ANALYSIS OF FORD MOTOR

COMPANY CASE
STRATEGY MANAGEMENT
 Suppliers
Employees Creditors

Government Customers

Distributors
Shareholders STAKEHOLDERS
/dealers

Society at
Competitors
large

Stock rating Board of

exchange agency/ directors
media/
analyst
OPPORTUNITIES THREATS

Huge potential in US
market Foreign Competition
(emerging markets)

Alternative fuel
vehicle, more
environment friendly Rising fuel prices
cars

Availability of other means of

New emerging transport like Tranx railway and
global markets. mass transit system (which the
phoenix is building) in U.S.

Foreign companies create

alliances to create new markets to
share legacy costs per vehicle.

Continue to pass cost efficiencies onto the

price of vehicles, in hopes to stimulate
sales.

US economic downturn
Competitive analysis:
 There is high competitive rivalry in US automobile market.
Many players such as Japanese, Koreans, Germans were
entering the market.
 Moreover, although the industry requires economies of scale
but still with the emerging new technologies the other foreign
players are entering the US markets encroaching upon the
share of domestic companies.
 Moreover we can say since the buyer power is high little
scope is left for higher profit margins for the companies. The
companies have to invest in new technologies in order to
satisfy the changing customer needs.

 With this analysis we can say that automotive industry is

not a very attractive market.
 VALUE CHAIN ANALYSIS

CUSTOMER
DISTRIBUTION
FULFILLMENT
Voice
Voiceof
ofthe
thecustomer
customer
(Process-focused)
High customer
PURCHASING service (High inventories)
High Service Levels
SUPPLY Stable Fixed Costs
Low purchase price Stable Fixed Costs (High safety stock)
Reliable Suppliers Managed inventories
(HighInventory
Low Inventory) Low inventory
Low inventory (High Costs)
Low inventories
(High inventories) Managed safety
expediting, overtime
(Stable
Flexibleschedules)
schedules Stable Part Mix stock
Short lead times
(Long times) Stable Part Mix
(Long times)
Short lead times Stable Schedules Managed Costs
Flexible expediting, overtime
Stable Schedules
Transportation Low Transportation
Cost
Low Transportation
Cost
SELL

Returns
SOURCE (MAKE) DELIVER
RETURN
 Culture Change
◦ Enable lean performance of
existing systems
◦ No disruption to existing
operations
 Prediction
◦ Support intelligent, proactive
analysis vs. reactive
◦ Predict impact of current plan
within lead time for resolution
 Prioritization
◦ Drive data to lowest actionable
level in organization
◦ Identify high-impact opportunities
◦ Combine forecasted and actual
demand levels
◦ Manage material velocity based
upon any desired variable of
prioritization
◦ Manage escalation
 Model-based analytics
◦ Adapt to any supply chain, any
level of data availability
◦ Calculate metrics across “white
spaces” where data availability
is poor
◦ Combine varying sources of
data
 Closed-loop issue management
◦ Support analysis of current
operating business systems
◦ Manage variability in real time
w/ feedback to analysts / source
systems
◦ Manage approval process for
recommended changes
 Comprehensive visibility
◦ Identify segments and
processes with biggest
problems
◦ Locate specific material
throughout the supply chain
◦ Assess historical performance
 Support segmentation
 Suppliers Ford Motors Buyers

Supplier of Holding Finished

Purchasi Assembl Distributi
mechanical supply Sales Support cars Customers
ng y on
Components inventory inventory

Just-in-time
purchasing: Valuable Electronic support:
& rare  temporary Valuable & rare  On
competitive web and cell phones,
advantage continuous
improving its support

Continuously improving Supply chain management

sophisticated assembly of ford: Excellent relation
operations: R and D, with its suppliers
continuous improvement in worldwide: Honored top 47
assembly line and plants suppliers for their
layout, fuel efficient cars commitment in 2008-09
and new technology support 9
STRENGTHS WEAKNESSES

Not able to fully

Huge number of
capitalize on R&D
production units

Excellent brand Weak Distribution network

image

Cost reduction
focus & Overburdened ex-employees
efficiencies

Current Improper product mix. Unable to

development of meet the customer needs
alternative
vehicles

Rigid Bureaucratic structure mainly

Capital controlled by Ford family

Global presence
(even in the new
fastest growing
markets)
 Ford has invested in new technologies and it trying
to keep up with the changing customer needs.
 It has got a good brand image which has a positive
impact on its sales.
 Moreover ford is trying to save by having good
supply chain management practices like JIT, etc.
 Till 2006, ford suffered with highly rigid
bureaucratic structure which was a major hurdle in
ford’s strategy fully on its R&D and led to improper
product mix.
 Post 2006, ford is developing new strategies to
overcome its weaknesses and is emerging as one of
the top players in US market.
Ford PS&L Supply Chain Overview

PLAN SOURCE (MAKE) / DELIVER DELIVER

REGIONAL
NATIONAL DISTRIB.
PARTS CENTERS DEALERS
SUPPLIERS Reclass
DEPOT Count - 8 Count - 5,900
Count - 2,000

D
S D
S PDC D
S Reclass D
S D
S Bypass fro D D
S S m
an D
S yP D D
S S DC
S PACKAGERS PDC x-fer D
PARTS D D
S S Count -7
Carrier Carrier REDISTRIBUTION Carrier D
S DC D D
S S CENTER ny P
S to a D
D D
S S PDC D
S D D
S S
D
S D D
S S Bypass / Emergency Stocking D
S PDC Consumption D D
S S Redirect PDC
D
S D D
S S Consumption
Emergency D
S D D
S S
D
S Bypass / PDC D D
S S
Redirect D
S D D
S S Stocking PDC Consumption
Emergency D
S D D
S S
D
S PDC D D
S S
D
S D D
S S
D
S D D
S S
PDC D
S D D
S S
D
S D D
S S Stocking PDC Consumption
D
S D D
S S
S
PDC D
D
S

RETURN RETURN RETURN

Ford PS&L Supply Chain Overview

PLAN SOURCE
High levels of
(MAKE) / DELIVER DELIVER
processing time REGIONAL
variability NATIONAL
Different cultures,DISTRIB.
DEALERS
PARTS
Analytical Data
SUPPLIERS + DEPOT
Reclass
CENTERS
Material expedited
Count - 5,900
Count - 2,000 processes and Count - 8

updated weekly, at Forecast error over by teams ofD people

S
supply chain process practices at each
PDC D
best S S
S Reclass at headquarters
D D

S
S
S =
Bypass node fro
m
D
D
D
an D
S
S S High safety stock PDC
yP
DC
D
D
D
S PACKAGERS PARTS x-fer D
S S
Carrier
levels
Count -7
Carrier REDISTRIBUTION Carrier
D
D
S DC D D
S S CENTER ny P
to a D
S
S
S Increasing PDC
D
D
D
S
S S complex supply D D

S
S Little abilityD toD D
HighlyS Reactive
S - chain including
Bypass / Emergency Stocking D
S S Redirect PDC prioritize which
PDC Consumption D D
focus SonS S external partners Metrics not aligned D
D
D
S
Emergency actions areD critical
Consumption D
backorders
S Sand and sources as - Data not common D
S Bypass / PDC to the business
D
D
D
blameS assessment
S
S
well as non
Redirect D
S S Stocking PDC Consumption requirementsD D
D

S
S
S
Emergency
traditional D D
D
S
S
S channels PDC D
D
D
S D D
S S
D
S D D
S S
PDC D
S
S S * Voluminous D
D
D
S D D
Stocking PDC Consumption
S S
reports - both D
S
S
S Forecast accuracy D D
S paper and PDC D
D
S
and safety stock
electronic
management
* Labor-intensive
to collect
RETURN RETURN RETURN
 High
operating
cost

Inefficient High
supply chain competition

ISSUES
IN THE
CASE
Improper Declining
product mix market share

Poor
organization
structure
Focus on changing customer needs

Improve R&D and focus on new innovations

to keep pace with changing customer needs

Proper market segmentation to understand the

customer value proposition

New product lines- low price, highly fuel

efficient cars
 changing
customer needs
through increased
focus on R&D

market
Insufficient research is
recommended to
product mix understand what
the customer
wants
New product
development: low
price and highly fuel
efficient environment
friendly cars
 By incentivizing innovation
through award program

Cross functional team

Managers and R&D personnel
Lack of Effort on R
should be in close contact and
and D front management should be regularly
updated about new trends

HR managers should recruit

right kind of people for proper
development
 Identify all ill-performing dealers
to understand the reason of low-
performance

Collect point-of-sales data which includes:

Features desired by consumers
Price they are willing to pay
Rationalizing the Performance (mileage desired)
distribution network Extent of customization required
Feedback on cars sold
Demographic and psychographic data

This would enable to do proper

targeting and positioning
 There should be proper vision and mission to
encompass the company’s goals. All employees
of companies should work coherently towards
uniform goals
• Company should keep pace with changing
times
Rigid bureaucratic
structure

It should be agile and not rigid in its

approach

• It should be able to adapt to changing

environment with trough new innovations and
R&D
 Net Income(in Million $) Sales and Revenue (in Million $)
4
180
2 160

0 140

2006 2007 2008 2009 120

-2
100
Year
-4 80 Sales and Revenue (in
Net Income(in
-6 60 Million $)
Million $)
40
-8
20
-10
0
-12 2006 2007 2008 2009

-14 Year

-16
ONE Ford expands on the company’s four-point business
plan for achieving success globally. It encourages focus,
teamwork and a single global approach, aligning employee
efforts toward a common definition of success and optimizing
their collective strengths worldwide.
Ford’s Global Product Strategy is focused
on four key areas
• Delivering on our commitment
• Building on a dynamic to be unsurpassed in providing
heritage to define a truly fuel-efficient vehicles, which is
engaging driving becoming increasingly
experience. important to customers.

Fuel
Driving quality
economy

Safety and
Technology
Craftsmanship

• The next-generation small cars are • Engineering to global safety

loaded with intuitive and intelligent standards.
features until now found only in
• Material selection and fit-and-
larger, more premium vehicles. finish take a major step forward.
Interior quietness bests the
competition and then some.
 CURRENT SCENERIO

 Ford posted a profit of 2.3 billion in 2009

 Total net income has been rising from -12613.00 millions in
2006 to 2717.00 million in 2009 to 6561 million in 2010
 Has reported 6th straight profit in September 2010 and also
paid 4.055 billion back in dividend to preferred stock holders
and retires.
 Ford has taken a good decision to have a same layout of all its
95 plants all over the world.
 In less than 10 years Ford is expects that 20 percent of its fleet
will be electrified either hybrid or fully electric
 Making global cars like Ford focus not region specific cars.
 They have got a very good mix of short term and long term
strategies.