COMPARATIVE ANALYSIS: FORD MOTOR COMPANY TOYOTA

MOTOR CORP

based on presentation by: Kelompok 10

Nama Kelompok :

• 1. Enfanta Pamungkas 1408031010572. Faisal Firmansyah 1208031010353. Fajar Rahmat Santoso 140803101085 4. Feri Priadana Kurniawan 140803101062

FORD: the beginning• Henry Ford designed his first moving assembly line in

1913• “Wheels for the world”-the motto behind

popularization of cars• Each section of the production process was divided

into component parts• Combination of precision, continuity, and fast-paced

brought the world – mass production• In Highland Park, Model T production reached record

levels, every day a car came of the assembly line every ten seconds

TOYOTA: the beginning• Toyota's history began at the end of XIX century• Sakichi Toyoda invented Japan's first power loom

which revolutionized the country’s textile industry• Two years later, he founded the company Toyoda

Automatic Loom Works• Toyody Sakichi’s son, Kiichiro Toyoda invested

100,000 pounds in the creation of Toyota Motor Corporation in 1937 (TMC)

• Sakichi Toyoda received this money for selling the patent rights to an automatic loom

FORD• The fourth-largest automotive company in the world in terms of sales • Sells cars on 6 continents• Car Brands: Ford, Mercury, Lincoln and Volvo

– in March of 2010 confirmation of sale of Geely Automobile Holdings Ltd)• Since the mid-90’s Ford continually loses significance in the American

market• Over the same period steadily increases its share in the European market• Reasons for the gap between the development of the brand in the U.S.

and Europe:– high labor costs in the U.S.– high expenditure on healthcare in the U.S.– strong trade unions in the U.S. (high pension commitments)– strong economic growth in lower combustion cars

TOYOTA

• The biggest carmaker in the world in 2009 (more than 7.5 million cars)

• Main markets are Japan and North America, but recently we can see a strong growth in Asian and South America markets

• Toyota has three brands: Toyota, Lexus and Scion

FORD: more economic• Dominance of large cars: SUVs, Pick ups• Rapid fluctuations in oil prices and legislators striving

to reduce consumption of materials led to reorganization

• Restructuring of the three production lines for production of more economic models in Europe (Mondeo, Focus etc.)– in short-run minimization of costs

• Ultimately, Ford intends to make engines in all their models to be more economical

• In 2009 to market were introduced four hybrid models based on technology leased from Toyota

FORD: hybrid technology

• Currently, Ford has four hybrid models– Ford Focus Hybrid is a direct threat to so far the most

popular Prius (hybrid line of Toyota)

• In 2010, the company plans to spend an additional $450 million to develop electric motors

• By 2012, Ford wants to produce own hybrid technology and plug-ins– Ford has invested more than $550 million in restructuring

its manufacturing facility in Michigan

• What if the market chooses a different path?

TOYOTA: hybrid technology• Toyota as one of the first ones started a hybrid cars

production line (including leasing its technology to Ford)

• At present, hybrid Toyota - Prius line, represents approximately 73% of all hybrid vehicles sold in the U.S.

• So far in the U.S. Toyota sold the 1,000,000+ hybrid cars

• In addition, Toyota announced its intention to manufacture electric cars with lithium-ion batteries “Toyota Plug-HV”

FORD: ONE FORD• Despite the very large amount of

cars produced, so far Ford has derives small economies of scale by applying a separate, independent technologies and models for European, US and developing markets

• “One Ford” – changed approach– Ford moves the emphasis to

universal models for use in different regions of the world (the first "world car"-new Ford Fiesta)

FORD: wrong sales model• From the 90s Ford has created demand

– sales on installments without interest charged– discounts– promotions combined with a loan

• Ford exceptionally strong suffered from a crisis on a real estate market– in recent years, sales in the U.S. were strongly associated with the

property market– it is estimated that in California, 30% of car purchases has been

financed with a mortgage• Feeling the effects of this approach, Ford began to change

strategy– less emphasis on creating demand– emphasis on quality and safety

FORD: developing markets

• Ford is mainly engaged in the American market,which slowly begins to lose its attractiveness

• Ford’s task now is to develop a universal line for use in every country (European Ford Fiesta in the U.S., Ford Transit Van in Asia)

• Whether european car models will be appealing to clients in India or Brazil depends the future of Ford in the long term.

TOYOTA: with drawal of models• Several serious flaws in the models has significantly hurt

Toyota’s image– in 2009, the company had to withdraw from the market 3.8 million

vehicles due to the acceleration system flaw• In the short term:

– it is estimated that due to defects and withdrawals Toyota models suffered losses of $ 3 billion in 2010

– over the past year, throughout the world over 9 million vehicles have been withdrawn

– for consideration more than 30 lawsuits are waiting • In the long term:

– current crisis has significantly hurt the reputation of the company– competition has used well (Chrystler, Ford and Honda hasorganized

the promotions, giving discount on a new car for customers who got rid of the old Toyota)

TOYOTA: the future• Car Sales in highly developed countries will fall and remain at

low levels– majority of consumers’ demand is already satisfied– relatively low economic growth

• The biggest outlays directed on emerging marketsmainly Brazil, Russia, India, China (BRIC) countries – Toyota earlier than other companies in the sector began to invest in

the development of appropriate infrastructure and brand awareness in the above countries

– in 2009 Toyota announced the beginning of motor vehicle production in India (the company Toyota Kirloskar)

– in 2010 Toyota plans to produce 100,000 cars in the new factory opened in India

FORD/TOYOTA: general data (in $ mln)

2006 2007 2008

Sales (FORD) 143,249 154,379 129,166

Sales (Toyota) 203,874 256,581 2081,262

Income from operations (FORD)

-7,926 8,031 -4,130

Income from operations (Toyota)

19,058 22,159 -4,674

Net income (FORD) -12,613 -2,723 -14,672

Net income (Toyota)

13,996 16,776 -4,430

Employment (FORD)

283 247 213

Employment (Toyota)

286 299 316

Total Assets (FORD)

279,196 279,264 218,328

Total Assets (Toyota)

277256 318875 294627

TOYOTA: production (in 1000s) 2006 2007 2008

North America 1201 1205 1268

South America 122 147 150

Europe 623 709 711

Asia,Africa,Australia

1081 1019 1258

Japan 4684 5100 5160

FORD/TOYOTA: sales (in 1000s)

2006 2007 2008

North America (FORD)

3051 2890 2329

(TOYOTA) 2556 2943 2958

South America (FORD)

381 438 435

(TOYOTA) 233 284 320

Europe (FORD) 1846 1918 1820

(TOYOTA) 1023 1224 1284

Asia,Africa,Australia (FORD)

589 535 464

(TOYOTA) 1384 1361 1559

Japan (TOYOTA) 2364 2273 2188

Risk factors

FORD• Ford is exposed to various kinds of risk not only to the market

risk– currency risk, commodity price changes, interest rate risk,

financing risk, risk of extraordinary events are just some of the most important kinds of risk present

– risk of loss of liquidity: hedge against it by sale of receivables (securitization), issue of debt and bank loans

– insurable risks: the loss (damage) of property, civil liability – companies insure themselves privately

– they use derivatives to hedge – currency, interest rate or changein commodity prices risk – by forwards, swaps, options

• does not use derivative to speculate

TOYOTA• Toyota is exposed to risks arising from:

– changes in exchange rates– interest rates– availability of materials– changes in prices of materials

• Instruments used to protect:– forward contracts – currency and interest rate options – swaps

• Unfortunately, Toyota does not protect itself from price changes and changes in supply of materials– only protection is to maintain reserves of some materials

TOYOTA: currency risk• Toyota settles its invoices in Japanese yen which

increases its currency risk• Changes in exchange rates reflect very strongly on

company results– change in the dollar-yen exchange rate of 1% will change

revenues by about $42 million• Toyota protect itself from risk with the help of swaps

and futures• Despite this, the company is unable to protect itself

from a falling demand for exports of Japanese cars due to a change in exchange rates

SWOT analysis

FORD

Strengths

Hybrid technology

Well-known brand in the USA

Weaknesses:

Weak sales results

Inability to accommodate products

to changes on the market

Opportunities:

Promotion of ecology-friendly cars

Appeal of a national brand in crisis

Threaths:

Further evolution of the crisis

TOYOTA

Strengths

Hybrid technology

Ability to cope in crisis

Weaknesses:

Lack of protection against changes

in prices and demand

Opportunities:

Promotion of economical and

ecology-friendly cards

In crisis, lesser importance of

competitors

Threaths:

Rapid increase of material costs or

decrease in supply

Thank you for your attention