Ford presentation

Hamill BassueOwen Hendershot

Goran Nagradic

Overview• Company Overview

– Ford’s brief history– Mission and Vision statement– Current Objectives &

Strategies• New Mission and Vision• External Assessment

– Industry Analysis– Opportunities & Threats– EFE Matrix

• Internal Assessment– Strengths & Weaknesses– Financial ratios– IFE Matrix

• Strategy Formulation– SWOT Matrix– BCG– Space Matrix– IE Matrix– Grand Strategy Matrix– QSPM Matrix

• Strategic Plan for the Future– Objectives– Strategies

• Implementation – EPS/EBIT– Other issues

• Evaluation

• Ford 2008 Update

About the Company

• Manufactures and distributes automobiles on six continents, strong presence in all 50 states.

• Employs approximately 224,000 people and operates 90 plants worldwide.

• Brands include Ford, Lincoln, Mercury, Volvo, Mazda and Ford Motor Credit Company (financial service).

Ford’s Brief History

1903 – Ford Motor Company founded in Michigan1908 – Model T introduced1913 – first moving automobile assembly line in the

world1956 – Ford’s stocks go on sale (10.2 million shares

sold the first day)1987 – beginning of the acquisitions of other

brands1988 – Ford Motor Company reached the peek

Management

Mission & Vision Statement

"To become the world's leading consumer company for automotive products and services.“

- Ford doesn’t have vision statement

Objectives

• To contribute to stabilizing the climate by considering reducing long-term emission

• To promote the development of an infrastructure that will expand the use of bio-fuels and help reduce our dependence on oil

• To cut the usage of global energy by 27% and the usage of water by 25%

Strategies

• Utilizing their advance technology• Building of smaller vehicle• Cost reduction• Market expansion through joint venture and

strategic alliance

New Mission & Vision Statement- Both mission and vision are one statement

“Our vision is to become the world's leading consumer manufacturing company for automotive products and services. To achieve this, we the company and all our employees are dedicated to provide all our customers and the community with safe innovative products and services of world class standards. Through our engineering excellence, high quality and the use of our constantly upgrading technology we limit the harm that we cause to the environment while delivering superior value to our customers. Our close knit working environment allows our employees, community and business partner to share in our success, while achieving a substantial return on our shareholders investment. “

External Assessment

Industry Analysis

Global Automobile Industry Value Global Automobile Industry Volume

Industry Segmentation

Industry Segmentation

Industry Market Share

Industry Forecast

CPM

Ford GMDiamlerChrysler

AG Toyota

Critical Success factorsWeigh

tsRating

Weighted Score

Rating

Weighted Score

Rating

Weighted Score

Rating

Weighted Score

 0.0 to

1.01 to

4  1 to

4  1 to

4  1 to

4  

Global Expansion 0.14 2 0.28 3 0.42 2 0.28 3 0.42

Financial Position 0.10 2 0.2 4 0.4 3 0.3 3 0.3

Growth 0.16 1 0.16 3 0.48 1 0.16 4 0.64

US Market Share 0.20 3 0.6 4 0.8 2 0.4 2 0.4

Customer Loyalty 0.15 4 0.6 3 0.45 4 0.6 3 0.45

Hybrid/Fuel Efficient Vehicles 0.18 3 0.54 3 0.54 2 0.36 2 0.36

Management Experience 0.07 3 0.21 4 0.28 3 0.21 3 0.21

Totals 1  2.59  3.37  2.31  2.78

Opportunities & Threats

Opportunities• Consumers demand hybrid

and fuel efficient vehicles• Increase in consumer

spending trends• Consumers demand more

innovative vehicles• Global expansion• Industry experiences slow

and steady growth

Threats• Weak USD• Increase in steel and resin

pricing• Increasing gasoline prices• Stricter CO2 emission

standards• Increasing mortgage rates

EFE Matrix

Internal Assessment

Stock performance

Financial Highlights

• Income Statement• Balance Sheet• Cash Flow Statement

Ratios

Strengths & Weaknesses

Strengths• Strong and globally positioned

brand names• Large employee base with

highly educated engineers and good R&D department

• One of the largest automotive manufacturer (along with a long history)

• 1285% increase in net cash• Huge increase in total equity

Weaknesses• A lot of time spent to actually

put the product on the market• Recording continuous losses

(net income) from 2006• Low quality of new products

(recalls – causing losing customers)

• Lack of management of the company

• EPS very bad – in negative numbers (unattractive for the investors)

IFE Matrix

Key Internal Factors Weights RatingWeighted

Score

 0.0 to

1.01, 2, 3 or

4  Internal Strengths   3 or 4  Strong and globally positioned brand names 0.13 4 0.52Large employee base with highly educated engineers and good R&D department 0.09 3 0.27One of the largest automotive manufacturer (along with a long history) 0.06 3 0.181285% increase in net cash 0.09 3 0.27Huge increase in total equity 0.11 4 0.44Internal Weaknesses   1 or 2  A lot of time spent to actually put the product on the market 0.1 2 0.2Recording continuous losses (net income) from 2006 0.12 1 0.12Low quality of new products (recalls - causing losing customers) 0.12 1 0.12Bad management of the company 0.08 2 0.16EPS very bad - in negative numbers (unattractive for the investors) 0.1 1 0.1Totals 1  2.38

Strategic Formulation

SWOT MatrixStrengths – S

1.Marcas posicionadas a nivel mundial Fuertes 2.Gran base de empleados con los ingenieros de alto nivel de educación y un buen departamento de I + D 3.Uno de los mayores fabricantes del automóvil (junto con una larga historia) 4.Aumento de 1.285% en el efectivo neto 5.Enorme incremento en el patrimonio neto

Weaknesses – W1. gran cantidad de tiempo dedicado a poner en realidad el producto en el mercado 2.Grabación de continuas pérdidas (ingresos netos) a partir de 2006 3.La baja calidad de los nuevos productos (recuerda - que causa la pérdida de clientes) 4.La falta de gestión de la empresa 5.EPS muy malas - en números negativos (poco atractivos para los inversores)

Opportunities – O1.Los consumidores piden vehículos híbridos eficientes y bajo consumo de combustibles 2.Aumento de las tendencias de consumo 3.Los consumidores piden vehículos más innovadores 4.La expansión global 5.Crecimiento de las experiencias de la industria lento y constante

SO1.El desarrollo de nuevos vehículos en los combustibles alternativos (S1, S2, S4, O1, O3. O5) 2.Ofrecer nuevos productos innovadores - Aumento del mercado - motos (S1, S2, S3, O2, O3, O5) 3.Concéntrarse en hacer los mejores vehiculos de combustible eficiente

WO1.Realizar producción mas economica y de bajos impuesto

Threats – T1.Débil USD 2.Aumento de los precios del acero y resina 3.El aumento de los precios de la gasolina 4.Estrictas normas de emisión de CO2 5.El aumento de las tasas hipotecarias

ST1.Construir productos ecológicos con materiales alternativos (S2, S3, S4, T2, T3, T4) 2.Producir más autos para el mercado exterior (S1, S2, S4, T1, T4)

WT1.Combinar con los competidores (W1, W2, W5, T2, T3, T5) 2.Fabricación únicas partes de automóviles (W1, W2, T1, T2)

SPACE Matrix

FS

+6

+1

+5+4+3

+2

-6

-5

-4

-3

-2

-1-6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6IS

Conservative Aggressive

Defensive Competitive28

BCG Matrix

Revenues % Revenues Profit % Profit % Market Share

% Growth Rate

NA 69365 45% -4161 - 61% -0.1

SA 7585 5% 1172 - 30% +33

Europe 36330 24% 744 - 81% -3

PAG 33067 21% -1872 - - +10

Asia 8032 5% 206 - 38% +3

Total 154379 100% -3911 - - -

BCG MatrixRelative market share position in the industry

High 1.0 Medium .50 Low 0.0 High +30 M

edium 0 Low

-3

Industry sales growth rate

SA

APA

NA

IE Matrix

Hold and Maintain

31

Grand Strategy MatrixRapid Market Growth

Quadrant II Quadrant I

Strong Competitive

Position

Slow Market Growth

Weak Competitive

Position

Quadrant III Quadrant IV

Matrix EvaluationAlternative Strategies BCG IE SPACE GRAND COUNT

Forward Integration x 1

Backward Integration x 1

Horizontal Integration x 1

Market Penetration x x x 3

Market Development x x 2

Product Development x x x 3

Concentric Diversification x x 2

Conglomerate Diversification x x 2

Horizontal Diversification x x 2

Joint Venture x 1

Retrenchment x x 2

Divestiture x x 2

Liquidation x 1

Possible Strategies

• Developing new vehicles on alternative fuels (S1, S2, S4, O1, O3, O5) – SO1

• Offer new innovative products – increase market share (S1, S2, S3, O2, O3, O5) – SO2

• Concentrate on making the best fuel efficient cars (S1, S2, S3, S4, O1, O4, O5) – SO3

QSPM

Strategic Plan for the Future

Objectives for the 2008 - 2010

• Reduce manufacturing expenses by 15-20% 2008• Introduce new small fuel efficient vehicles 2009• Enter Latin American and Asian market with

hybrid vehicles 2010• Develop affordable electric car for US market

2009-2010• Increase market share 2009-2010• Build up strong financials (increase net income

and EPS by 15%) 2009-2010

Recommendation

• Manufacturing of new small fuel-efficient vehicle $ 7,000,000,000

• Entering the Latin American and Asian market with hybrids $ 20,000,000,000

• Implementation of electric car in the US market $ 13,000,000,000

Total Cost = $ 40,000,000,000

Implementation

EPS/EBIT

• Amount needed: $40,000,000,000• Stock price: $7.42• Interest rate: 7.5%• Tax rate: 0% (firm is having a loss)• # of shares outstanding: 2,195,000,000• # shares needed: 500,404,312

EPS/EBIT

Common stock financing Debt financing

Recession Normal Boom Recession Normal Boom

EBIT 10 20 40 10 20 40

Interest 0 0 0 1.5 1.5 1.5

EBIT 10 20 40 8.5 18.5 38.5

Taxes 0 0 0 0 0 0

EAT 10 20 40 8.5 18.5 38.5

#shares 2.695 2.695 2.695 2.695 2.695 2.695

EPS 3.71 7.42 14.84 3.15 6.86 14.28

*data in $ billion

Other Issues

• Laws and regulations in foreign countries• Regain lost trust in the Ford’s brand

Evaluation

Ford 2008 Update

Industry Update

Sources

• Ford Motor Company Annual Report 2007• General Motors Annual Report 2007• http://www.ford.com/about-ford/investor-rel

ations• Datamonitor

– Global Automobile Industry manufacturer 2006

• Pictures taken from Web

Questions???