Ford Motors Company

Ford Motors Company

International Business

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Presented by:

M. Rizwan Qamar

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Outline

Brief Introduction of Ford Motors Overview of Pakistan Automobile Industry Mode of Entry in Pakistan Political Effects On Investment in Pakistan Model to be Introduced Overview and Features Comparison with Competitors Marketing Strategy Conclusion

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Introduction

Slogan: Bold Moves. Type: Public (NYSE) Founded: June 16, 1903 Headquarters: Dearborn, Michigan, USA Revenue: $177.4 billion USD (2005)

Employees: 327,531 Website: www.ford.com

Source: Annual Report Ford Motors Co. 2005

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World Motor Vehicle Production by ManufacturerSource: World motor vehicle production by manufacturer: World ranking 2005.

9040

7100

6418

5173

4319

3375

3373

3348

2853

2617

2072

1934

1327

1323

1285

0 5000 10000

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No. of Units ('000)

Mazda

BMW

Mitsubishi

Fiat

Suzuki-Maruti

Renault-Dacia-Samsung

Hyundai-Kia

Nissan

Honda

PSA PeugeotCitroën

DaimlerChrysler

Volkswagen Group

Ford

Toyota

General Motors

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World Motor Vehicle Production by CountrySource: World Motor Vehicle Production by Country and Type: Light

Commercial Vehicles 2004 - 2005. OICA

1152410064

55435067

36573495

26772624

23751783

1607140612641110995

0 5000 10000 15000

1

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Annual Production Units ('000)

United States Japan Germany

China South Korea France

Spain Canada Brazil

United Kingdom Mexico India

Russia Thailand Italy

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Brief History

Incorporated in 1903 with a paid up capital of US$ 28000 by 11 investors

Henry Ford 40 years old man Found this company

One of those companies which survive in great depression

1908 Released 1st T-Model car Introduces new HRM system which later on

called FORDISM 1911 Ford opens first factory outside North

America – in Manchester, England.

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History……….continued

1918 50% of the county cars were T-Model Henry Ford Make efforts to Stop World War-I 1919 loss market share when GM and Chrysler

offer new luxurious Models 1922 acquire Lincoln Motor Company, named for

Abraham Lincoln in US$ 8 Million 1925 introduces Ford Tri-Motor Airplane 1926 Ford Australia was founded in Geelong,

Victoria, Australia.

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1927 introduce new luxury Model-A and stop the production of Model-T after producing 15 million units

1930 establish Mercury division to serve mid price auto market

1938 Henry Ford was awarded The Grand Cross of German Eagle- Highest award given by the Germans to any foreigner

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1941 Ford begins building general purpose "jeep" for the military

1942 Production of civilian vehicles halted, diverting factory capacity to producing B-24 Liberator bombers, tanks, and other products for the war effort

1947 Henry Ford dies of cerebral hemorrhage at the age of 83, Henry Ford II becomes new chairman

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1945 Lincoln and Mercury were combined into a single division.

1948 F-1 Truck introduced. Lincoln Continental was introduced

1956 Ford goes public with common stock shares 1957-58 Ford was top selling brand, with 1.68

million automobiles produced per year 1965 Ford brand US sales exceed 2 million units 1967 Ford of Europe was established

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1970 Ford establishes Asia Pacific operations

1973 Ford US brand sales reaches an all time high of 2.35 million vehicles produced

1979 Ford acquires 25% stake in Mazda. 1985 Annual turnover exceed 2.70 million

with a revenue of more than US$ 53 billion 1987 Ford acquires Aston Martin Lagonda

and Hertz Rent-a-Car

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1989 Ford acquires Jaguar, and the Mazda MX-5 Miata is unveiled

1995 Annual revenues reached $137 billion 1996 Ford certifies all plants in 26

countries to ISO 14001 environmental standards

1999 Ford purchases Volvo (car division) 2000 Ford purchases Land Rover from BMW

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2003 Ford Motor Company 100th Anniversary.

2006 Ford buys Rover brand name from BMW

Sources:

General Timeline: Ford Motor Company 2002 Annual Report

Production figures: U.S. Automobile Production Figures

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Pakistan and its Automobile Industry…………An Overview

Pakistan is Situated between two biggest nations of the world, India and China consisting of ¼ Population of the world

It provides a strategic link to the Middle East in the west, Central Asia in the north

The country has a sizeable market of 160 million people

Its hard core workforce consists of over 45 million people, both men and women

The literacy rate is 52 % with 68 universities and 1,164 colleges

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Pakistan…………….Climate

The country comprises a land mass of 796,095 sq km, with one of the world’s highest mountains, such as K-2 in the north

Too vast deserts in the south, with arable plains in the middle irrigated by five famous river systems of the great Indus Valley

Five seasons, namely winter, spring, summer, Moon Soon and autumn are among the greatest natural endowments of the country

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Pakistan……….Infrastructure

The country’s infrastructure is fairly well developed, comprising an elaborate cross country railways network, extensive road linkages reinforced by motorways and highways, seaports, airports and dry ports.

A fully developed export processing zone has been operating in Karachi since the early 1980s

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Pakistan…Infrastructure……….Continued

Three new export processing zones are being established in Sialkot, Risalpur and Saindak

There are 72 industrial estates and three special industrial zones in the country

The country is fast exploring the brave new world of information technology and keenly assimilating the requirements of e-government and e-commerce

Source: Mr. Yasin Tahir, Joint Secretary (Investment and

Engineering), Ministry of Industries and Production, Islamabad

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Pakistan…Infrastructure……….Continued

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Pakistan…….Automobile Industry

The existing population of automotive vehicles in Pakistan is 3.9 million

The annual demand is estimated at 300,000 2/3 of demand is being met from local sources

and imports and the remaining one third is left unmet

The market value of automotive vehicles in terms of US$ is estimated at more than 1 billion

Import constitutes around US$ 200 million

Source: Pakistan Automotive Manufacturers Association 2001-2002

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The demand in the auto sector in Pakistan is skewed towards small cars. Due to this trend Pak Suzuki Motors enjoys a monopoly in the small-car market.

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Product characteristics As the production of automotive vehicles is based

on foreign joint ventures of Japanese, Korean and European origin, the product quality is

of international standard. The quality standards being followed are mainly:

i) Japan Industrial Standards (JIS). ii) Society of Automotive Engineers, United States, (SAE) iii) International Standards Organization (ISO)

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The prices of locally manufactured automotive vehicles are generally less than the landed cost of imported vehicles

In the domestic market the profit margins are estimated at 10 % to 20 % of return on equity (ROE)

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Govt. Investment Policy Liberalized Investment Policy No Upper Limit for Foreign Equity No restriction on remittance of Profits, dividends, payment

of royalty and Technical fee etc. Promoting Joint ventures, Co-Manufacturing and Co-

Exporting and technology tie-ups Abundant Land and Natural Resources Vast Human Resources Growing Domestic Market Well established Infrastructure Strategic Geographical Location

Source: Ministry of Industries and Production, Islamabad, 2001-02

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Mode of entry in Pakistan

The mode of entry of Ford Motors Company in Pakistan will be the Foreign Direct Investment (FDI).

Following are the main advantages of FDI:

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Advantages of FDI……...To Pakistan

Foreign Direct Investment will be increased in Pakistan. Decrease in Unemployment Improvement in Foreign Exchange Reserves Local resources will be used in other productive industries Transfer of new Technology Customers can get the product of international level which

may not be possible in Licensing or Franchising. Increase in Growth Rate of GDP Helpful in boosting the Local Stock Market Index

Source: Economist Intelligence Unit's 2001

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Advantages of FDI...…...To Company

10 to 20% Return on Equity Cheap Labor and infrastructure as Compared with other

Countries A vast Market around the country Decrease in Production Cost Foreigners are allowed to open FX deposit Account in

local banks FX bearer certificates are Discounted Free from heavy excise duties

Source: "Economic Performance during 1999-2002," Ministry of Finance, Government of Pakistan

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Political Effect on Investment in Pakistan

Unstable Political System Unstable tariff and taxes policy Rapid change in Govt. Reshaping the Foreign Policy Politically federal countries attract higher levels of

FDI Lack of Consensus on Federalism affect

Macroeconomic Performance

Source: Nathan M. Jensen, 2006

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Model to be Introduced Ford Fusion 2006

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Model Introduced……….Continued

Production 2006—present Assembly Muridke, Pakistan Predecessor Ford Contour Ford Taurus Class Mid-size Body style 4-door sedan Platform Ford CD3 platform Engine 2.3 L Duratec 23 I4 3.0 L Duratec 30 V6 Transmission: 6-speed Aisin automatic 5-speed Mazda manual

5-speed Mazda automatic

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Model Introduced……….Continued

Wheelbase 107.40 in. Length 190.20 in. Width 72.20 in. Height 57.20 in. Win Total Quality Award in America 30000 units sale in America in 1st Quarter of 2006

Source: Motor Trend magazine, (September 2006)

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International Competitors

Related Brands

Ford Edge

Lincoln MKX

Lincoln MKZ

Lincoln Zephyr

Mazda6

Mazda CX-9

Mercury Milan

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International Competitors

Similar Brands

Chevrolet Malibu

Honda Accord

Mitsubishi Galant

Toyota Camry Honda Accord is only the local competitor

in Pakistan

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Comparison with Competitors

Features Ford Fusion 2007

Chevrolet Malibu 2007

Toyota Camry 2007

Honda Accord 2007

Base Price $18,155 $18,155 $20,775 $20,925

Destination Charge

$700 $650 $620 $595

Total Equipped Price

$18,855 $19,380 $22,745 $21,520

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Comparison with CompetitorsFeatures Ford

Fusion 2007


Toyota Camry 2007

Honda Accord 2007

Standard Seating

5 5 5 5

Manual Air

Conditioning Standard Standard Standard Standard Manual Transmission

5-Speed Manual Transmission With

Overdrive

(Standard) Not Available Not Available Not Available

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Toyota Camry 2007

Honda Accord 2007

CD Player Standard Standard Standard Standard

Power

Windows Standard Standard Standard Standard Power Door

Locks Standard Standard Standard Standard

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Fusion 2007


Toyota Camry 2007

Honda Accord 2007

AM/FM Radio

Premium AM/FM Radio With 6 Speakers Total; 6-Disc CD Changer; MP3 Player

(Standard)

AM/FM Radio With Seek, Scan, Speed Sensitive Volume and 6 Speakers Total; CD Player

(Standard)

AM/FM Radio With 160-Watts and 6 Speakers Total; CD Player; MP3/WMA

Player (Standard)

AM/FM Radio With 120-Watts and 6 Speakers Total; CD Player

(Standard)

Horsepower @ RPM 160@6250 144@5600 158@6000 166@5800

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Toyota Camry 2007

Honda Accord 2007

Rear Suspension

Independent Independent Independent Independent

Torque @ RPM

156@4250 155@4000 161@4000 160@4000

Brakes (Rear) Disc Drum Disc Drum

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Fusion 2007


Toyota Camry 2007

Honda Accord 2007

Driveline Front Wheel

Drive Front Wheel

Drive Front Wheel

Drive Front Wheel

Drive Fuel Economy

City (mpg) 23 24 24 24

Fuel Economy Highway (mpg)

31 34 33 34

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Toyota Camry 2007

Honda Accord 2007

Wheelbase (in.)

107.4 106.3 109.3 107.9

Front Head Room (in.)

38.7 39.9 38.8 40.4

Front Leg Room (in.)

42.3 41.9 41.7 42.6

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Toyota Camry 2007

Honda Accord 2007

Basic (Miles) 36000 36000 36000 36000 Powertrain (Months) 60 60 60 60 Powertrain (Miles)

60000 100000 60000 60000

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Marketing Strategy

Target Market

Individuals having income level Rs. 100,000 and More which includes:

• Industrialist • Businessmen• Bureaucrats • High Profile Gentry

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Marketing Strategy……….Continued

Product• Ford Fusion• Near Luxury• Passenger Volume 100 ft3 (4D) • Luggage Volume 16 ft3 (4D) • Fuel Type: Regular Gasoline • Mileage MPG (combined) 26 • 5 or 6 volume Automatic speed

(Optional)

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Marketing Strategy……….Continued……………………………………………Price

Description Price in US$ Price in PKRUS$ 1= 60 PKR

Base Price MSRP

$18,155 Rs. 1,089,300

Destination Charge

$700 Rs. 42,000

Total Equipped Price

$18,855 Rs. 1,131,300

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Place

The distribution outlets will be situated in:

• All Major Cities

• Industrialized Cities

Established Markets

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Promotion

• Print Media• Electronic Media• Sign Board• Direct Selling

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Sign Board Design

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Conclusion

Fulfilling Unmet demand 10%-20% ROE Established Infrastructure Local Content Requirement Easy access to capital

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Thank You

Investor Relations

Ford Motors Company