Docstoc

Financial Markets Bailout Nascar

Document Sample
Financial Markets Bailout Nascar Powered By Docstoc
					    Anietie Ekpa
 ChanWoong Lee
Khuluod Al-Haddad
Shiuan-Yi Sherry Wu
      Although Ford Motors Company faced some difficulties and challenges during its history,
but it’s still produced new cars and provided different services. Moreover, in 2005, Ford
revenue increased of 3.2% over 2004, but after 2005, Ford reported the largest annual loss in
company history, $12.7 billion. Then a SWOT analysis be used to identify the Strengths and
Weaknesses of our organization, as well as the opportunities and threats.
      As company that believes in sustainability, Ford has been able to endure the global
economic crisis by taking a number of calculated steps and initiatives, like the Consumer
Driven Six Sigma, Debt restructuring and financial initiatives as well as its global sustainability
strategy (which not only minimizes its environmental impact through the conservation of
energy and a reduction in pollution, but saves the company and its customers money).
      Through its debt restructuring initiative, Ford has substantially reduced its debt thereby
taking another step toward creating an exciting, viable enterprise that continues to lead the
industry in taking the decisive actions necessary to weather the current downturn and deliver
long-term profitable growth.
      To create future business plan, we analyze primary driving forces: Social dynamics,
economic issues, Political issues, and Technological issues and then make a scenario for
automotive industry in 2020. The scenario presents the future figures of the automotive
industry in demand, customer, R&D, and management and production: the growth of
emerging markets and generating ultra low cost cars (ULCC) segment, the growth of the
number of car model, the growth of green vehicles, interdependent ecosystem in automotive
industry, and proactive flexibility in management.
      In order to face the complex market environment in 2020, Ford should follow the
strategic business plan that includes: emerging market strategy, senior citizen car strategy,
green vehicle strategy, and collaboration strategy. Furthermore, the role of HR should also pay
attention on global leadership, diversity issues, and attracting and retaining high-skilled
employees to help Ford to overcome the changing market automobile industry.
   Ford overview & history
   Ford revenue
   SWOT analysis
   Strategic initiatives & results
   Operational milestones
   Scenario planning in 2020
   Business plan
   HR strategic plan

                                      SW
   Ford Motor Company is the world's second largest motor
    vehicle manufacturer. It produces cars, trucks, some of the
    vehicles' plastic, glass and electronic components &
    replacement parts
   The company’s automotive vehicle brands include Aston
    Martin, Ford, Volvo, Jaguar, Lincoln, Land Rover, Mazda and
    Mercury
   The company was founded by Henry Ford in 1903
    It is headquartered in Dearborn, Michigan and employs
    more than 270.000 people




                                                                  KA
            •The company was founded by Henry Ford, The original (Ford Model A) was the first car
1903-1908   produced.
            •It produced its T model which known as the Tin Lizzie, Flivver, T-Model Ford.
  1917      •It began to produce trucks and tractors.
  1925      •It expanded into the luxury car market with its purchase of Lincoln Motor Company.
1970-1980   •It continued to develop and spread around Europe and Asia.
1990-1999   •Jaguar was produced by Ford.
            •It produced Volvo’s passenger vehicle business.
2002-2004   •It started its business in China and Thailand.
            •It has expanded its recall of Escape and Mazda Tribute SUVs almost 600,000 vehicles.
            •The company was recalling about 792,000 pickup trucks and sport utility vehicles because of
2005-2006   the fire risk from overheating of the speed control switch.
            •It sold its largest general use car rental businesses in the world, The Hertz Corporation.
  2007      •Ford reported the largest annual loss in company history $12.7 billion.
            •Ford has become the second largest automaker in Europe.
  2008      •Ford produced 5.532 million automobiles.
            •Employed about 213,000 employees at around 90 factories and facilities around the world.
                                                                                                      KA
   Revenues by Division:
    Ford generates revenues through two business divisions: automotive &
    and financial services
                Year             Automotive           Financial Service
                2005            $153,503 million       $23,586 million
                2004            Increase of 4.3%      Decrease of 3.8%

   Revenues by Geography

       Year    The Americas          Ford Europe          Ford Asia, Africa
       2005   $85,000 million       $60,258 million         $8,245 million
       2004     Decrease of     Increase of 11.3% over    Increase of 18.5%
                   1.2%
                                                                              KA
                 Strengths                                              Weakness
 One of world’s best known brands. Ford has
                                                      Weakening North American automotive
good market share in Europe.
                                                     operations.
 Ford are seen as supportive:-
                                                      Ford sold the UK based Jaguar and Land
(Give Generously after the September 11 Attacks,
                                                     Rover companies and brands to Tata Motors
Give Generously to Help Fight Breast Cancer,
                                                     of India.
Support Racing Teams, NASCAR, and Formula
                                                      Ford fired number of employees and closed
One).
                                                     more than 10 factories
 Ford motors sales better quality vehicles.
                                                      The company posted a $ 2.1 billion charge
 Good relations with employees by offering
                                                     against profits to cover the current recall of 13
better work environment and competitive
                                                     million tires.
wages

 Produce fuel efficient Cars & Hybrid cars in the
                                                      Rising raw material prices.
upcoming years.
                                                      Low capital spending.
 They have a change to become more
                                                      Rapid changes in fuel prices.
environment friendly company.
                                                      Increasing competition from other motor
Enter into the Asian market.
                                                     vehicle companies like Toyota, TATA motor
Giving more charities.
                Opportunities                                            Threats
                                                                                                         KA
   Consumer Driven Six-Sigma
     Began in late 1999, launched in January 2000
     To uncover the root cause of consumer problems,
      eliminate high priority concerns and drive out defects
     Roadblocks:
       Skeptical employees
       Resource allocation( primarily people) and
       Data availability
     Cost
      • Over $6 million in training licenses
      • Thousand of hours in training
      ▪ Millions in new equipment and new software installation
                                                                  AE
   Six-Sigma Results -( first three yrs)
     2000- contributed $52 million to bottom line
     2001-
        • about $300 million from closed projects
        • a two pt +ce in consumer satisfaction
        • 1000 Six Sigma projects completed, 3000
          projects in various stages of completion
     2003 Annual Report, globally eliminated over
      $2.19 billion in waste worldwide

                                                     AE
   Design For Six Sigma
     Focuses on using Six Sigma in product design processes to
      prevent problems before they occur.
     Incorporated in the development of new products
     Involves supplier training
     Has become a “basic of business”
     Decreased the defective part count, limiting additional
      work needed to be preformed by employees
     DMAIC: Define, Measure, Analyze, Improve and Control



                                                                  AE
   2007- Negotiated transformational labor agreement with
    the United Auto Workers ("UAW“) including lower wage
    structure for new employees, flexible work rules, and
    transfer of long-term responsibility for retiree health care
   2008- Laid off more than 60,000 hourly and salaried in US
    (including Automotive Components Holdings, LLC ("ACH“)
   2008 - Sold a significant portion of its ownership in Mazda
   2008- Closed 12 manufacturing facilities in US (including ACH
    facilities)
   2008- Divested substantial non-core assets - Aston Martin
    and Jaguar Land Rover operations etc ( to focus resources on
    "One Ford" vision)
   Jan 2009 laid off 1200 salaried personnel
                                                                    AE
   Improved vehicle quality around the world ( using Six sigma)
   Undertook plans to introduce their smaller, more fuel-efficient European
    vehicles to the North American market
   2007 Signed online advertising commitment with Specific Media for two
    yrs to promote advertising of Lincoln Mercury
   March 2009- Debt restructuring effort by giving cash and stock to debt
    holders(effort to eliminate 2/3 of debt-$10.4 billion) instead of taking
    bailout money
   Teamed up with North Plains Inc (the leading provider of digital asset
    management) and TeleScope - to dev a global digital asset mgt solution
    to manage, share & distribute digital media files among its global
    marketing teams
     increase efficiency and drive down costs while enabling brand
       consistency


                                                                               AE
   Oct 2007- announced partnership with MIT to research and develop new power
    train, fuel and energy technologies to deliver sustainable transportation for
    consumers
   April 1, 2008- Was first U.S. auto company to spell out how it plans to reach the
    goal of reducing by at least 30 percent the greenhouse gas (GHG) emissions from
    its new vehicle fleet by 2020.
   On Feb 14, 2010- announced it is launching a voluntary sustainability initiative for
    Ford and Lincoln Mercury dealers to reduce their carbon footprint and improve
    the energy-efficiency of their dealerships
   Integrates recycled fabrics and parts in new vehicles
   Partnering with Rocky Mountain Institute( a leading energy-efficiency
    organization) to pilot new technologies and architectural design principles, at
    three dealerships in diverse climates
   The 'Go Green' dealer sustainability initiative is fully integrated into the
    company's existing architecture to provide dealers with the ability to improve
    energy efficiency and lower operating costs.


                                                                                           AE
   Ended 2009 with 33 % sales increase
     first full-year market share gain since 1995
   Ford Motor Credit Company reported net income of $1.3 billion in 2009
     improvement of $2.8 billion from a net loss of $1.5 billion a year earlier

   Kicked off 2010 with 24 percent sales increase, market share gain
   2010- Higher sales for every brand and in every product category
    .
   2010- Estimates Jan 2010 US total mkt share was approximately 16 % (about
    2 points higher than in Jan 2009)
   posted gains in every fleet market – commercial, government and rental
   2010-Record levels in every consumer metric about the brand – including
    favorable opinion, consideration, shopping and intention to buy
   Ford Fusion (recently named Motor Trend’s Car of the Year), January sales
    increased of 49 percent

                                                                                   AE
   2012 Ford Focus is the “Most Significant” vehicle of the
    Detroit Auto Show.
   Already received over 11,000 orders for the 2011 Mustang
   Ranked one of the “Top Most Innovative Companies” For its
    SYNC infotainment system and MYFord Touch Technologies
   Nov 2009- unveiled the industry’s first inflatable seatbelt
   announced development of all-new police interceptor for law
    enforcement use nationwide- 2010
     Superior quality, safety, performance, fuel efficiency,
      durability
     Enhanced driver convenience and comfort


                                                                  AE
Scenario for automotive industry in 2020
 Ford escaped from a long slump in 2009
 Ford should prepare next 10 years for its sustainable growth
 Use Scenario Planning to understand the dynamics shaping the future

Primary driving forces
Social dynamics       • Urbanization (Change of urban infrastructure)
                      • New consumer: Senior citizen, Me generation
                      • Shifting lifestyles and consumer choices
                      • Demand for corporate social responsibility
Economic issues       •Globalization
                      • Growing demand in emerging markets (China, India, etc)
                      • The expected lowering of tariff barriers
                      • The emergence of trading blocs and free-trade agreement
                      • Volatility of oil prices
Political issues      • Greenhouse emissions and their impacts
                      • Degree of public pressure for regulations and legislation
Technological         • Development of new technologies
issues                  : Software, Electrical systems, Engine and auxiliary
                      systems,
                          Powertrain, etc                                           CWL
Scenario for automotive industry in 2020
 Demand – The growth of emerging markets
    Sales in emerging markets
     : 27% of global sales (2007) → 40~47% of global sales (2020)
    Emerging market buyers generate ultra low cost cars (ULCC)
     segment
       • ULCC will grow by 24.3% per year to 14 million units in 2020
       • As OEMs from emerging markets dominate the new ULCC
          segment, their global market share will grow to over 30%
    The Shift of innovation leadership to Asia




                                                                        CWL
Scenario for automotive industry in 2020

 Customer – The growth of the number of car model
     Senior citizens play increasingly important role in mature markets
     “Me generation” ask for more tailored products even higher price
     The increased emphasis on environmental, safety, personalization, traffic
      congestion and alternative transportation will have a major impact on
      how and what people choose for their mobility needs
    Lifestyle changes will allow access to
     luxury or larger vehicles during
     weekends, while a small, efficient
     vehicle will suffice for daily commuting
     needs




                                                                              CWL
Scenario for automotive industry in 2020

 R&D – Green vehicles
      Gasoline powered vehicles: 80% (2007) → 40% (2020)
      In 2020, Gasoline powered vehicles: Europe (29%), America (46%), Asia (51%)
      In 2020, Hybrid vehicles: Europe (19%), America (18%), Asia (15%)
      Electric vehicles
        • Asian players and start-up companies are currently leading on e-vehicles
        • Asian suppliers control 90% of the Lithium-Ion battery market
        • US and European OEMs are still in prototype and field testing stages




                                                                               CWL
Scenario for automotive industry in 2020

 Management &Production – Interdependent ecosystem
      Collaboration with the consumer electronics industry for in-vehicle
       electronics and software
      Collaboration with the energy/utilities industry for alternative fuel and
       energy sources
      Partnership with telecommunications industry for connected vehicle
       communication technology
      Cooperation with the financial
       services industry to develop
       new financing models
      Association with government
       for infrastructure improvements
       to enable the connected vehicle
       and regulatory requirements




                                                                                   CWL
Scenario for automotive industry in 2020

 Management &Production – Proactive flexibility
      Proactive flexibility in operations and processes will be necessary to keep
       up with rapidly evolving consumer needs and the demands of working
       with interdependent ecosystems
        •   Advanced IT allows motor companies to realize “e-manufacturing “
        •   Needs for human resources who have the ability to work across
            diverse cultures and who have high technologies will grow
        •   Needs for management skills that consider regional differences in
            the competency of Human recourses will grow
        •   Corporate social responsibility will be a critical factor in
            management




                                                                                     CWL
EMERGING MARKET STRATEGY               SENIOR CITIZEN CAR STRATEGY
 Growth of global market split         Aging population in 2020, senior
  from the emerging markets. E.g.        citizens will become a large
  China, Russia, India, Iran,            portion of auto customers (in
  Malaysia, etc.                         Europe, US)
                                        To attract senior citizen buyers,
 Increasing demands for ultra low
                                         Ford should:
  cost cars (ULCC) in the emerging
                                           Provide a cheap model
  markets                                  Mass production to reduce
 Although provides ULCC, Ford              production costs
  should focus on designing:               Easy using and learning functions
    Larger and more comfortable car        for senior citizens
     interior                                ▪ E.g. LG Electronics designed a
                                               mobile phone for senior citizens
    Fashion and trendy car exterior           that has different design and
                                               functions from the normal mobile
                                               phone
                                                                                  SW
GREEN VEHICLE STRATEGY                   COLLABORATION STRATEGY

   Hybrid car will become a                Maintain good relationship with
    mainstream of automobile                 the suppliers
    market in 2020                          Participate in the transportation
   Ford focuses on hybrid car               plan of the governments (cities)
   Ford should prepare new                   E.g. Plan the parking spaces
    electronic vehicle model during            around the mass transportation
    the next 10 years                          system, provide the sockets for
       (According to Frost & Sullivan,         the e-vehicles
       electronic vehicle will be sold      Social responsibility to the
       about 120,000 units in 2020)          community




                                                                                 SW
A.       Global Leadership
              Leadership Development Center
           ▪   Adopt a transformational mindset
           ▪   Use action learning-learning by doing, leading, and teaching
           ▪   Leverage the power of e-tools
           ▪   Integrate work and life
           ▪   Adopt a transformational mindset
              Be conversant in multiple languages
              Be effective working virtually
B.       Diversity
              Lifestyle is changing, market is going more complex in 2020
              Employees should be diverse in order to deal with the diverse
               environments and diverse cultures
              Ford should fostering a culture that supports learning and
               development


                                                                               SW
C.   Attracting & Retaining high-skilled employees
        Emerging markets will continue to produce highly skilled
         workers that auto companies will leverage
        Lack of attraction to the industry in developed markets and
         work requirements of next generation workers will cause
         greater turnover and a skills shortage




                                                                       SW
A.T. Kearney (2009, January). Auto 2020: Passenger cars. Retrieved February 17, 2010, from
      www.atkearney.com/res/shared/pdf/Auto2020.pdf
About Ford (n.d.). In Ford Auto Company website. Retrieved February 23, 2010 from http://www.ford.com/about-ford
Ahemd S. (n.d.). Ford Motor Company – case study. In Ezine Articles website. Retrieved February 24, 2010, from
      http://ezinearticles.com/?Ford-Motor-Company---Case-Study&id=1420478
Bhattacharya A., D’souza K., Mosquet X., Sticher G., & Subramanian A. (2008). Envisioning an uncertain future: Scenario for
      passenger car markets in 2020. Retrieved February 17, 2010, from http://www.bcg.com/documents/file15266.pdf
Bunkley, N. & Vlasic, B. (2009, March 5). Ford Seeks to Eliminate $10.4 Billion of Its Debt. New York Times. Retrieved February 27,
      2010, from http://www.nytimes.com/2009/03/05/business/economy05ford.html?ref=business
Carty, S. (2009, November 6). Ford says inflatable seatbelt improves safety, comfort, too. In USA Today website. Retrieved
      February 27, 2010, from http://www.usatoday.com/money/autos/2009-11-05-ford-inflatable-seat-belts_N.htm
Dannen, C. (n.d.). Top 10 Most Innovative Companies. In Fast Company website. Retrieved February 27, 2010, from
      http://www.fastcompany.com/mic/2010/industry/most-innovative-mobile-companies
Ford announce energy partnership (2007, October 1). MIT news. Retrieved February 27, 2010, from
      http://web.mit.edu/newsoffice/2007/ford-mit-1001.html
Ford Joins Forces with AOL Latino and Essence Magazine on Initiatives Aimed at Empowering Multicultural Women (2009, May
      7). Business Wire. Retrieved February 27, 2010, from
      http://www.thefreelibrary.com/Ford+Joins+Forces+with+AOL+Latino+and+Essence+Magazine+on+Initiatives...-
      a0199170725
Langlois, S. (2010, February 2). Ford sales up 25% as Toyota tallies more pain: GM hands in upbeat report; Chrysler reports another
      decline. In MarketWatch website. February 27, 2010, from http://www.marketwatch.com/story/ford-posts-25-jump-in-
      january-us-sales-2010-02-02
Rishi S., Stanley B., & Gyimesi K (2008). Automotive 2020: Clarity beyond the chaos. Retrieved February 17, 2010, from
      http://www-935.ibm.com/services/us/index.wss/ibvstudy/gbs/a1030141?cntxt=a1000041
Shunk, C. (2008, April 11). Ford's new green initiative cuts emissions by 30-percent. In PRNewswire.com website. Retrieved
      February 27, 2010 from http://www.autoblog.com/2008/04/11/fords-new-green-initiative-cuts-emmisions-by-30-percent/

                                                                                                                                      SW

				
DOCUMENT INFO
Description: Financial Markets Bailout Nascar document sample