Henry Ford had the dream of making cars available and affordable to the multitude of Americans and the whole world at large. He adopted a business model which lowered the production cost of a unit of car and the profit margin of the company in exchange for an increased volume of sales. This led to mass production of Ford vehicles which were highly efficient. Fords Model T or the Tin Lizzie was the most successful of her products. It sold for just $850, was relatively fuel efficient, had fairly big engines and had a speed range in excess of 40 MpH. The T Model alone sold over 15 million units between 1908 and 1927. This feat made her the main American Automobile and in no time she ventured into France, Germany and Great Britain.
Market research is done periodically by Ford Motors whenever a new model of car is about been designed. Customer’s preferences and expectations are sought about their products and services and they are improved upon. The company then focuses more on the product designs and churns out efficient and diverse models. For example, presently, a lot of car users prefer smaller, cheaper, fuel efficient and environment friendly cars as opposed to the gigantic fuel guzzling, non environment friendly SUVs. This has led to the production of Ford Fiesta SFE by the Ford Motors Corporation.
UNIQUE SELLING POINTS
Like the other previous Ford models that comes with sophistication, high performance and sporty design. Presently, the Ford Focus RS, F-150 SVT Raptor, Shelby GT500 and the Ford ST. The Ford RS is specially engineered, powerfully built with a high output, advanced and efficient newer 2.0 litre EcoBoost four cylinder engine that is capable of producing more than 240 horsepower. Also, it comes with a 6-speed manual gearbox, lowered chassis and excellent braking system.
Ford Motor's innovation and imagination placed it miles ahead of her competitors both in production of quality products and service rendering. In 1909, the company initiated and adopted the assembly line technique to manufacture her cars. The moving assembly line greatly improved the speed with which chassis was assembled from 12 hours and eight minutes to an hour and thirty three minutes. Ironically, in 1914, Ford Motors Corporation produced a total of 308,162 cars compared to the 299 produced by all the other automobile manufactures in America. By 1927, the company was producing a unit of car every 24 seconds. That was a feat unrivalled by any automobile manufacturer. Also, Ford was the first American automobile maker to use vanadium steel in the production of her cars. In addition the Company was the first to invent the one-piece engine, otherwise known as the V-8.
THE COMPANY FORMATION
On 16th June 1903, Henry Ford with the backing of 11 other investors signed articles of incorporation for the Ford Motor company. The company started with John S. Gray as the president and Henry Ford was vice president. Other stockholders were; Henry Ford, John W. Anderson, Alexander Malcomson, C.H Bennett, Horace E. Dodge,James Couzens, John F. Dodge, John S. Gray, Vernon C. Fry, Albert Strelow, Horace H. Rackham and Charles J. Woodall. In october 1906, Henry Ford became the president of Ford Motor Company. By January 1919, Edsel Ford succeeds his father ( Henry Ford) as the president of Ford Motors. Also, by that time the company became the Ford family company as they purchased the stock of the other stockholders. However, on January 17th 1956 got listed on the New York Stock Exchange as she became a publicly held company following the sale of common stocks. Presently, Alan Mulally is the CEO and president of Ford Motors.
The Ford Motors Company is a business that thrives on team work to produce, design and sell the best vehicles and render world class services to her customers. Over the years, a team of professionals that possess excellent consumer instincts and innovative ideas and draw great strength from diversity, deliver optimally and compete favourably in the global market. The team consists of seasoned administrators, talented businessmen and marketers, first class engineers and a lot of people who can face challenges headon, are mentally strong, trustworthy and highly intelligent. Today, William Clay Ford, Jr. is the Executive Chairman, while Alan Mulally serves as the Chief Executive Officer and the President. Also Michael E. Bannister is the Executive Vice President and doubles as the Chairman and CEO of Ford Motor Credit Company. Mark Fields serves as the Vice President and President of the Americas. In addition to the above, the company is composed of seasoned and shrewd businessmen and women.
RESOURCES AND FUNDING
The company's recent strong performances have been attributed to her surviving the global economic recession that has crippled a lot of businesses globally. Prior to the onset of the recession in 2008, Ford Motor's secured a huge bank loan which she used in turning around her business while others were hit hard by the cash constraint. Also, she enjoys a huge chunk of shareholders funds with which the new leadership of the company has utilised well in producing better versions of existing models and marketing aggressively in emerging markets. The company is now viewed as strong and reliable because she was not part of the automobile companies bailed out by the United States government in order to prevent a total collapse of the automobile industry.
A resource is an element controlled by a firm to organise her operational processes. Resources are used to create competitive advantage. The combination of resources may lead to formation of capabilities and competencies.
The resources could be Financial, Human, physical and intangible resources.
Financial resources- In the 2006 financial year, the company reported a net loss of $12.7 billion. But their history and previous performances point to the fact that they are capable of bouncing back from the huge loss. The loss resulted majorly from the toxic assets of the Ford North America business unit. The revenue for the automobile section of Ford is derived mailly from sales of Ford vehicles to distributors and dealers, while the revenue for the financial sector is from interest on finance receivables. In improving her profitability, Ford proposes to reduce costs through health care cost reductions, capacity and personnel reductions and also reduce material cost actions.
The company is blessed with a huge human resource base. As at 2006, the company has approximately 300,000 employees.
Up till this moment, the company has about 108 plants globally. There is also a worldwide engineering release system and a sophisticated communications network which allows communications between affiliates and subsidiaries. This system makes it possible for her workers to share manufacturing information and design when developing new products.
With associations with other global automobile industries like Mazda, Ford was able to globalize her activities. She was able to reduce production, marketing costs and development costs.
The enviable heights attained by Ford Motors in the present day automobile industry does not require a soothsayer to predict. Going by the visions of the founder and the events that surrounded the growth of the company, beginning with a quadricycle and presently the range of beautiful cars produced today is highly enviable. The first car produced the the company was the Model A in 1903. The car had a twin cylinder engine with a potential to reach a speed of 20 miles per hour. The company subsequently introduced the 999, then the model C, the model B and finally the very popular Model T in 1909. As time went by, the company modified and remodified her cars with emphasis on speed, size, comfort and efficiency. The company has since increased production, their products are relatively cheap, they are innovative, and customers are satisfied with their products.
In the first quarter of 2012, the Ford Motor Company reported that its profit plummeted by almost half. This was as a result of losses in Europe and higher taxes. She reported a net income of about $1.4 billion, which is 45% lesser than $2.55 billion which she earned during the same period last year. Her revenue went down to $32.4 billion. According to the officials, about half of the decline was attributable to the monumental increase in the company's tax as opposed to last year's. Asides special items and taxes, the company earned $2.29 billion, though still lesser than last year’s when she earned $2.84 billion. The company's net income increased to $20.2 billion with net margin at 14.8%. The increase in net margin and net income was due to the $12.4 billion add - back on deferred tax assets, all of which had already been previously written down by the company. The net income for the year by the company that she is generating profits the third time in a row after the 2008 financial year crisis. This made her announce resumption of payments of quarterly dividends to her shareholders. Also, volume of wholesales increased by about 382,000 units with the average price of a vehicle increasing by $ 1,530 to $22,511. In the 2011 financial year, the balance sheet liquidity of the company improved with $9.8 billion against $1.4 in the 2010 financial year.
SWOT analysis is the strategic method of planning used to evaluate Strengths, Weakness, Opportunities and Threats in a business venture.
They are the characteristics of Ford that places it at an advantageous position over others. Ford Company has a very strong brand name and portfolio which has positioned it at a strategic position in the market. Also, the company is endowed with a robust engineering capability. She has a wide range of distributors and dealers whose excellent marketing drives have increased their sales. The company has high employee productivity.
Ford automobile has experienced continued decline in automobile market share. Cars produced by Asian manufacturers, especially the Japanese cars have taken over the global automobile market. The cars are smaller, they are more fuel efficient and relatively cheaper compared to the heavier, and gas guzzling sports utility vehicles and trucks produced by Ford. Repeated product recall has placed blemishes on the company's image. In January 2005, Ford had to recall about 792,000 sports utility vehicles and pickup trucks due to fire risk from overheating speed control switch. In addition weak returns and a declining operating efficiency all contribute to the company's weakness.
Opportunities abound for Ford in emerging economies. Such places include China and India where with improving economies and purchasing power of the citizens, there is a growing trend to acquire some of Ford's luxury cars. Due to the increasing preference for cars with little or no emission, demand for hybrid cars is on the increase. Hybrid cars are environment friendly, are fuel efficient and come with electric engines. Also, an increased demand for vehicles that operate on dual fuel is an exciting opportunity for Ford.
Increasing prices of raw materials like hot rolled steel coil and crude oil has been on the increase steadily. Increasing tensions in the middle east and other major crude oil producing countries has led to increasing crude oil prices which has resulted in an increase in polymer prices. All these will definitely affect the company's profit margins. Also, Ford is experiencing a continual fall in the United States light vehicle market. The main competitors are the Japanese cars like Toyota, Honda and Nissan. Their continued capture of the automobile market could spell doom for Ford in the nearest future. Also, Ford has a low capital spending compared to these Japanese competitors. Ford's capital spending which includes research and development expenditure is low compared to Toyota and Honda's. For instance, Ford's capital spending was $1,766 per vehicle, Toyota was $2,937 per vehicle and that of Honda was $3,193 in 2010. In addition economic stagnation in the United States and the Euro zone coupled with regulations and restrictions by the European Union are all monumental threats to the continued success of Ford automobiles.
At the dawn of the new millennium, Ford changed her strategy to increase the market share, production of small, smart fuel efficient cars and she aimed to increase revenues at the same time. The company was able to concentrate on both local and international market opportunities. Excessive costs in production were pruned down, hence the low production strategy. Also, her market position was improved partly because she refused government funding for a bailout, thereby increasing consumer’s confidence in the company and the brand. Also, the readiness of the company to produce smart, fuel efficient and environment friendly cars called ''world cars'' is another big plus. Ford has started installing a highly sophisticated gadget called the Ford SYNC in her new cars. The Ford SYNC is an entertainment and communications gadget that connects its users to the internet using a smart phone. The owner can then make telephone calls or control music using voice prompt.
The system was developed in conjunction with the Microsoft Corporation. It is a first in the industry and has already caught the attention of several consumers. With the introduction of the Ford SYNC, the company's failing image was given a lifeline. Therefore, continuous aggressive and goal oriented marketing drives will continue to place the company on the summit of all other automobile manufacturers.
In the nearest future, the main challenge could be changing their factories and production line entirely. This is unconnected with the fact that there is a gradual shift from the gas guzzling non eco friendly SUVs to smaller, smarter and eco friendly electric cars. The problems anticipated could be that of financing, and labour problems. A large number of the technical staff could be rendered redundant and highly skilled ones have to be hired.
In conclusion, Ford Motors is a colossus in the global automobile industry. For her to continue maintaining her lead, production has to shift to the production of hybrid/electric cars.
A. Gunderson 2012 The Great Leaders Series: Henry Ford, Founder of Ford Motor Company http://www.inc.com/30years/articles/henry-ford.html
M. Davis 2003 A History of the Ford Co. http://wardsauto.com/news-amp-analysis/history-ford-motor-co
S. Allen 2012 Henry Ford- Founder of Ford Motor Company and Assembly Line Innovator http://entrepreneurs.about.com/od/famousentrepreneurs/p/henryford.htm
2012 The Model T Ford A Short History of Ford's Innovation http://www.modelt.ca/background.html
2010 Ford Motor Company Chronologyhttp://www.thehenryford.org/exhibits/fmc/chrono.asp