F ORD M OTOR C OMPANY Strategic Audit 5/1/2009 Management 4710 Lisa Krone, Charise Hansen, NaTasha Kearney, Jasmine Franklin
I.
CURRENT SITUATION A. Current Performance Ford Motor Company is an automotive leader hailing from Dearborn, Michigan, which produces and/or distributes automobiles in several continents. The company owns brands which include Ford, Lincoln, Mercury and Volvo as well as providing financial services through Ford Motor Credit Company. Ford employees around 213,000 people and operates about 90 plants
worldwide.
company’s
2008
“As annual
noted
in
report,
the after
earning a profit in the first quarter of 2008, Ford had an overall net loss of $14.7 billion for the year with $6 billion coming in the
"Consumers remain anxious about the economy and their own outlook for the future," said Ken Czubay, vice president of sales and marketing. "We at Ford want to do our part to rebuild faith in the marketplace by offering payment protection on every new Ford, Lincoln or Mercury vehicle for up to a year if our customers lose their jobs."
fourth quarter. That compares with an overall net loss of $2.7 billion in 2007. Since 2006, Ford Motor Company losses total $30 billion.” “In the first two months of 2009, Ford's U.S. sales plunged 44 percent compared to a market that declined 39 percent overall.” Due to current trends, with tightening of the credit market and other economic factors, there has been a major slowed down in the growth of sales volume and has also put significant pressure of the liquidity on the current business environment. Ford has done increasingly well compared to the other two “Big Three” automakers since Ford is the last “man” standing who has not taken government bailouts. In Ford’s Business Plan which was submitted to
the Senate Banking Committee, for proposes four elements to help the company afloat: 1. ‘Aggressively restructure to operate profitably at the current demand and changing model mix;’ 2. ‘Accelerate development of new products our customers want and value;’ 3. ‘Finance our plan and improve our balance sheet; and’ 4. ‘Work together effectively as one team, leveraging our global assets.’
Ford is taking the current crisis to make many cuts across the board which has totaled over ten billion dollars in areas such as marketing, dealership sales costs, human capital, and many more. “Ford is trying to reduce its unsecured debt by twothirds and its overall debt from about $36 billion to about $25 billion through a cash-for-debt swap to bondholders that expires Friday (first week of April, 2009).” In the current market and industry Ford has gained market share over several months which has been rare in the past decade. As many analysts have noted, Ford is not out of the deep and torrentially waters that the world economy is currently treading. From Bill Ford’s video on the Ford Story, “As we move forward toward the future, I would like to be seen as the company that interrupts that. That we again will be the company with leading solutions that help people have a better life. At the end of the day if all we are about is making cars and trucks and making money and going
home, that’s not enough. Our goal has to be to do that, but with the goal of making peoples life’s better.”
B. Strategic Posture
Table 1: From money.cnn.com:
% change from 2007
$ millions
Revenues
146,277.0
-15.2
Profits
-14,672.0
N.A.
Assets
218,328.0
—
Stockholders' equity
-17,311.0
—
Market value (3/27/2009)
6,805.6
—
Ford’s Vision Our vision is to become the
Profits as % of Revenues
-10.0
world’s leading consumer
Assets
-6.7
company for automotive
Stockholders' equity
N.A.
products and services.
Earnings per share
Ford’s Mission
2008 $
-6.46
% change from 2007
N.A.
1998-2008 annual growth rate %
N.A.
We are a global family with a proud heritage, passionately committed to providing personal mobility for people
Total return to investors
%
2008
-66.0
1998-2008 annual rate
-21.2
around the world. We anticipate consumer needs and deliver outstanding products and services that improve people’s lives. Ford’s Values The customer is Job 1. We do the right thing for our customers, our people, our environment and our society. By improving everything we do, we provide superior returns to our shareholders.
Ford’s Strategy New Products offerings collected from the business plan submitted to Congress: 2009 F-150
2010 Ford Fusion +
2010 Lincoln MKT
2010 Lincoln MKS
Hybrid
2010 Lincoln MKZ
2010 Ford Mustang
2010 Ford Taurus
2011 Ford Fiesta
2010 Mercury Milan and Milan Hybrid Ford has been making great progress: •
Ford Motor Company, Honda Motors and Toyota Motors quality ratings are in a dead heat.1
•
Our cars, trucks and SUVs deliver fuel economy that's competitive with that of all other automakers.2
•
Fifteen 2009 Ford Motor Company vehicles are rated Top Safety Picks by the Insurance Institute for Highway Safety (IIHS), more than those of any other automaker.
•
Our factories and the vehicles they produce have pioneered environmentally friendly techniques.
II.
CORPORATE GOVERNANCE A. Board of Directors Ford Motor Company has 14 Board of Director members. There are 4 internal members and 10 external members on this board. The members of the Board have
a very diverse background with a very large range of experience. The majority of the members have been on the Board longer than five years. The Ford family owns three of the seats on the board as well as 6 percent of the company’s stock as well as a special class of stock that allows them 40 percent of voting rights as well as control over the company.
B. Top Management Top management for Ford Motor Company consists of executives of different skill sets, backgrounds and experience. To name a few of the key executives, William Clay Ford, Jr. is the great-grandson of Henry Ford and also once served as the Chief Executive Officer and Chief Operating Officer. He attended Princeton as well as received an S.M. in Management as a Sloan Fellow from the MIT Sloan School of Management.
Alan Mulally, the current President and CEO of Ford Motor
Company also received a Masters degree in Management (S.M.) as a Sloan Fellow. Mr. Mulally began a long career at Boeing in 1969 before being named President and CEO of Ford Motor Company in 2006. There are a number of executives that make up the large number of top management for Ford Motor Company. Exhibit 2 shows a list of top management that ranges from the President and CEO of the entire company as well as the area Vice Presidents and the Group Vice Presidents of the divisions.
III. EXTERNAL ENVIRONMENT : OPPORTUNITIES AND THREATS (SWOT) A. Societal Environment Economic: According to the CanadaSpace Reference regarding Ford Motor Company, economic conditions have a major impact on the very being or existence of Ford Motor Company. It is the second largest automobile company in America as well as the fourth largest company in the world. By 2007, Ford produced more than 6 million vehicles and had an estimated 245,000 employees. The current recession has caused extreme damage to the sales of automobiles, declining at a very high rate. To keep cost down and remain in business, lay-offs among employees must occur. As a result, the inflation rate increases and the economy worsen. As the economy worsens an opportunity for Ford Motor Company to maintain a healthy customer base is to offer incentives to help in these hard times. Some incentives that Ford offers is if the customer losses their job, Ford Motor Company will pay their car note for up to a year as reported on multiple newscasts. In May of 2008, due to the rising gas prices, Ford Motor Company decided to reduce the assembly of trucks and SUVs for the remainder of 2008 according to ABC News. By making these cuts, it hurts the automakers immediately because these vehicles go on the books as sold as soon as they leave the plants. The average gallon of gas during the week of May 12, 2008 was $3.72 (ConsumerReports.org).
Technological: Fueleconomy.gov states that Hybrid vehicles mark the foremost technological innovation within the automobile industry. These new revolutionary vehicles combine gasoline engines and electric motors that create more powerful, fuelefficient vehicles. Some of the components include regenerative braking, which turns energy that is usually wasted during braking, into electricity that is stored in the battery until used by the electric motor. The Electric Motor Assist provides power to assist in acceleration therefore allowing smaller engines to be used. Hybrid vehicles also include an Automatic Start/Shutoff, which turns off automatically when vehicle comes to a complete stop and restarts upon pressing the accelerator. This technological advance is very beneficial not only to the customers who will save lots of money, but also for the economy. Being fuel efficient causes a reduction in climate change, oil dependence costs, and increases energy sustainability. In an article found on Media.Ford.com, Ford Motor Company has invested up to $1 billion for the development of flexible manufacturing. This has allowed the company to retain its title of efficiency while simultaneously remaining competitive in its field through cost-savings and continuous improvement. According to Media.Ford.Com, Ford Motor Company has developed the new EcoBoost engine which will be made for 90% of the fleet of vehicles by 2013.
EcoBoost is made to reduce CO2 emissions as well as increase in fuel economy by 20 percent.
Political-Legal: As the recession period continues to grow, the demand for purchasing a new vehicle decreases.
The United States government has offered bail-out funds that would
assist and fund operations, company debt, employee payroll, and save jobs. If funds are accepted, then so are the rules and guidelines that follow. Some guidelines include government control over subject matters and decisions that were once determined by top management and/or the Board of Directors. In 2008 Ford Motor Co. showed a record loss of $14.6 billion. Ford is striving to survive the market without federal aid. Ford has become the first domestic automaker to accrue a new round of concessions from UAW after its members agreed to cut compensations. This new deal will save Ford billions and is expected to set a pattern for GM and Chrysler to follow in the future.
Sociocultural: In an article found on ezinearticles.com it was discussed that, Ford Motor Company has its challenges and in order to move forward in today’s society, substantial changes will need to be made and accepted first. The Ford Escape Hybrid and Mercury Mariner Hybrid were developed to have its benefits. Along with a better
fuel economy, these vehicles provide tax credits and go for reasonable prices. Improvement to this process is a main strategy for Ford Motor Company. Customers receive many benefits by using a hybrid vehicle for example, they receive lower insurance premiums in many states, tax credit, and the capability of using electrical power and the enjoyment of more mileage in gasoline operated vehicles for less the price. Ford Company Motor closely follows the legal aspects of environmental scanning for example; they were the first to receive the Energy Star 2007 Partner of the Year Award in Energy Management from the Environmental Protection Agency two years in a row (Brown).
B. Task Environment There are many forces that drive industry competition; entrants, existing firms, substitutes, buyers, suppliers, and other stakeholders. These forces vary from country to country. Each force has been rated high, medium, or low as it pertains to the United States. •
Threat of New Entrants: The threat of new entrants is low for the automobile industry. In this current economic environment, R&D dollars are spent in the area of more economical, fuel efficient vehicles.
•
Rivalry among Existing Firms: The rivalry among existing firms is high. Different automotive companies are offering rebates, preferred financing, and price competitions. Foreign competitors are another threat to Ford because they are offering more practical and economical automobile models as well.
•
Threat of Substitute Products or Services: The threat of substitute products or services is medium. A customer could choose to purchase a different car or could choose other means of transportation such as bus, train, bikes, etc.
•
Bargaining Power of Buyers: The bargaining power of buyers is high a lot due to the current economy. Customers are free to shop around to different cars for lower prices.
•
Bargaining Power of Suppliers: The bargaining power of suppliers is low. There are many automobile supply industries.
They are vulnerable to
demands of manufacturers and do not have much power. In these hard economic times, Ford Motor Company must do what is important to serve its customers, society, and the economy for the current and future state. Currently the foreign competition could hurt the sales of Ford Motor vehicles and Ford must think strategically how to handle this issue. Another issue that could hurt Ford is to have to lay off employees. This can hurt the Ford image as an employer and a view of a family business. Currently Ford is not being affected by gas prices as they were this time last year due to the drop but the future could still pose risks. Ford should concentrate on their strategy of short-term customer concentration of customer incentives, quick cash from renegotiating UAW contracts and will see great benefits in the long-term plan of the EcoBoost Engine.
IV. INTERNAL ENVIRONMENT : STRENGTHS AND WEAKNESSES (SWOT) Corporate Structure: Ford Motor Company is comprised of two unique businesses. Automotive Operations provide services and sell vehicles through popular brand names; Ford, Lincoln, Mercury, Volvo and a portion of Mazda. Ford Credit is the largest finance company in the world. This distinctive business is devoted to providing financing and other services to the automotive industry. Over the years of this business, Ford Motor Company has built up a trusting brand name. Many people know and chose Ford as their brand of vehicle to drive and this is what has brought Ford a long way over the years. Employee opinions and ideas are valued heavily at Ford Motor Company. Business decisions are made centrally and prioritized based on its impact on the ability to complete the company’s objective and business processes. Corporate Culture: In an article on diversity on mycareer.ford.com, it points out that diversity is the key ingredient to a well managed company that outperforms in quality and creativity. Ford Motor Company prides itself on being such a diverse company. It is a shared belief that is embraced domestically and internationally. Diversity is received as a competitive advantage and one that stimulates imagination, broadens talents, and has proven to help serve customers better. Being diverse is not limited to physical characteristics such as race, gender, ethnicity, age, disability, or sexual
orientation. Diversity extends to culture, language, opinions, beliefs, experience, education and a host of others. Ford Motor Company is very compatible with the employees’ diversity of backgrounds. Corporate Resources: Marketing The focus is on providing customer satisfaction and increasing market share. Ford traditionally uses the cost approach by comparing their vehicle to a similar vehicle made by its competitor. Advertising during popular events such as the Superbowl or Olympics, has supported the ability to increase market share while simultaneously reaching large amount of people. In April of 2009, Ford Motor Company was the main sponsor for the stadium during the NCAA Championship games that were broadcasted in Detroit at the Ford Field Stadium. The media exposure that they received was worth more than $22.5 million. Ford earned half of that with inbroadcasting exposure during the game broadcasts. The rest was earned by the announcers, newspapers, and internet articles according to an article found on www.calgaryherald.com.
Finance Ford Motor Company is in a dire financial situation, many key elements that determine strength are negatively reflected on the Income Statement. Ending in December of 2008 (in millions): Net Income
$-14,672.0
Operating Income
$-13,812 .0
Return on Assets
-6.70%
Revenues
$146,277.0 (slightly down from $172,316 in 2004)
Despite Ford’s current financial status, the decision not to accept any bail-out funds or assistance from the government still remains.
Ford is a moderately risky
investment with cost reductions and better strategic alliance with fuel efficient vehicles, Ford can re-establish their market share. Both the finance company and sales are hurting right now due to the economy. Ford Motor Company has had to increase interest rates just like other companies because of the economy. The sales in the automotive industry have fallen also because of what is being called a recession.
Research and Development Ford Motor Company is more concerned with actual task performance rather than the output therefore being process-oriented. By focusing on quality during product development and manufacturing, vehicle sales have proven to increase, thus allowing success in the objective of gaining market share. Employees create and plan product cycles which assist forecasters on how to approach different markets. Analysts determine new the vehicle productions and the designers and engineers conclude the needs of the market. Research and Advanced Vehicle Technology teams decide what new technologies to develop and implement and Strategic Infrastructure Engineering provides management for the
research
and
development
of
new
technologies
in
an
article
found
in
mycareer.ford.com under Product Development. Ford’s recent developments include: •
Smart Gauge with Eco-Guide- this innovation is a digital instrument created to teach Ford hybrid drivers how to maximize fuel efficiency.
•
Electric Power Steering- software-based system that offset drivers pulling or drifting that may occur due to an uneven road.
•
Virtual Technology- a combination of motion-capture technology with human modeling software that assists engineers in analyzing and redesigning assembly lines; thus reducing physical stress amongst workers(www.ford.com/innovation).
Ford has also come up with a “Greener Way to Paint Vehicles” according to an article on Ford.com. The new paint technology used by Ford reduces greenhouse gases by 15 percent as well as cuts the production costs. This could save Ford a substantial amount of money per vehicle as well as with the overall process of painting the vehicles. Another concern for Ford Motor Company is to re-establish top safety picks for their vehicles. According to media.ford.com, “the Insurance Institute for Highway Safety (IIHS) named the 2009 Ford Escape, Mercury Mariner and their hybrid models as “Top Safety Picks”.” This is very important for Ford to be able to offer for their customer base.
To Ford, high ratings in safety and fuel efficiency is a way to
regaining the customers they once had.
Operations Core competencies adhere to mass production of automobiles at an affordable price. The founder of Ford Motor Company, Henry Ford, created this concept with the birth of an assembly line in the year of 1902. He paid his workers high wages and sold inexpensive cars, allowing the average person the ability to own a vehicle. The ability to lower cost permitted the development of technical and business innovations. Ford Motor Company continues the legacy of its founder through the use of powertrain control systems and calibration, which are methods created to provide flawless drivability. In addition to the current recession, an increase in the interest of more fuel-efficient vehicles has caused a reduction in the amount of cars currently being produced. Many plants are at a halt, waiting to receive word on what to do next. This is aiding in the increase of costs and decrease of income.
Human Resources As an area that seeks change agents to assist in the transformation of Ford Motor Company into a leading consumer business with an automotive focus, the Human Resources department is dedicated to the company’s objectives and continuous improvement. This is accomplished in part by providing company-paid training to new hires and current employees dedicated to furthering their education. Although Ford experienced a strike that lasted 99 days due to not meeting 24 needs of its workers, the company has proven the ability to benefit from negotiating. On
March 12, 2009, the United Automobile Workers (UAW) and Ford’s top management reached an agreement regarding buyout packages that saves Ford Motor up to $500 million a year (Aguilar). In an effort to decrease cost, outsourcing has increased. An estimated 30,000 jobs were outsourced to Mexico City in 2008 which was justified by the need to accommodate development of its new fuel-efficient “global car” and upgrade two of Mexico’s local warehouses at the expense of $3 million (Roig-Franzia). Ford Motor Company has announced its inability to meet profitability, thus more layoffs are to be expected.
Information Systems Viewed and accepted as Ford’s competitor differentiator, information systems are of high standards coupled with pride. Primary focus is on leadership and the ability to utilize reengineering techniques within every part of the company. Ford works with three groups in order to remain a leader of innovations; Process and Technology Group (PTG), Application Development Services (ADS) and Information Technology Infrastructure Group (ITI). PTG works individually with each unit to determine particular information technology needs, ADS are responsible for maintaining and providing support during the products life cycle, and ITI provides hosting, deskside, and telecommunication services based on an article found in the Career Programs section under www.mycareer.ford.com.
V.
ANALYSIS OF STRATEGIC FACTORS (SWOT) Situational Analysis (See SFAS within Apendix)
VI. STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY A. Strategic Alternatives Retrenchment – Turnaround Strategy In this type of retrenchment strategy, Ford could make a plan of transformation and reconstruction to turnaround how this company works. One step they have already made is to focus on their core brand by selling off Land Rover and Jaguar to Tata Motors. Closing dealerships is another option for this strategy. The company has too many dealerships making it hard to maintain a valuable dealer network. Another reconstruction theory is to focus more on the “Green” effort of the business. Being in the times today, hybrid vehicles, the EcoBoost engine, saving greenhouse gases to paint vehicles can lead to a safer environment. [Pros]
With reconstructing the Ford business, Ford is able to focus more on
the Ford brand and strive to provide excellent customer service and profitability in the future. By focusing on the economy, this will serve all areas that are key factors to Ford Motor Company; customers, economy and company image. Closing some of the Ford dealerships, this will help regain some of the profits within the company.
[Cons]
As any new development for any new type of technology comes a price
of research and development as well as testing. It can be costly to develop the environmentally safe products, especially when the company is one of the first to use these new innovations.
Closing dealerships could prove to be a bad idea
because of injuring company image. This could cause workers to be laid off and affect consumers who may have to drive further distance to reach a dealership. Stability – Pause/Proceed with Caution Strategy Through use of this corporate strategy, Ford could make only slight changes to strategic plans and stay with focusing on the currently developed hybrid vehicles. This strategy is a temporary pause before a company decides to go towards growth or retrenchment. Only slight changes are made to until the situation can improve. Some changes that Ford could make would be hiring freezes, pay cuts, budget cuts, and cut costs for research and development.
Implementing a temporary hiring
freeze would reduce projected labor budgets. Cutting or reducing other budgets like the marketing budget could free up money to use for other needs until the economy can pick back up again.
The Ford brand is an established brand so the Ford
advertising department needs to focus more on showing consumers how they can help in these economic times instead of trying to market the brand. Putting a temporary hold on research and development on new products would be a good way to cut costs until the economy can be rebuilt. [Pros]
This strategy could help Ford maintain business without having to use
government funding. Ford would also not have to cut jobs, thus saving employee
morale as well as maintaining the customer’s perception of the brand. This being a temporary fix, once the economy has been rebuilt, Ford could choose a better corporate strategy to follow. [Cons]
The sales for Ford Motor Company have already started to decline.
With the dropping sales, this strategy might not prove to be enough to bring the company through the struggling economy. Putting a hold on R&D could end up hurting the future strategic plans for Ford because new development, especially towards a better “Green” technology. Growth – Horizontal Growth Strategy This type of growth strategy can be used to grow by expanding its products into other geographic locations and increase the range of service in the location areas that Ford has locations in.
Ford could expand to countries to become the
automotive leader in the industry.
They could also plan on the possibility of
acquiring small companies that produce motor bikes.
This could prove to be a
growth opportunity for the company. [Pros]
Expanding into more international locations will reach Ford’s objective
of become more of a global leader within the industry. By joining the motorcycle industry, Ford Motor Company could produce a brand of motorcycles that could prove to produce a profitable idea. [Cons]
In expanding and new ideas of new products, cost is always associated.
The cost that would go along with opening new locations as well as producing motorcycles is too significant to risk.
B.
Recommended Strategy
The recommended strategy is the turnaround retrenchment strategy. Ford Motor Company has already started on implementing this plan by selling Jaguar and Land Rover to put more focus on their core brand. In their business plan submitted to Congress, they have proposed that they will have a 14 percent reduction in dealers since 2005. Ford’s effort in going “Green” will lead the company to a better future and life for their customers. This strategy will prove to be the best strategy for Ford Motor Company because it will allow Ford to serve their customers as they always have with quality vehicles with a loyal brand name. By restructuring the way Ford does business, the future of Ford will be brighter because of all the new innovations to make a better, stronger company. The impact of this strategy falls right in line with what Ford is looking for to reconstruct their business and provide their customers with the quality brand everyone knows and trusts.
VII. IMPLEMENTATION
At Ford, the current state of business calls for immediate and direct business analysis and action to make sure Ford achieves a financial breakeven point. Ford has decided as stated above that it is focusing on its core competencies which will help them a strong and stable position which will improve long-term performance.
The strategic business unit that represents the corporation in United States, Top Management, and the Board of Directors should be the responsible for the analysis and implementation of the recommended strategy. As innovations within improving inefficiencies arise, new procedures and processes will need to be developed and documented by the appropriate business units. Here are several of the overall retrenchment type strategies that Ford has decided to implement, which is outlined within their business plan submitted to Congress: •
Based on current business planning assumptions, Ford expects both its overall and its North American Automotive business pre-tax results to be breakeven or profitable in 2011
•
Ford provided initial details of an accelerated vehicle electrification plan for a family of hybrids, plug-in hybrids and battery electric vehicles. The plan includes a Ford full battery electric vehicle (BEV) in a van-type vehicle for commercial fleet use in 2010 and a BEV sedan in 2011
•
Ford’s plan calls for an investment of approximately $14 billion in the U.S. on advanced technologies and products to improve fuel efficiency during the next seven years
•
Ford said it will sell its corporate aircraft as part of its overall cash improvement plan
The financially feasible steps, which are based on the information gathered during this project, are as follows:
Transform leadership: The Top Management of Ford will need to be evaluated within long term strategic plans. Ford will have to define those methods in which resulted in failure and make the decision makers aware that these things are to be avoided for long term profitability. Redefining Strategic Focus: Ford has reviewed their portfolio on the basis of long-term profitability and growth prospects; they determined to go “green”. The largest piece of Ford’s future strategy is focusing on R&D of those types of vehicles and reinvest into itself since it is in a very mature industry.
Selling and Divesting Assets: Ford has already been engaged in selling off assets such as brand names (Land Rover & Jaguar), corporate jet fleet, and closing dealerships. Regional dealership evaluations should be done to determine low or negative profitable locations to see if consolidation or closing is an option in that area. If the situation worsens lay-offs and more restructuring may be needed. They need to reduce the scope and focus on core business needs to get back to black. Mend and Improve Profitability: Ford has to take extreme steps. For example: 1. Transfer profit accountability to divisions 2. Acquiring labor saving equipment 3. Restructuring human assets and laying off when needed 4. Tightening finance controls and reducing overhead
No or Careful Acquisitions: Ford needs focus on its core business and keep acquisitions on the backburner. Rebuild, restructure, and renew!
VIII.
EVALUATION AND CONTROL
A management system could be used to monitor the savings per vehicle for every new "Green" innovation implemented as well as reporting to monitor all reconstruction efforts to proceed with their "One Ford" vision. Most reporting information is based on customer reviews and reports so some reporting is not timely and is based on quarterly and even yearly reporting. Ford compares results against other automotive industries both in the U.S. and in the foreign markets. Ford has adequate control measures to make sure that the strategic plan that is chosen is followed and measured appropriately. The automotive industry already offers awards for quality, service, and good performance as well as many others every year to many of the different companies.
WORKS CITED "It was a tough year.(THIS JUST IN)(Brief article)." Petersen's 4 Wheel & OffRoad 32.5 (May 2009): 19(1). General Reference Center Gold. Gale. Tennessee Electronic Library - TEL. 24 Apr. 2009 <http://find.galegroup.com/itx/start.do?prodId=GRGM>. Woodyard, Chris. "Ford shares Toyota's vision.(MONEY)(Ford Motors and Toyota Motors)." USA Today (April 1, 2009): 01B. Academic OneFile. Gale. Tennessee Electronic Library - TEL. 24 Apr. 2009 <http://find.galegroup.com/itx/start.do?prodId=AONE>. Wilson, Amy. "Ford's OK with new rival, Uncle Sam.(NEWS)." Automotive News 83.6354 (April 6, 2009): 6. Military & Intelligence Database. Gale. Tennessee Electronic Library - TEL. 24 Apr. 2009 <http://find.galegroup.com/itx/start.do?prodId=SPJ.SP02>. Durbin, Dee-Ann. “Gas Prices Force Ford to Cut Production”. ABC News, May 22, 2008. Web. 27 Apr. 2009 <http://abcnews.go.com/Business/Economy/wireStory? id=4909030>. “Average Gas Prices – May 12, 2008”. ConsumerReports.org, 2008. Web. 27 Apr. 2009 <http://blogs.consumerreports.org/cars/2008/05/gas-prices.html>. “Ford to Equip Half a Million Vehicles with EcoBoost Engine Technology For Up to 20% Better Fuel Economy”. Media.Ford.Com. Jan 6, 2008. Web. 29 Apr. 2009 http://media.ford.com/article_display.cfm?article_id=27455 “2009 FORD ESCAPE EARNS ‘TOP SAFETY PICK’; TOPS TOYOTA, HONDA IN COMBINED SAFETY AND FUEL EFFICIENCY RATINGS”. Media.Ford.Com. Aug 20, 2008. Web. 30 Apr. 2009 <http://media.ford.com/article_display.cfm? article_id=28911> Brown, Steven Phillip. “Forces and Trends in Business”. Ezine Articles, May 22, 2008. Web. 27 Apr. 2009 <http://abcnews.go.com/Business/Economy/wireStory? id=4909030>. “Ford’s NCAA Sponsorship a Slam Dunk”. Herald News Services. Apr 10, 2009. Web. 30 Apr. 2009 <http://www.calgaryherald.com/Cars/Ford+NCAA+sponsorship+slam+dunk/148463 1/story.html> “A Greener Way to Paint Vehicles”. Ford Motor Company 2008 Web. 3 May 2009
<http://www.ford.com/about-ford/company-information/corporatesustainability/greener-vehicle-paint/environmentally-friendly-painting-381p> Aguilar, Louis. “Union to save Ford $500M”. The Detroit News-detnews.com. 9 April 2009. <http://www.detnews.com/article/20090312/AUTO01/903120359/0/SPECIAL/Union+ to+save+Ford+$500M > Allen, Scott. “Henry Ford - Founder of Ford Motor Company and Assembly Line Innovator”. About.com: Entrepreneurs. 9 April 2009. <http://entrepreneurs.about.com/od/famousentrepreneurs/p/henryford.htm> Brown, Steven Phillip. "Forces and Trends in Business". EzineArticles.com. 9 April 2009. <http://ezinearticles.com/?Forces-and-Trends-in-Business&id=708724> “Ford Motor Company”. Canada Space Reference. 9 April 2009. <http://reference.canadaspace.com/search/Ford%20Motor%20Company> “Ford Motor Company- Career Programs IT”. Information Technology. 9 April 2009. <http://www.mycareer.ford.com/CAREERPROGRAMS.ASP?CID=3> “Ford Motor Company- Career Programs PD”. Product Development. 9 April 2009. <http://www.mycareer.ford.com/CAREERPROGRAMS.ASP?CID=5 > “Ford Motor Company- Financial Statement”. MSN Money. 9 April 2009. <http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?symbol=F> “Ford Motor Company- Innovation”. Technology. 9 April 2009. <http://www.ford.com/innovation/automotive-technology> “Ford Motor Company- On the Team”. Valuing Diversity. 9 April 2009. <http://www.mycareer.ford.com/ONTHETEAM.ASP?CID=15> “Ford Motor Company- Our Company”. Our Businesses. 9 April 2009. <http://www.mycareer.ford.com/OURCOMPANY.ASP?CID=24> “How Hybrids Work”. FuelEconomy.gov. 9 April 2009. <http://www.fueleconomy.gov/feg/hybridtech.shtml > “New Ford Flex Rolls off Line at Oakville Assembly”). Media.Ford.com. 9 April 2009. <http://media.ford.com/article_display.cfm?article_id=28364>
Patrauscu, Daniel. “NCAA Men's Basketball Final Four Brings Ford $22.5mn”. Autoevolution.com. 9 April 2009. <http://www.autoevolution.com/news/ncaa-men-sbasketball-final-four-brings-ford-225mn-5701.html> Roig-Franzia, Manuel. “Ford's 'Global Car' To Roll Out in Mexico”. LinknZona. 9 April 2009. <http://linknzona.blogspot.com/2008/05/more-outsourcing-to-mexico-by-ford.html>
APPENDIX
Exhibit 1 – Board of Directors Director
Position
William Clay Ford Jr.
Executive Chairman, Ford Motor Company
Internal
Stephen G. Butler
Retired Chairman and Chief Executive Officer KPMG, LLP
External
Kimberly Casiano
President and Chief Operating Officer Casiano Communications, Inc.
External
Anthony F. Earley, Jr
Chairman and CEO of DTE Energy
External
Edsel B. Ford II
Director and Consultant, Ford Motor Company
Internal
William Clay Ford
Director Emeritus
Internal
Richard A. Gephardt
President and CEO of the Gephardt Group
External
Irvine O. Hockaday, Jr.
Retired President and CEO Hallmark Cards Inc.
External
Richard A. Manoogian
Executive Chairman and Chairman of the Board Masco Corporation
External
Ellen R. Marram
President, The Barnegat Group, LLC
External
Alan Mulally
President and Chief Executive Officer Ford Motor Company
Internal
Homer A. Neal
Director, ATLAS Project, Professor of Physics, Interim President Emeritus, and Vice President for Research Emeritus External
Gerald L. Shaheen
Retired Group President Caterpillar Inc.
External
John L. Thornton
Professor and Director, Global Leadership Program, Tsinghua University, Beijing, China
Exhibit 2 - Top Management
William Clay Ford, Jr. Executive Chairman
External
Alan Mulally President and Chief Executive Officer Michael E. Bannister Executive Vice President (Chairman & CEO Ford Motor Credit Company) Lewis W. K. Booth Executive Vice President and Chief Financial Officer Mark Fields Executive Vice President and President The Americas John Fleming Executive Vice President (Chairman and CEO, Ford of Europe) John G. Parker Executive Vice President Asia Pacific and Africa Thomas K. Brown Group Vice President Global Purchasing Susan M. Cischke Group Vice President Sustainability, Environment and Safety Engineering James D. Farley Group Vice President Marketing and Communications and U.S. Marketing, Sales and Service Felicia J. Fields Group Vice President Human Resources and Corporate Services Bennie W. Fowler GroupVice President Quality Joseph R. Hinrichs Group Vice President Global Manufacturing
Derrick M. Kuzak Group Vice President Global Product Development David G. Leitch Group Vice President and General Counsel J C. Mays Group Vice President Design and Chief Creative Officer Ziad S. Ojakli Group Vice President Government and Community Relations Nicholas J. Smither Group Vice President and Chief Information Officer Peter J. Daniel Senior Vice President and Controller Darryl B. Hazel Senior Vice President (President, Customer Service Division) Joseph Bakaj Vice President Product Programs & Product Development Stephen E. Biegun Vice President International Governmental Affairs Ken Czubay Vice President U.S. Sales & Marketing Raymond F. Day Vice President Communications Robert J. Graziano Vice President (Chairman and CEO, Ford Motor China) Ken Macfarlane
Vice President - Manufacturing Ford of Europe Paul A. Mascarenas Vice President North America Engineering Martin J. Mulloy Vice President Labor Affairs Stephen T. Odell Vice President (President and Chief Executive Officer, Volvo Cars) Barb J. Samardzich Vice President Powertrain Operations Neil M. Schloss Vice President and Treasurer Gerhard Schmidt Vice President Research and Advanced Engineering and Chief Technical Officer Robert L. Shanks Vice President and Controller, The Americas Philip G. Spender Vice President Executive Vice President, Mazda Motor Corporation Ingvar Sviggum Vice President Marketing, Sales and Service, Ford of Europe James P. Tetreault Vice President North America Manufacturing
Internal Factor Analysis Summary (IFAS) Weight 0.00 = Not Important 1.00 = Critically Important Rating 1 (Poor) to 5 (Outstanding) based on the company's response to that factor Type
Key Internal Factor
Weight Rating
Strength
Brand name
.15
5
Strength
Customer loyalty
.10
4
Weighted Comments Score .75 Known around the world Well established company that has a history & customer loyalty to help .40 survive
Strength
Quality (Q1)
.10
5
.50
Strength
Service and parts
.05
2
.10
Weakness Financing segment Weakness Falling sales
.20 .15
4 4
.80 .60
Weakness Too many dealers
.15
3
.45
.10 1.00
3
.30 3.90
Weakness Balanced portfolios TOTAL
External Factor Analysis Summary (EFAS) Matrix Weight 0.00 = Not Important 1.00 = Critically Important Rating 1 (Poor) to 5 (Outstanding) based on the company's response to that factor
Has more vehicles chosen as top safety picks by the Insurance Institute for Highway safety than any other brand Provides to car companies that perform better than Ford Higher interest rates have increased costs incurred by Ford to finance customer purchases Due to economy (recession) Made it difficult to substain profitable dealer network Investment allocation mostly in trucks, SUVs, instead of cars and crossovers vehicles
STRENGTHS
SWOT Matrix (TOWS)
S
1
S
2
S
3
S
4
OPPORTUNITIES
Incentives UAW Contract EcoBoost engines K-bag (airbag)
1
O
2
O
3
O
4
THREATS
Gas prices Foreign competitors Substitute products Bankruptcy
W 1
Brand name Customer loyalty Quality (Q1) Service and parts SO STRATEGIES
O
Introduce product innovations that improve safety, Re-establish the brand by offering the best automotive value ST STRATEGIES
T
WEAKNESSES
Financing segment W 2 Falling sales W 3 Too many dealers W 4 Balanced portfolios WO STRATEGIES Negotiate contracts with UAW for lesser compensations amounts, restructure to offer customers better deals on financing and vehicles. WT STRATEGIES
1
T
2
T
3
T
4
Build competence in hybrid vehicles, Market EcoBoost engine and "Green" technologies
Selling off some of the dealerships to use that money to focus more on new innovations
Dec-08
Dec-07
Dec-06
Dec-05
Operating Revenue (Revenue/Sales)
146,277,000
172,455,000
160,123,000
177,089,000
Total Revenues
146,277,000 172,455,000 160,123,000 177,089,000
Cost of Sales
116,644,000
129,519,000
132,350,000
138,222,000
Cost of Sales with Depreciation
128,977,000
143,255,000
148,869,000
144,944,000
Gross Operating Profit
29,633,000
42,936,000
27,773,000
38,867,000
Selling, Gen. & Administrative Expense
21,430,000
21,169,000
19,180,000
24,652,000
8,203,000
21,767,000
8,593,000
14,215,000
Depreciation
12,333,000
13,736,000
16,519,000
6,722,000
Operating Income After Depreciation
-4,130,000
8,031,000
-7,926,000
7,493,000
*
1,161,000
1,478,000
1,249,000
163,000
389,000
421,000
285,000
Other Income, Net
*
*
*
612,000
Other Special Charges
*
-2,400,000
-241,000
*
Special Income/Charges
*
-2,400,000
-241,000
*
PERIOD ENDING
FINANCES Income Statement
Operating Income b/f Depreciation (EBITDA)
Interest Income Earnings from Equity Interest
All numbers in thousands
Total Income Avail for Interest Expense (EBIT)
-3,967,000
7,181,000
-6,268,000
9,639,000
Interest Expense
10,437,000
10,927,000
8,783,000
7,643,000
Pre-tax Income (EBT)
-14,404,000
-3,746,000
-15,051,000
1,996,000
63,000
-1,294,000
-2,646,000
-512,000
214,000
312,000
210,000
280,000
Income before Income Taxes
-14,404,000
-3,746,000
-15,051,000
1,996,000
Net Income from Continuing Operations
-14,681,000
-2,764,000
-12,615,000
2,228,000
9,000
41,000
2,000
47,000
-14,672,000
-2,723,000
-12,613,000
2,275,000
*
*
*
-251,000
Total Net Income
-14,672,000
-2,723,000
-12,613,000
2,024,000
Normalized Income
-14,681,000
-364,000
-12,374,000
2,228,000
Net Income Available for Common
-14,681,000
-2,764,000
-12,615,000
2,228,000
Revenues Year-to-Date
146,277,000
172,455,000
160,123,000
177,089,000
Income Year-to-Date fr. Total Ops.
-14,672,000
-2,723,000
-12,613,000
2,275,000
Income Taxes Minority Interest
Net Income from Discontinued Ops. Net Income from Total Operations Income from Cum. Effect of Acct Chg
Income Statement - Year-to-Date
Dec-08
Dec-07
Dec-06
Dec-05
Cash and Equivalents
22,049,000
35,283,000
28,894,000
31,499,000
Marketable Securities
17,411,000
15,515,000
26,728,000
11,044,000
Accounts Receivable
93,484,000
109,053,000
106,863,000
*
6,073,000
8,210,000
8,772,000
114,497,000
99,557,000
117,263,000
115,635,000
114,497,000
Raw Materials
3,016,000
4,360,000
4,604,000
4,056,000
Finished Goods
6,493,000
6,861,000
7,989,000
7,224,000
-891,000
-1,100,000
-1,015,000
-1,009,000
8,618,000
10,121,000
11,578,000
10,271,000
Current Deferred Income Taxes
*
*
*
5,881,000
Other Current Assets
*
*
*
26,950,000
PERIOD ENDING
Balance Sheet - Assets
Other Receivable Receivables
Inventories Adjustments & Allowances Inventories
Total Current Assets Land & Improvements
147,635,000 178,182,000 182,835,000 200,142,000 579,000
764,000
820,000
697,000
Building & Improvements
12,560,000
14,402,000
13,803,000
12,833,000
Machinery, Furniture & Equipment
43,633,000
45,303,000
59,824,000
45,680,000
Construction in Progress
1,355,000
2,031,000
2,307,000
2,736,000
Other Fixed Assets
8,675,000
10,300,000
269,000
11,378,000
Total Fixed Assets
66,802,000
72,800,000
77,023,000
73,324,000
Gross Fixed Assets (Plant, Prop. & Equip.)
66,802,000
72,800,000
77,023,000
73,324,000
Accumulated Depreciation & Depletion
38,237,000
36,561,000
38,518,000
32,617,000
Net Fixed Assets (Net PP&E)
28,565,000
36,239,000
38,505,000
40,707,000
*
*
1,098,000
5,945,000
Cost in Excess
1,593,000
2,069,000
5,839,000
*
Non-Current Deferred Income Taxes
3,108,000
3,500,000
4,950,000
*
Other Non-Current Assets
37,427,000
59,274,000
45,327,000
22,682,000
Total Non-Current Assets
70,693,000
101,082,000
95,719,000
69,334,000
Intangibles
Total Assets
218,328,000 279,264,000 278,554,000 269,476,000
Balance Sheet - Liabilities, Stockholders Equity
Accounts Payable
14,772,000
20,832,000
23,549,000
22,813,000
Short Term Debt
63,662,000
28,275,000
27,676,000
*
Accrued Liabilities
28,728,000
23,579,000
24,287,000
72,977,000
Deferred Revenues
3,667,000
4,093,000
4,708,000
*
110,829,000
76,779,000
80,220,000
95,790,000
90,534,000
140,255,000
144,373,000
154,332,000
2,035,000
3,034,000
2,744,000
5,275,000
Total Current Liabilities Long Term Debt Deferred Income Taxes
Other Non-Current Liabilities
31,046,000
52,147,000
53,523,000
*
1,195,000
1,421,000
1,159,000
1,122,000
Total Non-Current Liabilities
124,810,000
196,857,000
201,799,000
160,729,000
Total Liabilities
235,639,000 273,636,000 282,019,000 256,519,000
Common Stock Equity
-17,311,000
5,628,000
-3,465,000
12,957,000
24,000
22,000
19,000
19,000
9,076,000
7,834,000
4,562,000
4,872,000
-16,145,000
-1,485,000
-17,000
12,461,000
-181,000
-185,000
-183,000
-833,000
Other Equity Adjustments
-10,085,000
-558,000
-7,846,000
-3,562,000
Total Capitalization
73,223,000
145,883,000
140,908,000
167,289,000
Total Equity
-17,311,000
5,628,000
-3,465,000
12,957,000
Total Liabilities & Stock Equity
218,328,000 279,264,000 278,554,000 269,476,000
Minority Interest
Common Par Additional Paid In Capital Retained Earnings Treasury Stock
Cash Flow
-2,339,000
11,013,000
3,906,000
8,997,000
Working Capital
36,806,000
101,403,000
102,615,000
104,352,000
-34,000
12,286,000
-57,442,000
11,393,000
73,223,000
145,883,000
140,908,000
167,289,000
Free Cash Flow Invested Capital
PERIOD ENDING
Dec-08
Dec-07
Cash Flow From Operating Activities
Dec-06
Dec-05
Net Income (Loss)
14,672,000
-2,723,000
12,613,000
2,228,000
Depreciation
12,826,000
13,052,000
16,453,000
6,667,000
Amortization
-592,000
578,000
*
*
Amortization of Intangibles
99,000
106,000
66,000
55,000
Deferred Income Taxes
1,954,000
-5,477,000
*
787,000
Operating (Gains) Losses
1,332,000
1,524,000
101,000
6,720,000
(Increase) Decrease in Receivables
1,091,000
45,000
2,221,000
-1,058,000
(Increase) Decrease in Inventories
-358,000
371,000
-695,000
-76,000
(Increase) Decrease in Payables
12,647,000
1,348,000
6,553,000
-347,000
(Increase) Decrease in Other Curr Liabs.
*
*
*
-629,000
(Increase) Decrease in Other Working Capital
3,689,000
4,539,000
-9,271,000
473,000
Other NonCash Items
7,108,000
3,752,000
6,796,000
6,854,000
Net Cash from Continuing Operations
-170,000
17,115,000
9,611,000
21,674,000
-9,000
-17,000
*
5,000
Net Cash from Discontinue d Operations
Net Cash from Operating Activities
-179,000 17,098,000
9,611,000 21,679,000
Sale of Property, Plant, Equipment
*
*
5,120,000
7,937,000
Sale of Short Term Investments
62,046,000
18,660,000
18,456,000
6,154,000
Purchase of Property, Plant, Equipment
-6,696,000
-6,022,000
-6,848,000
-7,517,000
-2,031,000
Acquisitions
6,841,000
1,210,000
59,737,000
Purchase of Short Term Investments
64,754,000
11,423,000
23,678,000
-6,278,000
Other Investing Changes Net
348,000
-8,825,000
41,823,000
9,192,000
-928,000
-83,000
*
*
Cash from Disc. Investing Activities
Net Cash from Investing Activities
-3,143,000
-6,483,000 24,864,000
Issuance of Debt
42,163,000
34,032,000
58,258,000
24,559,000
756,000
250,000
431,000
325,000
Repayment of Debt
51,419,000
39,431,000
42,426,000
44,671,000
Repurchase of Capital Stock
*
-31,000
-183,000
*
Payment of Cash Dividends
*
*
-468,000
-738,000
-604,000
-62,000
-339,000
-126,000
Issuance of Capital Stock
Other Financing Charges, Net
Net Cash from Financing Activities
-9,104,000
7,457,000
-5,242,000 15,273,000 20,651,000
Effect of Exchange Rate Changes
-808,000
1,014,000
464,000
-496,000
Net Change in Cash & Cash Equivalents
13,234,000
6,387,000
484,000
7,989,000
Cash at Beginning of Period
35,283,000
28,896,000
28,410,000
23,510,000
Cash at End of Period
22,049,000
35,283,000
28,894,000
31,499,000
Foreign Sales
67,136,000
91,581,000
78,968,000
80,325,000
Domestic Sales
62,030,000
80,874,000
81,155,000
96,764,000
UQ
UQ
UQ
UQ
Auditor's Report (Aud. Name & Aud. Op.)
* = Data not available