Ford: Company Analysis

Topics: Automotive industry, Ford Motor Company, General Motors Pages: 26 (8421 words) Published: March 28, 2014
EXECUTIVE SUMMARY
Macro Economy
The U.S. economy was stagnant during the last decade primarily due to the two recessions that occurred from March to November 2001 and from December 2007 to June 2009. The two recessions resulted in weak GDP growth, zero net job growth and a decrease in household wealth that eradicated any gains in household wealth accumulated during expansionary periods. Over the next year the unemployment rate is expected to decline at a slow pace keeping consumer confidence low. In the short run, it is not likely that household spending will increase significantly. Industry Analysis

The last several years were also tumultuous for the U.S. auto industry. After dominating the market for decades, American automakers had grown complacent about product development. At the same time, rising gas prices and uncertainty about the economy caused consumer preferences to shift from SUVs to more fuel efficient vehicles. Foreign competitors entered the U.S. market offering more reliable, higher quality and more fuel efficient vehicles at a lower price and began to steal market share away from American automakers. In order to remain competitive, U.S. automakers need to focus on increasing production efficiencies and developing innovative product offerings. Firm Analysis

Ford started the decade lagging behind foreign competitors in production efficiency and technological advances in new product development. However, by the end of the decade Ford was the industry leader in alternative fuel vehicles. Additionally, Ford cut their production cost by $2 billion over the last six years and once again has positive profit margins. Recommendations

Ford should continue to develop new alternative fuel vehicles as well as improving their current offering of alternative fuel vehicles. Ford should also invest in inventing new technologies, such as their Sync® technology, that improve the quality of their vehicles. Most importantly, Ford should continue making productivity improvements so they can remain profitable and competitively price their vehicles in order to attract customers during the slow economic recovery the U.S. will experience for the next few years. INTRODUCTION

The past decade has fostered innovations from Ford Motor Company (Ford) that would have made Henry Ford proud. With increasing market share, technological advances in production, industry-leading safety features, and cutting edge car amenities, Ford Motor Company is producing vehicles to meet the evolving demands of its consumers. In the past decade filled with economic turmoil, Ford has weathered through the weakened U.S. economy and rising fuel prices. At the same time Ford refused government bailout assistance, reorganized its operations, developed technologies to improve passenger car quality, safety and fuel economy, created more efficient methods of production and helped America reduce emissions and decrease its dependence on foreign oil. Beginning in the early 2000’s consumers wanted large SUVs, but due to economic uncertainty and rising fuel prices that were perceived to stay, American consumers changed their demand toward smaller, more efficient, higher quality passenger cars and Ford responded. In the last 10 years Ford has developed new EcoBoost engines that are lighter and less expensive while at the same time being more durable, responsive and efficient than its previous engines. Ford has also introduced Hybrid Electric Vehicles, Plug-in Hybrid Electric Vehicles and Battery Electric Vehicles with great response from the consumers. Improvements in technology have influenced consumers to desire more technologically advanced safety features and amenities in their vehicles. Features such as MyFord Touch, Ford Sync, Ford MyKey, Active Park Assist, built-in navigation and Wi-Fi systems are in high demand in today’s consumer market. Although these technological advancements are helping Ford gain market share from its...

Cited: Mother Jones (http://motherjones.com/politics/2009/02/why-you-cant-buy-new-car-online)
Social Science Research Network (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1394877)
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