You are on page 1of 11

Brief description of the company Ford Company was founded by Henry ford in 1903.

At 40 years old Ford began making cars in a converted factory in 1903 with just $28,000 from a dozen investors. Two of these investors were John and Horace Dodge, who later went on to found their own car company. During 1903, the factory only produced a few cars each day by paying his workers $5 per day, more than the double going wage in the industry. His strategy paid off; by attracting the best and the brightest mechanics to his factory, reducing turnover. Ford Motor Company is an American automaker based in Dearborn, Michigan, manufactures and distributes across six continents (Africa, Europe, Americas, Asia, and Australia), the fifth largest automaker in the world based on his 2010 annual vehicles sales, the fifth automaker in Europe in 2010. Ford is the third-ranked automaker in the U.S., after GM and Toyota, the best selling automaker in Canada in 2010.

Ford brand previously include Volvo Corporation, Mercury, Ford and Lincoln but Volvo Corporation was sold and Mercury was discontinued and the company provides also financial services through Ford Motor Credit Company. Ford brand makes a variety type of cars such as trucks, small cars such as the Ford Focus while Lincoln brand does luxurious cars. Ford’s first major success was the Model T, introduced in 1908. The Model T was the first car to place the steering wheel on the left, which later became the standard for American vehicles. Henry Ford created a network of local dealerships that made the Model T almost omnipresent in most American cities. Ten years later, in 1918, 50% of all cars in American were Model Ts. Sales of the Model T eventually began to decline throughout the 1920s, as competition increased and Henry Ford refused to update the vehicle’s features. Ford had 198,000 employees and 90 plants in 2009 and 164,000 employees and about 70 plants worldwide, a 17% layoff of employees and a 22% close down of plants in 2010

more successful in realizing his dream of ―a car for the great multitude. principally in France and Germany. such as engines and bodies. often called semis.. and is one of the world's most important economic sectors by revenue. vans. markets. Ford. including pickups. Commercial vehicles i.‖ designed his car first and then considered the problem of producing it cheaply. hundreds of which each produced a few handmade cars. The car was the so-called Model T. and Americans. even though steam-powered road vehicles were produced earlier. Later in the beginning of the 20th century France and Germany were joined by the Italians.e. Olds made the first major bid for the mass market with a famous curved-dash Oldsmobile buggy in 1901.Brief description of the Industry The automotive industry designs. batteries. and sport utility vehicles. History The origins of the automotive industry are rooted in the development of the gasoline engine in the 1860s and ’70s. delivery trucks and large transport trucks. the best- . During the era of large scale production few of the handmade manufacturers survived and they all got the same characteristics such as Opel with his bicycle production and many others. Automotive industry are all those companies and activities involved in the manufacture of motor vehicles. manufactures. . Two companies such as Rolls-Royce in Britain and Ford in the United States were founded combining engineering talent and business skill. but he was not alone in seeing the possibilities in a mass market. In the United States almost all of the producers were assemblers who put together components and parts that were manufactured by separate firms. including most components. and sells motor vehicles. but excluding tires. and fuel. Ransom E. During the pre-World War I most automobile companies were small shops. The industry’s principal products are passenger automobiles and light trucks. develops. FORD AND THE ASSEMBLY LINE The mass-produced automobile is generally and correctly attributed to Henry Ford. British.

British Ford was the largest single producer in the United Kingdom. Only a large firm could make the heavy investment in plant and tooling that the assembly line required. Appearance of mass production in the automotive industry coincided with the emergence of large-scale business organization. In 1913 the Ford Motor Company displayed to the world the complete assembly-line mass production of motor vehicles consisting of a technique with two basic elements: a conveyor system and the limitation of each worker to a single repetitive task. Durant. a carriage manufacturer of Flint. but his primacy remained unchallenged until he lost it in the mid 1920s by refusing to recognize that the Model T had become outmoded.known motor vehicle in history. It was built to be durable for service on the rough American country roads of that period. As initially formed. Ford’s success inspired imitation and competition. GM was emerging as a . and more than 15 million were built before it was discontinued in 1927. and influenced each other as the industry expanded. the two had originated independently. Durant developed the idea for a combination that would produce a variety of models and control its own parts producers. Oldsmobile. GM ran into financial trouble in 1910 and survived. There have been exceptions. Ford was the colossus. The mass producer in turn enjoyed a cost advantage that tended to make it increasingly difficult for smaller competitors to survive. was founded in 1908 by William C. It was first put on the market in 1908. Michigan. and Ford was already the largest single American producer when it introduced the technique. They were related. which ultimately became the world’s largest automotive firm and the largest privately owned manufacturing enterprise in the world. and easy to maintain and repair. economical to operate. however. and Oakland and an assortment of smaller firms. brought Chevrolet company to GM in 1918 with the backing of DUPONT de NEMOURS and company RISE OF THE BIG THREE At the end of World War I. but the trend has been consistent. Cadillac. dominating the automotive scene with the Model T not only in the United States but also through branch plants throughout the world. GENERAL MOTORS General Motors Corporation (GM). General Motors included four major vehicle manufacturers: Buick.

Ford weathered the storm (though many of his dealers. Walter P. which facilitated management of a large corporate structure and became the model for other major automotive combinations. South Korea. and the countries of Western Europe have been rapidly approaching the level in the US consolidation Diversity of products The automotive industry’s immense resources in production facilities and technical and managerial skills have been devoted predominantly to the building of motor vehicles. For other countries these proportions are somewhat smaller. The modern industry The modern automotive industry is huge. The third member of the ―Big Three‖ automotive manufacturers in the United States was created at this same time.potential major competitor in the United States. No other automotive firms of comparable size existed. In the United States it is the largest single manufacturing enterprise in terms of total value of products. Henry Ford also went through a crisis because the 1921 crash caught him involved in the construction of a large new plant (River Rouge) and in the process of buying out his stockholders. or use of motor vehicles. servicing. During the next decade there was a striking transformation. When Ford went out of production in 1927 to switch from the Model T to the Model A (a process that took 18 months). Alfred P. was called in to reorganize it. Chrysler was able to break into the lowpriced-car market with the Plymouth. but there . he gave GM a staff-and-line organization with autonomous manufacturing divisions. value added by manufacture. GM was plunged into another financial crisis. went out of business). sales and receipts of automotive firms represent more than one-fifth of the country’s wholesale business and more than one-fourth of its retail trade. but Japan. Chrysler. It became the Chrysler Corporation in 1925 and grew to major proportions with the acquisition of the Dodge Brothers company in 1928. and number of wage earners employed. The depression of 1921 had farreaching effects on the American automotive industry. Among other steps. but the Ford Motor Company had reached its crest. When the Maxwell Motor Company failed in the 1921 depression. distribution. formerly of General Motors. Sloan became president of the corporation in 1923 and raised it to its unchallenged first place in the industry. One of every six American businesses is dependent on the manufacture. unable to sell cars and not permitted to return them.

. Therefore. but to a lesser extent. Ford motors sales better quality vehicles. for example. automakers also divested noncore operations. Ford rank number 2 in strategic vision. Ford occupied third rank automaker in US and the best selling automaker in Canada in 2010. The Ford Motor Company. Ford and GM had divested themselves of most of their nonautomotive operations and had spun off the majority of their automotive component-making divisions into separate stock companies—Delphi Automotive Systems in the case of General Motors and Visteon Automotive in the case of Ford. Proper SWOT analysis is necessary for the betterment of a company. Pg 401. In Europe. 2007) Strengths • • • • • • • • It is the fifth large automaker in the world. By the late 1990s the trend was toward more international consolidation of core automotive operations. while depressed economic conditions in Japan forced auto companies there to begin divorcing themselves from nonautomotive and components companies in which they had long held interests. Ford has good market share and rank fifth in Europe.has been a consistent and strong incentive to extend into related products and occasionally into operations whose relationship to automobiles is remote. New car development SWOT ANALYSIS Due to SWOT analysis. GM manufactured refrigerators and diesel-powered railway locomotives. SWOT analysis should be carried on regular basis in order to generate better outcomes. (Gundry & Kickul. One of the best known brands in the world. Manufacturing facilities in more than 30 countries. By the end of the 20th century. once manufactured tractors and made the famous Ford Trimotor all-metal transport airplane in the late 1920s and early ’30s. a company can work well and can generate effective outcomes. however. Ford motors develop vehicles under several names.

• • • • • Good relations with employees by offering better work environment and competitive wages. Expansion of their market share into the Asian and Africa market. Ford looses market share Single source supply of components or materials Inability of Ford Credit to obtain competitive funding Opportunities • • • • • • • • Produce fuel efficient Cars in the upcoming years. hybrid and solar energy Vehicles.S. Ford supports racing teams which include NASCAR. Ford offer 14vehicles with segment leading fuel economy more than any other automaker. Formula One and etc Lincoln named top brand in 2011 Auto Pacific Vehicle Satisfaction awards. Produce Hybrid cars in upcoming years. And sales increase in 2010 compared to 2009. .000 in 2010 Ford closes down 22% of his production plants from 90 in 2009 to 70 in 2010. They have a change to become more environment friendly company. Invest on electric. Sell vehicles across 6 continents. In the U. Giving more charities Threats • Rapid changes in fuel prices. Weaknesses • • • • • • Ford sold the Volvo Corporation and discontinued the Mercury Ford layoff employees from 198000 in 2009 to 164. Joint ventures with other major competitors to combat recession. Initiate manufacturing operating in low cost countries.

Ford announced plans to redesign three of his . Variation in currency rates. Traditionally. This tough recession has caused Ford since 2008 to sell some of their assets such as the jaguar and land rover subsidiaries based in the UK to Tata Motors of India. Long lasting recession in majority of countries. As a quick fix. Decrease of the industry sales volume The economic recession has affected the industry in a way that has reduced the sales volume of the whole industry. Ford reduces his portfolio in other to be more focus and improve on Ford and Lincoln brand. volatile oil prices and political pressures for more fuel-efficient cars have taken a toll on the market for these larger vehicles. reducing his market share and increasing his capital to repaid loans and reducing interests. Ford Fiesta first in segment to earn top safety ratings in the world's largest markets Thus. causing an increase in price competition.• • • • • • • Government regulation outside US. the future of Ford’s main sales is centered on fuel efficient vehicles. However. Lincoln was named top brand in 2011 Auto Pacific Vehicle Satisfaction awards and all ford brand made received awards such as Ford Fiesta and F-150 first place segment winners and Explorer and Mustang among six other Ford vehicles in top three rankings. Threats of substitutes Due to the recession ford face tough time to please its investors and employees. Hard competition from other motor vehicle companies like Toyota. Ford focus enables to launch the first ford electric cars. Keys Trends As political pressures for a greener economy intensify. TATA motors. Ford's most profitable vehicles have been large SUVs and pickup trucks. the Volvo Corporation were sold to Geely automobile in 2010 and discontinuation of the Mercury.

enhancing direct injection turbochargers will be made an option on all vehicles. which has better fuel economy than the Honda Fit or Nissan Versa. which will be introduced in Asia and the US. all of Ford's engines will be redesigned or updated. As part of this plan.manufacturing facilities formerly used to produce trucks for instead the production of six of its more fuel efficient European models in the US (such as the Mondeo and European version of the Focus. The first fruit of this scheme is the new Ford Fiesta. Ford hopes to build 98% of its vehicles with six-speed transmissions by 2012. These 6-speed transmissions allow the engine to work at more efficient levels and improve fuel efficiency by 4-6% over the 4 and 5 speed transmissions currently installed on most Ford vehicles. Yet as the development and production of a new car costs billions of dollars and several years to implement. Ford's efficiency campaign is both costly in itself and difficult to reverse once implemented. which was developed by Ford Europe but will be sold in all Ford's major markets. has been ranked the best affordable midsize car by US News and World Report. the company intends for all of its vehicles to be the leader (or co-leader) for fuel economy in any given car category. which seeks to save production and design costs by producing a single fleet of vehicles for all markets worldwide. Ford Plans to Expand into Emerging Markets by Designing "One-Fit-All" Vehicles. and the 2009 Ford Escape. considered to be a better drive than the Prius and with better initial quality than the Camry or Accord. and Ford of Europe's iconic Ford Transit van. both of which are far more efficient than Ford's current American offerings). Whether Ford will be able to successfully use a single product line to both cut costs and grow sales worldwide remains to be seen. In the long term. . and research and development spending on cars and crossovers will be increased from 1/2 to 2/3 of total development spending. which gets better mileage than either the Toyota Rav4 or Honda CRV says the US news report. for example. The beginnings of this massive adjustment can be seen with the 2009 Ford Focus. The 2010 Ford Fusion Hybrid. The company is also embracing lower tech solutions such as low resistance tires and 6-speed automatic transmissions that improve fuel efficiency over transmissions with fewer gears. especially since Ford has practically exhausted its ability to borrow or sell additional assets to raise money. Ford's current international plan is the "One Ford" campaign.

Increased sales volume. I am proud of the outstanding job that has been done by the Ford team around the world.Chairmans reports Ford Motor Company completed a Remarkable turnaround in 2010. but we know we still have a lot of work to do. which is enabling us to make greener. we expect overall industry sales volumes to continue to grow worldwide in 2011. William Clay Ford. We plan to continue introducing best-in-class new products at a rapid pace. not a destination – and we are racing toward the future. we have no intention of slowing down now. Jr. Looking further ahead. safer. we want to build on the solid foundation we have established. should enable us to continue to improve our year-over-year performance. but determined not to lose focus on executing our plan and achieving our strategic goals. combined with our ongoing efforts to improve productivity. Concerns about the availability and affordability of fuel and the impact of CO2 emissions on the environment are growing. Executive Chairman March 10. it is clear that the difficult challenges we face as a society and an industry also present us with an incredible opportunity to add value for our stakeholders and shareholders. Thank you for your continued support of our efforts. Companies that address these issues with products that customers want and value will gain a significant competitive advantage. 2011 . smarter cars without tradeoffs in function or performance. In the near term. As we climb out of the recession. We believe that success is a journey. These efforts will continue and intensify as we move forward. Our full year net income was an improvement of more than $21 billion compared to two years ago. We are pleased with these results. Today automobiles are once again on the leading edge of technology. Having traveled so far in such a short time. I am optimistic about the possibilities that lie ahead. Ford has introduced new fuel-saving technologies across a wide range of vehicles to provide better fuel economy for millions of customers. As the global economy improves and expands. I believe this is one of the most exciting times in our industry since the automobile began being mass produced more than 100 years ago. We also are launching a full range of electrified vehicles to make it easier for our customers to embrace this exciting new technology.

8 Asset turnover ratio (2009): (116.11 times .9 times Current ratio (2009): 39.793) = 0.717/116.08% Net profit after tax% (2009): (2.283 – 98.954 – 104.283))*100 =14.23% Net profit after tax% (2010): (6561/128. Profitability and Efficiency ratios Gross margin (2010): ((128.283)*100=2.33% Asset turnover ratio (2010): (128. Profit before tax% (2010): (7149/128954)*100 =5.283)*100 =2.954/165.006) = 0.283/195.866)/116.368/34.Financial analysis of Ford Motor Company Ford Motor Company income is generated by 2 sectors: the automobile and the financial services.541)/128.932 =1.954))*100 =19% Gross margin (2009): ((116.954)*100 =5.516 =0.54% Profit before tax% (2009): (2599/116.98% The gross margin increases from 14.98% in 2009 to 19% in 2010 this is partly because of the increase of sales in 2010 from the automobile sector and a decrease by 22% in service sector.923/35.6 Return on Equity (2010): (6561/2569)*100 = Liquidity ratios Current ratio (2010): 34.

923 – 5.368 .041)/35.82 times Acid ratio test (2009): (39.932 = 0.5.Acid ratio test (2010): (34.97 times INVESTMENT and Financial RATIOS Gearing ratio (2010): (88733/(88733+2569))*100 = .516 = 0.917)/34.