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    Bab 4 - Case 18 - Ford Motor PDF

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    Ayu Selian

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    Ford Motor Com, for Internationai Growth Nicole Daniel Tuck School of Business at Dartmouth INTRODUCTION ohn Casesa, group vice president of F Company's Global Strategy team, cia from his office window at Ford's corporate headquarters in Dearborn, Michigan, on a cold Janu- ary day in 2016. The warm and tropical climate of Mumbai seemed worlds away from snowy Dearborn but Casesa’s attention had been on India for some time now. Hired the year previously after nearly 25 years as an investment banker in the automotive industry, Casesa had been charged with the implementation of new initiatives under the One Ford Plan. Originally designed to help Ford return to global profitability in its core automotive business after the Great Reces- sion, the One Ford Plan had been further refined to help Ford aggressively pursue emerging opportuni- ties that were an extension of the Ford brand. ‘A key facet of this plan was the introduction of Smart Mobility, which reflected Ford's intent to branch out from its core automotive market. Smart Mobility sought to position Ford as a company that a technological innovation and a leader in connect ty and mobility, while leveraging its existing | strengtt fal a global automotive powerhouse. Casesa's Nt devised an idea called Dynamic Shuttle, a We service at prices similar to mass transit an eel by smartphone access. While other soni s ae ride-service companies typically MOV ry. per ride, Dynamic Shuttle had the asp ie per ride, lizing shuttles to transport UP [° 12 pr i emerging and was thought to be an ideal solution vy economies with large urban populations afford personal transportation. WW: New Sir Thomas Lawton Tuck School of Business at Dartmouth After analysis of population demographics and profitability estimates, Casesa’s team had decided to create a Dynamic Shuttle pilot in India. The large urban population, including a subset of aspirational workers that Casesa believed would be ideal Dynamic Shuttle customers, as well as the overcrowded met- ropolitan transport systems and growing smartphone adoption, made India an ideal environment to test the pilot, If successful, it could serve as a model for cre- ating Dynamic Shuttle programs in other countries. Ford, however, could not develop the program alone. It would need a partner that had the right business model and similar aspirations for growth potential and scalability, along with the willingness to expand into the Indian market. The team had found five potential candidates to partner with but had yet to determine the most appropriate one. ‘Casesa reviewed the agenda for his team’s meet- ing that afternoon. What criteria were most impor- tant in determining who Ford should partner with, and did any of the identified prospects best fit Ford's needs? What characteristics would ensure a success fal launch of Dynamic Shuttle in India? FORD MOTOR COMPANY Founded in 1903 by Henry Ford and a group of 11 investors, the Ford Motor Company had modest origins, launching in a converted factory on Mack Qwenue in Detroit that produced only a few ei per day. Ford quickly differentiated itself, however, «© 2016 Trusts of Dariouth College, AI rights reser C2238 through a variety of unique production and employ- actices that transformed the automobile ‘dustry and positioned Ford at the forefront of tech- gical innovation. The 1908 launch of the Model iater voted as the Car of the Century by a panel industry experts, revolutionized manufacturing tion globally.' Produced on the world’s first ne production model, the Model T was assembled by individual workers who remained in \¢ place on the line and performed the same task every shift as vehicle parts passed before them on a conveyor belt. The implementation of the assembly Jine and conveyor belt, and the scale opportunities it afforded, allowed Ford to quickly surpass its com- petitors. Then in 1914, Ford began offering a stan- dardized wage of $5/day to its factory employees, vaulting many of its low-skilled workers into the middle class and enabling them to afford the prod- ucts they helped produce for the first time. In the 1920s Ford purchased the Lincoln Motor Company, a competitor, and moved most of the com- bined company’s production operations to the Ford Rouge Complex in nearby Dearborn, Michigan. By the end of the decade the company was producing 1.5 million cars annually, a huge ramp-up in pro- duction from the Mack Avenue facility's original output. Ford also played a vital role in assisting the Allied forces during the Second World War. Sus- pending automobile production for the duration of the war, the company converted its assembly lines to churn out B-24 Liberators at the rate of 1 per hour, or nearly 600 every month, utilizing the same mass- production techniques first piloted by the Model T 30 years earlier. The 1950s and 1960s witnessed the introduction of some of Ford’s most iconic vehicles and family lines, including the Mustang and the Thunderbird, which quickly became international symbols of American consumerism in the postwar era. Through- out the next several decades, Ford continued its global expansion, By the 1990s, the company refocused its attention on automotive concerns and financial ser- vices, Organic growth, in the form of newly opened Asian operations and the establishment of the Ford Motor Credit Company, the firm's financial arm, was complemented by a series of high-profile acquisi- tions. In 1989-1990, Ford purchased Jaguar, a British manufacturer of luxury cars, and in 1993 added Aston ‘Martin. Later acquisitions in the 1990s included rental, car company Hertz Corporation in 1994, Volvo's PART 2 Cases in Crafting and Executing Strategy automotive division in 1999, and Britain's Laud Rover brand of sport-utility vehicles in 2000. All four brands were placed in the newly created Premier Automotive Group. Ford also made a significant investment in the more economically priced Japanese automobile pro- ducer Mazda, rounding out its profile of global brands and automobiles that appealed across the spectrum to all types of drivers. Despite these investments in global growth, Ford struggled as it entered the 2Ist century, and sought to shrink its portfolio. By 2007, the company had divested the majority of Aston Martin to a con- sortium of investors and car enthusiasts for nearly $850 million, and the following year sold Jaguar and Land Rover to Tata Motors Litd., an Indian conglom- erate. When the Great Recession crippled markets in 2008-2009, the American automobile industry cen- tered in Detroit was hit especially hard. Through the Troubled Assets Relief Program (TARP), the U.S. government made over $13 billion in government loans available to struggling automobile makers. Although Ford had secured a $23.6 billion lending earlier and thus did not require govern- it was not completely exempt from need- ing to downsize through the recession. The company closed 13 plants and laid off more than 50,000 of its nearly 200,000 employees to decrease capacity. In 2010 the automaker announced an agreement to sell Volvo to the Chinese automotive conglomerate Zhejiang Geely Holding, and later announced it would discontinue its Mercury line, a brand first conceptu- alized in the 1930s to bridge the price gap between the Ford and Lincoln brands. By the end of fiscal year 2015, Ford's total revenues were $149.6 billion. ‘The 6.7million cars sold globally in that year com- promised nearly 94 percent of that revenue.? Ford Motor Company's income statements for 2013 through the second quarter of 2016 are pre- sented in Exhibit I. The company’s balance sheets for 2013 through 2015 are presented in Exhibit 2. The Modern Automobile Industry The modern automotive industry was one of the larg- est in the world; in 2015, industry experts anticipated that nearly 90 million vehicles were sold globally.’ The U.S. auto market was approximately 10 percent of that worldwide total, with 7.7 million passenger cars sold in 2014, and the industry in the United States comprised the largest single manufacturing CASE 18 Ford Moto pany: Ne EXHIBIT1 Ford Motor Company Quarterly and Annual Income State. « for International Grow ©.239 Second Quarter 2016 (in millions except per share amounts) 06/30/2016 Automotive revenues $ 36,932 Financial services revenues Total revenues Automotive cost of sales Selling, administrative & other expenses 2.661 Financial services interest expense - Financial services provision for credit & insurance losses . Total costs & expenses 37,267 Automotive interest expense 212 Automotive interest income & other income (loss), net 389 Financial services other income (expense), net 82 Equity in net income (loss) of affiliated companies 308 Income (loss) before income taxes 2.875 Provision for (benefit from) income taxes 903 Net income (loss) 1,972 Less: loss (income) attributable to noncontrolling interests 2) Net income (loss) attributable to Ford Motor Company $ 1,970 Weighted average shares outstanding a973 Weighted average shares outstanding - 3097 diluted : Year end shares outstanding 3,902 Net income (loss) per share - basic $0.50 Net income (loss) per share - diluted sre Cash dividends declared 03/31/2016 $35,257 $140,566 $135,782 $139,369 2.461 8.992 __ 8,295 7.588 37,718 149,558 144,077 ‘146,917 30,281 124,041 123,516 125,224 3,823 14,999 14,917 13.176 658 2.454 2,699 2,260 41 a7 305 208 34,903 141911 140,637 141,478 200 773 797 829 404 1,188 76 974 1 372 348 (348) 541 1,818 1.275 1,069 3,651 10,252 4,342 7,001 4.196 666 559 877 2,455 7371 3,186 7.148 @ 200 154 : $2452 $ 7.373 $ 3187 $ 7,155 3,970 3,969 3912 3.935 3,996 4,002 4,045 4,087 3,973 3,970 3,956 3,944 $0.62 $1.86 $0.81 $1.82 $0.61 $1.84 $0.80 $1.76 $0.40 $0.60 $0.50 $0.40 ‘Source: Ford Motor Company 10-K and 10-0 reports, various Years of total product value, value ise in terms A enterprise in term: total of wage earners added by manufacturer, and the z employed throughout the industry." et other ind trialized nations with strong automebi ine a including countries in the European bn tt ie and South Korea, the dominance of the at industry on gross domestic product (GDP), and espe- cially on exports, had grown exponentially over the latter half of the 20th century. Ford Motor Company was one of the leading car manufacturers on both a profitability and pro- duction basis, but other major competitors included PART 2. Cases in Crating and Executing Strategy >» Ford Motor Company Balance Sheet Data, 2013-2016 ($ in mifiians} 12/31/2015 12/31/2014 Cosh & cash equivalents $ 14,272 $ 10,757 : le securities 20,904 20,393 22,190 ewables, net 401,975 101,975 101,975 nventeries 8319 7,866 7,708 Other current assets 59,480 48,496 27,877 Fined assets, net 19.975 49,040 12,298 Total assets $224,925 $208,527 $ 202,026 Total current liabilities, $188,591 $195,645 $179,373 Total long-term liabilities 7.677 (11.950) (3,763) Total equity (deficit) 28.657 24,832 26,416 Total liabilities and shareholders’ equity $224,925 $ 208,527 $ 202,026 ‘Source: Ford Motor Company 205 10-K. General Motors (also U.S. based, in Detroit), Toy- ota (a Japanese automaker, whose portfolio also included the Lexus luxury car brand), and Volkswa- gen (a German manufacturer that also owned Audi), While Ford primarily operated in the mid- to lower- priced end of the pricing spectrum, it had also owned stakes in more luxury brands such as Land Rover and Jaguar, as noted. Major competitors of these brands included producers like BMW and Daimler-Benz (also German manufacturers), Acura (the luxury arm of Honda in Japan), and at an even higher price point, boutique manufacturers like Porsche, Ferrari, and Maserati. Consolidation and decentralization were two of the major trends of the industry. Part of this was due to the overall capital intensity of the industry; heavy investments in equipment and large production facili ties have traditionally been required in order to achieve economies of scale. As attitudes on environmental impact have evolved, so too have more stringent regu- lations been placed on the industry that require greater costs on the part of the manufacturer. Ford, as noted, ‘was pioneer in the industry in the United States due to its innovative production facilities and creation of the assembly-line process, aimed at lowering overall production costs. These savings, however, were being ‘set by bigher transportation costs as the industry glo- alized. Asian automakers such as Honda and Toyota in Japan had pioneered a “just-in-time” inventory method whereby noncritical component parts were outsourced to independent suppliers producing close to assembly plants and then sent back to the production facility at the time needed. Toyota had also pioneered a production method known as kaizen, now adopted by many industries ex-automobiles globally, that empha sized continuous process improvement throughout the organization Ford was not alone in adopting an international acquisition strategy at the end of the 20th century. Major domestic competitors like Chrysler infa- mously merged in 1998 with Daimler-Benz, the pro- ducer of luxury brand Mercedes, and then later took controlling interest in Japanese manufacturer Mit- subishi in 2000. GM, which had purchased control- ling interests in Saab (Sweden) and Subaru (Japan). began to look toward overseas consolidation as @ method for keeping production costs lower and diversifying into new markets outside the United States. While traditionally the most profitable mat kets have been developed countries with signi middle-class purchasing power, developing nations. with larger populations overall and growing percent- age of middle-class workers, have become great! consumers. In 2015, Chinese consumers purchase ‘more vehicles than in the United States (21.1 millio Passenger cars), although at lower margins.° CASE 18 Ford Motor Company: Ne FORD MOTOR COMPANY'S STRATEGY IN THE 21ST CENTURY Following the Great Recession, Ford's global str egy had largely been focused on ae nce pany to profitability in each of the markets it operates in, Under then-CEO Alan Mulally, the company developed the One Ford Plan, as noted earlier The four elements of the One Ford Plan included: . Aggressively restructure Ford to operate profitably at the current demand and changing model mix Accelerate development of new products Ford's customers want and value Finance out the plan and improve Ford’s balance sheet Work together effectively as one team Under the One Ford Plan, Ford shifted from having many regional platforms to a focus on fewer, more global production platforms to better capi- talize on economies of scale. The company began to launch more products off fewer platforms, and revamped older vehicle families with technologi- cal improvements designed to win over new buyers. ‘The Fiesta, originally a supermini car first sold in Europe and Latin America in the 1970s, launched in the United States in 2010, followed by the Iaunch of the Brazil-based mini-utility vehicle the EcoSport in India and Europe. Ford transformed its global best- seller, the F-series, a line of pickup trucks produced since the postwar era and the bestselling vehicle in the United States for 34 years running (1981-2015), switching from steel to aluminum, & feat unprece- dented in manufacturing at such high volumes” Much of Ford’s strategy shifts had been in response to the rapidly evolving external Gavin ment for automotive companies in the 2010s. The sorce of ride-share companies like Uber and ft in the United States, Didi in China, and Ola i and participation by technological giants $Y) ‘as Google and Apple in the development of auto fomous (otherwise known a driverless) cars hi a Caused ulomakers to reconsider how 10 compere jn what had developed into @ jetely di reat world from the Detroit of Henry F rd, Mark Aa, Mulally’s successor to the CEO position 18 = Mecounized the need wo ridapt in an ineressingly *W Strategies for International Growth : eee obile landscape. In 2015, Fields jel doh Cassa, a ongtime avomebil ind ie lalyst and former investment banker, to lead the newly created Global Strategy team. Casesa had fen shed with aceleaing he implementation of ¢ One Ford Plan, and revamping the Global Stra egy team's mandate. ee Genel In early 2016, CEO Fields cham, CE pioned updatin the One Ford Plan to beter reflect Ford's business needs. These refined initiatives included: Competitive automo + Strengthening and investing in Ford’s core busi- ness, including design, development, manufactur- ing, and marketing of great cars, trucks, SUVs, and electrified vehicles Aggressively pursuing emerging opportunities through Ford Smart Mobility, Ford’s plan to be a leader in connectivity, mobility, autonomous vehicles, the customer experience, and data and analytics ‘Transforming the customer experience to com- bine Ford's great products with great experiences customers want and value” Fields’s vision for Ford as it entered the third decade of the 2st century was to transform Ford into both a strong automotive and mobility company. The company had rededicated itself to “delivering smart mobility solutions at the right place and the right time, and transforming the way that people move. as Henry Ford did when he started the company back in 1903.” The Smart Mobility Platform and Dynamic Shuttle Concept ‘A key component of Ford's Smart Mobility plat- form was assessing the strategic markets and loca- tions where the program could be implemented. Ford began to pilot a concept known as the Dynami Shute program in Dearborn and one other city in the United States, with the aim of expanding the program on a global scale. “The concept of the Dynamic Shuttle was an on- demand shutile that could be aceessed via a user's sobite phone, and be dispatched either direetly to the requesting customer (usually in developed mar- kets), or toa pickup location within a short walk that ugregated multiple customers for pickup (poten- tially in more rural weds oF areas with poor infra Structure). The pricing of the shuttle was usually at c-242 «4 premium to mass transit in the market but save compared f0 a taxi service or a ride-hail service (stich as Uber, Lyf, and Ola), Additionally, ditional bus service, dynamic shuttling’s amis and “earning capability” offered much creater flevibility in pickup and departure times and ns The program had multiple goals, It aimed to exist as « new transport ride-sharing platform in the space between scheduled (mass-transit) and private transport, enabled by smartphone development and penetration, Less expensive than a taxi, itexpected to offer a more comfortable and convenient experience than mass transit. Typically, the shuttle anticipated serving between 4 and 6 people in developed coun- tries and up to 12 passengers in developing countries per ride. In developing countries, Dynamic Shuttle could also be used to connect riders from their home communities to mass-transit routes, if passengers lived long distances from a major transit line. Some startups had started dynamic shuttles in cities like New York, Chicago, and Helsinki. Com- petitors like Uber and Lyft, through their analogous UberPOOL and Lyft Line services, had also begun to experiment with their own conceptualization of shared, or pooled, rides, and by mid-2015 over 50 percent of Uber's fares and 60 percent of Lyft’s in the San Francisco market were based on carpooling ser- 1 Yet for the most part, no ride-hailing smart- vices. phone-based app service was at the carrying capacity of a full shuttle, as Ford intended, and most pilots in developed countries were too small in size and scale compared to the possibilities already offered in many developing nations. Ford’s hope was to experiment with the shuttle to learn as much as possible from both a technological and operational perspective, but eventually the company hoped to quickly scale and enter into markets where mobility and movement of people are true problems. THE INDIAN MASS-TRANSIT MARKET Emerging economies, with large populations, densely populated urban areas, overcrowded streets, and clogged transport and infrastructure systems, pre- sented 4 unique challenge for a shuttle concept. In considering which developing economy to launch Dynamic Shuttle, Ford considered two options, One PART 2. Cases in Crafting and Executing Strategy 1s China, but for mony res..0%s, need for unique joint ver! obvious eh including the nis mandated by the Chinese go esa’s Global Strategy Team decided tv the feasibility of a Dynamic Shuttle launch in India hould Dynamic Shuttle launch successfully there, Casesa’s team was confident it could act as a test case for other densely populated countries coping with mobility issues that had a need for a program like Dynamic Shuttle. India was anticipated to have a population of, nearly 1.5 billion residents by 2020. "As one of the most populous and densest countries in the world, India faced the challenge of needing to facilitate tans- port for millions of people daily. The Indian transport system consisted of multiple modes, including walk- a ing, bicycling, various forms of rickshaws, bus and metro systems, and regional railways. In densely populated urban areas of India, demand for public transport often exceeded capacity Trains in Mumbai, the most populous city in India, carried over 7.5 million riders per day, a sixfold increase over the last 40 years. while daily capacity on its tains had only doubled.'? Yet for a city as densely populated as Mumbai, with its 20 million residents, continuing to build new infrastructure and extending the woefully inadequate means of public transporta- tion was often limited, if not impossible. Besides the overcrowded public transportation, India’s tropi- cal climate could lead to uncomfortable traveling experiences. Research in cities like Mumbai found that some customers would pay at least a 25 percent premium to rid conditioned cabs versus ones without ait-conditioning.'> RIDE-HAILING APPLICATIONS IN THE 21ST CENTURY One of the most prevalent competitors to traditio taxi cabs in the rid = lc-hailing industry. was Uber. Founded in California in 2008, Uber lee vee Hones 3s carhailing mobile application, via which Phones ey fewest ear services trom their smat Fie ena gcite Was generated by charging uses & between Uber an dint using the: service, and then split by the comment he driver, who was oten viewed were calculated tha uiePendent contractor. Fares lakes into acca e Tush a proprietary algorithm that ‘ount time (both for the driver to arrive CASE 18 and the total estimated ride), distance, and demand. Uber's pricing structure could either be less expen- sive or at a premium to the local taxi market. The company had experienced explosive growth in its first six years, raising over $10 billion in capital, ‘ompleting 1 billion rides, and spreading to nearly 70 countries and 360 cities."*'S Major competitors similar business models included Lyft in the niied States, BlablaCar in France (a ride-sharing app). Didi Kuaidi in China, and Ola in India. Statis- tics related to smartphone and ride-hailing services usage in India are presented in Exhi As mentioned, despite its dominance over com- petitors in major metropolitan cities throughout the ‘world, Uber was not the only ride-hailing app in India, nor did it even occupy the dominant position in the Indian domestic market. In mid-2015, the company injected over $1 billion in investments in its Indian operations, with the goal of handling over 1 million rides on a daily basis, similar to its current capacity in both China and the United States." Yet while Uber could be found in over 22 Indian metropolitan areas by the end of 2015. its ridership statistics were much less impressive, with the company citing on average only 250,000 rides per day.'” Instead, the dominant ride-hailing app-based company in India, Ola, was speculated to actually achieve Uber’s goal of over 1 million rides on a daily basis spread across the 350,000 vehicles in its platform, and could be found in over 102 Indian cities. Through aggressive tactics more suited to the Indian market, including accep- tance of cash instead of credit-card smartphone-based payments, better utilization of rickshaws and cheaper modes of transportation, and diffusion of the business to second- and third-tier Indian cities, Ola was able ‘0 outpace Uber in the Indian ride-hailing market AAs of December 2015, Ola, Lyft, Didi Kuaidi, and GrabTaxi (a Southeast Asian app) had also pledged to allow customers of each company to use their local ‘pps in different markets, in an attempt to continue to block Uber's growth,!* Smartphone usage in India, projected to grow ‘0 nearly 317.1 million users by 2019, combined With the population statistics and competitive envi- Tonment described above, indicated India would be Atipe market for a smartphone-based ride applica- Uions."”29 As noted, however, neither Uber nor Ola had successfully piloted the concept of a mass- Seale ride-hailing shuttle in their Indian business "Model. For this reason, Ford's Global Strategy Team a Ford Motor Company: New Strategies for Intemational Growth c ultimately selected India as the pilot country for the launch of its Dynamic Shuttle pilot program. FORD'S INDIAN MARKET ASSESSMENT ‘The Ford team assessed a number of key variables, including population statistics, income levels, and daily mileage traveled to calculate a potential market share for Dynamic Shuttle. Total available mileage, rather than number of potential customers or conver- sion rates, was used as a baseline for calculations, as basic profitability for most ride-hailing and ride- sharing programs are calculated on a mileage basis (ie, not per customer). It was essential, however, to determine an appropriate customer base for the pilot. Casesa’s team first analyzed total population statis- tics of Indians living in urban areas (nearly 500 mil- lion), and then specifically drilled down by income segmentation into those who made between approxi- mately INR 90,000-200,000 per annum (roughly defined as “seekers"), and those who made between INR 200,000-500,000, (roughly defined as “aspira- tional workers"), Seekers and aspirational workers could not afford personal transportation and were in most instances still likely to use mass transit for their professional commutes, yet had the disposable income available to potentially pay a premium for an easier ride. This population yielded approximately 280 million potential shuttle riders. The team then considered the different modes of transportation available to riders in major cities. Approximately 70 percent of the miles traveled by Indian commuters in cities on a daily basis were through mass transit, an obvious target, but the team also considered the miles traveled by commuters on motorcycles as a possible customer segment that could be converted to Dynamic Shuttle, On the high end of estimates, approximately 73 percent of the miles traveled by Indian commuters on a daily basis were thought to be within Dynamic Shuttle's target market, The team next deliberated the transport alter- natives already available to commuters, including two-wheelers, trains, buses, and shared modes like rickshaws and taxis, and broke out the percentage usage rate by a variety of income levels. With these factors in mind, and the assumption of an 8 percent conversion or take rate, the estimates for annual mile- age traveled by seekers and aspirational worker cd given year using Dynamic Shuttle was thought to be in the range of 65~90 billion miles. With an aver- age rider cost of $0.30 per mile, Ford calculated a potential annual revenue of $19-26 billion. (See Exhibit 3 for further details on the team’s analysis.) Dynamic Shuttle Business Model and Partner Selection Business Model Once the market potential for Dynamic Shuttle in India was estimated, Case: team deliberated on the best path for market entry. Ford had established plants in India in the late 1920s, and Ford India had operated as a wholly owned subsidiary of Ford Motor Company since 1995, with manufacturing facilities in Chennai and Gujarat." The team assessed three different options for the Dynamic Shuttle rollout. In the first model, Ford Motor Company and Ford Motor Credit Corpora- tion (Ford’s financial and lending arm) would pro- vide the vehicles, financing, and parts and servicing, This solution was more complete and enabled more in-house control, but operating its own fleet on the ground would incur heavy capital requirements, as Ford would have to own the overall assets (the vehi- cles themselves), a strain on the company's overall capital. The second option identified was to organi- cally develop the technology in-house and sell it to companies already in operation to help them create this business. This option was ultimately rejected due to the slower speed of development, especially in light of the necessity of starting operations and scaling the business model quickly. The model ultimately selected was for Ford Smart Mobility to choose a partner that would establish operations on the ground in India. With this partner, Ford would establish a franchise model, which would facilitate the platform, payment system, and create a joint business model, Strategic Imperatives for Partner Selection Ford's vision for Dynamic Shuttle was to choose a partner whose current business model most closely aligned with their view of the offering. The team considered key questions and solutions that each partner would need to satisfy, provided below. After thinking through these key imperatives, the PART 2. Cases in Cralting and Executing Strategy team identified five potential partners. A matrix is provided in Exhibit 4 with details on how each partner aligned with the goals and competencies needed to successfully execute on the project. Key considerations for the team included: + Business Model: Would the shuttle have defined stops (B2C) or offer on-demand services? Are rides shared (usually with 1 other person) or a true shuttle (up to 12 passengers)? + Customer Strategy: Who is the primary com- petitor, and where does demand come from? + Scalability of Algorithms: What is the number of cities the partner currently operates in? + City Relationship: Has the partner cultivated relationships with cities to operate the business? + Physical Products: Who actually owns the vehi- cles in operation? + Operating Franchise Model: Can the partner quickly develop a franchise model? + Willingness to Accept Investment: To what degree could Ford be a controlling stakeholder? + User Experience: Is customer feedback and/ or research on the partner's ability to deliver on promised experience positive? + Growth Potential: What *s pla ne are the partner's plans 0 ‘Applicability and Flexibility of Algorithm: Can \ partner's technology (mapping and algorithms) adapt to different needs and new locations? How easily is it replicated? : Partner Selection Casesa and his team had 1 basics: identifi Dynamic Shuttle’s first intra Tees defined the business model ne the pilot; deliberated on specific wd t° Sxeeure on of business mode L, growth ficiency to succesypun in India? ‘ EXHIBIT 3 Market Sizing Anal Dynamic Shuttle in Indi. ysis and Revenue Projections for ‘Step 1: Indian Population Segmentation Total indian Population 1,311,051 Number living in urban araas 419,939 Income Segmentation % INR Income Ren 3%> INR 1,000,000 oo 6% INR 500,000 to 1,000,000 25% INR 200,000 to 500,000 Aspirational Workers ‘40% INR 90,000 to 200,000 Deprived 26%

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