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Copy of Ford Motor Company

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Jen Ricafort

on 24 September 2014

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Transcript of Copy of Ford Motor Company

Automobile Industry Map
Matching Stage
Ford Motor Company
Jen Amaro - Sev Antonio - Kirby Baun - Mikie Marchadesch - Angeline Marcos
Porters Five Forces
Threat of Entry
Threat of Substitutes
Competitors produce vehicles at a more inexpensive price
Unique options offered by competitors, not found in Ford
Public transportation can be used in largely populated areas
Intensity of Rivalry
Bargaining Powers of Buyers
Bargaining Power of Suppliers
External Factor Evaluation
Political Factors:
Foreign Currency Exchange: Fluctuation of foreign currency increases the difficulty of International business
Government Safety Regulations: Imposed regulations increases the amount of safety features needed in vehicles.
Labor Unions: Unions provide a defense for workers. Ford is subject and liable to the demands of the United Automobile
Economical Factors
Cost of Commodities and Resources: The increase in price of commodities and resources increase the expenses of the company.
International Market Growth: The growth in international markets allow Ford to increase its market share. The increased involvement in foreign markets will also enable Ford to conduct more efficient and accurate research.
Social Factors
Environmental Sensitivity: Growing concern for the environment has forced automobile industries to adjust their Business Models.
Travel Habits: Alternative modes of transportation have caused people to have less of a need of their own vehicles which affects the sales and revenue automobile manufacturers.
Technological Factors
Customer Research: The increased technology has given consumers the ability to conduct thorough and efficient research on products before the purchase. Examples: Customer Reviews, Specifications, Pricing models, etc.
Product Development: Technology has made the development and manufacturing of products much easier and efficient.
Hybrid vehicle: a vehicle that uses two or more distinct power sources to move the vehicle.

External P.E.S.T Analysis
S- Strengths
W- Weaknesses
O- Opportunities
T- Threats
BCG Matrix
Internal Factor Analysis
Space Matrix
Space Matrix
Analysis of Alternatives
The production of cheaper motor vehicles in masses for mass sales rather than the making of luxury cars are a good option because this will offer a large market.
The company may resort to multiple raw material suppliers and may even try to set up its own unit for production of raw materials. This will reduce dependence and make company more competent with rapidly shifting raw material prices
Technology is improving at an incredible rate.
Soon it will be a necessity rather than a feature. (Similar to the regulated safety features)
If technology is implemented into vehicles now, then there will be no need to adapt in the future.
For example, all new vehicles must have a back-up camera by 2018.
QSPM Matrix
Ford's 3 Year Projections
Ford is already trying to meet these needs by releasing twenty three new models all over the globe in 2014.
Ford will look to use the industry’s top technology in its vehicles and motorcycles to stay up with current trends and to keep the tech savvy generation that is starting to emerge in the market.
Ford has a current market share of around sixteen percent which is just behind the eighteen percent of General Motors. Our goal is to match that eighteen percent of General Motors within the next three years with the strategies that we have already discussed.
Provide a motorcycle line with the quality of a Harley but at better price.
Analysis of Alternative Strategies
Revision of Mission Statement
"One team working together to deliver the best customer service, top of the line vehicles at the best price, a motorcycle line better than any other and an experience that will allow a consumer to not only feel like they are getting a great car but are joining the Ford family."
Collecting and evaluating information on competitors is essential for successful strategy formulation. Identifying major competitors is not always easy because many firms have divisions that compete in different industries.
An American multinational corporation headquartered in Detroit, Michigan.

General Motors led global vehicle sales for 77 consecutive years from 1931 through 2007, longer than any other automaker, and is currently among the world's largest automakers by vehicle unit sales.
was an American automobile manufacturer headquartered in Auburn Hills, Michigan and owned by Italian automaker.

Chrysler was one of the "Big Three" American automobile manufactures.
a Japanese automotive manufacturer headquartered in Toyota, Aichi, Japan. Toyota was the largest automobile manufacturer in 2012 (by production).

As of January 2014, it is the fourteenth-largest company in the world by revenue.
is a Japanese public multinational corporation primarily known as a manufacturer of automobiles, motorcycles and power equipment.

Honda has been the world's largest motorcycle manufacturer since 1959. And it was the eight largest automobile manufacturer in the world in 2011
Financial Ratios
units with a high market share in a fast-growing industry. They are graduated question marks with a market or niche leading trajectory

The hope is that stars become next cash cows.
Cash cows
has high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business.

Corporations value owning them due to their cash generating qualities.
units with low market share in a mature, slow-growing industry. These units typically "break even, generating barely enough cash to maintain the business's market share.

Dogs, it is though, should be sold off.
Question marks
business operating in a high market growth, but having a low market share. They are a starting point for most businesses.

Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.
Grand Strategy Matrix
An American multinational automaker headquartered in Dearborn, Michigan, a suburb of Detroit. It was founded by Henry Ford and incorporated on June 16, 1903.

Ford owns a 2.1% stake in Mazda of Japan, a 15% stake in Aston Martin of the United Kingdom, and a 49% stake in Jiangling of China.

Ford is the second-largest U.S.-based automaker and the fifth-largest in the world based on 2010 vehicle sales. At the end of 2010, Ford was the fifth-largest automaker in Europe. Ford is the eight-ranked overall American-based company in the 2010 Fortune 500 list, based on global revenues in 2009 of $118.3 billion.

In 2008, Ford produced 5.532 million automobiles and employed about 213,000 employees at around 90 plants and facilities worldwide.
Henry Ford
Henry Ford was the American founder of the Ford Motor Company and father of modern assembly lines used in mass production. His introduction of the Model T automobile revolutionized transportation and American industry. As owner of the Ford Motor Company he became one of the richest and best-known people in the world.
William Clay "Bill" Ford, Jr.
The great-grandson of Henry Ford and the great-grandson of Harvey Firestone. He joined Ford in 1979 and 1981 held a variety of positions, beginning in product development and on the financial staff, a grooming ground for future executives. He served several years as a mid-ranking executive in product development.

Bill Ford served as the Executive Chairman of Ford Motor Company.
Alan Roger Mulally
Mulally was the former executive vice president of Boeing and CEO of Boeing Commercial Airplanes (BCA).

Mulally was named the President and CEO of Ford Motor Company on September 5, 2006, succeeding William Clay Ford, Jr.
Mark Fields
Mark Fields is the President and Chief Executive Officer of Ford Motor Company, effectively July 1, 2014. He is the former Chief Financial Officer.

He succeeded Alan Mulally as the company's President and CEO. Fields is the first openly Jewish CEO of a Detroit Three automobile manufacturer.
Vision and Mission
To become the world's leading Consumer Company for automotive products and services
Our mission is to improve continually our products and services to meet our customer's needs, allowing us to prosper as a business and to provide a reasonable return for our stockholders.
All automotive business units contributed to the company's pre-tax profit, and all improved from a year ago, except South America. Ford, like its rival, is facing tough times in South America.

Asia-Pacific has strong results because of the increased market share in China. The result in North America is especially important, as it contributes the lion's share of Ford's profits at the moment.
Ford Motor Company has been a leader in the auto industry. However, they have sustained to lose their market share to foreign opponent over the past few decades. In classifying their strengths and weaknesses and implementing them to the current opportunities while considering their threats, they thought of inventing a product responding to the growing environmental awareness trends concerning cars. Ford has already taken measures in response to this slump by introducing new car models which are Ford Edge Hybrid and Ford EcoBoost Engine.
Target Market
The primary targeted consumer is between 29-39 years old who earn higher income and have higher education. These groups of consumers are generally willing to pay more for environmental friendly car, have high interests in automotive products and have more knowledge of innovative products.
Product Strategy
Since Ford Edge Hybrid and Ford EcoBoost Engine are new products, Ford used product development strategy to introduce to its existing established markets like its home country USA and Europe.

Ford also used Product diversification to introduce their new launch vehicles globally, especially in China and Malaysia that are one of the largest markets in the world.
Pricing Strategy
Ford uses Competitive Strategy which basically involves the products being set around the same amount as the competitors in determining these particular vehicle. In Competitive Pricing Strategy, organizations try to reduce the emphasis on price competition by matching other firms' prices and concentrating their own marketing efforts on the product, distribution, and promotion elements of the marketing mix.
Promotion Strategy
Since Ford practices non-personal selling, advertising methods such as electronic media, printed media, social media and internet are most effective and promotes the brand and model well, as the population in each of the methods exist in a big quantity. Electronic media advertising such as commercial TV advertising and radio is the most effective way. Ford can maximize its advantage by creating
Marketing Budget
Ford's marketing executive said that their company has made a bigger digital and social media to compete with their rivals.

Other than that, in order to produce hybrid technologies, rare earth elements are required and they are dispersed and difficult to mine, which makes them highly expensive. For Ford, the spike in rare earth prices a couple of years ago came at a critical time, when it was finalizing development plans for its next generation hybrid system.
Ford cuts half of the amount of dysprosium - the most expensive rare earth elements they are using now. They redesigned the magnets that makes the electric motor's shaft rotates, making it consumes less dysprosium so they wouldn't have to spend so much funds on it. In all, Ford says it reduced the use of rare earth metals in its hybrids by 500,000 pounds annually - the equivalent weight of 150 cars.
Other than the pricing strategies, Ford also applies one of the pricing policies that is price flexibility. Price flexibility defines as whether or not to set one price that applies to every buyer or to permit variable prices for different customers.
In the auto manufacturing industry, this is generally a very low threat. Factors to examine for this threat include:
Effects of Brand Loyalty
Brand Equity
Large Manufacturing plants needed
Capital requirements
Government policy
US dealers were giving great deals to buyers to get the industry moving. While quantity a buyer purchases is usually a good factor in determining this force, even in the automotive industry when buyers only usually a good factor in determining this force.
The presence of diverse substitute vehicles
New technology
Concern for comfort and feel
Differential advantage of industry products
Suppliers are powerful relative to the firms in the industry if there are only few substitutes available for the products and services supplied.

Supplier power is further enhanced when the supplied product is unique and differentiated or when the companies in the industry face significant switching costs.
The threat of substitutes is the idea that products or services available from outside the given industry will come close to meeting the needs of current customers. The existence of substitutes that have attractive price and performance characteristics results in low switching costs, increasing the strength of this threat.
Rivalry among existing competitors describes the intensity with which companies in an industry jockey for market share and profitability.

When intense rivalry among existing competitors brings about price discounting, industry profitability clearly tends to erode.
There are many competitors in the industry
The competitors are roughly of equal size
aims to enable managers not only to understand their industry environment but also to shape their firm's strategy. The stronger the five forces, the lower the industry's profit potential - making the industry less attractive to competitors.

The model's perspective is that an existing firm competing for advantage in an established industry. The managers need to position their company in an industry in a way that relaxes the constraints of strong forces and leverages weak forces.
Strong position in US market (2nd largest automaker in US)
ECOnetic initiative - producing highly fuel-efficient engines. (Ford Fiesta, the lowest emitting car in Europe and Ford Focus that has better fuel consumption than Toyota Prius.
Global presence that sells vehicles in 180 countries around the world.
'One Ford' approach that significantly decreases costs for Ford and drives record profitability.
Significant growth in China that grew its sales by 46% according to Ford press release.
Produces Hybrid cars since 2007
Poor environmental record ( University of Massachusetts have rated Ford as the 7th worst air polluter and US Environmental Protection Agency also linked Ford to 42 toxic waste sites)
Unprofitable Europe operations at 7.9% down 2/10 of percentage point from a year ago.
Product recall because of low quality of new products that cause losing customers. (Ford has now been twice found guilty of inflating the window-sticker fuel economy ratings on a half dozen of its models.
High cost structure because of employee's compensation and pension plans.
Stock prices for Ford motors have also seen a huge drop in recent years that will lead to poor investor relations
Gaining popularity of green vehicles
Demand for Electric Automobiles since the world looks for an eco-friendly alternative that operates like the original gas-guzzling car
Cheap labor and material costs in China that will help them reduce their manufacturing costs.
New emission standards on vehicles to produce fuel-efficient engines.
Strategic partnerships with GM, Mazda, and Toyota.
Aggressive global competitors like Toyota, Honda, Nissin and GM.
Increasing in fuel costs that may shift consumers not to use or buy vehicles
Increase in usage of public transport
Rising raw material prices in US and Europe region
Fluctuating exchange rates that may negatively affect Ford's profit because most of Ford's suppliers are outside US.
Lingering effects from recession, since US have been facing economic slowdown and Ford main manufacturing plant exists in US.
Ford should try to expand sales in the Middle East.

It should try to gain share in some major oil companies to tackle uncertain oil prices in the future.
Financial Fit
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