FORD MOTOR COMPANY 2009-CASE STUDY

Background

Ford recently received $5.9 billion in Energy Department loans to help retool its plants in Illinois, Kentucky, Michigan, Missouri and Ohio to produce 12 fuel-efficient models, including 5,000 to 10,00 electric cars per year starting in 2011.

Since CEO Alan Mulally’s arrival at Ford in 2006, the company has cut 40,000 jobs and closed 17 plants, reducing costs by more than $5 billion. Ford increased its production 16 percent in the third quarter of 2009.

However, Ford want to sell its Volvo division due to the sales of Volvo in united states fell 36 percent in the first six months in 2009. Ford headquartered located in Dearborn, Michigan, Ford has a 13.8 percent market share of the auto industry as of February 2009, as compared to 17.5 percent in 2007.

Ford Motor operates two service businesses: Ford Motor Credit Company and Genuine Parts and Motor craft. Furthermore, Ford manufactures and distributes automobiles across six continents with a team of about 246,000 employees. The company operates about 108 plants globally and produces such models as Ford, Lincoln, Mazda, Mercury, and Volvo. The company has sold its Jaguar, Land Rover, and Aston Martin business.

Ford’s major competitors are General Motors, Toyota and Chrysler with the market share of 18.8%, 16.9% and 10.9% while the Ford Motor company listed as U.S top three auto industry market share of 13.8%.

SWOT Analysis

	Strength	Weaknesses
	1. Received $ 5.9 billion loans to produce 13 fuel-efficient model from Energy Department. 2. Ford Motor Credit Company is the world’s largest finance company	1. revenue decreased from $172.5 billion in 2007 to $146.3 billion in 2008 2. Market share fell to 13.8% in 2009 as compared to 17.5% in 2007. 3. Ford Gross margin below the industry gross margin 4. Too focus on North America market 5. Ford is in financial trouble
Opportunity	SO Strategies	WO Strategies
1. Russia, Brazil, China and India economy is growing 2. Ford main competitor, Toyota posted a $4.4 billion loss. 3. produce product for low income to medium income customer		-Shifting the market to Russia, Brazil, China and India where the economic is growing (W4,O1,O2,O3)
Threat	ST Strategies	WT Strategies
1. global economic recession 2. United States economy slowed down 3. Exchange rates 4. Competitive competitor

Statement of the Problem

Ford Motor Company is in financial trouble

Alternative Course of Action

Shifting the market to Russia, Brazil, China and India where the economic is growing (W4,O1,O2,O3)

Recommendation

By analyzing the Ford Motor Company sector revenue by comparing 2007 and 2008 that are shown in exhibit 4, there is decreasing sales in North America by $ $18.1 billion, Volvo $3.2 billion, Asia Pacific/Africa by $0.5 billion and Financial services by $1 billion. Due to above reasons, the company sold its Jaguar, Land Rover, and Aston martin business. Furthermore, the company is also trying to sell its Volvo division.

Even though, the company has cut 40,000 jobs and closed 14 plants, reducing costs by more than $ billion in 2006 the company still record revenue decreased from $172.5 billion in 2007 to $ 146.3 billion in 2008. Furthermore, as an American icon ford market share in U.S by the year of 2009 fell down to number three below General Motors and Toyota.

By analyzing the income statement, the Ford Motor company performance record huge loss in 2008 compare 2007 and 2006 due to the global economic recession as consumer demand for new autos has plummeted. In addition, the government bailout money form U.S government is diminishing.

The recommended strategies for Ford Motor Company by considering the main problem that being faced by Ford Motor Company which is financial trouble, I come out with an alternative W4,O1,O2,O3). In order to solve the financial problems, Ford Motor Company should shift their market in growing country economy and designing the car based on the income level as we know, Ford too focus in high income people/expensive cars and too focus in North America market.

Action Plan

1. Analyze the target market (e.g. Russia, Brazil, China and India), understand the political, economic, social and technology condition. Deeper discussion, Ford Company should have the knowledge regarding the customer taste, income level, perception about the brand, competitor as well as the government restrictions.

2. Find partner in related country if needed, Ford Motor Company also should set up the distribution channel and marketing and advertising to boost the sales. The company should offer warranties system for the customer, as well as low interest rates to attract more customer.

3. Setting up factory and assembly plants that located in the centre or near from the new target country to minimize the transportation costs. The car that being produces should focus on fuel efficiency, durability, and carmaker’s sustainability in order to protect their brand value.

4. Analyze the performance of the new market. Furthermore, Ford Motor Company should minimize their selling general and administrative costs, goodwill that over $1 billion, and $154 billion long term debt.