Ford Presentation
Is The Way Forward Really Ford’s Way Forward?
Sameer Kirtane Rachit Shukla Louis Wang Jimmy Zhan
Overview
• • • • Ford’s current status Industry Analysis Recent History What is the Way Forward?
– Operations, Infrastructure and Human Resources – Marketing and Sales – Technology Development
• Recommendations
Current Status
• Leadership change • Market share ↓ since 2000 from 23.7% to 15.5% in N.A. • Reported loss of $1.2B qtr ending Sept. 2006 • On its way to losing $8-9B in 2006 alone • Third restructuring effort: Way Forward
Alan Mulally
Source: http://media.ford.com
Recent History
• Ambiguous business-level strategy in last decade
– Neither successful differentiator nor cost-leader
• Lacked innovation in compact and mid-sized cars • Focus on SUV division and luxury portfolio • Rising gas prices
– Consumers fled SUV and luxury portfolio → Strategic Failure
• Costs grew disproportionately to rivals
– Estimate: Costs Ford $2500/vehicle more to produce than Foreign rivals
Industry Analysis
• N.A. Automotive Industry: Difficult to be in
– Positives
• Captive but essential suppliers • High capital costs of potential entrants • Lack of feasible substitutes
– Negatives
• Low switching cost of buyers between firms • Fierce internal rivalry due to manufacturers competing with extensive product lines
Porter’s Five Forces Model
What is the Way Forward?
Operations Infrastructure Human Res.
Way Forward
Marketing and Sales
Technology Development
Areas of Improvement
Operations, Infrastructure, and HR
• Reducing idle or non-profitable plants
– Closure of 9 Plants and 7 Assembly Plants by 2012
•
~35% reduction in manufacturing jobs
– Reduce hourly headcount by 2530K and salaried headcount by 14K by 2008
• •
Cost Analysis
Target $5B reduction in costs by 2008 → Savings of approx. $1552/vehicle in N.A. However GM’s fixed cost per vehicle is $2354 lower than Ford’s
– Further reductions in fixed costs
Sameer Kirtane Rachit Shukla Louis Wang Jimmy Zhan
Overview
• • • • Ford’s current status Industry Analysis Recent History What is the Way Forward?
– Operations, Infrastructure and Human Resources – Marketing and Sales – Technology Development
• Recommendations
Current Status
• Leadership change • Market share ↓ since 2000 from 23.7% to 15.5% in N.A. • Reported loss of $1.2B qtr ending Sept. 2006 • On its way to losing $8-9B in 2006 alone • Third restructuring effort: Way Forward
Alan Mulally
Source: http://media.ford.com
Recent History
• Ambiguous business-level strategy in last decade
– Neither successful differentiator nor cost-leader
• Lacked innovation in compact and mid-sized cars • Focus on SUV division and luxury portfolio • Rising gas prices
– Consumers fled SUV and luxury portfolio → Strategic Failure
• Costs grew disproportionately to rivals
– Estimate: Costs Ford $2500/vehicle more to produce than Foreign rivals
Industry Analysis
• N.A. Automotive Industry: Difficult to be in
– Positives
• Captive but essential suppliers • High capital costs of potential entrants • Lack of feasible substitutes
– Negatives
• Low switching cost of buyers between firms • Fierce internal rivalry due to manufacturers competing with extensive product lines
Porter’s Five Forces Model
What is the Way Forward?
Operations Infrastructure Human Res.
Way Forward
Marketing and Sales
Technology Development
Areas of Improvement
Operations, Infrastructure, and HR
• Reducing idle or non-profitable plants
– Closure of 9 Plants and 7 Assembly Plants by 2012
•
~35% reduction in manufacturing jobs
– Reduce hourly headcount by 2530K and salaried headcount by 14K by 2008
• •
Cost Analysis
Target $5B reduction in costs by 2008 → Savings of approx. $1552/vehicle in N.A. However GM’s fixed cost per vehicle is $2354 lower than Ford’s
– Further reductions in fixed costs
References: Data Source: Deutsche Bank “Can Ford be fixed? First impressions of Alan Mulally” October 24th, 2006 Appendix D: Brand Positioning Source: Ford Motor Company, North America “Way Forward” Business Review, January 23, 2006 Appendix E: Percent Sales in US by Division and Type U.S