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MGMT 4710 report for spring of 2009. Thank god it's overTRANSCRIPT
FORD MOTOR COMPANYStrategic Audit
5/1/2009 Management 4710
Lisa Krone, Charise Hansen, NaTasha Kearney, Jasmine Franklin
I. CURRENT SITUATION
A. Current PerformanceFord 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. “As noted in the
company’s 2008 annual report, 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 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
"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."
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 two-thirds 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
Ford’s Vision
Our vision is to become the
world’s leading consumer
company for automotive
products and services.
Ford’s Mission
We are a global family with a
proud heritage, passionately
committed to providing
personal mobility for people
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.
Table 1: From money.cnn.com: $ millions
% change from 2007
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 —
Profits as % of Revenues -10.0
Assets -6.7
Stockholders' equity N.A.
Earnings per share 2008 $ -6.46
% change from 2007 N.A.
1998-2008 annual growth rate % N.A.
Total return to investors %2008 -66.0
1998-2008 annual rate -21.2
Ford’s Strategy
New Products offerings collected from the business plan submitted to
Congress:
2009 F-150
2010 Lincoln MKS
2010 Ford Mustang
2010 Ford Fusion +
Hybrid
2010 Ford Taurus
2010 Mercury Milan and
Milan Hybrid
2010 Lincoln MKT
2010 Lincoln MKZ
2011 Ford Fiesta
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, fuel-efficient 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 in-broadcasting 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.
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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>
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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 OfficerKPMG, LLP External
Kimberly Casiano President and Chief Operating OfficerCasiano 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 CEOHallmark Cards Inc. External
Richard A. Manoogian Executive Chairman and Chairman of the BoardMasco Corporation External
Ellen R. Marram President, The Barnegat Group, LLC External
Alan Mulally President and Chief Executive OfficerFord 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 PresidentCaterpillar Inc.
External
John L. Thornton Professor and Director, Global Leadership Program, Tsinghua University, Beijing, China External
Exhibit 2 - Top Management
William Clay Ford, Jr.Executive Chairman
Alan MulallyPresident and Chief Executive Officer
Michael E. BannisterExecutive Vice President(Chairman & CEO Ford Motor Credit Company)
Lewis W. K. BoothExecutive Vice President and Chief Financial Officer
Mark FieldsExecutive Vice President and PresidentThe Americas
John FlemingExecutive Vice President(Chairman and CEO, Ford of Europe)
John G. ParkerExecutive Vice PresidentAsia Pacific and Africa
Thomas K. BrownGroup Vice PresidentGlobal Purchasing
Susan M. CischkeGroup Vice PresidentSustainability, Environment and Safety Engineering
James D. FarleyGroup Vice PresidentMarketing and Communications and U.S. Marketing, Sales and Service
Felicia J. FieldsGroup Vice PresidentHuman Resources and Corporate Services
Bennie W. FowlerGroupVice PresidentQuality
Joseph R. HinrichsGroup Vice PresidentGlobal Manufacturing
Derrick M. KuzakGroup Vice PresidentGlobal Product Development
David G. LeitchGroup Vice President and General Counsel
J C. MaysGroup Vice PresidentDesign and Chief Creative Officer
Ziad S. OjakliGroup Vice PresidentGovernment and Community Relations
Nicholas J. SmitherGroup Vice President and Chief Information Officer
Peter J. DanielSenior Vice President and Controller
Darryl B. HazelSenior Vice President(President, Customer Service Division)
Joseph BakajVice PresidentProduct Programs & Product Development
Stephen E. BiegunVice PresidentInternational Governmental Affairs
Ken CzubayVice PresidentU.S. Sales & Marketing
Raymond F. DayVice PresidentCommunications
Robert J. GrazianoVice President(Chairman and CEO, Ford Motor China)
Ken MacfarlaneVice President - ManufacturingFord of Europe
Paul A. MascarenasVice PresidentNorth America Engineering
Martin J. MulloyVice PresidentLabor Affairs
Stephen T. OdellVice President(President and Chief Executive Officer, Volvo Cars)
Barb J. SamardzichVice PresidentPowertrain Operations
Neil M. SchlossVice President and Treasurer
Gerhard SchmidtVice PresidentResearch and Advanced Engineeringand Chief Technical Officer
Robert L. ShanksVice President and Controller, The Americas
Philip G. SpenderVice PresidentExecutive Vice President, Mazda Motor Corporation
Ingvar SviggumVice PresidentMarketing, Sales and Service, Ford of Europe
James P. TetreaultVice PresidentNorth America Manufacturing
STRENGTHS WEAKNESSES
SWOT Matrix (TOWS)
S 1
Brand name
W 1
Financing segmentS 2 Customer loyalty W 2 Falling salesS 3 Quality (Q1) W 3 Too many dealersS 4 Service and parts W 4 Balanced portfolios
OPPORTUNITIES SO STRATEGIES WO STRATEGIESIncentives O 1 Introduce product innovations that
improve safety, Re-establish the brand by offering the best automotive value
Negotiate contracts with UAW for lesser compensations amounts, restructure to offer customers better deals on financing and vehicles.
UAW Contract O 2 EcoBoost engines O 3 K-bag (airbag) O 4
THREATS ST STRATEGIES WT STRATEGIESGas prices
T 1Build 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
Foreign competitors T 2 Substitute products T 3 Bankruptcy T 4
STRENGTHS WEAKNESSES
SWOT Matrix (TOWS)
S 1
Brand name
W 1
Financing segmentS 2 Customer loyalty W 2 Falling salesS 3 Quality (Q1) W 3 Too many dealersS 4 Service and parts W 4 Balanced portfolios
OPPORTUNITIES SO STRATEGIES WO STRATEGIESIncentives O 1 Introduce product innovations that
improve safety, Re-establish the brand by offering the best automotive value
Negotiate contracts with UAW for lesser compensations amounts, restructure to offer customers better deals on financing and vehicles.
UAW Contract O 2 EcoBoost engines O 3 K-bag (airbag) O 4
THREATS ST STRATEGIES WT STRATEGIESGas prices
T 1Build 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
Foreign competitors T 2 Substitute products T 3 Bankruptcy T 4
PERIOD ENDINGDec-08 Dec-07 Dec-06 Dec-05
FINANCESIncome Statement
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
Operating Income b/f Depreciation (EBITDA) 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
Interest Income * 1,161,000 1,478,000 1,249,000
Earnings from Equity Interest 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 *
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
Income Taxes 63,000 -1,294,000 -2,646,000 -512,000
Minority Interest 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
Net Income from Discontinued Ops. 9,000 41,000 2,000 47,000
Net Income from Total Operations -14,672,000 -2,723,000 -12,613,000 2,275,000
Income from Cum. Effect of Acct Chg * * * -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
Income Statement - Year-to-DateRevenues 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
PERIOD ENDINGDec-08 Dec-07 Dec-06 Dec-05
Balance Sheet - Assets
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 *
Other Receivable 6,073,000 8,210,000 8,772,000 114,497,000
Receivables 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
Inventories Adjustments & Allowances -891,000 -1,100,000 -1,015,000 -1,009,000
Inventories 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
Total Current Assets 147,635,000 178,182,000 182,835,000 200,142,000
Land & Improvements 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
Intangibles * * 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
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 *
Total Current Liabilities 110,829,000 76,779,000 80,220,000 95,790,000
Long Term Debt 90,534,000 140,255,000 144,373,000 154,332,000
Deferred Income Taxes 2,035,000 3,034,000 2,744,000 5,275,000
Other Non-Current Liabilities 31,046,000 52,147,000 53,523,000 *
Minority Interest 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
Common Par 24,000 22,000 19,000 19,000
Additional Paid In Capital 9,076,000 7,834,000 4,562,000 4,872,000
Retained Earnings -16,145,000 -1,485,000 -17,000 12,461,000
Treasury Stock -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
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
Free Cash Flow -34,000 12,286,000 -57,442,000 11,393,000
Invested Capital 73,223,000 145,883,000 140,908,000 167,289,000
PERIOD ENDING
Dec-08 Dec-07 Dec-06 Dec-05
Cash Flow From Operating Activities
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 Non-Cash 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
Net Cash from Discontinued Operations -9,000 -17,000 * 5,000
Net Cash from Operating Activities -179,000 17,098,000 9,611,000 21,679,000
Sale of Property, Plant, * * 5,120,000 7,937,000
Equipment
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
Acquisitions 6,841,000 1,210,000-
59,737,000 -2,031,000
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
Cash from Disc. Investing Activities -928,000 -83,000 * *
Net Cash from Investing Activities -3,143,000 -6,483,000
-24,864,000 7,457,000
Issuance of Debt 42,163,000 34,032,000 58,258,000 24,559,000
Issuance of Capital Stock 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
Other Financing Charges, Net -604,000 -62,000 -339,000 -126,000
Net Cash from Financing Activities -9,104,000 -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
-13,234,000 6,387,000 484,000 7,989,000
Equivalents
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
Auditor's Report (Aud. Name & Aud. Op.) UQ UQ UQ UQ
* = Data not available