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Ford Motor Company 2009

Alen Badal
The Union State



Case Abstract

Ford Motor Company is a comprehensive strategic management case that includes the companys calendar
December 31, 2008 financial statements, competitor information and more. The case time setting is the year
2009. Headquartered in Dearborn in the U.S. state of Michigan, Ford Motor Company is traded on the New
York Stock Exchange under ticker symbol F.

Ford operates in two segments: Automotive and Financing. Products offered include: Ford, Mercury, Lincoln,
Volvo and Jaguar. Ford was founded in 1903 and operates worldwide. The company is led by CEO William
Ford Jr. and employs over 280,000 people. The firms major competitor in the United States is General
Motors.

Vision Statement (Actual)

Our vision is to become the worlds leading consumer company for automotive products and services.

Mission Statement (Proposed)

Ford Motor Companys mission is to anticipate consumer needs and provide safe, quality, reliable, and
innovative automotive products and services to consumers around the world (1, 2, 3). Meeting and exceeding
customers expectations for exceptional quality, cutting-edge technology, and superior customer service will
enable us to maximize returns to our shareholders (4, 5). We are passionately committed to ensure we do the
right thing for our customers, our employees, our environment, and our society (6, 9). Ford is committed to
leading all automotive firms in quality and safety in America and abroad. Along with our commitment to
saving the environment, we can continue to add to our proud heritage (7, 8).

1. Customer
2. Products or services
3. Markets
4. Technology
5. Concern for survival, profitability, growth
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees














External Audit

CPM Competitive Profile Matrix

Ford GM Toyota
Critical Success Factors Weight Rating
Weighted
Score Rating
Weighted
Score Rating
Weighted
Score
Price competitiveness 0.04 3 0.12 2 0.08 1 0.04
Global Expansion 0.05 4 0.20 2 0.10 3 0.15
Organizational Structure 0.02 1 0.02 2 0.04 3 0.06
Employee Morale 0.01 1 0.01 2 0.02 3 0.03
Technology 0.04 1 0.04 2 0.08 3 0.12
Product Safety 0.04 1 0.04 2 0.08 3 0.12
Customer Loyalty 0.20 2 0.40 1 0.20 4 0.80
US Market Share 0.15 2 0.45 4 0.60 3 0.30
Advertising 0.02 3 0.06 4 0.08 2 0.04
Product Quality 0.07 1 0.07 2 0.14 4 0.28
Product Image 0.20 2 0.40 3 0.60 4 0.80
Financial Position 0.16 1 0.16 2 0.32 4 0.64
Total 1.00 1.97 2.34 3.38


Opportunities

1. The Big Three hope to gain further concessions from the United Auto Workers regarding labor costs
2. The few consumers purchasing vehicles are doing so for practical reasons, with a focus on fuel efficiency,
durability, and carmakers sustainability
3. According to CSM Worldwide light vehicle production exceeded the production of cars and trucks in
North America and Europe by an estimated 16 percent and 14 percent, respectively
4. In 2008, the Big Three began offering lowered interest rates or zero percent financing to lure buyers
5. The auto industry has experienced a shift from trucks and SUVs to hybrid and small fuel-efficient vehicles
6. Specialized in car parts for business/aftermarket
7. Consumers/dealers willingness to improve brand/sales

Threats
1. Due to global economic recession, consumer demand for new autos has plummeted
2. Consumer confidence is the lowest in 40 years
3. Unemployment rates exceed 10 percent in many areas in the United States and is expected to remain high
for part of 2010
4. Unavailability of credit and high unemployment have pushed automakers to rethink methods of
producing and selling cars
5. Automakers have faced rising health care and pension costs
6. The Big three also suffer from an oversupply for dealers
7. The government bailout money is diminishing, and Ford has exhausted its credit lines
8. Consumers are concerned about voided Warranties if the Big Three go out of business
9. Many banks are just not making car loans

External Factor Evaluation (EFE) Matrix

Key External Factors Weight Rating Weighted
Score
Opportunities
1. The Big Three hope to gain further concessions from the
United Auto Workers regarding labor costs
0.07 4 0.28
2. The few consumers purchasing vehicles are doing so for
practical reasons, with a focus on fuel efficiency, durability,
and carmaker's sustainability
0.07 3 0.21
3. According to CSM Worldwide light vehicle production
exceeded the production of cars and trucks in North America
and Europe by an estimated 16 percent and 14 percent,
respectively
0.06 2 0.12
4. In 2008, the Big Three began offering lowered interest rates
or zero percent financing to lure buyers
0.07 3 0.21
5. The auto industry has experienced a shift from trucks and
SUVs to hybrid and small fuel-efficient vehicles
0.06 3 0.18
6. Specialized in car parts for business/aftermarket 0.06 2 0.12
7. Consumers/dealers willingness to improve brand/sales 0.07 4 0.28
Threats
1. Due to global economic recession, consumer demand for
new autos has plummeted
0.06 3 0.18
2. Consumer confidence is the lowest in 40 years 0.07 4 0.28
3. Unemployment rates exceed 10 percent in many areas in the
United States and is expected to remain high for part of 2010
0.07 4 0.28
4. Unavailability of credit and high unemployment have
pushed automakers to rethink methods of producing and
selling cars
0.05 4 0.2
5. Automakers have faced rising health care and pension costs 0.04 3 0.12
6. The Big three also suffer from an oversupply for dealers 0.07 2 0.14
7. The government bailout money is diminishing, and Ford has
exhausted its credit lines
0.06 2 0.12
8. Consumers are concerned about voided Warranties if the Big
Three go out of business
0.06 2 0.12
9. Many banks are just not making car loans 0.06 2 0.12
Total 1.00 2.96










Positioning Map



Internal Audit

Strengths

1. Ford Credit Division operates globally
2. Independent from Government bailout
3. Vehicles marketed in 6 continents, over 200 countries
4. Ford has strong brand image and is considered an American icon
5. Strong consumer loyalty on their popular F-150
6. Diverse vehicle lines give the company more flexibility to their customers to choose the desired car model
7. Sales in S. America and European segments increased by US$3.5 billion from 2007 to 2008

Weaknesses

1. In one year, revenue decreased by approximately US$30 billion
2. While the companys inventory was reduced from 2007 to 2008, the dealers are having higher inventory
to sell
3. Current asset dropped by approximately US$18 billion from previous year
4. Current liabilities increased by US$30 billion from previous year
5. Operational costs typically higher in a company with multi-segment business








Brand
Loyalty
(High)
Brand
Loyalty
(Low)
Price (High)
Price (Low)
Honda
Ford Motor
Company
GM
Toyota

Financial Ratio Analysis (December 2009)

Growth Rates % Ford Industry S&P 500
Sales (Qtr vs year ago qtr) -2.70 -19.00 -4.80
Net Income (YTD vs YTD) NA -21.00 -6.00
Net Income (Qtr vs year ago qtr) 719.30 -18.00 26.80
Sales (5-Year Annual Avg.) -2.51 2.92 12.99
Net Income (5-Year Annual Avg.) NA 1.67 12.69
Dividends (5-Year Annual Avg.) NA 8.76 11.83

Price Ratios Ford Industry S&P 500
Current P/E Ratio NA 2.1 26.7
P/E Ratio 5-Year High 10.3 2.9 68.0
P/E Ratio 5-Year Low 4.9 0.4 9.9
Price/Sales Ratio 0.30 0.57 2.25
Price/Book Value NA 1.13 3.48
Price/Cash Flow Ratio 8.90 25.70 13.70

Profit Margins % Ford Industry S&P 500
Gross Margin 7.4 11.2 38.9
Pre-Tax Margin -2.8 -11.5 10.3
Net Profit Margin -3.6 -10.6 7.1
5Yr Gross Margin (5-Year Avg.) 10.0 19.2 38.6
5Yr PreTax Margin (5-Year Avg.) -3.4 4.9 16.6
5Yr Net Profit Margin (5-Year Avg.) -2.9 2.9 11.5

Financial Condition Ford Industry S&P 500
Debt/Equity Ratio NA 1.41 1.09
Current Ratio NA 1.1 1.5
Quick Ratio NA 0.9 1.3
Interest Coverage -23.3 -4.6 23.7
Leverage Ratio -23.4 1.8 3.4
Book Value/Share -2.62 36.03 21.63
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Avg P/E Price/ Sales Price/ Book
Net Profit
Margin (%)
12/08 -0.80 0.04 -0.32 -10.0
12/07 -5.80 0.08 2.62 -1.6
12/06 -1.10 0.09 -4.09 -7.9
12/05 12.00 0.09 1.07 0.9
12/04 9.10 0.18 1.54 1.8
12/03 30.50 0.18 2.51 0.4
12/02 71.00 0.10 3.05 0.2

12/01 -7.90 0.18 3.65 -3.3
12/00 7.40 0.21 2.31 3.2


Book Value/
Share
Debt/ Equity
Return on Equity
(%)
Return on Assets
(%)
Interest Coverage
12/08 -$7.18 -8.91 84.8 -6.7 -1.4
12/07 $2.56 29.94 -49.1 -1.0 -0.5
12/06 -$1.84 -49.59 364.5 -4.5 -1.9
12/05 $7.21 11.40 12.1 0.6 -0.2
12/04 $9.52 9.31 18.3 1.1 0.3
12/03 $6.36 15.44 5.5 0.2 NA
12/02 $3.05 30.03 6.4 0.1 1.1
12/01 $4.31 21.51 -68.7 -1.9 -4.3
12/00 $10.14 8.93 29.3 1.9 6.0
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Internal Factor Evaluation (IFE) Matrix

Key Internal Factors Weight Rating Weighted
Score
Strengths
1. Ford Credit Division operates globally 0.08 4 0.32
2. Independent from Government bailout 0.08 3 0.24
3. Vehicles marketed in 6 continents, over 200 countries 0.07 3 0.21
4. Ford has strong brand image and is considered an American
icon
0.08 3 0.24
5. Strong consumer loyalty on their popular
F-150
0.08 3 0.24
6. Diverse vehicle lines give the company more flexibility to
their customers to choose the desired car model
0.08 3 0.24
7. Sales in S. America and European segments increased by
US$3.5 billion from 2007 to 2008
0.09 4 0.36
Weaknesses
1. In one year, revenue decrease by approximately US$30
billion
0.09 1 0.09
2. While the company's inventory was reduced from 2007 to
2008, the dealers are having higher inventory to sell
0.08 1 0.08
3. Current asset dropped by approximately US$18 billion from
previous year
0.1 1 0.1

4. Current liabilities increased by US$30 billion from previous
year
0.1 1 0.1
5. Operational costs typically higher in a company with multi-
segment business
0.07 1 0.07
Total 1.00 2.29


F. SWOT Strategies


Strengths Weaknesses
1. Ford Credit Division operates
globally
2. Independent from
Government bailout
3. Vehicles marketed in 6
continents, over 200 countries
4. Ford has strong brand image
and is considered an
American icon
5. Strong consumer loyalty on
their popular F-150
6. Diverse vehicle lines give the
company more flexibility to
their customers to choose the
desired car model
7. Sales in S. America and
European segments increased
by US$3.5 billion from 2007 to
2008
1. In one year, revenue
decreased by approximately
US$30 billion
2. While the companys
inventory was reduced from
2007 to 2008, the dealers are
having higher inventory to sell
3. Current asset dropped by
approximately US$18 billion
from previous year
4. Current liabilities increased
by US$30 billion from
previous year
5. Operational costs typically
higher in a company with
multi-segment business


Opportunities
S-O Strategies

W-O Strategies
1. The Big Three hope to gain
further concessions from the
United Auto Workers
regarding labor costs
2. The few consumers
purchasing vehicles are doing
so for practical reasons, with a
focus on fuel efficiency,
durability, and carmakers
sustainability
3. According to CSM Worldwide
light vehicle production
exceeded the production of
cars and trucks in North
America and Europe by an
estimated 16 percent and 14
percent, respectively
4. In 2008, the Big Three began
offering lowered interest rates
or zero percent financing to
lure buyers
1. Expand into S. American and
European countries by offering
better incentives and financing
(S1, S7, O3, O5, O7),
2. Produce more fuel efficient
and smaller models and
promote them with lower
financing options (S1, S3, O2,
O5)


1. Improve operations by being
more lean and cutting back
excessive executive spending (W3,
W4, W5, O1)
2. Sell off business units to
improve cash infusion to the
company (W2, W3, W4, W5, O6)

5. The auto industry has
experienced a shift from
trucks and SUVs to hybrid and
small fuel-efficient vehicles
6. Specialized in car parts for
business/aftermarket
7. Consumers/dealers
willingness to improve
brand/sales
Threats S-T Strategies W-T Strategies
1. Due to global economic
recession, consumer demand
for new autos has plummeted
2. Consumer confidence is the
lowest in 40 years
3. Unemployment rates exceed
10 percent in many areas in
the United States and is
expected to remain high for
part of 2010
4. Unavailability of credit and
high unemployment have
pushed automakers to rethink
methods of producing and
selling cars
5. Automakers have faced rising
health care and pension costs
6. The Big three also suffer from
an oversupply for dealers
7. The government bailout
money is diminishing, and
Ford has exhausted its credit
lines
8. Consumers are concerned
about voided Warranties if the
Big Three go out of business
9. Many banks are just not
making car loans
1. Improve promotion on
selected lower priced models
with zero or very low rate
financing to younger
generation through Internet
using Facebook, Twitter, and
other networking channels
(S2, S3, S4, S6, T1, T4, T6, T8,
T9)
2. Offer Free extended
warranty for additional 2
years to gain customer loyalty
and brand image (S4, S6, T1,
T8)
1. Since dealers are not able to
turn around their inventory fast
enough, offer co-op advertising
with more incentives for moving
the cars faster (W1, W3, T4, T6)


SPACE Matrix



Financial Stability (FS) Environmental Stability (ES)
Return on Investment 1 Unemployment -5
Leverage 1 Technological Changes -3
Liquidity 1 Price Elasticity of Demand -2
Working Capital 1 Competitive Pressure -4
Cash Flow 1 Barriers to Entry -5

Financial Stability (FS) Average 1 Environmental Stability (ES) Average -3.8

Competitive Stability (CS) Industry Stability (IS)
Market Share -2 Growth Potential 4
Product Quality -3 Financial Stability 2
Customer Loyalty -2 Ease of Market Entry 4
Competitions Capacity Utilization -3 Resource Utilization 3
Technological Know-How -2 Profit Potential 3

Competitive Stability (CS) Average -2.4 Industry Stability (IS) Average 3.2

Y-axis: FS + ES = 1.0 + (-3.8) = -2.8
X-axis: CS + IS = (-1.8) + (3.6) = 1.8


FS
CS
ES
IS
6 5 4 3 2 1
Conservative Aggressive
Competitive
Defensive
1
2
3
4
5
6
7 -2 -3 -4 -5 -7 -1 -6
7
-7
-6
-5
-4
-3
-2
-1

Grand Strategy Matrix




1. Market development
2. Market penetration
3. Product development
4. Forward integration
5. Backward integration
6. Horizontal integration
7. Related diversification.

The Internal-External (IE) Matrix

The IFE Total Weighted Score



Strong
3.0 to
4.0
Average
2.0 to
2.99
Weak
1.0 to
1.99
High
3.0 to
3.99
I


II III

Medium
2.0 to
2.99
IV IV

Ford Motor
Company
VI
Low
1.0 to
1.99
VII VIII IX
Weak
Competitive
Position
Quadrant II
Quadrant I
Quadrant IV
Quadrant III
Strong
Competitive
Position
Rapid Market Growth
Slow Market Growth
The EFE
Total
Weighted
Score

BCG Matrix

Relative Market Share

High 1.0 Medium .50 Low 0.0
High +20







Industry
Sales Growth
Rate
Percent


Stars


Question Marks
Medium 0








Low -20

Cash Cows

Dogs


Quantitative Strategic Planning Matrix


Improve
promotion on
selected lower
priced models
with zero or
very low rate
financing to
younger
generation
through
Internet using
Facebook,
Twitter, and
other
networking
channels
Expand into S.
American and
European
countries by
offering better
incentives and
financing
Key Factors Weight AS TAS AS TAS
Opportunities

1. The Big Three hope to gain further concessions
from the United Auto Workers regarding labor
costs
0.07 3 0.21 4 0.28

2. The few consumers purchasing vehicles are doing
so for practical reasons, with a focus on fuel
efficiency, durability, and carmaker's
sustainability
0.07 4 0.28 2 0.14
3. According to CSM Worldwide light vehicle
production exceeded the production of cars and
trucks in North America and Europe by an
estimated 16 percent and 14 percent, respectively
0.06 3 0.18 4 0.24
4. In 2008, the Big Three began offering lowered
interest rates or zero percent financing to lure
buyers
0.07 --- --- --- ---
5. The auto industry has experienced a shift from
trucks and SUVs to hybrid and small fuel-efficient
vehicles
0.06 --- --- --- ---
6. Specialized car parts business/aftermarket
0.06 --- --- --- ---
7. Consumers/dealers willingness to improve
brand/sales
0.07 3 0.21 4 0.28
Threats
1. Due to global economic recession, consumer
demand for new autos has plummeted
0.06 4 0.24 3 0.18
2. Consumer confidence is the lowest in 40 years
0.07 2 0.14 3 0.21
3. Unemployment rates exceed 10 percent in many
areas in the United States and is expected to
remain high for part of 2010
0.07 2 0.14 4 0.28
4. Unavailability of credit and high unemployment
have pushed automakers to rethink methods of
producing and selling cars
0.05 2 0.10 4 0.2
5. Automakers have faced rising health care and
pension costs
0.04 4 0.16 2 0.08
6. The Big Three also suffer from an oversupply for
dealers
0.07 1 0.07 4 0.28
7. The government bailout money is diminishing,
and Ford has exhausted its credit lines
0.06 --- --- --- ---
8. Consumers are concerned about voided
Warranties if the Big Three go out of business
0.06 --- --- --- ---
9. Many banks are just not making car loans
0.06 --- --- --- ---
TOTAL 1.00 1.73 2.17
Strengths

1. Ford Credit Division operates globally
0.08 --- --- --- ---
2. Independent from Government bailout
0.08 --- --- --- ---
3. Vehicles marketed in 6 continents, over 200
countries
0.07 2 0.14 4 0.28
4. Ford has strong brand image and is considered an
American icon
0.08 3 --- 4 ---
5. Strong consumer loyalty on their popular F-150
0.08 --- --- --- ---
6. Diverse vehicle lines give the company more
flexibility to their customers to choose the desired
car model
0.08 2 0.16 3 0.24
7. Sales in S. America and European segments
increased by US$3.5 billion from 2007 to 2008
0.09 3 0.27 4 0.36
Weaknesses
1. In one year, revenue decrease by approximately
US$30 billion
0.09 4 0.36 1 0.09

2. While the company's inventory was reduced from
2007 to 2008, the dealers are having higher
inventory to sell
0.08 2 0.16 3 0.24
3. Current asset dropped by approximately US$18
billion from previous year
0.1 --- --- --- ---
4. Current liabilities increased by US$30 billion from
previous year
0.1 --- --- --- ---
5. Operational costs typically higher in a company
with multi-segment business
0.07 --- --- --- ---
SUBTOTAL 1.00 1.09 1.21
SUM TOTAL ATTRACTIVENESS SCORE 2.82 3.38


Recommendations

Expand sales in South American and European countries when the value of money is higher,
economy is better and unemployment is lower and in the U.S. by promoting better pricing strategies,
promotional campaign and offering more incentives.

EPS/EBIT Analysis

US$ Amount Needed: $80 million
Stock Price: US$10.00
Tax Rate: (0.4%) for 2008 and 31.1% for 2007
Interest Rate: 6.5%
# Shares Outstanding: 3.3 billion


Common Stock Financing Debt Financing
Recession Normal Boom Recession Normal Boom
EBIT $300,000,000 $600,000,000 $1,000,000,000 $300,000,000 $600,000,000 $1,000,000,000
Interest 0 0 0 5,200,000 5,200,000 5,200,000
EBT 300,000,000 600,000,000 1,000,000,000 294,800,000 594,800,000 994,800,000
Taxes 0 0 0 0 0 0
EAT 300,000,000 600,000,000 1,000,000,000 294,800,000 594,800,000 994,800,000
# Shares 3,301,464,397 3,301,464,397 3,301,464,397 3,300,000,000 3,300,000,000 3,300,000,000
EPS 0.09 0.18 0.30 0.09 0.18 0.30

70 Percent Stock - 30 Percent Debt 70 Percent Debt - 30 Percent Stock
Recession Normal Boom Recession Normal Boom
EBIT $300,000,000 $600,000,000 $1,000,000,000 $300,000,000 $600,000,000 $1,000,000,000
Interest 4,160,000 4,160,000 4,160,000 1,040,000 1,040,000 1,040,000
EBT 295,840,000 595,840,000 995,840,000 298,960,000 598,960,000 998,960,000
Taxes 0 0 0 0 0 0
EAT 295,840,000 595,840,000 995,840,000 298,960,000 598,960,000 998,960,000
# Shares 3,301,025,078 3,301,025,078 3,301,025,078 3,300,439,319 3,300,439,319 3,300,439,319
EPS 0.09 0.18 0.30 0.09 0.18 0.30



Source Note: Dr. Mernoush Banton