies were merely
short term and not strategic. It is important to analyse and define the problems
they are facing, explore option available and recommend strategic options that
are suitable, acceptable and feasible.
Ford Motor has achieved its globalization strategy largely through
horizontal

integration

with

acquisitions

and

forward

integration.

Their

competitive strategy differs as per competitor group, their objective is to satisfy

their global customer need irrespective of the consumer segment. Their initial
objective was produce affordable car for the mass market, until they started
developing new market and product for middle and upper class. Ford motors
product portfolio is made up seven different band namely Ford , Jaguar , Volvo
,Loncoln , Land Rover , Mazda and Mercury. The financial position of ford motor
for 2006 was $12 Billion loss and this has necessitated the sale of Aston martin
Ford Motor are in a critical situation, but with the right strategies could
win this battle, but the worst that could happen are the sale of other brands
which are not that profitable from manufacturing like Jaguar and Land Rover as
finance option for the car giant, but this could happen in the short to medium
term. If the problem retain, there could be pressure from shareholders,
stakeholder to sell off their stake in the business as they want to make economic
profit from their investment. The risk of takeover will be eminent in the long run
as other players who want access to new market and technology would be option
for opportunity like this.

33

Balanced Scorecard

Area of Objectives

Measure or Target

Time
expectation

Primary
Responsibilit

1 year

y
Front line

Gross margin

2 years

Finance

On-time deliveries

1 year

Operation

Employee retention

1 year

Human

Customers

Returning

-satisfy the customer

score

customer

-market share
-customer

retention

percentage
-time

taken

to

fulfil

customer requests
Financial
-improve profitability
-operating income
-cost

reduction

in

some areas
-return on investment
Process
-deliver

products

on

time
-defect rates
Learning and Growth
-foster

an

enjoyable

Resource

workplace
-employee

education

and skill level

10.0 CONCLUSION
34

Ford Motor Company has been the King of innovations in the automobile industry.
Ford R&D and their all-time proven invention of interchangeable parts in moving
assembly lines resulted in phenomenal global expansion for them. They ruled the
global automobile markets of the world. In fact some of the most prestigious
motor brands of the world have been owned by Ford Motor Company.
Ford had witnessed the best times in terms of revenues and profitability
and enjoy a large customer base until today. However, some mistakes such as
Ford 2000 initiative caused permanent damages for which Ford Motor Company
is still paying the price and in this context they completely went the wrong way
and hence could not survive Japanese competitors that were quick to grab Fords
own home market in USA.
As presented earlier in terms of mapping with Michael Porters five forces
theory, Ford Motor Company was critically hit by new entrants in the market.
They indulged deep into debt financing due to financial crisis and hence have
today become largely debt financed company. The highest debt/equity is in 2005
with 11.91%. They had sell Jaguar and Land Rover companies to Tata Motors to
build some cash which, however are peanuts because bad times are continuing.
Moreover, they havent paid dividends for past two years and hence are losing
shareholder confidence.
They have not able to manage their cash flows and have lost substantial
cash in 2008 and rapidly closing extra plant capacities and laying off people to
downsize as per their current market standing. The lowest EBT Margin is in 2008
with -9.85%. Their Net Margin in 2008 is -10.03% and Return on asset in 2008 is
-5.90%.
We strongly recommend the company to implement the strategy that we
have presented in this analysis. Ford Motor Company should take corrective
action as soon as possible to avoid from losing market share to Chrysler LLC who
holds 10.9% of market share in the United States in February 2009.

35

11.0 REFERENCES

Bateman, T. S., Snell, S., A., (2009); Management: Leading and Collaborating in
the Competitive World, Eighth Edition. McGraw-Hill/Irwin: New York, NY.
Fred R. David. (2013). Strategic Management: Concepts and Cases, Fourteenth
Edition. Pearson Education Limited: United Kingdom
Ford Motor Company. (2008). Ford Motor Company - Press Release - As customers
rebuild from hurricane Ike, Ford Motor Credit offers financial relief. Retrieved Oct.
1,

2008,

from

http://media.ford.com/newsroom/release_display.cfm?

release=29045
Ford Motor Company: Cars, Trucks, SUVs, Hybrids, Parts-Ford. (2008). Letter from
Alan

R.

Mulally.

Retrieved

October

3rd,

2008

from

http://www.ford.com/microsites/sustainability-report-2007-08/overview-lettermulally

36