Ford Presentation d2v61

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 Michigan 1908 – Model T introduced 1913 – first moving automobile assembly line in the world 1956 – Ford’s stocks go on sale (10.2 million shares sold the first day) 1987 – beginning of the acquisitions of other brands 1988 – 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 t 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

M

Critical Success factors

DiamlerChrysler Ford GM AG Toyota Weigh Rati Weighted Rati Weighted Rati Weighted Rati Weighted ts ng Score ng Score ng Score ng Score 0.0 to 1 to 1 to 1 to 1 to 1.0 4 4 4 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

Weaknesses

• 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

• 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

Internal 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 Internal 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) Bad management of the company EPS very bad - in negative numbers (unattractive for the investors) Totals

Weights Rating 0.0 to 1, 2, 3 or 1.0 4 3 or 4 0.13 4

Weighted Score

0.52

0.09

3

0.27

0.06 0.09 0.11

3 3 4

0.18 0.27 0.44

2 1 1 2 1

0.2 0.12 0.12 0.16 0.1 2.38

1 or 2 0.1 0.12 0.12 0.08 0.1 1

Strategic Formulation

SWOT Matrix Strengths – S 1.Strong globally positioned brand names 2.Large employee base with highly educated engineers and good R&D department 3.One of the largest automotive manufacturer (along with a long history) 4.1285% increase in net cash 5.Huge increase in total equity

Weaknesses – W 1.A lot of time spent to actually put the product on the market 2.Recording continuous losses (net income) from 2006 3.Low quality of new products (recalls - causing losing customers) 4.Lack of management of the company 5.EPS very bad - in negative numbers (unattractive for the investors)

Opportunities – O 1. Consumers demand hybrid and fuel efficient vehicles 2.Increase in consumer spending trends 3.Consumers demand more innovative vehicles 4.Global expansion 5.Industry experiences slow and steady growth

SO 1.Developing new vehicles on alternative fuels (S1, S2, S4, O1, O3. O5) 2.Offer new innovative products – increase market share - motorbikes (S1, S2, S3, O2, O3, O5) 3.Concentrate on making the best fuel efficient cars (S1, S2, S3, S4, O1, O4, O5)

WO 1.Relocate the production to cheaper country with lower taxes (W2, W4, O4, O5)

Threats – T 1.Weak USD 2.Increase in steel and resin pricing 3.Increasing gasoline prices 4.Stricter CO2 emission standards 5.Increasing mortgage rates

ST 1.Build eco-friendly products from alternative materials (S2, S3, S4, T2, T3, T4) 2.Produce more cars for foreign market (S1, S2, S4, T1, T4)

WT 1.Merge with competitors (W1, W2, W5, T2, T3, T5) 2.Manufacture only parts for automobiles (W1, W2, T1, T2)

SPACE Matrix FS

Conservative

Aggressive

+6 +5 +4 +3 +2 +1

IS -6

-5

-4

-3

-2

-1

-1

+1

+2 +3

+4

+5

+6

-2 -3 -4

Defensive

-5 -6

Competitive 27

BCG Matrix Revenu es

% Revenue s

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 Matrix

High +30 Medium 0 Low -3 Industry sales growth rate

High 1.0

Relative market share position in the industry Medium .50 Low 0.0 S A

APA

NA

IE Matrix Hold and Maintain

30

Grand Strategy Matrix Rapid Market Growth Quadrant II

Quadrant I

Weak  Competitive  Position

Strong  Competitive  Position

Quadrant III

Quadrant IV Slow Market Growth

Matrix Evaluation Alternative Strategies

BCG

IE

SPACE

GRAND

COUNT

Forward Integration

x

1

Backward Integration

x

1

Horizontal Integration

x

1

x

3

x

2

x

3

Market Penetration

x

Market Development

x

Product Development

x

Concentric Diversification

x

x

2

Conglomerate Diversification

x

x

2

Horizontal Diversification

x

x

2

x

1

t Venture

x

x

Retrenchment

x

x

2

Divestiture

x

x

2

x

1

Liquidation

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 fuelefficient 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 *data in $ billion Common stock financing

Debt financing

Recession

Normal

Boom

Recessio n

Normal

Boom

EBIT

10

20

40

10

20

40

Interes t

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

#shar es

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

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/investorrelations • Datamonitor – Global Automobile Industry manufacturer 2006

• Pictures taken from Web

Questions???