Ford: Company Analysis
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,
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,
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)