Ford’s Strategic Positioning

Alex Harris 11/17/2010

Agenda

• Company Background• Economic Crisis• A New CEO Enters• A Big Gamble• Unexpected Results• Growth• Looking to the Future• Strategic Implications• Questions

Company Back Ground

• Founded by Henry Ford and incorporated on June 16, 1903o Transformed personal transportation with his Model T, an

automobile that was reliable, efficient and reasonably priced

• In addition to the Ford, Lincoln, and Mercury brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK

• Ford's former UK subsidiaries Jaguar and Land Rover were sold to Tata Motors of India in March 2008

• In 2010 Ford sold Volvo to Geely Automobile• Ford will discontinue the Mercury brand at the

end of 2010

Economic Crisis

• Auto sales began plummeting due to the mortgage crisis

• The Big Three auto makers asked for $25 billion of bailout moneyo Except for Ford

• If the U.S. auto industry failed, it would not only cause auto workers to loose jobs but snowball down to their suppliers

• CEO’s did not take responsibility • Need to be limitations

Alan Mulally

• Up to 2006, Ford’s CEO was always someone from within the Ford family

• Mr. Mulally was named the President and CEO of Ford Motor Company on September 5, 2006o Succeeded William Clay Ford, Jr.

• An Outsider from the company• Not all the board members were pleased with this

A Gamble: One Ford Plan

• Until Mulally, no one ever admitted anything was wrong with Ford’s Brand

• Restructuring of Ford:

o Slashed Ford’s North American workforce by 40%o Diverged all none core brands o Mortgaged every asset the company ownedo Accelerated the research and development o Developed a base design for all models of Ford o Lower labor costs

• Pay off debt to be net zeroo By the end of the year will have paid 10.8 billion in

debt

Brand Loyalty

• In doing this, they not only had the monetary funds to hold out the recession, but gained brand loyalty of the American consumers.o Consumers were “proud” to invest in company that had

the strength to withhold a recession.• Loyalty caused Fords sales to increase

exponentiallyo Q1: $2.1 Billiono Q2: $2.6 Billiono Q3: $2.1 Billion

• Sales has allowed Ford to add more jobs

A Family of Cars

• Mr. Mulally’s objective for Ford is to have the best in every category: small, medium, and large.

• Be best in:o Quality and classo Greeno Safetyo Fuel efficiency

• Ford has focused on consumer demands and quality

• Mr. Mulally said that “That’s not only good for Ford and our customers and our stakeholders but that’s good for the United States of America.”

Looking to The Future

• Global expansiono Ford said global auto production will rise in 2011o Expanding to Asia, in particular India

Strategic Implications

• A competitive advantage is not permanento In the 90’s Ford was number oneo Consumer demands changed

• There is such thing as too much diversificationo Ford was involved in several other brandso But must always look at your core competencies

• Brand loyalty is a key competitive advantageo Consumers are your income: without them you have no

business

Questions?

Sources• http://www.cnbc.com/id/15840232/?

video=1622185253&play=1• http://www.cnbc.com/id/15840232/?

video=1616442349&play=1• http://current.com/17hql4c• http://online.wsj.com/article/

SB122703811621838291.html?mod=todays_us_page_one#articleTabs_slideshow%3D%26articleTabs%3Darticle

• http://online.wsj.com/article/SB122823078705672467.html• http://blogs.forbes.com/greatspeculations/2010/11/08/ford-

the-remake-of-an-american-icon/• http://www.msnbc.msn.com/id/40010150/ns/business-

cnbc_tv/• http://www.msnbc.msn.com/id/39786621/ns/business-

us_business