Case Analysis Ford Motor Company Essay

Introduction fording Motor Company is one of the largest multinational cable carmaker in the macrocosm and part of the Detroit Big Three, along with GM and Chrysler. Since its inception in June 16, 1903, ford has gone through many ups and downs. Competition from domestic and international manufacturers, globalization, advancements of applied science and the ample scotch downturn in 2007-2008 meant that track had to rethink several of its strategic decisions if it had to survive in the merchandiseplace. When Henry Ford started the company, gondolas were a luxury good that could sole(prenominal) be afforded by the rich. He wanted to provide these vehicles to the general public at an affordable price, because Ford believed that this increase had the potential to transform society. As such(prenominal), he focused on labor and supply chain efficiency related to the implementation of the assembly line manufacturing process and Fords vertically unified supply chain to produce a utomobiles at a mass scale. The US auto marketplace was primarily dominated by the US Big Three, nevertheless this changed during the archaean 70s and 80s.The increase in gas prices and need for fuel efficient vehicles saw consumers seeking out for Japanese imports, which met the crude fuel efficiency standards. The market already was beginning to get competitive. In order to act, Ford tried to cut it costs by downsizing its workers and plants, whereas the need was fuel efficient cars. Ford later regained some of its market in 1988 by diversifying its product offerings by purchasing luxury European brands. It tapped the Chinese market as well thrashing GM in 1997. Ford had to cut many of its workforces and sell many of its plants during these periods in order to keep costs at a minimum level. The stinting downturn of 2007-2008 saw the automobile manufacturers taking a big hit. They were reduced to a position where they needed to ask the US government for a $34 billion bailout. Many uncertainties remained as to what had to be done to sustain in the future.The biggest strategic change came with the decision to hire Alan Mulally in 2006. Mulally made many sound and important changes to Fords corporate structure, such as, the ONE Ford plan to create a leaner, more efficient global enterprise and succumb the company to profitability. Under his guidance, Ford had to restructure its entire course as it was the merely way to survive in the highly competitive market. Every stones throw taken by Ford has been risky, but they bear yielded result. Ford has overcome challenges of bowed down(p) competition, economic depression and threat of bankruptcy. It is a prime example of how particular(a) leadership and strategic skills can help overcome hardships de bitterness turbulent condemnations.Situation analysis3I AnalysisImmediate CompetitorsFord Motor Company is run as one of the leading competitors in the US Automobile Market with 18.4 % of the total market sha re. The two major competitors of Ford are Chrysler Group LLC and habitual Motors (GM) with market shares of 11.4% and 20.4% respectively. These leading players of the US Automobile market, together, are known as The Detroit Three and are operating as the key local competitors of the US market. Among the other major global competitors of Ford, Toyota and Honda are competing with market shares of 10.5% and 8% respectively.Impending CompetitorsComparatively smaller players of the US Automobile market may pose a threat to Ford Motor Company in near future. Competitors such as Kia (4.3%), Hyundai (5.6%), and Nissan (6.8%) are also trying to firmly hold their position in the automobile market. Mazda, BMW, Mercedes, Mitsubishi, Subaru, Volvo, and Suzuki are also operating as impending competitors of Ford within the automobile market, contributing to 26.3% of the remaining market shares. These competitors can potentially extend their communication channel trading operations in future a nd change their strategies that may directly or indirectly affect the operations of Ford Motor Company.Invisible CompetitorsIn spite of potential risk factors, the automobile industry of US is a lucrative industry to compete in. Hence, China and India are expected to expand their automobile business to US very soon. China has already displayed automobiles of Brilliance, Geely, Great Wall, and BYD at the US Auto Shows. BYD specializing on fuel efficient cars may pose a major threat to Ford Motor Company in future. The European market can also become apotential threat by open up new and sustainable automobiles in the US market and may succeed due to advanced innovation and sustainable manufacturing processes.General analysisEconomic natural gas prices quadrupled during the 70s and 80s when the Middle Eastern OPEC nations halted exports to the US and other European nations. The global economic downturn of 2008 saw the US auto sales declining by 37% compared to the proceed year. Ford, GM and Chrysler had to go to Washington DC to ask the government for $34 billion bailout. In 2011, the earthquake in Japan disrupted production and come up gas prices affected consumer demand.Political/LegalNew vehicle sales in 2009 received support from the federal government when US president Barack Obama gestural the Cash for Clunkers bill into law in June. Rules and regulations on vehicle mileage and emission standards are established by the federal government. After talks with the automakers, the Obama regime eased the requirements to 54.5 mpg, with a 3.5 percent per year increase in fuel efficiency for cast down trucks through 2021, but kept the requirement for passenger cars at 5%.EnvironmentalWhen a massive earthquake and tsunami hit Japan in March 2011, Japanese automakers and parts suppliers experienced major disruptions in their operations and declared that productions would probably not reach normal levels before fall. The change magnitude global focus on sustainabi lity and need to gravel alternate power sources for vehicles, increasing population has led to increase in fuel demand, thus leading to higher gas prices and an increased impact on the environment. Recently the Obama Administration and the auto manufacturers were in negotiations over new standards that could reduce global warming emissions by millions of tons per year and decrease oil imports by billions of barrels during the life of the program. technologicalTodays consumers are technology-savvy than ever before and with the vast amount of information available on the inter crystallize they have access to an almost innumerable amount of information to compare products to determine the vehicles that meet their needs. An alternative to fuel known as biofuel or farm fuel E85 might reduce US dependency on external oil and initiate a domestic industry that supports farmers. Hydrogen fuel cell vehicles are still in the early stages of development but have the potential to reduce US d ependency on foreign oil significantly and abase emissions that cause climate change. companionableMany of the newer models of cars target the Generation Y buyers, as they are important to automakers because they help set trends, from popularizing mixer media sites to technologies.Industry analysis panic of product substitutes High.In the 70s and 80s, the three large US automobile manufacturers which produced larger, heavier and less fuel efficient vehicles saw decline in sales while sales of Japanese imports, which met the new efficiency standards, increased. Electric/gasoline powered hybrid vehicles are the most widely used alternative powered vehicles today and many companies offer richly electric vehicles as well. As the population increases, roads and highways become more congested. Many urban areas are developing or enhancing public transportation systems such as light rail systems and subways, as well as increasing bus routes and schedules.Intensity of rivalry HighThe US a utomotive industry faces heavy competition not only through domestic companies (Ford, GM and Chrysler), but from foreign competitors as well. In 2006, Ford, GM and Chrysler faced intense competition from foreign manufacturers such as Toyota, Nissan and Honda.Supplier power MediumThe auto industry obtains resources from a wide array of firms globally. Although the number of suppliers has decreased since the recession, some of the survivors are increase and beginning to diversify. Many suppliers relyheavily on the auto industry for a large part of their revenue. Some suppliers even went out of business during the economic downturn and decline of the US auto industry, and more were hurt by the earthquake in Japan in 2011. It is extremely important for auto manufacturers to develop and maintain strong relationships with their suppliers to gain access to their best technologies and receive priority order fulfillment in case of material or product shortages. purchaser power HighTodays te chnology-savvy consumers have access to a vast amount of information to compare products to determine the vehicles to meet their needs. Many level-headed consumers choose to shop and negotiate pricing between dealerships, while others prefer not to negotiate pricing at all. As US manufacturers lost market share to their Asian competitors, they realized the need to revise their business plans to place a much higher priority on customer satisfaction, thus creating customers for life.Threat of new starters HighFactors such as capital requirements, economies of scale, need for distribution channel and threat of retaliation make it unlikely for a new entrant to emerge within the US. However, new entrants can succeed in the US market, as evident by the Asian automakers. Automakers established in foreign markets have been able to gain a foothold by exporting to the US and targeting a niche market. New entrants to the US auto market will last come from China and India among others.Market ing and SalesFord is now focused on building only the two remaining brands Ford and Lincoln. They now offers product mix to meet the demand of people of all classes They reach the customer through traditional media like radio, newspaper, TV commercials and by also using the social sites. They are also sponsoring famous shows and events likeAmerican Idol ServiceAccording to the J.D. Power 2011 Automotive performance, Execution and Layout study all Fords newer vehicles have earned the fuel efficiency rating that were above the segment average The F-50 truck is the only large pickup that received the award for some(prenominal) performance and appeal in 2011Supportive ActivitiesHuman ResourceFord is best in cutting off companys employees to improve production or to face any awkward situation like loss for example In 80s to cover up the loss resulting of not having fuel efficiency facility it cut off its workforce and close plants In August 2001 Ford eliminate 4500 to 5000 of its salari ed employees using early retreat incentives In early 2002 ford closed 3 North American assembly plants for which 35000 worldwide jobs were cutoff In 2006 Ford cut 25000 to 30000 hourly jobs and 12% of management positions. It further cut 10000 white-collar job. In 2012 it closed 14 facilities as part of massive restructuring plantTechnology developmentFord has invested a lot in the development of fuel efficiency and currently they have 12 vehicles with best in class fuel economy. Not only in fuel efficiency they are also improving in initial quality and appeal(performance, execution and layout) Though they are laggards but atlast they managed to develop self-parking and blind spot detection facility. In 2011 they invested in hybrid and plug-in-hybrid and they also introduced turbocharged EcoBoost V6 engine They are in the way to introduce intelligence vehicle technology Procurement Ford signed an agreement with Azure Dynamic Corp. to install plug in hybrid power trains in the F seri es overseer duty trucks.Financial analysisMarket Share (in volume)From the above two pie charts, the market winners and losers in 2011 can be interpreted financially with the number of cars and light trucks they sold compared to the market sales as a whole (in volume)Profit over timeThe following data represents Ford Motors net income from year 2001 to 2010During 2001, Ford has been in bad shape financially making a loss of $162412 million. From before that time Ford was having a hard time to come back and had undertaken downsizing strategy from quite a time to lower its cost as per their profit structure. This trend go on in 2001 as well but the entrant of a CEO in July 2001 made a slight change in the strategy though it kept on with the legacy of downsizing, it also discontinued models that were unprofitable. Hence, with this strategy profits were expected but this didnt work out, mainly because of the unstable environment of the terrorist attack in family line 11, 2001. From ye ar 2002 onward till 2005, Ford was making a bit of profit but still heavily relied on downsizing its employees from time to time. but Ford started making some major losses from 2006 onwards and in order to make this work Alan Mulally was appointed as the CEO. Hence, it came in light that Ford needed a complete restructure in order to cut down costs, lower its debts, increase its revenues, and earn higher profits.Hence, downsizing strategy continued as well but this time with the introduction of new products, discontinuing the outdated ones keeping up with changing consumer trends. With some great decisions the company was recovering and hence, get down its net loss by 78% in 2007 compared to 2006 however, once again unfavorable economic conditions in 2008 with global downturn pulled the net loss difficult down which was more than the net loss made in year 2006 which resulted in the use of downsizing once again. With this Ford applied for bailed out funds, which was spurned and w as the cause for their popularity gaining more customers. And hence, with proper planning, and complete restructure of Ford, it earned profits during 2009 and 2010 with effective strategies. As seen in the graph below, Ford has definitely experienced lower sales from 2001 to 2010 but it managed to come back in 2009 and 2010 with providing cars that customer wants which they didnt follow earlier.