Hamill Bassue
Owen 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 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
William Clay Ford, Jr.
Executive Chairman
Alan Mulally
President and CEO
Donat R. Leclair
Lewis Booth
Executive V.P. and
CFO
Executive V.P. Ford of
Europe/PAG
Mark Fields
Executive V.P. and
President, The
Americas
Mark Schulz
Executive V.P.
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 biofuels 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
Ford Sales by Regions
11%
N. America
35%
54%
Europe
Other
Industry Market Share
Industry Forecast
CPM
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
Ratio
Compass
Group PLC
Industry
Debt-to Total assets
0.60
Debt-to Equity
Ratio
Compass
Group PLC
Industry
-
Return on Total Assets
-0.01
1.38
29.94
47.47
Return on Equity
-0.48
5.19
Long-term debt-to Equity
29.94
110.45
EPS
-1.24
-
Time-interest-earned
-2.64
0.01
P/E
-5.98
14.53
Sales (growth)
7.74
-7.24
Net Profit Margin
-0.02
1.75
Net Income (growth)
463
1.75
Gross Profit Margin
0.11
15.3
EPS (growth)
1101
14.91
Operating profit Margin
0.11
2.99
Dividends (growth)
-100
1
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
1.
2.
3.
4.
5.
1.
2.
3.
4.
5.
1.
2.
3.
4.
5.
Opportunities – O
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 – T
Weak USD
Increase in steel and resin pricing
Increasing gasoline prices
Stricter CO2 emission standards
Increasing mortgage rates
1.
2.
3.
1.
2.
Strengths – S
Strong 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
SO
Developing new vehicles on
alternative fuels (S1, S2, S4, O1, O3.
O5)
Offer new innovative products –
increase market share - motorbikes
(S1, S2, S3, O2, O3, O5)
Concentrate on making the best fuel
efficient cars (S1, S2, S3, S4, O1, O4,
O5)
1.
2.
3.
4.
5.
1.
ST
Build eco-friendly products from
1.
alternative materials (S2, S3, S4, T2,
T3, T4)
2.
Produce more cars for foreign
market (S1, S2, S4, T1, T4)
Weaknesses – W
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)
WO
Relocate the production to cheaper
country with lower taxes (W2, W4,
O4, O5)
WT
Merge with competitors (W1, W2, W5,
T2, T3, T5)
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
28
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 Matrix
Relative market share position in the industry
Medium .50
High +30
High 1.0
Low 0.0
SA
Medium 0
Industry sales growth rate
APA
NA
Low -3
IE Matrix
Hold and Maintain
31
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
Joint 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 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
*data in $ billion
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
Other Issues
• Laws and regulations in foreign countries
• Regain lost trust in the Ford’s brand
Evaluation
Excellent
Good
Unsatisfied
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???