Ford Project

Table of Contents

Industry definition

Introduction to Industry

Industry at current scenario

Literature review of PEST

PEST analysis of Ford

SWOT Analysis of Ford

Porter five force analysis of Ford

Competitors Analysis of Ford

Strategy of Ford (IFAS & EFAS)

Performance of Ford

Conclusion

Recommendations

References

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Executive Summary

In Global markets among different Industries we found Automobile industry because

the scope of the automobile industry is high when compared to the other industries. In today’s

life automobiles became necessary. In that automobile industry we choose the Ford motor

company to analyze their Macro and Micro Environment. This project is focused on PEST

Analysis of FORD, SWOT Analysis, Porter five force analysis, competitor analysis,

strategies, and its performance in share market and sales.

We focused more on the Political, Economical, Social and Technological Factors

which are playing a major role business environment of Ford.

The aim of marketing is to meet and satisfy the needs and wants of the customers.

India has long-term potential to become a significant vehicle market. It has huge population

of nearly one billion people (of which 150-250 million are middle class), and a current

vehicle population of 3.5 million (equivalent to only 3.4 cars per 1000 people).

The global automotive car market is growing at a rate of only 4% per annum.

Fortunes of the automobile industry will continue to hinge on the large, price sensitive

customer, who will take time to graduate to the higher end of the market. Unite then the small

car will continue to drive demand. And that is the eventuality that most of the car-

manufacturers are gearing up for.

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Automobile Definition-

Automobile can be defined as the vehicle which runs on two, three, four or more tyres; the

purpose may be to travel on the roads by people or to carry the loads from one place to

another place.

Introduction to Automobile Industry-

The automobile sector has today become one of the vital areas in markets. Various

upcoming features have enhanced the global competition in today's Automobile sector.

Implementing new technologies, new features and considering the customers preference are

the important factors for the company's existence in the competitive market. So if the

company wants to face the competition, it has to have the update knowledge of the consumer

tastes and preference. First Automobile is a three wheeler which was invented by Nicolas J.

Cugnot. Initially invented automobile is made by steam engine and later it was designed by

fuels which are currently available in the market. At present few Automobiles are running

based on the renewable energies like Solar and Bio Fuels. Some cars are designed to run on

Electricity.

From the past records we can identify that America is dominating in automobile

Industry. Currently countries like India and Brazil are presenting their growth rate in the

global markets of automobile industry.

Global recession influencing most of automobile manufacturing companies to stop their

production due to lack of demand in the market. This can be detailed from the following

statement.

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In the automobile industry by 2008 the sales are declined by 8% and in 2009 sales are rapidly

declined up to 20%.

AUTOMOBILE INDUSTRY IN INDIA

The Automotive industry in India is one of the largest in the world and one of the

fastest growing globally. India's passenger car and commercial vehicle manufacturing

industry is the seventh largest in the world, with an annual production of more than 3.7

million units in 2010. According to recent reports, India is set to overtake Brazil to become

the sixth largest passenger vehicle producer in the world, growing 16-18 per cent to sell

around three million units in the course of 2011-12. In 2009, India emerged as Asia's fourth

largest exporter of passenger cars, behind Japan, South Korea, and Thailand.

As of 2010, India is home to 40 million passenger vehicles and more than 3.7 million

automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the

country the second fastest growing automobile market in the world. According to the Society

of Indian Automobile Manufacturers, annual car sales are projected to increase up to 5

million vehicles by 2015 and more than 9 million by 2020. By 2050, the country is expected

to top the world in car volumes with approximately 611 million vehicles on the nation's

roads.

Current Scenario:

The Indian automobile industry crossed a landmark with total vehicle production of 10 million units.

Car sales during the year 2009 is 8, 93,934 units in March 2009 by rising 1.09% over 8, 84,313 units in March 2008.

Snippets

India, sourcing base for global auto majors.

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By 2012, India is expected to witness over Rs 40,000 crore of investment. Passenger car and motorcycle segment is set to grow by 8-9%. Commercial vehicle to grow by 5.2 per cent.

Introduction to Ford-

Ford motor company is a global leader in automobile industry, Ford Motor

Company is an American multinational automaker based in Dearborn, Michigan, a suburb of

Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In

addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and

Aston Martin in the UK. Ford's former UK subsidiaries Jaguar and Land Rover were sold to

Tata Motors of India in March 2008. In 2010 Ford sold Volvo to Geely Automobile. Ford

discontinued the Mercury brand after the 2011 model year.

Ford introduced methods for large-scale manufacturing of cars and large-scale

management of an industrial workforce using elaborately engineered manufacturing

sequences typified by moving assembly lines. Henry Ford's methods came to be known

around the world as Fordism by 1914.

Ford is the 2nd largest automaker in the U.S. and the 5 th largest in the world based on

annual vehicle sales in 2010. At the end of 2010, Ford was the fifth largest automaker in

Europe. Ford is the eighth-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. During the automotive crisis, Ford's worldwide unit volume dropped to

4.817 million in 2009. In 2010, Ford earned a net profit of $6.6 billion and reduced its debt

from $33.6 billion to $14.5 billion lowering interest payments by $1 billion following its

2009 net profit of $2.7 billion. Starting in 2007, Ford received more initial quality survey

awards from J. D. Power and Associates than any other automaker. Five of Ford's vehicles

ranked at the top of their categories and fourteen vehicles ranked in the top three.

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Ford has 15% of Market share & Net Income: - 6.6 billion.

Ford operating its business in following continents:-

North America

Europe

Asia Pacific

Latin America

Middle East

Africa

Caribbean

Ford is partnering with some of the companies to produce better optional vehicles. Ford is

partnering with companies like, BP, Microsoft, Sony, Roush, Adventure Island & Water

country USA.

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VISION & MISSION OF FORD

VISION:

To become the world's leading Consumer Company for automotive products and services.

MISSION:

ONE TEAM

People working together as a lean, global enterprise for automotive leadership, as measured

by:

Customer, Employee, Dealer, Investor, Supplier, Union/Council, and Community

Satisfaction.

ONE PLAN

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

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ONE GOAL

An exciting viable Ford delivering profitable growth for all.

CORPORATE GOVERNANCE:-

The relationship between the Board of directors, Top management & shareholders for

improving the performance of the company to achieve its goals.

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Managing Director:- Kathleen Gallagher

CEO:- Alan.R. Mulally

Executive Vice President:- Lewis Booth

Executive chairman:- Willian.C.Ford

Director:- John.L.Thorton

FORD CORPORATE SOCIAL RESPONSIBILITY:-

The Ford Foundation was chartered on January 15, 1936.

The Ford Foundation is a private foundation incorporated in Michigan created

to fund programs that were chartered by Edsel Ford and Henry Ford.

The Ford Foundation focuses on strengthening democratic values, community

and human rights, education, media, arts, culture, and economic development.

Ford has been a major funder of efforts to give more students access to higher

education, improve the quality of public schools.

Major Grants and Initiatives

In 1951, Ford made its first grant to support the development of the public

broadcasting system. These grants continued, and in 1969 the foundation gave $1

million to the Children’s Television Workshop to help create and launch Sesame

Street.

In 1952, the foundation's first international field office opened in New Delhi, India.

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In 1976, the foundation helped launch the Grameen Bank, which offers small loans to

the rural poor of Bangladesh. In 2006, the Grameen Bank and its founder, Muhammad

Yunus, were awarded the Nobel Peace Prize for pioneering micro-credit.

In the late 1980s, the foundation began making grants to fight the AIDS epidemic,

which included support for the establishment of a $4.5 million program to improve

AIDS education and treatment in communities around the country.

FORD PRODUCT MIX & PRODUCT LINE:-

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FORD CATEGORIES

Ford vehicle design

Ford Team Rally Sports

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Ford video games

Ford village industries

Formula Ford

Ford Times

Ford Aircraft

Ford Motor Company Lamp Factory

Ford Transmissions

Ford Fuel corporation

Ford Aerospace

Ford Platforms

FORD COMPETITORS

International National

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1

Nissan Tata

Fiat Maruti Suzuki

Honda

Range Rover & Land Rover Honda

Volkswagen Skoda

Audi Hyundai

Chevrolet General Motors

Renault Mahindra

Mitsubishi Volkswagen

Skoda

PEST Analysis-

Pest analysis represents Political, Economical, Social and Technical factors of an organization.

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Political factors explain about taxation, employment laws, internal trade regulations and

competitor trade regulations.

Economical Factors explains about economic growth by industry, policy towards

unemployment, inflation and influence of exchange rates

Social Factors explains about income distribution, labour, life style changes, health &

welfare, attitude to work and living conditions.

Technical Factors explain about Technological efficiency, technological transfers, rate of

spending in R&D, Energy use cost and New Inventions.

Ford Pest Analysis-

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Political Factors-

Exchange rates, oil prices & free trade flows which influence the consumer to invest on the

vehicles.

Foreign ownership regulations and technological cooperation’s between countries

helping the ford in raising the funds and building the advanced models which can cope with

the current scenario.

Introduction of new business laws Impacts the ford to change its rules and regulations

which are necessary to producing a quality vehicle.

Forced Groups (Labour unions) who plays a major role in the production of a vehicle in a

ford manufacturing organization. The labour unions should work according to the rules and

regulations amended by the business laws.

Investor’s climate- In most of the company’s investors had a premier role to play in the

growth and development of the company.

Economical Factors-

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Growth potential of target market - The growth potential of target market will determine

the purchasing power of the buyer. That is the major reason ford is operating in the countries

like America, India and Brazil where the growth potential is high when compared to the other

markets.

Based on the above geography of demand for vehicles, we can state that ford is operating its

business in the potential target markets.

Target Market Size – Again the sales of the ford was influenced by the Market size where it

is operating its business. When the target market GDP growth is high the consumers will

show more interest to have a premium or luxury vehicle.

Economic Development – Economic development is the major part which will determines

the development of a particular economy as a whole and which will influence on individual

GDP.

Oil Price Fluctuations- The oil fluctuations influence the sales of the ford company. If the

oil prices are more it will difficult to sell the premium and luxury cars. Cost conscious

customers may not show interest to buy the cars which provides low mileage.

Altogether the mentioned economical factors will determines the growth of the potential

markets, margin cost of the operations, return rate on the investment, and strategy to provide

the price of the vehicle.

Social Factors

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Social factors plays a role in trend in demand based on the various factors like attitudes,

demographical, beliefs of the consumers in that particular market region Some of social

factors of Ford are given below

Geographical Changes - The consumers of ford had changed from one geographical region

to another geographical region

Eg- The US for consumers will use the cars or commercial vehicles which have large

engines. But the Brittan consumers are habituated to use the cars or commercial vehicles

which are designed by small engines.

Consumer Attitude – Consumer attitude plays a role in selecting car model and design, If

the consumers are favour about sport they will select the sports model car for their usage. But

if the consumers are cost and safety concerned them probably will choose a normal car which

will provide mileage and better safety.

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Travel Habits – The ford company is designing the cars based on the travel habits of the

consumers. Ford is a medium cost car which can be affordable by the medium class people. It

is providing the facilities based on the travel habits of the whole family.

Technological Factors

Technological factors of the ford motor company are very advanced when compared with

their competitors. The technological factors of the automobile company will influence on

most of the things like sales percentage of the cars, consumer satisfaction which leads to the

automatic growth in the sales figure.

Supply chain collaboration – It is the Initial and too crucial factor in the ford motor

company, because the consumers of car are more concerned about the ordering and when the

company is going to deliver the car. The Ford Company is having strong supply chain

collaboration which is in more than thirty countries.

Operations Capability – Ford Operation are more capable to provide the better service to

consumers. Ford motor company is operating its manufacturing in more than 30 countries, so

Ford operations are very efficient so it is able to providing quality vehicles at right time.

Technological Improvements in distribution – Ford motor company is one of the

automobile companies which are providing the car view and specification in online through

its website named a www.ford.co.uk. One more advanced technological thing is consumer

can customize the materials what he requires inside as well as outside of the car. The

Customer will get the delivery after min 1 month and max 2 months. If the ford is having the

booked car in the assess they will deliver within one or two weeks.

Product Development – Ford Motor Company is providing the consumer to customize the

car and its needs. So ford had gained a chance to innovate a new car based on the most of the

customer’s selection and preferences. The ford company cars manufacturing will be

influenced based on the consumer customization needs.

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SWOT Analysis of Ford Motor Company

Strengths of Ford –

Brand Image- Ford brand is well-known in automobile industry. Its brand image is well

known in the global markets due to huge marketing & advertising.

Online Marketing capability - Ford is one of the well-known automobile companies which

is providing the online consumer selection of cars through its website. In online the consumer

is allowed to customize the engine, colour, interiors and exteriors.

More consumer choices – Ford is one of the automobile companies which is providing the

consumer more variety of cars and commercial vehicles. Ford is manufacturing following

kind of vehicles.

Cars

Commercial Vehicles (Jeeps, Vans, & Trucks)

Heavy Vehicles.

Operations and distribution efficiency - Ford is the rich in its operations and distribution

because it is operating its business more than 30 countries and it enhances its manufacturing

process more than ninety plants.

Relations with high profile companies - Ford Company is maintaining the relations with

high profiled companies like Suzuki and Isuzu Motors Company to develop qualitative

vehicles and in the part to technological aspect for motor company is maintaining relation

with Toyota and Honda motor services.

Employee are assert - Ford motor car company recruits a qualified and skilled employees in

all its functions. Ford will maintain good relation with the employees by paying them better

wages in automobile industry. Ford is more concerned about the working environment and

safety aspects of the employees.

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Weakness of Ford –

Sales Decline - The sales figure of the ford company was declined from the year 2008 to

2009 due to global recession in the world financial market. Recession is one of the major

factors for decline of sales and one more important factor is ford will manufacture the

standard cars which are not able to cope up with current market automobiles.

Huge unfunded pensions and other obligations - Ford is one of the automobile company

which takes more responsibilities in the health and safety of the employee. Ford invests more

money on maintaining a good working environment.

Low productivity - Ford expanded its business operations in diversified geographical areas,

so management is missing focus on some lines performance and it influence the ford to cause

the low productivity.

Weakening operations in North America – In the North America part ford operations has

been declined due to the huge competitors like GM, Toyota etc. The revenue of Ford was

declined by 2.4%.

Opportunities of Ford –

Production of the fuel efficient cars – At present ford is producing the cars with low

mileage and pick up. Ford is having a great opportunity to produce fuel efficient cars and

commercial vehicles. The automobile industry is having one more fuel efficient types like,

cars which can run on renewable energies like solar power and bio fuels.

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Production of Hybrid Vehicles - Ford had one more option in designing the cars and

commercial vehicles based on electric engines. If the cars are designed based on electricity

engines the consumers will show more interest to buy the cars, the reason is the car

maintenance charge will low when the car is run on electricity.

Opportunities in India and China markets- Ford is having the market opportunities in

India and china countries because two countries are having huge geographical market and

population. The most of the people in these two countries are more interested to own a four

wheeler for their family. That is the reason ford fiesta is a most successful car in these two

markets.

Threats to ford-

Price Rise in raw material prices – Raw material prices like hard steel and rolling steel cost

will influence the margin price of the car. As a whole it will influence the profit margin of

the ford because of low margin price.

Rapid growth of competitors - Ford growth and development may effected by rapid growth

in no of competitors in the automobile industry. From the beginning America demanded

automobile industry. Ford’s main competitors are General motors, Toyota, Honda, BMW,

etc.

Less Capital spending - Ford is spending low on its operations and research development

activities, when compared to its competitors. The competitors are spending huge amount on

R&D programmes.

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Porters Five Force Analysis -

Threat of new entrants – Threat of new entrants will be low for the ford because the ford is

one of automobile which is providing the best services with low cost of price, ford provides

customers to choose their vehicles. Ford is having cost advantage because it is providing the

vehicles with low cost when compared to the other competitors.

Bargaining power of suppliers – Ford motor company enhances the relations with sixteen

new suppliers to gain the bargaining power of suppliers. Ford is having good relations with

suppliers for the output of quality cars.

Bargaining Power of customers – Customers of Ford are comfortable with ford way of

providing the vehicles customization and way of delivering the products within the specified

time. The bargaining power of customer is low when compared to the other automobile.

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Threat of substitute – Substitutes for ford motor company are less but there are some

substitutes which the cars are running on the electricity and other bio fuels. Eg: – riva one

small car which runs on electricity.

Rivalry among existing companies - The important competitors of Ford motor company is

General motors, Toyota, Honda and BMW. All the above mentioned forces will lead to the

rivalry among these companies to provide the customer with competitive advantage and

provide the customer with quality cars and commercial vehicles.

Competitor Analysis –

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22%11%

11%16%

25%Other 17 Co.

The Core Competencies of Ford are it is very innovative in using the high technology in the

manufacturing the cars & commercial vehicles. Ford is more concerned about safety and

more over ford is gave the opportunity to its customers to customize their interiors and

exteriors of Cars.

The important competitive advantage is ford is the first motor company to come with active

park assist, which can help the driver to park with a touch of a button.

Strategies of ford –

Ford Motor Company implements the Hybrid strategy to perform well in the automobile

industry and to provide the competitor edge.

As a part of Hybrid Strategy – ford motor company is providing the customers with low

prizes when compared to the others. Ford is providing the small engines with high pickup and

mileage.

Ford is providing the customers to choose their design of the car and their interiors through

online sales. Ford attracted eleven millions people per annum

Ford manufactures cars with small engines and mostly it is for focused group like a family.

Ford manufactures the some models like CRV, SUG for the people who are interested in

using premium and luxury cars.

Pure battery electric vehicles - In future ford is coming with cars which will run on bio

fuels and electricity to attract the cost concerned customers.

Overall we can conclude that Ford is concentrating on product approach rather than customer

approach. It focuses more on new technology and innovative products.

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IFAS OF FORD MOTORS

A table that organizes internal factors into Strengths (S) & Weaknesses (W) and how

well management is responding to these specific factors.

IFAS OF FORD

MOTORS Weight Rating

Weighted

score

Strengths

Variants of models 0.05 2.6 0.13

Business Structure 0.15 4 0.6

Brand 0.2 4 0.8

Network Distribution 0.15 4.8 0.72

Weakness

Recall of Product 0.1 3 0.3

Size of company 0.15 3.5 0.52

Ageing Workforce 0.2 3.2 0.64

Total Score 1 3.71

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EFAS OF FORD MOTORS

A table that organizes external factors into opportunities (0) & Threats (T) and how

well management is responding to these factors of a company.

EFAS OF FORD

MOTORS

Weight Ratings

Weighted Score

Opportunity

R & D Technology 0.1 4.5 0.45

Eco friendly vehicles 0.1 4.75 0.47

Demand for dual fuel 0.15 3.8 0.57

Foreign Markets 0.15 3.5 0.52

Threats

Sluggish Production 0.25 3.8 0.8

Technology 0.15 3 0.45

Imports 0.1 2.75 0.27

Total Score 1 3.53

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Performance of Ford:-

Performance of Ford in Share Market

The performance of Ford is declining in the share market due to recession in global market.

But the ford performance in share market was not too declined when compared with the

general motors. The performance of ford in the year 2009 was increasing, the share value of

ford according to 2009 market it was increased by 12%. Now ford shares are increasing due

to loyal customers and increased satisfied

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SALES PERFORMANCE OF FORD:-

Summary of vehicle unit sales

From the above chat we can interpret that sales of ford from 2003-2007 went well some

fluctuations but in the year of 2008 the sales of ford was declined due to various reasons like

Recession in the global markets.

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Conclusion –

Ford automobile company is performing well in the aspects of political, economical, social,

and environmental. But ford suddenly faced the problem in 2008 sales due to the economical

problem (Recession).

Global economic conditions are improving but remain fragile. Recoveries in some markets

are modest due to weak labour markets and tight credit.

Recommendations-

Ford should concentrate more on revenue growth by manufacturing premium and luxury cars

and should use the focus group strategy.

Ford has the opportunity to manufacture cars which can run of electricity, solar energy and

bio fuels. It will help the organization to develop in environmental factor.

References –

www.ford.com

www.automobiles.com

www.ford.uk.com

www.fordmotorsco.com

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www.ford.com http://www.ford.com/microsites/sustainability-report-2008- 09/economy-data-market.

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