Strategy Management - Individual Report Submission Ford - Case Study Example

 Contents Executive Summary 3 Introduction 4 Automotive Industry Analysis 4 Analysis of Financial Performance 6 Political, Economic, Social and Technological Analysis 7 Resources and Capabilities Analysis 10 Resources and capabilities plot has been illustrated in figure 18. A scale of 1-10 has been constructed illustrating relative strengths and weaknesses. The horizontal scale indicates importance while the vertical scale indicates strength. The resulting quadrants are superfluous strengths, key strengths, irrelevant, and key weaknesses. Resources include tangible and intangible assets, based on which capabilities for launching products and services have been built. Resources and capabilities lying within specific quadrants provide insight for developing strategies. Ford's resources include distribution network, finance, geography, plant and equipment. Ford enjoys strength in finance and technology. Ford's capabilities include corporate management, engineering, financial management, industrial relations, manufacturing, marketing and sales, product development, purchasing, and research and development. Ford enjoys relative strengths in corporate management, industrial relations, manufacturing, product development, purchasing, marketing and sales, and research and development. Ford needs to improve in engineering and financial management. 10 Porter’s Five Forces Analysis 10 Functions, Assets and Risks Analysis 11 Value Chain Analysis 13 Strengths, Weaknesses, Opportunities and Threats Discussion 13 Conclusion 14 Recommendations 14 References 15 Appendix A: Figures 20 Appendix B: Tables 29 Executive Summary A case study has been conducted to analyze Ford’s positioning for increasing its market share in the European markets. Ford operates through Automotive and Financial segments to operate in the global markets. Ford, Lincoln, Mercury and Volvo are vehicles in the market. Ford has operations in North America, South America, Europe, Africa and Asia Pacific. Lower-medium makes up 31.7%, upper-medium 17%, executive 12.3%, small 38.8% and others 0.1% of the European car market. Ford competes with Nissan, PSA, Fiat, GM, Volkswagen and Renault in the small and lower segment. Ford recently achieved over 10% market share in Europe’s 19 main markets. 2008 saw a decline in revenues from $172.46B to $146.28B, a decline in 15.18%. Over 88% of revenues were from the automotive business, while over 11% were from the financial services business. 41% revenues were from the US, 13% from Mexico, 6% from Germany, 11% from UK, and the rest from others. PEST analysis indicates current influences on Ford's practices. Resources and capabilities indicate areas that Ford needs to improve upon. Potential entrants, substitutes, suppliers and buyers shape the automotive industry competition forming Porter’s five forces. Functions, assets and risks analysis revealed Ford's positioning in the automotive market. Value chain analysis indicates that consumers remain decoupled, large inventories continue to exist, while dealers continue to rely on rebates and discounts for selling vehicles not meeting consumer desires. SWOT analysis indicates that Ford is ideally positioned to take advantage of the economic rebound. Increase in cost of raw materials and cost of R&D are putting pressure on income. The economic situation is still a concern and Ford's luxury segment vehicles continue to underperform. Threats include competition from rival car makers, development costs, and large scale manufacturing. Ford should focus on increasing portfolio diversity and increasing small and medium vehicles to fulfil consumer demands leveraging on its current position. There would be cost pressure from increased cost of innovation, stricter laws, swings in raw material prices, and slower demand growth caused by the credit crisis. Ford should concentrate on technology and innovation which would be the key differentiation areas, and initiatives should include focus on growth in markets, use of novel and cost-efficient materials, flexible manufacturing, R&D offshoring, reduction in budgets and employee wages, innovation in financial management and production practices, and manage supplier relationships prudently. Introduction Ford Motor Company (Ford) is in the business of selling cars and trucks, and financing and renting vehicles and equipment. Ford operates through the two segments: Automotive and Financial. Ford, Lincoln, Mercury and Volvo are vehicles in the market. The Automotive segment is responsible for design, manufacture, sales and services of cars and trucks, automotive components and systems. The Financial services segment is responsible for financing, leasing and insurance, renting and leasing of vehicles, and renting industrial and construction equipment. Ford has operations in North America, South America, Europe, Africa and Asia Pacific (CNBC.com, 2009). Automotive Industry Analysis An analysis of the automotive market accounting for the dynamic nature of innovation and evolving market structure revealed an inverted U shaped relationship between market structure and innovative activity. An application of Sutton’s framework of fixed endogenous costs gives an idea for the industry that continues to evolve. This includes fragmented markets at the beginning with income levels, trade barriers, etc. As the forces behind fragmentation disappear, firms limit competition by increasing R&D, and pushing up fixed costs of entry (Copeland, 2009). This is a case of industry consolidation consistent with the evolution of other markets. The global vehicle production was approximately 73 million in 2007. The pace of growth was driven by the opening of new markets in China and India. China saw a growth of 19.3% while India enjoyed a 13.2% compounded annual growth rate from 1996 to 2007. USA, UK and Italy witnessed decline in growth during the same period. Global vehicle production in USA, Canada, Japan, and EU decreased from 77% to 50% during 1997 – 2007, but still accounted for 50% of the global vehicle production (see figure 12). The world automotive industry has seen a shift from being a series of national industries to a larger integrated global industry. This has caused firms to compete in global scale production, consumption, innovation, sourcing, command and control. Global ties have been accompanied by strong regional structures at the operational level. Differences in markets have required automakers to alter design to fit characteristics of specific markets. Ford enjoyed a market share of 43% in region’s share of global production and 55% in region’s share of global sales in 2006 (see table 3). Renault and Peugeot and Citroen SA enjoyed the highest share in region’s share of global production with 97% and 85 % respectively, and region’s share in global sales with 93% and 84% respectively. This shows a change in production and sales in other markets of the world. Nissan, Honda and Toyota have been most successful in market penetration in Europe and North America. There has been a strong trend towards regional integration on the production side, while suppliers of vehicle parts have been engaged in multiple regional production systems. Within regions, there has been a gradual shift in investments towards locations with lower operating costs such as south of USA and Mexico in North America, Spain and Eastern Europe in Europe, and South East Asia in China and Asia. Political, technical, and economic factors have resulted in keeping production close to markets (Sturgeon et al., 2009). Automakers have voluntarily set production local production units to avoid political backlash, despite the availability of countries with lower operating costs. Production of vehicle parts has been close to avoid transportation costs and justify lean production techniques that include Just-in-Time deliveries of parts and quick rectification of defects. Sturgeon et al. (2009) observed that consumer tastes, purchasing power, driving conditions, labour market regulations, standards and public policies are other influences on the automotive industry. Automotive production has been typically clustered in few industrial regions. Clusters specialize in specific business aspects such as vehicle design, assembly, or manufacture of parts. Components with high logistics costs have seen the supplier park model, and have seen an increase in co-location of dedicated supplier clusters. Logistics operations in the automotive supply chain are complex accounting for large expenses and improvements in the value chain could be made. European car market segmentation (see table 6) has been illustrated in figure 21. Lower-medium makes up 31.7%, upper-medium 17%, executive 12.3%, small 38.8% and others 0.1%. Over 70% of the European auto market is made of vehicles in the lower or lower-medium segment. Ford competes with Nissan, PSA, Fiat, GM, Volkswagen and Renault in the small and lower segment. Ford Fiesta and Ford Focus were among the top six sellers in Europe with 51291 and 32329 vehicle sales respectively from September 2008 to September 2009. Fiesta enjoyed a 40.2% growth while Focus saw an 18.8% decline. Volkswagen Golf, Opel/VAUXHAUL Corsa, Peugot 207, Opel/VAUXHAUL Astra, and Renault Clio were Ford’s closest competitors (AutoNews, 2009). Europe October sales increased by 6.8%, while Ford enjoyed increase in sales of over 12.8% (TD Ameritrade, 2009). Ford recently achieved over 10% market share in Europe’s 19 main markets (Patrascu, 2009). Ford vehicles in Europe include Fiesta, Focus, Transit, Ford Ka, Ford S-Max, Mondeo, and Kuga. According to Ford of Europe (2009) the last one year saw Ford vehicle registrations decline 15.3%. Ford’s performance in Euro 19 was down 7.3%, while the industry was down 12.2%. Ford’s performance in Euro 21 was down 12.3%, while the industry was down 17.7%. Ford’s top five markets were Germany, UK, Italy, France, Spain, and Russia. Ford had the highest market share in Turkey, Hungary, UK, Ireland, and the Czech Republic. This illustrates Ford’s strength even during the downturn. Analysis of Financial Performance Ford is headed by Alan Mulally, CEO, Lewis Booth, CFO, and Nicholas Smither, CIO. In the 1990s, Ford’s pickup trucks and sports vehicles were making an adjusted profit of slightly more than $2000 per vehicle, and it was believed that Ford would overtake GM to become America’s top car maker. However, it did not happen as Ford lost its advantage and lost its advantages and scale. The reason was attributed to stronger competition, sloppy engineering and manufacturing. Some analysts believed that the future was in luxury cars, and Chrysler estimated that stylish upmarket cars commanded higher prices and could be more profitable. The premium car market would enable them to break free of incentive culture. Ford, GM, and Chrysler raised its average incentive by $1000s. However, Ford’s luxury car business: Lincoln, Jaguar and Land Rover had been disastrous. 2008 saw a decline in revenues from $172.46B to $146.28B, a decline in 15.18%. An increase in COGS has resulted in a decline in net income from a loss of $2.72B to $14.67B. The gross margin was 7.38%, net profit margin was -3.59%, and operating margin was -3.25%. The return on assets was -1.81%, and return on investment was -2.79%. Cash reserves declined by $13.23B, and saw a cash flow loss of 179M. The cash flow per share was $1.27, and the price per cash flow per share was $7.94. The book value per share was -$2.67, and tangible book value per share was -$2.68. $3.14B was used for investing activities and $9.10 was used for financing cash flows. The debt to total capital ratio was 1.06% (FT.com, 2009). There are 3.3B shares outstanding, with a market capitalization of 29.6B, and institutional ownership of 44.6%. Among 16 analysts polled 4 were strong buy, 4 were buy, 5 hold, 2 sell, and 1 underperform. The company stock last traded for 8.94, and has outperformed the S&P 500, and its peers: Toyota Motor, Honda Motor, and Daimler (CNBC.com, 2009). Over 88% of revenues were from the automotive business, while over 11% were from the financial services business. 41% revenues were from the US, 13% from Mexico, 6% from Germany, 11% from UK, and the rest from others (Ford, 2009). Political, Economic, Social and Technological Analysis Hyundai adopted a positive brand image creation and local adaptation strategy when they introduced the Santa Fe based on an understanding of factors affecting standardization, adaptation decisions and possible negative effects of country-of-origin effects. This included an international advertising strategy including plans to build a production facility local market (Raymond and Lim, 2002). The 1970 Clean Air Act, 1975 Energy Policy and Conservation Act, 1992 Intermodal Surface Transportation Act were early influences on Ford’s practices. As Ford is a major employer in the global markets, this has caused political forces to come into play. Some have called for greater protectionism based in the rhetoric of patriotism and economic sustainability. On the other hand others have stresses free trade values and market capitalism based on a more liberalized policy. Tariffs, NAFTA, WTO and EU regulations are influences on auto manufacturing practices (Gereffi, 2007). Automakers in Europe have called for measures to prevent a prolonged recession. Vehicle manufacturers have requested access to €40B backed by state guarantees in low interest loans. €15B may be required in 2009 and legislators would have to be prepared to simplify procedures for fund access and shortening timeframes. Car makers have been presented new CO2 regulation as a part of 80 European Directives and 115 UNECE legislation. CO2 emissions have fallen by 20% with CO2 emissions approximately 154 g/km in 2008. Regulation requires reductions in CO2 emissions to 120 g/km with a staggered approach requiring 100% compliance by 2015. Failure to comply with regulation would attract fines. A 10 gm reduction would come from complementary measures and biofuels. Vehicle manufacturers have been adopting necessary measures including fewer temporary contracts, lower vehicle output and shorter working hours to combat the economic crisis. It is not clear when demand would pick up. Electrical vehicles are thought to hold the promise for the future and vehicle manufacturers continue to work with battery suppliers to on energy density, durability and discharge times. Standardization of recharging infrastructure is under discussion. Makers of trucks and light commercial vehicles across Europe are working on hybrid technology with the aim of reducing fuel consumption by 15-20%. Models capable of running on alternative fuels such as bioethanol and compressed natural gas are under trails. This has been reaffirmed by manufacturers in Vision 20-20 at the Hanover motorshow in 2008. Continuous innovation is required to comply with Euro 5, 6, V and VI (European Automobile Manufacturers Association, 2009). The release of corrosive pollutants by the automotive industry has been one of the environmental concerns. The Vehicle Air Pollution and Control Act, Clean Air Act, and the Energy Policy, Conservation Act, EU set standards for automotive pollution. Recently, climate change resulting from green house gas emissions has been at the forefront of global debate on environmental concerns and corporate responsibility. The Kyoto Protocol ratified by 169 countries sought to stabilize green house gas emissions. GM, Ford, Chrysler, BMW, Volkswagen, Volvo, Toyota, Mazda, and Nissan are a part of the Alliance of Automobile Manufacturers. Ford has formed a strategic alliance with Mazda owning 25% stake in Mazda. Ford bought Aston Martin, Jaguar, and KIA to gain resources and skills. Ford has deployed multi-model assembly lines for reducing company manufacturing costs allowing greater flexibility to change quickly from one model to another. Ford was the first automaker to adopt ISO 14001 quality standard. Ford has been dedicated to social services and environment by setting up funds and grants for art and humanities and the environment (Ford, 2009). Business strategies adopted by Ford include vertical integration of suppliers into its own operation; strategic alliance with Hertz owning 49% of the company; adopting cartels and increasing profits by price fixing along with GM for trucks; Aligned Business Framework for improving suppliers collaboration; and resizing the company to match current market realities; withdrawing unprofitable and inefficient models and consolidating production lines (Ford, 2009). Computer Aided Engineering (CAE) resources and features in software codes and engineer education play an important role in product development at Ford. Ford has developed an ergonomics program to manage injury and illness issues, ensuring the appropriate use of human resources at the plant floor. Labor and management teams identify and evaluate jobs and develop and implement solutions using ergonomic principles in automobile assembly and manufacturing operations. The ergonomics process has become an important part of the health and safety process at Ford (Joseph, 2003). Lean manufacturing systems includes a strategy for incurring less input for better achieving the organization’s goals by producing better output. Leanness has seven characteristics: relative, dynamic, long-term fuzzy logical, objective, integrative and comprehensive. A comparison of production leanness at Ford when compared to GM revealed that Ford’s system was 17% leaner than GM’s system. Just-in-time, Kaizen, and quality controls were lean attributes and Honda Motor was the benchmarking company (Bayou and de Korvin, 2008). Ford relies not just on technology for Knowledge Management (KM), but has integrated IT systematically with organizational culture, capacity, and processes. Ford has a culture of knowledge-sharing, which has been extended to the company’s global operating units with formal processes and Web-based technology. This includes best practice replication and engineering Codes of Practice. Key lessons learned were importance of documentation, usability design, adherence to content templates and taxonomy, optimization of infrastructure, automated altering mechanisms for co-ordinating knowledge validating processes, and using pilot testing (Kwiecien, 2005). E-procurement is becoming prevalent in supply chain management. Advantages include cut in operational costs across the supply chain. Online information and processes act as resources resulting in logistics fulfilment capabilities, which lead to satisfaction with e-procurement. Vaidyanathan and Devaraj (2008) found support for relationships between the flow of information and process quality, logistics fulfilment quality processes, and e-procurement satisfaction performance. Fulfilment order timeliness has a greater impact on satisfaction than fulfilled order accuracy. The dimension of time plays an increasingly important role in the competitive world of today. Resources and Capabilities Analysis Resources and capabilities plot has been illustrated in figure 18. A scale of 1-10 has been constructed illustrating relative strengths and weaknesses. The horizontal scale indicates importance while the vertical scale indicates strength. The resulting quadrants are superfluous strengths, key strengths, irrelevant, and key weaknesses. Resources include tangible and intangible assets, based on which capabilities for launching products and services have been built. Resources and capabilities lying within specific quadrants provide insight for developing strategies. Ford's resources include distribution network, finance, geography, plant and equipment. Ford enjoys strength in finance and technology. Ford's capabilities include corporate management, engineering, financial management, industrial relations, manufacturing, marketing and sales, product development, purchasing, and research and development. Ford enjoys relative strengths in corporate management, industrial relations, manufacturing, product development, purchasing, marketing and sales, and research and development. Ford needs to improve in engineering and financial management. Porter’s Five Forces Analysis Potential entrants, substitutes, suppliers and buyers shape industry competition forming Porter’s five forces (see figure 14). The penetration of Japanese automotive companies is changing the landscape of the automotive industry. Clearly the rivalry in the global automotive industry is intense. As the developed markets have reached market maturity in terms of growth firms are under intense pressure to gain market share or prevent declining market share. According to Bradley et al. (2005) high fixed costs associated with the manufacture of cars and trucks, and low switching costs for consumers while buying different makes and models increases the degree of rivalry. Automotive industry faces mild threats of substitutes. Despite the availability of other forms of transportation none offers the utility, convenience, independence, and value afforded by automobiles. Switching costs associated with other forms of transportation may be high in terms of time, convenience, and utility. An exception is urban areas with high population densities, where substitutes could be less costly and preferred. Social and cultural attitudes could influence ownership of vehicles. Factors such as geography, race, class, race, or religion could influence the decision to own a vehicle. There are significant barriers to enter the automotive industry. Startup capital required establish manufacturing capacity with minimum efficient scale in prohibitive. Automotive facility is quite specialized and could not be retooled in case of a failure. Despite these barriers, established companies that have abundant cash could enter new markets through strategic partnership, buy outs, or merging with new companies. This is evident by Japanese and recently Korean firms entering global markets. Also, gaps existing in markets provide new opportunities for new entrants. For example, the failure to offer quality vehicles in the lower price marker segment caused Japanese firms to gain rapid marker share. The price of fuel is expected to drive the market in the near future, and the demand for fuel efficient and or hybrid vehicles would provide interesting opportunities to market participants. Knowledge of local markets and expertise would provide firms an edge while seeking to eke out market share from each other as the global market matures. The balance of power between automotive industry and suppliers is in favour of the automotive industry, and automotive forms are in a position to dictate terms to suppliers. Characteristics of the automotive industry include; small number of companies manufacturing automotives; automotive parts being standardized commodities used only on automobiles; and occurrence of backward integration when firms purchase struggling parts maker. In the relationship between the automotive industry and consumers the consumers are clearly in the driver’s seat. The automotive commodity is fairly standardized and the cost of switching is low among competing brands of vehicles. However, the automotive industry enjoys a large customer to producer ratio. The automotive industry is undergoing a consolidation phase, and will continue to change, evolve, and adapt. Functions, Assets and Risks Analysis Ford’s business functions include manufacture and sale of automobiles, and financial services. Ford’s assets include plants across the globe; intellectual property; and a dedicated workforce. As Ford envisages eking out market share from its competitors across the developed and emerging markets, FAR analysis provides insight into Ford’s positioning. A study of automobile firms revealed that pre-experience influenced the performance of entrants and extent to which pre-entry experience had enduring effects (Klepper, 2004). Training is a key capability in the next generation of advanced technology systems. The design of integrated-embedded training systems that is flexible and easy to implement operates on exerting leverage on foci of self-regulation is central to learning and performance for difficult, complex, and dynamic tasks (Kozlowski et al.,2001). The credit boom and its impact were pronounced in the financial sector, where intermediaries competed aggressively for providing credit. A study by Eichengreen and Mitchener (2004) provides a useful view of uneven expansions and subsequent slumps. Ford's financial services would be impacted negatively should the slump continue for a prolonged period of time. Advanced sensors (Bogue, 2002), machine vision (Kochan, 2002) and vision systems (Wilson, 1999), robots (Ksuda, 1999) played a key role in automation of the Japanese automotive industry that helped Japanese car makers gain market share in Europe and America. Production systems at Ford emphasize the need to tap workers' knowledge for enhancing productivity and quality. The potential conflict between the expectation of workers to contribute and making their jobs harder is often overlooked (Rothstein, 2006). A labour relations environment that cultivates broad employee participation, while placing constraints on employee participation is desirable. Ford would benefit by the deployment of competing values model by Dendelbach and McGrath (2006) that is culturally neutral and non-normative framework helping leaders understand the value of leadership behaviours and their applications. Allocation of machinery costs is important to product profitability at Ford. The changing nature of machinery adds to this complexity. Activity-based methods allows managers better match machine costs to products, allowing better strategic decisions about pricing, mix, customer retention, capacity utilization and equipment acquisition (Palmer and Davis, 2004). A macro perspective on micro practices and associated outcomes is essential for the management for talent at the managerial and executive level within Ford that includes management development, career planning, succession planning, etc. (Cappelli,2009). Long-term collaborative manufacturer-supplier partnerships would enable Ford exploit incentive benefits of market-based exchange (Guillot and Lincoln, 2004), in addition to learning and coordination benefits. As climate change issues gain momentum, institutional pressures would increase on Ford's practices and products (Kolk and Levy, 2003). Ford's participation in "global issues arenas" would generate institutional forces for strategic convergence. Tacit knowledge is difficult to create and transfer in the absence of social interaction and labour mobillity, while forms the most important source of learning and sustainable competitive advantage (Lam, 2004). Ford should focus on education and training systems and labor markets. Supplier risks should be analyzed dynamically, and monitored over time (Blackhurst et al, 2008). This would allow Ford understand and control risk in its supply base. Value Chain Analysis The value chain analysis has a focus on vehicle assembly and parts suppliers. Product design, production of engines and transmissions, and vehicle assembly is carried out in Ford’s own facilities. Outsourcing has led to the creation of large global suppliers. In a “build-to-order” fulfilment approach, consumers are able to define characteristics of vehicles before production. Large economies of scale have moving assembly lines with dedicated fixtures, and use of integrated pressed-steel monocoque bodies but long lead times for custom-built vehicles distorts demand information (see figure 16). The average time for delivery is 40 days on an average; where 60 h is for production and 85% of the time is for parts sequencing. This has resulted in little change in production techniques and operation of distribution networks. Consumers remain decoupled, large inventories continue to exist, while dealers continue to rely on rebates and discounts for selling vehicles not meeting consumer desires (Ford, 2009; Sturgeon et al., 2009). Strengths, Weaknesses, Opportunities and Threats Discussion Ford is the only automobile company that has not required aid. Ford has emerged as the strongest player after the financial slowdown in the global markets. Ford is ideally poised to take advantage of the economic rebound. Ford’s other strengths include technological innovation, and strategic positioning for global operations. The economic recovery would increase fuel prices to previous highs. This would increase the demand for hybrid vehicles. Ford is well positioned to take advantage of the situation. Ford’s weaknesses include struggling sales and losses especially in the luxury segment. Increase in raw material prices has put pressure on margins. Also, the cost of innovation has increased putting pressure on income. Opportunities include development of innovative products. There has been an increase in the development of fuel efficient technology, and concentrating on R&D activity to develop fuel-efficient and electric cards would enable Ford to gain market share from its competitors. Visionwise (2009) has advocated an increase in portfolio diversity and increase small and medium vehicles to fulfil consumer demands. The strategic acquisition of Aston Martin, Jaguar and KIA, and alliance with Mazda would provide an opportunity to gain market share in global markets. Threats include competition from rival car makers, development costs, and large scale manufacturing. A return in economic downturn could decrease consumer spending affecting sales. Conclusion Industry researchers (Visionwise, 2009) have forecasted high level of M&A over the next five years. The company would be faced with cost pressure from increased cost of innovation, stricter laws, swings in raw material prices, and slower demand growth caused by the credit crisis. Technology and innovation would be the key differentiation areas. Initiatives include focus on growth in emerging markets, use of novel and cost-efficient materials, flexible manufacturing, R&D offshoring, reduction in budgets and employee wages. Wireless technology, fuel technology, increase in production of environment-friendly cars, and increased innovation would be areas for differentiation. Recommendations With Euro zone expected to grow 0.4% in 2010 a similar growth in automobile sales is expected (see Fig. 19-20). Ford is poised to take advantage in the economic rebound with two vehicles in the top six in Europe. Ford should continue to leverage on its strengths in the small and lower market segment, and sell the luxury market segment vehicle to another player should it continue to underperform. Innovation management involves application of innovative features in a regular stream of products and platforms. Innovation Life-Cycle Management (Beaume et al., 2009) provides a platform that would allow Ford to focus on radical and incremental innovation applied to alternative powertrain technologies, including hybrids, biofuels and hydrogen power (Zapata and Nieuwenhuis, 2010). Collaborations with skilled suppliers allowing access to existing technologies and developing joint technologies (Langner and Seidel, 2009) coupled with an understanding of expectations and investments required over time early in a relationship between Ford and its suppliers would enable Ford to stay competitive (Lettice et al., 2009). Ford should be cognizant that the next generation of vehicles would change from integrated "unibody" having high volume and low flexibility to modular with middle to high production volume and flexibility (Pandremenos et al., 2009). Ford should explore remanufacturing for automotive aftermarket (Subramoniam et al., 2009), automotive component reuse (Amelia et al., 2009), and ecodesign of automotive components (Alves et al., 2009) which would provide increasing business opportunities as Green technologies gather momentum. Financial innovation such as the use of reverse production planning and pricing can increase net revenues by 7-15% (Qu and Williams, 2008). Producing scheduling strategy (Childerhouse et al., 2008) could be deployed to deal with order volatility in the European automotive sector. References Academic Mind. (2008). Automotive industry analysis - GM, DaimlerChrysler, Toyota, Ford, Honda. Available: http://www.academicmind.com/unpublishedpapers/business/management/2004-11-000aaa-automotive-industry-analysis.html. Last accessed 6 December 2009 Alves, C., Ferrão, P., Silva, A., Reis, L., Freitas, M., Rodrigues, L. & Alves, D. (2009). Ecodesign of automotive components making use of natural jute fiber composites. Journal of Cleaner Production. Available Online. Amelia, L., Wahab, D., Haron, C., Muhamad, N. & Azhari, C. (2009). Initiating automotive component reuse in Malaysia. Journal of Cleaner Production. 17 (17), 1572-1579. AutoNews. (2009). European Market Sales. Available: http://www.auto-power-girl.com/images-info/ford_fiesta_and_volkswagen_golf_lead_european_market_sales-3313-4509. Last accessed * december 2009. Bayou, M. & de Korvin, A. (2008). Measuring the leanness of manufacturing systems—A case study of Ford Motor Company and General Motors. Journal of Engineering and Technology Management. 25 (4), 287-304. Blackhurst, J., Scheibe, K. & Johnson, D. (2008). Supplier risk assessment and monitoring for the automotive industry. In: International Journal of Physical Distribution & Logistics Management. London: Emerald Group. 143-165. Bogue, R. (2002). Advanced automotive sensors. In: Sensor Review. London: Emerald Group. 113-118. Bradley, D, Bruns, M., Fleming, A., Ling, J., Margolin, L. & Roman, F. (2005). Automotive Industry Analysis. Available: http://www.srl.gatech.edu/Members/bbradley/me6753.industryanalysis.teamA.pdf. Last accessed 6 December 2009. Beaume, R., Maniak, R. & Midler, C. (2009). Crossing innovation and product projects management: A comparative analysis in the automotive industry. International Journal of Project Management. 27 (2), 166-174. Cappelli, P. (2009). What's old is new again: Managerial “talent” in an historical context. In: A Research in Personnel and Human Resources Management . London: Emerald Group. 179-218. Childerhouse, P., Disney, S. & Towill, D. (2008). On the impact of order volatility in the European automotive sector. International Journal of Production Economics. 114 (1), 2-13. CNBC.com. (2009). Ford Motor Company. Available: http://data.cnbc.com/quotes/F/tab/4. Last accessed 6 December 2009. Copeland, A. (2009). Market Structure and Innovation: A Dynamic Analysis of the Global Automotive Industry. Available: http://www.ftc.gov/be/workshops/microeconomics/2009/docs/copeland.pdf. Last accessed 6 December 2009. Dendelbach, N. & McGrath, M. (2006). Leadership Development without Borders. In: A Advances in Global Leadership. London: Emerald Group. 229-254. Eichengreen, B & Mitchener, K. (2004). The Great Depression as a Credit Boom Gone Wrong. In: Research in Economic History. London: Emerald Group. 183-237. European Automobile Manufacturers Association. (2009). European Automobile Industry Report. Brussels: European Automobile Manufacturers Association. 89. Ford. (2009). Ford. Available: http://www.fordeurope.net/. Last accessed 8 December 2009. Ford of Europe. (2009). Ford European Sales Gains Continue with Best July and Year-to-Date Market Share in 10 Years. Available: http://media.fordvehicles.com/. Last accessed 10 December 2009. FT.com. (2009). Ford Motor Company. Available: http://markets.ft.com/tearsheets/performance.asp?s=FDMB%3ALSE. Last accessed 6 December 2009. Gareth, J. (2004). Organizational theory, design, and change, text and cases.(4th edition). New Jersey: Prentice Hall. Gereffi, G. (2007). Politics and Society. Available: http://www.duke.edu/web/soc142/team1/political_social.html. Last accessed 6 December 2009. Grant, R. (2010). Industry Analysis: The Fundamentals. In: Contemporary Strategy Analysis. 7th ed. USA: Blackwell. 66-99. Guillot, D. & Lincoln, J. (2004). Dyad and Network: Models Of Manufacturer-Supplier Collaboration In The Japanese TV Manufacturing Industry. In: Advances in International Management. London: Emerald Group. 159-185. Harrington, H (1991). Business Process Improvement: The Breakthrough Strategy for Total Quality, Productivity, and Competitiveness. USA: McGraw-Hill. 274. Holweg, M. and Pil, F.K. (2004) The second century: reconnecting customer and value chain Joseph, B. (2003). Corporate ergonomics programme at Ford Motor Company. Applied Ergonomics. 34 (1), 23-28. Klepper, S. (2004). Pre-Entry Experience and Firm Performance in The Evolution Of The U.S. Automobile Industry. In: Advances in Strategic Management. London: Emerald Group. 289-315. Kochan, A. (2002). Machine vision guides the automotive industry. In: A Sensor Review. London: Emerald Group. 119-124. Kolk, A. & Levy, D. (2003). Multinationals And Global Climate Change: Issues For The Automotive and Oil Industries. In: Research in Global Strategic Management. London: Emerald Group. 171-193. Kozlowski, S., Toney, R., Mullins, M., Weissbein, D., Brown, K. & Bell, B. (2001). Developing adaptability: A theory for the design of integrated-embedded training systems. In: Advances in Human Performance and Cognitive Engineering Research. London: Emerald Group. 59-123. Ksuda, Y. (1999). Robotization in the Japanese automotive industry. In: A Industrial Robot. London: Emerald Group. 358-360. Kwiecien, S. (2005). Knowledge Management Processes and Tools at Ford Motor Company. In: Knowledge Management Tools and Techniques. London: Emerald Group. 175-184. Lam, A. (2004). Societal Institutions, Learning Organizations And Innovation In The Knowledge Economy. In: A Research on Technological Innovation, Management and Policy. London: Emerald Group. 43-67. Langner, B. & Seidel, V. (2009). Collaborative concept development using supplier competitions: Insights from the automotive industry. Journal of Engineering and Technology Management. 26 (1-2), 1-14. Lettice, F., Wyatt, C. & Evans, S. (2009). Buyer–supplier partnerships during product design and development in the global automotive sector: Who invests, in what and when?. International Journal of Production Economics. Available Online. Pandremenos, J., Paralikas, J., Salonitis, K. & Chryssolouris, G. (2009). Modularity concepts for the automotive industry: A critical review. CIRP Journal of Manufacturing Science and Technology. 1 (3), 148-152. Patrascu, D. (2009). Ford Breaks 10 Percent European Market Share. Available: http://www.autoevolution.com/news/ford-breaks-10-percent-european-market-share-11923.html. Last accessed 8 December 2009. Palmer, R. & Davis, H. (2004). Connecting Concepts of Business Strategy and Competitive Advantage To Activity-Based Machine Cost Allocations. In: A Advances in Management Accounting. London: Emerald Group. 219-236. Qu, X. & Williams, J. (2008). An analytical model for reverse automotive production planning and pricing. European Journal of Operational Research. 190 (3), 756-767. Raymond, A. & Lim, J. (2002). Creating a positive brand image with a local adaptation advertising strategy: The Hyundai Santa F. In: Advances in International Marketing. London: Emerald Group. 101-118. Rothstein, J. (2006). Selective Participation: Controlling Workers’ Input at General Motors. In: Research in the Sociology of Work. London: Emerald Group. 151-175. Sturgeon, T., Memedovic, O., Van Biesebroeck, J. & Gereffi, G. (2009). Globalisation of the automotive industry: main features and trends. Int. J. Technological Learning, Innovation and Development. 2 (1/2), 7-24. Subramoniam, R., Huisingh, D. & Chinnam, R. (2009). Remanufacturing for the automotive aftermarket-strategic factors: literature review and future research needs. Journal of Cleaner Production. 17 (13), 1163-1174. TD Ameritrade. (2009). Ford Europe (F) Rolls To Higher Sales and Market Share in October. Available: http://www.streetinsider.com/Retail+Sales/Ford+Europe+(F)+Rolls+To+Higher+Sales+and+Market+Share+in+October/5097741.html. Last accessed 8 December 2009. Vaidyanathan, G. & Devaraj, S. (2008). The role of quality in e-procurement performance: An empirical analysis. Journal of Operations Management. 26 (3), 407-425. Wilson, M. (1999). Vision systems in the automotive industry. In: Industrial Robot. London: Emerald Group. 354-357. Zapata, C. & Nieuwenhuis, P. (2010). Exploring innovation in the automotive industry: new technologies for cleaner cars. Journal of Cleaner Production. 18 (1), 14-20. Appendix A: Figures Figure 1. Revenue (FT.com, 2009) Figure 2. Net Income (FT.com, 2009) Figure 3. Cash Flow (FT.com, 2009) Figure 4. Cash (FT.com, 2009) Figure 5. Total Assets (FT.com, 2009) Figure 6. Total Debt (FT.com, 2009) Figure 7. 5 Year Stock Performance (CNBC.com, 2009) Figure 8. 1 Yr Stock Performance vs Peers (Daimler, Honda Motor, Toyota Motor) CNBC.com, 2009) Figure 9. Evolution of Automotive Industry (Bradley et al., 2005) Figure 10. Market Structure and Innovation (Copeland, 2009) Figure 11. Geographic and Organizational Structure of Automotive Industry (Sturgeon et al., 2009) Figure 12. Globalization of the Automotive Industry (Sturgeon et al., 2009) Figure 13. Environmental Analysis to Industry Analysis (Grant, 2010) Figure 14. Porter’s Five Forces (Grant, 2010) Figure 15. Value Chain Analysis (Sturgeon et al., 2009) Figure 16. Make to Forecast Cycle (Holweg and Pil, 2001) Figure 17. Delays in Order Fulfilment Process (Holweg and Pil, 2001) Figure 18. Resources and Capabilities Analysis Plot Figure 19. Commercial Vehicle Registration and GDP Growth (European Automobile Manufacturers Association, 2009) Figure 20. Passenger Car Registrations and GDP Growth (European Automobile Manufacturers Association, 2009) Figure 21. European Car Market Segment (European Automobile Manufacturers Association, 2009) Figure 22. GDP Forecast (European Automobile Manufacturers Association, 2009) Figure 23. Passenger Car has to Comply with 45 EU Directives and Regulations (European Automobile Manufacturers Association, 2009) Appendix B: Tables Table 1: Global Motor Vehicle Production (x 1000) from 1996 – 2007 (Sturgeon et al., 2009) Table 2: Production of Motor Vehicles by Region (Sturgeon et al., 2009) Table 3: Market Share (Sturgeon et al., 2009) Table 4. USA Automobile Industry Concentration Ratios (Bradley et al., 2005) Table 5. Resources and Capabilities Analysis Resources and Capabilities Code Importance Relative Strength Resources Distribution Network R1 7 4 Finance R2 9 6 Geography R3 8 4 Plant and Equipment R4 7 5 Technology R5 9 6 Capabilities Corporate Management C1 8 5 Engineering C2 8 4 Financial Management C3 9 4 Industrial Relations C4 7 5 Manufacturing C5 7 5 Marketing and Sales C6 8 5 Product Development C7 9 5 Purchasing C8 7 5 Research and Development C9 9 5 Table 6. European Market Segmentation Matrix Segment Automaker Market Share Lower and Lower-Medium Nissan, Renault, Fiat, Ford, GM, PSA, Suzuki, Volkswagen 70.5% Upper-Medium BMW, Mazda, Toyota, Volkswagen, Honda 17% Executive Mercedes, Volvo 12.3% Read More