Ford Motor Company

Founders : Henry Ford Alexander Malcomson , john W. Anderson c.w.

bennett james couzens , Horace e.dodge john f dodge Vernon c fry ,

john s gary Horace h rackham , albert strelow & Charles J Woodall.

Distinction : completely transformed the process of manufacturing.

Primary Products : Cars ,Trucks and Auto Finance.

Annual Sales : $162.558 billion.

Number of Employees : 364,550.

Major Competitors : Daimler Chrysler,General Motors,Toyota.

Chairman : William C Ford Jr.

President & CEO : Jacques A. Nasser.

HeadQuaters : Dearborn,Mich.

Year Founder : 1903.

History

Ford Motor Company was founded in 1903 by Henry Ford and has continuously remainedunder

family ownership since this time. The company developed and implemented assembleline

production by the release of the Model T in 1909, and produced planes and vehicles for the Allies

in World War II. Ford has operated internationally since 1904, when it opened a branch

inCanada to gain access to Commonwealth markets. For the first half of the 21 stCentury, Ford

remained the dominant car manufacturer within the market it had effectively created. In 1956,

Toyota exported its first automobile to the United States, and began acquiring market share. In

hindsight this was a turning point in the U.S. market, and as the 21 st Century drew to a close

Ford faced declining market share and had difficulty remaining competitive in the global

marketplace. Ford was particularly inhibited by substantial legacy costs—primarily from

employee pensions and healthcare benefits—and falling demand for its most profitable lines of

vehicles.In 1996 the company launched the ‘Ford 2000’ initiative to streamline supply lines

andreorganize the company’s worldwide operations into a more cohesive unit. In spite of some

important successes, including the popular Ford Focus model and a streamlined organizational

structure, costs at Ford remained higher than most of the firm’s competitors.

In 2006, Ford posted its biggest operating loss to date: $12.6 billion. This coincided with

continued deterioration in market share, with the majority of these losses being captured by

Toyota and General Motors. From 1997 to 2007, Ford’s United States market share plummeted

from 25% to 15%.

In 2006, Alan Mulally was hired as CEO and took over a company at the precipice of failure.

Mulally announced a new restructuring plan in 2006 entitled ‘The Way Forward’, designed to

“better align capacity to demand”. At its core, this plan involved the closure of seven assembly

plants and strategic reorientation towards ‘One Ford’. Championed by Mulally, this strategy

focuses on creating a standard Ford personality which is seen and felt within every automobile

produced by the company. In addition, the plan entails standardizing chassis worldwide and a

greater focus on the core Ford nameplate. As a part of this plan, Ford mortgaged all of its

assets—both physical and intellectual property—in December2006 for a $23.4 billion line of

credit. While originally seen as a risky and potentially desperate move, this timely acquisition of

capital has made Ford the most stable of the Big Three carmakers. The company also divested

some of its non-Ford brands during this time, selling Jaguar and Land Rover to Tata Motors for

$2.3 billion in 2008. Ford is also currently attempting to sell Volvo, which it purchased in 1999 for

$6.5 billion.

Business Model and Market Overview

Ford Motor Company currently employs approximately 213,000 workers worldwide and markets

vehicles under four primary brands: Ford, Lincoln, Mercury, and Volvo. The firm isdivided into

two departments, Automotive and Financial Services. Ford Credit offers vehicle financing to both

retail consumers and to dealers. Approximately forty percent of vehicles sold by Ford, Lincoln,

and Mercury dealerships within the United States were financed by Ford Credit in 2008, a

number which has remained stable in the past three years.

In Europe, the only other region with reported data, this figure has remained steadily

around27%. Conversely, financing for wholesale purchases by dealerships is nearly

exclusively(98%) done by Ford Credit in Europe whereas in the U.S. this number is slightly

beloweighty percent. Ford Credit also plays a role in financing dealership purchases of real

estate and other larger capital expenditures by the company and its affiliates.

Ford’s automotive segment designs, manufactures, and services cars, trucks, SUVs, and vehicle

parts. This sector is primarily broken down by region: North America, South America, Europe,

and Asia Pacific Africa. The only exception to this regional model is Volvo, which operates as a

separate subsector and manages all Volvo sales worldwide. Ford retail sales operate under a

dealership model, where dealerships sign exclusive contracts with the company to sell Ford

vehicles. At the close of 2008, Ford operated nearly 3,800 dealerships within the United

States. Approximately half of these dealerships sold only the Ford brand, with another quarter

selling Ford, Lincoln, and Mercury. 1 Production of vehicles for Ford typically takes within 20

days from point of order to shipping, meaning the firm faces little to no backlog or inventory

buildup. Production is typically higher in the first two quarters to accommodate peak seasonal

demand, which occurs in the spring and summer.

SWOT (Strengths, Weaknesses, Opportunity, Threats)

Strengths

Timely acquisition of capital makes Ford more financially sound than the other Big Three carmakers.

Product line is respected by industry experts and is qualitatively seen to be a step above many of its

competitors. Recent surveys place Ford in a tie with Toyota for greatest customer satisfaction, a

significant improvement from five years ago.

Has a global market presence, with worldwide brand recognition and a particularly strong presence in

Europe.

Is perceived to be a thoroughly “American” brand, which helps Ford among certain groups of

consumers.

U.S. market share, after years of decline, has stabilized in recent years.

The Ford F-series pickup remains the most respected commercial truck available; despite demand

shifts, profitability on this line should remain high.

Ford has had great success, particularly when compared to its competitors, at renegotiating labor

contracts with the UAW.

Weaknesses

Poor Profitability: Ford still loses money on many automobile lines, particularly within the United

States.

Importance of single components source (Visteon).

The automotive market is highly competitive with large fixed costs. In addition, the market demands

continual long term planning and research and development.

Very little market penetration within China and India.

Global excess capacity for the automobile industry is estimated to average 30.5 million vehicles per

year from 2009-2011.

Ford is selling a durable good during the most severe economic downturn in recent history.

Opportunities Ford has recognized the importance of small, fuel efficient vehicles and is actively transitioning into

this market. Of particular interest is Ford’s ‘EcoBoost’ technology, which the company claims will

result in 20% greater fuel efficiency and 15% fewer CO2 emissions.

The ‘One Ford’ vision has the chance to generate significant margin increases for Ford’s smaller line

of vehicles. Of particular importance is the Ford Fiesta, which was recently released in Europe and

China and is slated for an early 2010 release in North America. The ‘One Ford’ vision appears to be a

coherent strategy for Ford to adopt given its changed role within the industry.

Ford is perceived to be the most stable ‘American’ car manufacturer because it has not been forced to

take bailout money, leading to slight increases in market share.

GM and Chrysler flexibility is limited by government involvement in their debt situation, putting Ford

as a competitive advantage.

In the event of a GM or Chrysler bankruptcy, Ford has placed itself in a position to steal market

share—at least in the short term.

COMPETITIVE ADVANTAGE

After many decades, the company launched a new strategy plan in 2000 to focus on the 21

century. The new strategy was aimed an in creasing the market share, increase the revenues

earned and production of smart cars with fuel efficiency. Ford implemented the centralized

decision making system. This allowed the company to concentrate on the available market

opportunities both locally and internationally. With the implementation of centralized decision

making system, the top management becomes more engaged in the development of products to

satisfy the customer expectation in various markets (porter, 1986). This strategy allowed the

company to improve the communication system from top to bottom.

Ford motors adopted the strategy that allowed it low production cost by cutting all the excessive

cost involved in this operations. The huge expenditure on raw materials was cut down and the

online manufacturing process was introducd that focus on the development of cars on one

process rather than having different segments of engineering and production. This strategy was

establishes cost advantage and give the company advantage over its competitors in terms of

lower cost (porter, 1983), in the mean while company focused on producing smart cars that were

not price sensitive and offered the functionality of traditional ford cars.

The market position of ford has been enchanced due to multiple factors. Firstly, since it fought

hard against bancruptcy and refused governmental funding as its competitors did, the consumer

trust has increased in the company and its brands. Secondly, its products are widely accepted by

the cunsomers and integrating with the first factor, the company has increased market share.

Lastly, the company has adopted the strategy to provide smart cars to the cunsomers it will

further benefit the company in terms of market share and increased volumes (GLG Expert,

2009). Ford can benefit from the industrial recovery by offering and focusing on the consumer-

oriented products and give value to them while generating reasonable profits.

The demand for better fuel economic cars has increased due to high energy prices with the

increasing wealth of developing world; the ford motors currently believe in providing few

automobile models to sell around the globe with some modifications; to be called world cars.

Ford fiesta is the first world car which was designed by ford europe and was produced in US and

China. The future strategy of ford company is to develop more world cars with the idea of

providing standarized products to its worldwide markets. The company developed its

competitive edge thet carried it to the future. They introduced a technology which was already in

use by its competitors but wich the new perspective and modification. The tech gadget called

ford SYNC. It is a science sync-equipped in the vehicles thet can connect the driver with so many

options

Ford SYNC is a company fitted, fully integrated communication and entertainment system that

connects the users with internet, through his smart phone and allows them to make telephone

calls and control music and other functions using voice commands. This system is the integrated

interface developed by ford and microsoft that operates on microsoft Windows Embedded

Automotive operating system.

Value chain

Information Technology

Ford is also using information technology to improve its value chain. It has teamed-up with

Caterpillar Logistics and SAP to improve warehousing and its Daily Parts Advantage network for

getting spare parts to their dealers. Their hope in partnering with Cat Logistics was “to secure a

partner with expertise in the automotive supply chain, laying a foundation for development of a

new information system. The goal was to obtain end-to-end visibility of service parts, increase

the speed of time to market, optimize inventories at each location, and do a better job serving the

customer” (Supply Chain Brain).

Along with Cat Logistics and SAP, Ford is also using an SAS platform that supports customer

relationship management (CRM). This SAS platform enhances Ford’s existing customer

relationship database and provides a powerful base for information analysis, data mining and

predictive modeling thus enabling highly effective reporting, trending, segmentation, customer

scoring, and customer life-cycle analysis all of which support key activities for CRM. But

according to Jim Ader, IT coordinator for analytics at Ford, “Predictive modeling is the most

important endeavor supported by SAS platform. Using data modeling to leverage your

understanding of customers and the way that you treat them is the key to customer relationship

management. In the future, one of the big challenges for any company marketing to consumers

will be to use models more and more effectively.” (SAS)

The implementation of these information technologies has enabled the Ford value chain to

become a cost savings powerhouse for the company. Ford has been able to reduce its’ supply

chain cycle by 57% to 37 days, achieve a 40% decline in inventory levels in the U.S. and an 85%

reduction in customer back order lines.

Critical Data Elements

Ford is also adopting Lean Manufacturing practices to support continual improvement in the

value chain. Studies have suggested that there is as much as 30% waste in many

manufacturing processes. In order to combat this, Ford established the Value Analysis

Center. With these two programs, critical data elements are identified in order to determine the

best approach to eliminate this waste and add greater value to all aspects of the value

chain. “Lean” uses various technological tools, data collection sensors and data manipulation

software to describe process baselines, lead times and processes in order to discover waste in

the value chain processes. Essentially, the Value Analysis Center at Ford is its’ cost

management program.

Ford’s Generic Strategy

Most companies in the auto industry are taking similar steps to gain an advantage, but Ford has

its own strategy to get the most out of their value chain. Ford is now taking steps to enhance

supplier relations. By improving these relations, Ford hopes to ensure consistent production of

parts and supplies. By reducing the number of suppliers and offering bigger and longer contracts

to the remaining suppliers, Ford hopes to be able to reduce costs while increasing quality and

consistency. “If the parts suppliers collapse, the automakers would face paralyzing production

disruptions and financial repercussions of their own.”

Supplier Power

Supplier power is a significant threat to auto companies and manifests itself in severaldifferent

ways. While the primary raw materials used in vehicles (metals and resins) have many suppliers

around the globe, intermediate parts pose a greater problem. Currently, Ford wields significant

buying power over its parts suppliers. Many parts suppliers rely on contracts with only one or

two automotive firms, meaning changes in production at Ford can dramatically impact the

stability of its supply chain. In the past few years Ford has made a concerted effort to reduce the

number of suppliers it contracts with.

Since 2004, the number of parts suppliers has fallen from 3,300 to 1,600, and the company has

set a target of 750 suppliers. The goal of this process is to solidify supplier viability during

difficult economic times and combat one of the biggest threats posed to Ford: the potential for

failure or unexpected bankruptcy of a critical parts supplier The United Auto Workers Union

(UAW) is the single greatest source of supplier power vis- à-vis Ford, GM, and Chrysler. This

union controls the majority of the U.S. labor supply for the Big Three, which leads to higher costs

per worker. Ford has been particularly successful recently in reaching cost concessions with the

union, however, lowering the average wage from approximately $70 per hour to $55 per hour in

an agreement reached in March 2009.

The largest difficulties, however, are with co-called legacy costs: retirement, benefits, and

healthcare costs. In the past, these costs have been significantly higher than its international

competitors such as Honda and Toyota. Ford has again been more successful than both GM

and Chrysler in reducing these costs, successfully renegotiating multiple contracts by swapping

equity contributions for cash infusions. In the long run, we believe that these recent negotiations

may finally have turned the tide against this strategic disadvantage. Of particular importance is

the structural changes which have been made regarding healthcare benefits and other legacy

costs.

Ford India Private Limited

Anurag Mehrotra - Executive Director of Marketing, Sales & Service at Ford India

Anurag Mehrotra is the executive director of Marketing, Sales &

Service at Ford India. Anurag leads the responsibility for all aspects of

MS&S operations of Ford India including revenue, sales volume,

market share, marketing strategy & launches as well as dealer

development, after sales service and overall customer satisfaction.

Anurag previously served as vice president, Sales at Ford India and

was responsible for looking after Ford’s growing sales network in

India. Earlier, he also served as the vice president Marketing at the

company and was instrumental in designing and implementing

successful marketing campaigns for Ford’s product range in India.

Before joining Ford India, Anurag was vice president – Corporate

Marketing at WNS Global Services, a leading business process

outsourcing company, where he was responsible for lead generation

and brand building in North America and Europe.

Before WNS, he worked as vice president with Accenture India where

he was responsible for marketing and communication for Accenture's

delivery centers for Technology and the India consulting business.

Anurag has a degree in Electronics Engineering and a diploma in

marketing management.

Rahul Gautam - Vice President, Marketing, Ford India Rahul Gautam was appointed Vice President, Marketing, Ford India

effective August 2015 and reports to Anurag Mehrotra, Executive

Director of Marketing, Sales and Service at Ford India. He is based

out of the Ford India office in Gurgaon.

In this role, Rahul drives all product strategy and brand building efforts

being undertaken by the company as it strengthens its product

portfolio and undertakes several benchmark consumer experience

initiatives.

With Ford since 2003, Rahul has held several responsibilities across

product strategy, sales and marketing in India as well as Asia Pacific

region. With immense experience in conceptualising and executing

brand launch campaigns, Rahul has been involved in development

and launch of some of Ford’s most successful nameplates i.e. Ford

Figo, Ford EcoSport, Ford Aspire and Ford Endeavour in India till

date. Rahul has also served as B-Car product marketing lead for Ford

Asia Pacific, based in Shanghai during 2010-2013 contributing

towards development of Ford EcoSport and All-New Figo & Aspire.

Rahul is an MBA from Faculty of Management Studies, Delhi

University. He did his Bachelors in Mechanical Engineering from Delhi

College of Engineering.

George Elisseou- HR Director, Ford India

George Elisseou is the HR Director, Ford India and is based in

Chennai. With Ford in India since April 2015, George is responsible

for spearheading employee initiatives spanning across talent

acquisition, training and development, HR technology deployment

along with diversity and inclusion.

In his previous assignments, George was the Asia Pacific HR

Director, Finance and Business Strategy Group. George started his

career with Ford in Australia gaining experience across a variety of

profiles in the field of Human Resource across Ford Credit and other

domains. In January 2010, he was appointed General Manager

Human Resources for Ford Thailand where he led the development,

establishment and launch of the new Ford Thailand Manufacturing

Plant.

George has a Bachelor’s Degree in Arts (History and Sociology) from

La Trobe University, Melbourne.

David Schock - Chief Financial Officer, Ford India

David Allan Schock, has been with the Ford Motor Company for more

than 26 years. He joined the company as an audit analyst and has

held numerous position across geographies including North America,

Europe and Asia Pacific. Before being appointed as the Chief

Financial Officer of Ford India, David worked with Ford Asia Pacific

operations as a product development controller, overseeing resource

allocation and investments on new products for markets across the

region.

Go further

Type Subsidiary

Industry Automotive

Founded October 1995 (as Mahindra Ford India

Limited)

Headquarters Maraimalai Nagar, Chennai,Kanchipuram

district, Tamil Nadu[1]

Key people Nigel Harris - President, Ford India

Products Automobiles

Number of

employees

10,000

Parent

Ford Motor Company

Sales and service Network

Presently, Ford has more than 376 sales and service outlets in 209 cities across

India.

Sales performance

In the year 2010, FIPL recorded sales of 83,887 vehicles against 29,488 vehicles

sold during the year 2009 and registered a sales growth of 172%.

Exports

Ford India currently exports 40 percent of its engine production and 25

percent of its car production to 35 countries, some of them are, South

Africa, Nepal, Mexico, Kenya, Bahrain, Angola, Bermuda, Ghana, Iraq,

Liberia, Lebanon, Malawi, Madagascar, Mauritius, Nigeria, Senegal,

Tanzania, UAE, Zambia and Zimbabwe

Corporate social responsibility

Ford India’s CSR activities are focused primarily in four key areas: road

safety, education, healthcare, and environment.

Manufacturing facilities

FIPL's main manufacturing plant located in Maraimalai Nagar, 45 km

from Chennai has a capacity to produce 150,000 cars on a two-shift

basis and 200,000 with three shifts. In 2010-11, the company's

production crossed the 100,000 mark.[5]

As its new hatchback Figo was launched in March 2010,[6] Ford Motor

Company has invested $500 million to double capacity of the plant to

200,000 vehicles annually and setting up a facility to make 250,000

engines annually.[7][8] The engine plant opened for operations in January

2010.[9]

To meet the growing domestic demand and with an eye on engine

exports, the company has invested $72 million to raise engine

production capacity to 330,000 units.[10]

The company is rolling out the urban SUV Ford EcoSport in June 2013.

It had announced a $142-million investment on this. With Ford EcoSport,

the Chennai plant will ramp up to full capacity (200,000 units). Last year,

production touched 127,000 units.[11]

As part of its plan to launch 8 new vehicles by 2015, the car maker is

pumping in an investment of $1 billion for a new state-of-the-art

manufacturing plant at Sanand, Gujarat. The plant is coming up on 460

acre site. It will have an initial installed capacity to manufacture 2,70,000

engines and 2,40,000 vehicles a year. Coming up alongside the plant is

the supplier park spread across 150 acres and the company has

attracted 19 world-class supplier manufacturers to date. The plant is

expected to commence production by 2014.[12]

Once the Sanand plant is fully operational, Ford India will have a

cumulative capacity to make 440,000 cars and 610,000 engines

annually