Analysis of Ford Motor Company
External Factors and Economic Environment
1) Market and Customers
Between 22% and 23% (average over past five years) of Ford’s customers are defined as fleet customers as described above. The residual 77%to 78% of customers are private individuals who purchase Ford vehicles through licensed dealers. Ford customers come from all demographic strata given the diverse brand lineup and product mix, and Ford’s products are purchased and driven the world over.
Argus Research estimates that the car market will decrease 3.8% in terms of units sold during 2003, and that light truck sales will increase 0.2%. The company predicts an decrease of 3.9% in car ...view middle of the document...
” (Kerwin and Muller, 2001) The authors of the article predict it will take Ford years to reverse the damage created by these issues.
Rebuilding Ford’s “depleted talent bank” could take many years. In the meantime, the lack of talent will prevent the company from being able to rapidly design and manufacture innovative car and truck models. Given shrinking sales levels, the company also needs to quickly reduce capacity, and should shut down two or three assembly plants, according to analysts. But the company is hampered on the technology end because of strict labor agreements with the UAW, and will therefore likely reduce shifts and slow down assembly lines rather than close plants completely.
During Jack Nasser’s tenure, the company pursued a downstream vertical integration strategy, acquiring various replacement parts and maintenance companies such as Kwik-Fit in Europe. In order to generate cash flow and reduce expenses, the company is now seeking tooffload such subsidiaries. Nasser also invested heavily in various eBusiness ventures such as Covisint, believing that Ford would be able to benefit from the dot.com boom. As the prospects for the success of such ventures have all but evaporated, Ford is now seeking to exit such eCommerce related ventures.
4) Contribution to GNP, GDP and Balance of Payments
Ford’s 2002 net sales totaled $163.4 billion, with a net loss of $980 million. US GDP for 2002, according to the United States Government Office of Management and Budget, is estimated at $10,860 billion. US GNP is estimated at approximately $10,000 billion. Ford, therefore, contributes approximately 1.5% of GDP and a little over 1.6% of GNP. Given the extremely complex international structure of the Ford Motor Company at this point in time, estimating the company’s impact on the US balance of payments is a very intricate accounting calculation that would have to account for the net exports of every one of the company’s subsidiaries. Since Ford now imports many of the components for its cars, I would venture to estimate that the company’s impact on the US balance of payments is negative.
5) Value Provided by Ford to Local, Regional and National Economies
Given the size of the company, with approximately 350,000 employees worldwide and a relatively significant share of US GDP/GNP it is clear that Ford also has a significant impact on the regions in which it operates. In the US, with more or less...