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US Auto Industry

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by

Adrian Shojaei

on 1 March 2013

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Transcript of US Auto Industry

Japan U.S. SWOT
Strengths •Strong management during the financial crisis
•One of the first to switch to smaller, fuel-efficient vehicles
•Strong operational and financial performance
•All electric commercial vans 2010
•All electric cars 2011
•Global Dealer network
•Outsourcing
Strong Ford Asia Pacific and Africa (APA)
Expanding Ford Europe
Successes in renegotiating labor contracts with UAW •All electric commercial vans 2010
•All electric cars 2011
•Global Dealer network
•Virtual prototyping, modular design and collaborative design and development •Electric vehicles - small, compact, flexible manufacturing, customizable •State of automobile industry in post recessionary world
•Dynastic family owners and Government intervention obstacle to consolidation
•Emerging manufactures into world markets
•Mergers
•Capacity rationalization
•Legal challenges with new/upcoming environmental regulations
•Costs faced with becoming environmentally sustainable
•Continuous change in technology
•Pressures to produce fuel efficient models
•Increasing oil prices
•Rising Supply costs
•Government bailout for competitors •Return on invested capital 1.1% 1999-2008
•2008 preforming poorly in Europe and Asia
•Excess capacity – 34 million vehicles per year in industry
•Push system with high inventory •Numerous suppliers
Weaknesses
Opportunities
Threats Honda By
Adrian Shojaei
Vanessa MacKinnon
Forrest McWade
Chantal Mantha
Raul Ponce Ford and the World Automobile Industry in 2009 Started as a part producer for Toyota in 1937 U.S. Share 10.86% The first Japanese car in the U.S. was Honda Accord Italy Fiat Founded
in
1899 Strategic alliance with Chrysler in 2009 The most profitable auto company in the last 3 years U.S. market share 16.73 Largest auto manufacturer in the world with sales of $265 billion Most of Totota cars are manufactured in U.S. GM Chrysler Ford Founded in 1908 GM lost its ranking as the top global automaker by vehicle sales for the first time in 2008 when it was outsold by Toyota Motor Corp. 19.4 billion in U.S. government loans in 2009 Smallest of the big 3 U.S. car makers Have been bailed out twice by the state - once in the 1970's and again in 2009 Established in 1925 Only member of the big 3 to escape bankruptcy "Fordism" the first major revolution in process technology Founded in 1903 McKinsey 7S Model Hard Elements Strategy
Structure
System Soft Elements Shared Values
Skills
Style
Staff Porter's Five Forces Porter's Five Forces Threat of New Entrants: Capital Requirements
Economies of Scale
Product Differentiation
The threat of new entrants is low, except in the category of electric vehicles. Threat of Substitute Products Environmental Concerns
Rising fuel cost
Healthy Living
The threat of substitutes is medium Porter' Five Forces Bargaining Power of Suppliers Dependant relationship
The bargaining power of suppliers is low Bargaining Power of Consumers Buyer's Price Sensitivity
Relative Bargaining Power
The bargaining power of consumers is high Industry Rivalry Concentration
Diversity of Competitors
Excess Capacity and Exit Barriers
Cost Conditions: Scale Economies and the Ratio of Fixed to Variable Costs
The competitive rivalry is high Fuel Economy Gaining increasing importance for four reasons: 1. Saves you money
2. Reduces climate change
3. Reduces oil dependence costs
4. Increases energy sustainability According to the Globe and Mail, a study showed that fuel-efficiency is the number one thing Americans look for now in a car. Overview Auto Bailout Blowout Issues SWOT
Competitive
7S's
Porter's five forces
Industry
Blue Ocean Analysis
Fuel economy
Excess Capacity
Recommendations
Updates Strategy Ford Current Stategy
Aggressively restructure to operate profitably at the current demand and changing model mix.
Accelerate development of new products our customers want and value.
Finance our plan and improve our balance sheet.
Work together effectively as one team Structure Hierarchical corporate structure
17 member Board of Directors
37 corporate officers Crisis in the Industry System Evolving production and manufacturing systems
Adopting best practices in the industry
Change with Technological advances Market share
Changing customer demand
No Response to changes External Factors Shared Values Traditional values shared by NA automakers:
scale economies were primary drivers of competitiveness
no viable alternative to combustion engine
efficiency required offering full range of models
big cars more profitable than small
customers prefer more 1. What will Ford's long-term strategic plan be that will allow them to remain competitive moving forward?
2. How will they appeal to the changing consumer demand?
3. How will they compete with emerging technology? SKILLS Style Leadership has been effective
Carried ford through the Recession
weathered the storm, now must shift to long term goals Blue Ocean Staff Assemble ford vehicles in china
Research in emissions and electric vehicles - Chrysler
Research fuel cells - Daimler
Produce engines in china - Volvo
Produce components in india – Maruti
Hydrogen research - BMW Blue Ocean How to create uncontested market space "Value innovation" is one of Blue Ocean Strategy's main themes Blue Ocean How to create uncontested market space Lower customer spending
Job market
Credit crunch Price and cost position ultimately satisfies the needs and demands of the consumer and the firm. Blue Ocean Fuel Efficiency Why Did They Need Bailout? Challenging the cost of fuel
"The bigger, the better" Assets:
Sound Management
Vision
Gaps:
Compact car line
Electric car production
production costs Sales dropped
GM and Chrysler

Management failure

Impact on the economy

Banks rejected
High risk
Financial freeze Excess Capacity
Ford is bleeding CASH through excess capacity.
Imperative Ford closes down and sells off excess capacity
Improves balance sheet cash flows
Restructure - Moving to countries with cheaper labor and production cost, such as Mexico and Eastern Europe area, lessor labor and production cost Auto industry characteristics
Low cost production
Attractive new models
New technologies Competitive advantage
Perceived vs. real
Toyota, BMW, GM? Future? Short term Long term 1. Electric and hybrid cars 2. Acquire electric companies 3. Set the industry standards Current auto industry has major problem with excess capacity
Creates an opportunity for Ford
Free up resources for future projects Electric Car http://FunnyOrDie.com/m/1vtv
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