St.

Paul University Manila

CASE STUDY
Ford Global

Gonzales, Renaliz

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Table of Contents
Abstract 3-4

o Background / History

Opportunity Identification 5-11

o PESTEL
o SWOT
o Market Analysis
o 7p’s
o Problem Statement

Areas of Consideration 12

Course of Action 13-14

Conclusion 15

Recommendation 16-17

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BACKGROUND / HISTORY
FORD MOTORS

Ford Motors have the history of providing excellent products ranging from small
cars to luxurious brands to its customers. Ford had secured 25% US automobile market
in 1998. It is ranked as a 2nd largest automobile manufacturer in the United States and
the fifth-largest in the world rankings as of 2010. Ford is ranked at number eight in the
2010 Fortune 500 list based on its global revenues in 2009. As of 2010, the company
earned the profit of $ 6.6 Billion which was utilized to manage its debt requirement of
$33.6 Billion. In the year 2007, the company earned more quality survey awards than
any other automaker. The company domain ford.com had more than 11 million annual
visitors by the year 2008 according to the US national survey.

All this was not possible if we take a look at the company’s performance in the
year 1999 and onwards. Its market share dropped from 25% to 14%, the market value
of its products fell. The company was at the verge of collapse. High debt, failed market
image, retracting customers and sky rocketing operational costs were the some of the
issues Ford Motors was facing. Ford related its market failure with the increased prices
of gasoline and weak US economy.

The expert reviews about the market failure of Ford motors give another
dimension to its failure. According to them, Ford took eyes off the market trends and
consumer preferences. They emphasized only on the product lines (SUVs and trucks),
they had increased operational costs and they lacked communication with the
customers and appropriate market research. The products offered at Ford were free
from innovation.

Porter (1980) relayed that a company can gain competitive edge via cost
efficiency, product diversification and focus on the goals. The company can succeed
only because of its strategies it uses against the competition and how well it handles its
strategies. Two types of advantages a company can master, cost efficiency and
differentiation (Porter, 1985).

Today firms are keen on developing plans based on their strategies that can give
them edge over their competitors. In this case study, Ford motors re-engineered its
processes, devised new goals and differentiated its branding and product strategies in
order to sustain in the market.

Alan Mulally, the CEO of Ford Motors, took an initiative to improve the company’s
image and its operations. He devised couple of strategies to come out of the black hole

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which was sooner or later going to eat the company out which includes One Ford,
divesting other brands in the market, insulating communications strategy within the
organization, changing the culture of Ford, introducing coding system for the reports
and many other functional strategies. With the redefined image, and revolutionized
products, the company was able to pay off some of its debts.

They are the second largest auto car maker and fifth largest on the vehicles
manufacturer it was founded by Henry ford in 1903. The first car launch by Ford was
ford model A. before coming with the plan he has built gasoline powered carriage. The
first model after 1903 was “Model T”

A history of 112 old companies has created one of the best brand names in the
world no matter how it is Ford has proved that if the vision is broad it is always
achievable. Today known by everybody as it is the world’s second largest automotive
producer. The number of employees is just outstanding over 224000 employees
worldwide they work for more than 90 manufacturing plants internationally. The
company is still growing and lots more to grow and get prosper. They always have one
of the best strategies. They enable sustainability, they invest more and latest technology
is their strength and eco- friendly initiative.

Characteristics of Car industry (Global)

·         Priorities to the innovation

·         High level of competition has even made them unique

·         Product line extension/product category extension

·         Brand image and brand positioning

·         Convenience

·         Customer friendly

·         Cost efficiency

·         Research and development

·         Changes in the strategy of corporate, renewal, marketing, product,

operations.

Those were the outlines features of the global car industry all these
characteristics make them unique of what they are on what level they compete.
Similarly, innovation changes in the product extension and category, cost,

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 efficiency and customer friendliness is all needed to be the 21st century
automotive industry.

OPPORTUNITY IDENTIFICATION
PESTEL
Ford Motor Company PESTEL analysis is a strategic tool to analyze the macro
environment of the organization. PESTEL stands for - Political, Economic, Social,
Technological, Environmental & Legal factors that impact the macro environment of
Ford Motor Company.

PESTEL analysis provides great detail about operating challenges Ford Motor
Company will face in prevalent macro environment other than competitive forces. For
example, an Industry may be highly profitable with a strong growth trajectory but it won't
be any good for Ford Motor Company if it is situated in unstable
political environment.

Political Factors

Political factors play a significant role in determining the factors that can impact
Ford Motor Company's long term profitability in a certain country or market. Ford Motor
Company is operating in Auto Manufacturers - Major in more than dozen countries and
expose itself to different types of political environment and political system risks. The
achieve success in such a dynamic Auto Manufacturers - Major industry across various
countries is to diversify the systematic risks of political environment. Ford Motor
Company can closely analyze the following factors before entering or investing in a
certain market:

 Political stability and importance of Auto Manufacturers - Major sector in the

country's economy.
 Risk of military invasion
 Level of corruption - especially levels of regulation in Consumer Goods sector.
 Bureaucracy and interference in Auto Manufacturers - Major industry by
government.
 Legal framework for contract enforcement
 Intellectual property protection
 Trade regulations & tariffs related to Consumer Goods
 Favored trading partners
 Anti-trust laws related to Auto Manufacturers - Major
 Pricing regulations – Are there any pricing regulatory mechanism for Consumer
Goods

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  Taxation - tax rates and incentives
 Wage legislation - minimum wage and overtime
 Work week regulations in Auto Manufacturers - Major
 Mandatory employee benefits
 Industrial safety regulations in the Consumer Goods sector.
 Product labeling and other requirements in Auto Manufacturers - Major

Economic Factors

The Macro environment factors such as – inflation rate, savings rate, interest
rate, foreign exchange rate and economic cycle determine the aggregate demand and
aggregate investment in an economy. While micro environment factors such as
competition norms impact the competitive advantage of the firm. Ford Motor Company
can use country’s economic factor such as growth rate, inflation & industry’s economic
indicators such as Auto Manufacturers - Major industry growth rate, consumer spending
etc. to forecast the growth trajectory of not only sector name but also that of the
organization. Economic factors that Ford Motor Company should consider:

 Type of economic system in countries of operation – what type of economic

system there is and how stable it is.
 Government intervention in the free market and related Consumer Goods
 Exchange rates & stability of host country currency.
 Efficiency of financial markets – Does Ford Motor Company needs to raise
capital in local market?
 Infrastructure quality in Auto Manufacturers - Major industry
 Comparative advantages of host country and Consumer Goods sector in the
particular country.  
 Skill level of workforce in Auto Manufacturers - Major industry.
 Education level in the economy
 Labor costs and productivity in the economy
 Business cycle stage (e.g. prosperity, recession, recovery)
 Economic growth rate
 Discretionary income
 Unemployment rate
 Inflation rate
 Interest rates

Social Factors that Impact Ford Motor Company

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 Society’s culture and way of doing things impact the culture of an organization in
an environment. Shared beliefs and attitudes of the population play a great role in how
marketers at Ford Motor Company will understand the customers of a given market and
how they design the marketing message for Auto Manufacturers - Major industry
consumers. Social factors that leadership of Ford Motor Company are:  

 Demographics and skill level of the population

 Class structure, hierarchy and power structure in the society.
 Education level as well as education standard in the Ford Motor Company ’s
industry
 Culture (gender roles, social conventions etc.)
 Entrepreneurial spirit and broader nature of the society. Some societies
encourage entrepreneurship while some don’t.
 Attitudes (health, environmental consciousness, etc.)
 Leisure interests

Technological Factors

Technology is fast disrupting various industries across the board. Transportation

industry is a good case to illustrate this point. Over the last 5 years the industry has
been transforming really fast, not even giving chance to the established players to cope
with the changes. Taxi industry is now dominated by players like Uber and Lyft. Car
industry is fast moving toward automation led by technology firm such as Google &
manufacturing is disrupted by Tesla, which has stated an electronic car revolution.

A firm should not only do technological analysis of the industry but also the speed at
which technology disrupts that industry. Slow speed will give more time while fast speed
of technological disruption may give a firm little time to cope and be profitable.
Technology analysis involves understanding the following impacts:

 Recent technological developments by Ford Motor Company competitors

 Technology's impact on product offering
 Impact on cost structure in Auto Manufacturers - Major industry
 Impact on value chain structure in Consumer Goods sector
 Rate of technological diffusion

Environmental Factors

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 Different markets have different norms or environmental standards which can
impact the profitability of an organization in those markets. Even within a country often
states can have different environmental laws and liability laws. For example, in United
States – Texas and Florida have different liability clauses in case of mishaps or
environmental disaster. Similarly a lot of European countries give healthy tax breaks to
companies that operate in the renewable sector.

Before entering new markets or starting a new business in existing market the firm
should carefully evaluate the environmental standards that are required to operate in
those markets. Some of the environmental factors that a firm should consider
beforehand are:

 Weather
 Climate change
 Laws regulating environment pollution
 Air and water pollution regulations in Auto Manufacturers - Major industry
 Recycling
 Waste management in Consumer Goods sector
 Attitudes toward “green” or ecological products
 Endangered species
 Attitudes toward and support for renewable energy

Legal Factors

In number of countries, the legal framework and institutions are not robust
enough to protect the intellectual property rights of an organization. A firm should
carefully evaluate before entering such markets as it can lead to theft of organization’s
secret sauce thus the overall competitive edge. Some of the legal factors that Ford
Motor Company leadership should consider while entering a new market are:

 Anti-trust law in Auto Manufacturers - Major industry and overall in the country.
 Discrimination law
 Copyright, patents / Intellectual property law
 Consumer protection and e-commerce
 Employment law
 Health and safety law
 Data Protection

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SWOT Analysis
Strengths Weaknesses Opportunities Threats
Enhancing brand Remain in the huge
Strong brand Insufficient safety awareness in debt and pension
awareness “Recall Incident” emergency liabilities
economies (BRIC)
Innovation
Affordable Low-end car for new models Fierce competition
American brand manufacturer (hybrid and electric in the global market
cars)
Reduced levels of Global
High exposure
Oil-consumption debt slowdown in a car
worldwide
consumption
Good performance Be late in Increasing raw
in domestic market innovation material price
Efficient operational
Bad financial
process (HR,
management
Logistic, R&D)

MARKET ANALYSIS
It has included their focus strategy to be focus on the market. The
advertisements of the ford are always an example to the normal person as they always
have one of the best advertisements that separate them from other competitors. They
always offer variety of products and services to the consumers like trucks, rally cars,
sports cars, touring cars they got so many varieties with them. They have every option
for the consumers. They have always taking good steps in order to make the
environment friendly and they are moving one step further to be the good CSR
Company.

Ford’s Strategies

Mass production concept was derived and used by Ford Motor Company. They
triggered their customers’ demands and acts through of those demands. Some of the
strategies I see are as follows:

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·         Large production plans
·         Changeable parts of the cars
·         Moving assembly line
·         Standard product
The methods like this help them to establish their brand name and production
frame, even the cost of the production was reduced down. We can see the changes in
the labor wages in this period from 2.34$ it has gone to 5$ which is quite double looking
at the working hours from 8 hours to 9 working hours in this way they have made
themselves efficient and production and labor innovation has direct impact on their
brand which later turns out to be their competitive advantage.

The company even makes their move to the new production and change in the
product category with upgraded horse power and brakes, as this created them the gain
towards the world largest automobile industry.

As soon they have gone global and make their presence internationally they
started giving their global strategy. They apply regional, transnational strategies.

Ford’s global strategy:

The global strategy of ford relates them to the worldwide expansion of fords into
the international level. Some of the plans are explained below:

·         Restructuring the business with profit and growth

·         Financing the plans and improving balance sheet.
·         Product development as the customer’s wants
·         Team work these things led to the perfect strategies of the ford which are:
·         New outstanding models were introduced to the consumers.
·         Aggressive strategy of capturing the market
·         Sales of wide range of their cars and sales of their luxurious cars were their sales
strategy.
·         Product line extension to the truck and buses.

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PROBLEM STATEMENT
Ford must determine how to best use its strengths and resources to serve a
newly expanding global consumer base and capitalize on demand for eco-
friendly vehicles.

Across the globe, there is an increasing demand for a variety of vehicle types
and classes. An immense segment of untapped consumers globally is gaining wealth
and are now able to afford low cost vehicles, while the wealthy are getting wealthier and
demanding more luxury vehicles with an American brand name. There is an increasing
demand for eco-friendly vehicles as consumers are more aware of their effects on the
environment. Furthermore, recovering economies worldwide are demanding more
commercial vehicles for housing and commercial construction for homes, plants, and
other large scale building projects. This is also coupled by President Obama's initiatives
to increase infrastructure repair in the United States (Bridges, roads, etc.)

Ford has a uniquely positive challenge in that there is a plethora of choices as to

where to attack growing demand across consumer segments who are demanding
different types and classes of vehicles. Whether at home or abroad, there are many
demands that need to be met. Ford must analyze what market to enter and with what
type of vehicle, given the global demand, economic conditions, and their firm goals. The
decision that they make must be one that is fiscally possible given the company's
current financial standing, and one that will allow them to grow and sustain profit over a
long period of time.

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AREA OF CONSIDERATION
Growing interest in utility vehicles among America’s 80 million-strong millennial
generation those born between the early 1980s and early 2000s is bolstering purchase
consideration for the Ford brand.

Maritz Research, a St. Louis-based marketing research firm, collects data from
consumers as part of its annual New Vehicle Customer Study, asking would-be buyers
and actual buyers about their new vehicle preferences and buying behaviors. The data
in this study came from research conducted between 2008 and 2013.

Marketers understand purchase consideration to be a leading indicator for future

purchases in what’s known in the industry as the “sales funnel.” In simplest terms,
consumers move from awareness of a brand to consideration to eventual purchase.
Strong consideration tends to correlate highly with future purchase decisions.

Small and midsize cars remain the top two segments both considered and purchased
by younger buyers, but compact and full-size SUV segments – such as Ford Escape
and Ford Explorer – show the largest jumps in consideration, with increases of 1.1
percentage points and 1.7 percentage points, respectively.

While these percentage point increases appear small, in terms of potential sales
volume, they represent hundreds of thousands of vehicles. For instance, in a vehicle
market of 16.5 million units sold, a 1.1 percentage point increase equates to roughly
181,000 vehicles and a 1.7 percentage point gain equates to approximately 280,000
vehicles.

In the same period in which millennials began to show greater interest in SUVs, Ford
overhauled its high-volume utility vehicle lineup, most notably Explorer in 2011 and
Escape in 2012.

“The trend of millennials starting families comes at the same time Ford is updating or
replacing nearly its entire product lineup,” said Amy Marentic, Ford global car and
crossover marketing manager. “These fastest-growing segments like small utilities
coincide with Ford’s product strengths.”

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Explorer sales were up 32 percent last month with 16,797 vehicles sold, for the best
July sales since 2005. And Escape had its best July ever, with 26,558 vehicles sold a
19 percent gain.

COURSES ACTION

Ford has adopted a number of corporate social responsibility initiatives and has
made sustainability a major priority. The company has an online global ethics training
program for employees available in 13 languages. The company also offers hotlines for
employees in 24 countries and trains its Office of the General Counsel on how to handle
global complaints. The following sections will discuss Ford’s initiatives to improve
employee conduct and well-being, its community involvement initiatives, and the
sustainability of its products.

Employee well-being

Ford recognizes that without its dedicated employees, the firm would cease to
function. It has therefore introduced a number of employee initiatives to motivate
employees and increase their quality of life. For instance, Ford has developed a
Sustainable Workforce Initiative to improve employee well-being, productivity, and
efficiency. The Sustainable Workforce Initiative is based on four different principles:
strategic hiring, training, protection and safety, and healthcare. Strategic hiring means
that Ford does what it can to ensure that the best person is selected for a particular
position. Training varies depending upon the level of the employee; for example,
semiskilled operators receive about six months of training. Ford also makes use of
simulated factory training in its program. In 1999 Ford revamped its safety program and
created global safety process standards that have reduced injury rates to one-tenth
what they were in 1999. Realizing the potential dangers of repetitive motion, Ford also
conducts virtual ergonomic assessments to identify and thereby reduce injuries. Finally,
Ford has partnered with the United Auto Workers union to offer a voluntary two-year
enhanced healthcare program that offers personalized care to employees with chronic
health issues. Ford is also a strong supporter of employee diversity and education. Ford
Motor created an employee program called Ford Interfaith Network to help employees
learn about and respect different religious beliefs. Every year Ford holds a National Day
of Prayer at its Ford World Headquarters and invites employees of all races, ethnicities,

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and religion to participate. Ford has also created Ford GLOBE to support a safe and
supportive work environment for gay, lesbian, bisexual, and transgendered employees.

Community Involvement

Because Ford recognizes the importance of gaining consumers’ trust and

respect, it strongly believes that the consumer is a major priority. It participates and
sponsors many events to help its local communities. Locally, every Ford dealership
individually does its own share to help out its community; however, on a national level
Ford has a few major events that it initiates. One of the major events is The Ford
Partnership for Advanced Studies, or Ford PAS. This is an award-winning academic
program that brings together high school students, teachers, employers, and community
leaders to help better educate today’s youth by offering free tutoring to all who
participate. The 9 goal of the program is to prepare young people for higher education
and career development, as well as provide them with the knowledge to successfully
participate in the global community. This program is currently operating within 600
schools in 27 states. Another way Ford gives back to its community is through its Ford
Volunteer Corps. The Ford Volunteer Corps are a special group of volunteers who
rebuild homes in poverty-stricken areas. Every year Ford holds a Global Day of Caring
in which thousands of volunteers engage in building projects in communities throughout
the world. Ford also spreads awareness of the company and its brand with Ford
Community Day. Ford Community Day is a fair that offers free food and games while
inviting community members to learn more about what it has to offer.

Ford believes that safe driving is essential for all particularly for teenagers just
learning how to drive. As a result, it has a specific section at Ford called the Ford DSFL,
which stands for “driving skills for life.” Ford DSFL sets up a unique driver training
course in each community it visits. Professional drivers ride with students and teach
them important skills to help keep them safe on the road. Ford also established Drive 4
UR School. In this program, Ford assists dealers in contributing to their communities by
hosting test drive events at schools. Drive 4 UR Community is similar in purpose but
involves partnering with local organizations to host test drives. Ford donates $20 for
each person who completes a test drive to a nonprofit organization, up to $6,000.

Finally, Ford Motor Company—in cooperation with the Charles H. Wright

Museum of African American History—gives the Ford Freedom Award to honorees who
have dedicated their lives to improving the African-American community and global
community through their chosen fields. This award is given annually to support those
willing to make a positive difference. To keep all these events in order, Ford has a

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community services department called the Ford Motor Company Fund and Community
Services.

CONCLUSION
Although Ford Motor Company faced significant ethical challenges in the past, it
is taking a proactive approach toward eliminating future issues. It holds the distinction of
being the only one of the “Big Three” carmakers to avoid having to be bailed out by the
government during the 2008- 2009 recession. This showed that the company had made
a significant turnaround and was financially viable enough to weather the economic
storm. In contrast, the government only just recently sold off its shares in General
Motors, which it bailed out in 2009 with $49.5 million. It is estimated that taxpayers lost
$10.5 billion. By avoiding a government bailout, Ford was able to improve its reputation
and gain a competitive edge over its major rivals. The company was also able to outsell
its rival Toyota in the United States in 2012 and 2013. Ford has taken proactive
measures toward improving its internal processes, such as improved testing procedures
and internal quality control. The firm made a renewed commitment to consumer safety,
environmental sustainability, and stakeholder appreciation. This has led to its four-time
nomination as a world’s most ethical company. These results are based upon an
intensive review of Ford’s social responsibility efforts, innovation, transparency,
communication, citizenship, corporate governance, and business practices. 11 Ford has
learned from its past mistakes and has taken proactive measures toward ensuring
consumer safety and satisfaction. Ford is an elite company that has secured an ethical
reputation. It must continue to investigate ways to improve corporate social
responsibility and sustainability without compromising consumer safety or quality.

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RECOMMENDATIONS
Ford Motor is the only one in the US auto motor industry who tried to sustain its
leadership and its market position with effective strategies to match the market
requirements and needs. It updated its products with latest technology gadgets and
equipped its products with the latest ones. After conducting the in depth analysis of the
company’s success factors, revamped processes and other operational strategies as
well as the study of case study, I came to the following recommendations for the Ford
Motors that can help the company to leverage its market position and sustain
profitability:

1. RESEARCH

Before designing a new model, the Ford motors should conduct a market
research and survey to understand the customer preferences. Since the company is still
under huge debts and has to come up again it has to keep an eye on the market trends
and needs because one wrong step can lead it to the deepest pit which the company is
scared of. Instead of changing the models each year, they should bring out the quality
and performance in the existing projects by improving the production operations of the
company. The company should focus more on the designs of its products and come up
with more diverse and efficient models.

2. INNOVATION

Japanese car makers are already providing small cars and catering to the needs
of the people in the segment. Fords main competitors in this market are Toyota, Honda
and others. Who are offering products that are priced low, carrying nice features and
their performance is not under rated in anyway. The C-car platforms at Ford require
engineering the products that are innovative to gain the attraction of large number of
potential buyers.

3. GREEN VEHICLES

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 Due to the increased emphasis by the government of US and other countries on
the production of eco-friendly cars and other vehicles, it has become extremely very
important for every car maker to introduce the cars which are more fuel efficient and
emit less smoke without causing harm to the environment. The Japanese Car maker,
Honda, has introduced a new car called Honda Civic GX as a green car. The car has
won the title of greenest car of 2011 from the American Council for an Energy-Efficient
Economy. Though Ford has also taken initiative of producing environmental friendly
cars with the production of Ford Fiesta SFE (ranked at # 7 in the ACEE list), it is
desirable that the company should introduce eco-friendlier cars in order to gain
competitive advantage in this front as well.

4. MARKETING

Today it is an era of marketing. Only those who market them-self well are likely to
succeed in this competitive market. Ford has won the marketer of the year award by
highlighting the features of the product instead of the tech gadgets installed in it. The
Ford’s products are better than before with the newly devised strategies and promoted
and marketed well by Mr. Farley, VP global marketing and sales. The sales are up 17%
double the industry wide gain of 8.4%. I suggest that the company should continue with
the current marketing strategies and the other promotional channels it is already into.
They should also engage into aggressive marketing and promotional activities to attract
the customers about the newly introduced products. Savvy marketing and re-defined
focus can be a good sign for this iconic company. The company should link up with the
TV sponsorships and engage in the public relations activities to attract the general
public about how concerned the company is towards the social issues.

5. PRICE

The Ford’s small world cars are intended to sell in the developing markets and
the other markets around the globe. These markets are highly price sensitive. The
customers want excellent features, quality performance in the affordable prices which is
why there are various regional competitors in these markets to compete with the Ford
with their products priced low.

I suggest Ford motors to produce the cars which are better not only in the
domains of features, performance, and fuel efficiency but also in the pricing of the car.
The small cars concept can achieve its goals only if the cars are priced low with all the
existing features of their products.

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