FORD MOTOR COMPANYStrategic Audit

5/1/2009 Management 4710

Lisa Krone, Charise Hansen, NaTasha Kearney, Jasmine Franklin

I. CURRENT SITUATION

A. Current PerformanceFord Motor Company is an automotive leader hailing from Dearborn,

Michigan, which produces and/or distributes automobiles in several

continents. The company owns brands which include Ford, Lincoln, Mercury

and Volvo as well as providing financial services through Ford Motor Credit

Company. Ford employees around

213,000 people and operates about 90

plants worldwide. “As noted in the

company’s 2008 annual report, after

earning a profit in the first quarter of

2008, Ford had an overall net loss of

$14.7 billion for the year with $6 billion

coming in the fourth quarter. That

compares with an overall net loss of $2.7 billion in 2007. Since 2006, Ford

Motor Company losses total $30 billion.”

“In the first two months of 2009, Ford's U.S. sales plunged 44 percent

compared to a market that declined 39 percent overall.” Due to current

trends, with tightening of the credit market and other economic factors,

there has been a major slowed down in the growth of sales volume and has

also put significant pressure of the liquidity on the current business

environment. Ford has done increasingly well compared to the other two

“Big Three” automakers since Ford is the last “man” standing who has not

"Consumers remain anxious about the economy and their own outlook for the future," said Ken Czubay, vice president of sales and marketing. "We at Ford want to do our part to rebuild faith in the marketplace by offering payment protection on every new Ford, Lincoln or Mercury vehicle for up to a year if our customers lose their jobs."

taken government bailouts. In Ford’s Business Plan which was submitted to

the Senate Banking Committee, for proposes four elements to help the

company afloat:

1. ‘Aggressively restructure to operate profitably at the current demand

and changing model mix;’

2. ‘Accelerate development of new products our customers want and

value;’

3. ‘Finance our plan and improve our balance sheet; and’

4. ‘Work together effectively as one team, leveraging our global assets.’

Ford is taking the current crisis to make many cuts across the board which

has totaled over ten billion dollars in areas such as marketing, dealership

sales costs, human capital, and many more. “Ford is trying to reduce its

unsecured debt by two-thirds and its overall debt from about $36 billion to

about $25 billion through a cash-for-debt swap to bondholders that expires

Friday (first week of April, 2009).” In the current market and industry Ford

has gained market share over several months which has been rare in the

past decade. As many analysts have noted, Ford is not out of the deep and

torrentially waters that the world economy is currently treading.

From Bill Ford’s video on the Ford Story, “As we move forward toward the

future, I would like to be seen as the company that interrupts that. That we

again will be the company with leading solutions that help people have a

better life. At the end of the day if all we are about is making cars and trucks

and making money and

going home, that’s not

enough. Our goal has to be

to do that, but with the goal

of making peoples life’s

better.”

B. Strategic Posture

Ford’s Vision

Our vision is to become the

world’s leading consumer

company for automotive

products and services.

Ford’s Mission

We are a global family with a

proud heritage, passionately

committed to providing

personal mobility for people

around the world. We anticipate consumer needs and deliver outstanding

products and services that improve people’s lives.

Ford’s Values

The customer is Job 1. We do the right thing for our customers, our people,

our environment and our society. By improving everything we do, we provide

superior returns to our shareholders.

 Table 1: From money.cnn.com: $ millions

% change from 2007

Revenues 146,277.0 -15.2

Profits -14,672.0 N.A.

Assets 218,328.0 —

Stockholders' equity -17,311.0 —

Market value (3/27/2009) 6,805.6 —

Profits as % of  Revenues -10.0

Assets -6.7

Stockholders' equity N.A.

Earnings per share  2008 $ -6.46

% change from 2007 N.A.

1998-2008 annual growth rate % N.A.

Total return to investors %2008 -66.0

1998-2008 annual rate -21.2

Ford’s Strategy

New Products offerings collected from the business plan submitted to

Congress:

2009 F-150

2010 Lincoln MKS

2010 Ford Mustang

2010 Ford Fusion +

Hybrid

2010 Ford Taurus

2010 Mercury Milan and

Milan Hybrid

2010 Lincoln MKT

2010 Lincoln MKZ

2011 Ford Fiesta

Ford has been making great progress:

Ford Motor Company, Honda Motors and Toyota Motors quality ratings

are in a dead heat.1

Our cars, trucks and SUVs deliver fuel economy that's competitive with

that of all other automakers.2

Fifteen 2009 Ford Motor Company vehicles are rated Top Safety Picks

by the Insurance Institute for Highway Safety (IIHS), more than those

of any other automaker.

Our factories and the vehicles they produce have pioneered

environmentally friendly techniques.

II. CORPORATE GOVERNANCE

A. Board of Directors

Ford Motor Company has 14 Board of Director members. There are 4

internal members and 10 external members on this board. The members of

the Board have a very diverse background with a very large range of

experience. The majority of the members have been on the Board longer

than five years. The Ford family owns three of the seats on the board as well

as 6 percent of the company’s stock as well as a special class of stock that

allows them 40 percent of voting rights as well as control over the company.

B. Top Management

Top management for Ford Motor Company consists of executives of different

skill sets, backgrounds and experience. To name a few of the key

executives, William Clay Ford, Jr. is the great-grandson of Henry Ford and

also once served as the Chief Executive Officer and Chief Operating Officer.

He attended Princeton as well as received an S.M. in Management as a Sloan

Fellow from the MIT Sloan School of Management. Alan Mulally, the current

President and CEO of Ford Motor Company also received a Masters degree in

Management (S.M.) as a Sloan Fellow. Mr. Mulally began a long career at

Boeing in 1969 before being named President and CEO of Ford Motor

Company in 2006.

There are a number of executives that make up the large number of top

management for Ford Motor Company. Exhibit 2 shows a list of top

management that ranges from the President and CEO of the entire company

as well as the area Vice Presidents and the Group Vice Presidents of the

divisions.

III. EXTERNAL ENVIRONMENT: OPPORTUNITIES AND THREATS (SWOT)

A. Societal Environment

Economic:

According to the CanadaSpace Reference regarding Ford Motor Company,

economic conditions have a major impact on the very being or existence of

Ford Motor Company. It is the second largest automobile company in

America as well as the fourth largest company in the world. By 2007, Ford

produced more than 6 million vehicles and had an estimated 245,000

employees. The current recession has caused extreme damage to the sales

of automobiles, declining at a very high rate. To keep cost down and remain

in business, lay-offs among employees must occur. As a result, the inflation

rate increases and the economy worsen.

As the economy worsens an opportunity for Ford Motor Company to maintain

a healthy customer base is to offer incentives to help in these hard times.

Some incentives that Ford offers is if the customer losses their job, Ford

Motor Company will pay their car note for up to a year as reported on

multiple newscasts.

In May of 2008, due to the rising gas prices, Ford Motor Company decided to

reduce the assembly of trucks and SUVs for the remainder of 2008 according

to ABC News. By making these cuts, it hurts the automakers immediately

because these vehicles go on the books as sold as soon as they leave the

plants. The average gallon of gas during the week of May 12, 2008 was

$3.72 (ConsumerReports.org).

Technological:

Fueleconomy.gov states that Hybrid vehicles mark the foremost

technological innovation within the automobile industry. These new

revolutionary vehicles combine gasoline engines and electric motors that

create more powerful, fuel-efficient vehicles. Some of the components

include regenerative braking, which turns energy that is usually wasted

during braking, into electricity that is stored in the battery until used by the

electric motor.

The Electric Motor Assist provides power to assist in acceleration therefore

allowing smaller engines to be used. Hybrid vehicles also include an

Automatic Start/Shutoff, which turns off automatically when vehicle comes to

a complete stop and restarts upon pressing the accelerator. This

technological advance is very beneficial not only to the customers who will

save lots of money, but also for the economy. Being fuel efficient causes a

reduction in climate change, oil dependence costs, and increases energy

sustainability.

In an article found on Media.Ford.com, Ford Motor Company has invested up

to $1 billion for the development of flexible manufacturing. This has allowed

the company to retain its title of efficiency while simultaneously remaining

competitive in its field through cost-savings and continuous improvement.

According to Media.Ford.Com, Ford Motor Company has developed the new

EcoBoost engine which will be made for 90% of the fleet of vehicles by 2013.

EcoBoost is made to reduce CO2 emissions as well as increase in fuel

economy by 20 percent.

Political-Legal:

As the recession period continues to grow, the demand for purchasing a new

vehicle decreases. The United States government has offered bail-out funds

that would assist and fund operations, company debt, employee payroll, and

save jobs. If funds are accepted, then so are the rules and guidelines that

follow. Some guidelines include government control over subject matters and

decisions that were once determined by top management and/or the Board

of Directors.

In 2008 Ford Motor Co. showed a record loss of $14.6 billion. Ford is striving

to survive the market without federal aid. Ford has become the first domestic

automaker to accrue a new round of concessions from UAW after its

members agreed to cut compensations. This new deal will save Ford billions

and is expected to set a pattern for GM and Chrysler to follow in the future.

Sociocultural:

In an article found on ezinearticles.com it was discussed that, Ford Motor

Company has its challenges and in order to move forward in today’s society,

substantial changes will need to be made and accepted first. The Ford

Escape Hybrid and Mercury Mariner Hybrid were developed to have its

benefits. Along with a better fuel economy, these vehicles provide tax

credits and go for reasonable prices. Improvement to this process is a main

strategy for Ford Motor Company.

Customers receive many benefits by using a hybrid vehicle for example, they

receive lower insurance premiums in many states, tax credit, and the

capability of using electrical power and the enjoyment of more mileage in

gasoline operated vehicles for less the price. Ford Company Motor closely

follows the legal aspects of environmental scanning for example; they were

the first to receive the Energy Star 2007 Partner of the Year Award in Energy

Management from the Environmental Protection Agency two years in a row

(Brown).

B. Task Environment

There are many forces that drive industry competition; entrants, existing

firms, substitutes, buyers, suppliers, and other stakeholders. These forces

vary from country to country. Each force has been rated high, medium, or

low as it pertains to the United States.

Threat of New Entrants: The threat of new entrants is low for the

automobile industry. In this current economic environment, R&D

dollars are spent in the area of more economical, fuel efficient

vehicles.

Rivalry among Existing Firms: The rivalry among existing firms is high.

Different automotive companies are offering rebates, preferred

financing, and price competitions. Foreign competitors are another

threat to Ford because they are offering more practical and economical

automobile models as well.

Threat of Substitute Products or Services: The threat of substitute

products or services is medium. A customer could choose to purchase

a different car or could choose other means of transportation such as

bus, train, bikes, etc.

Bargaining Power of Buyers: The bargaining power of buyers is high a

lot due to the current economy. Customers are free to shop around to

different cars for lower prices.

Bargaining Power of Suppliers: The bargaining power of suppliers is

low. There are many automobile supply industries. They are

vulnerable to demands of manufacturers and do not have much power.

In these hard economic times, Ford Motor Company must do what is

important to serve its customers, society, and the economy for the current

and future state. Currently the foreign competition could hurt the sales of

Ford Motor vehicles and Ford must think strategically how to handle this

issue. Another issue that could hurt Ford is to have to lay off employees.

This can hurt the Ford image as an employer and a view of a family business.

Currently Ford is not being affected by gas prices as they were this time last

year due to the drop but the future could still pose risks. Ford should

concentrate on their strategy of short-term customer concentration of

customer incentives, quick cash from renegotiating UAW contracts and will

see great benefits in the long-term plan of the EcoBoost Engine.

IV. INTERNAL ENVIRONMENT: STRENGTHS AND WEAKNESSES (SWOT)Corporate Structure:

Ford Motor Company is comprised of two unique businesses. Automotive

Operations provide services and sell vehicles through popular brand names;

Ford, Lincoln, Mercury, Volvo and a portion of Mazda. Ford Credit is the

largest finance company in the world. This distinctive business is devoted to

providing financing and other services to the automotive industry. Over the

years of this business, Ford Motor Company has built up a trusting brand

name. Many people know and chose Ford as their brand of vehicle to drive

and this is what has brought Ford a long way over the years.

Employee opinions and ideas are valued heavily at Ford Motor Company.

Business decisions are made centrally and prioritized based on its impact on

the ability to complete the company’s objective and business processes.

Corporate Culture:

In an article on diversity on mycareer.ford.com, it points out that diversity is

the key ingredient to a well managed company that outperforms in quality

and creativity. Ford Motor Company prides itself on being such a diverse

company. It is a shared belief that is embraced domestically and

internationally. Diversity is received as a competitive advantage and one

that stimulates imagination, broadens talents, and has proven to help serve

customers better. Being diverse is not limited to physical characteristics such

as race, gender, ethnicity, age, disability, or sexual orientation. Diversity

extends to culture, language, opinions, beliefs, experience, education and a

host of others. Ford Motor Company is very compatible with the employees’

diversity of backgrounds.

Corporate Resources:

Marketing

The focus is on providing customer satisfaction and increasing market share.

Ford traditionally uses the cost approach by comparing their vehicle to a

similar vehicle made by its competitor. Advertising during popular events

such as the Superbowl or Olympics, has supported the ability to increase

market share while simultaneously reaching large amount of people. In April

of 2009, Ford Motor Company was the main sponsor for the stadium during

the NCAA Championship games that were broadcasted in Detroit at the Ford

Field Stadium. The media exposure that they received was worth more than

$22.5 million. Ford earned half of that with in-broadcasting exposure during

the game broadcasts. The rest was earned by the announcers, newspapers,

and internet articles according to an article found on

www.calgaryherald.com.

Finance

Ford Motor Company is in a dire financial situation, many key elements that

determine strength are negatively reflected on the Income Statement.

Ending in December of 2008 (in millions):

Net Income $-14,672.0

Operating Income $-13,812 .0

Return on Assets -6.70%

Revenues $146,277.0 (slightly down from $172,316 in 2004)

Despite Ford’s current financial status, the decision not to accept any bail-

out funds or assistance from the government still remains. Ford is a

moderately risky investment with cost reductions and better strategic

alliance with fuel efficient vehicles, Ford can re-establish their market share.

Both the finance company and sales are hurting right now due to the

economy. Ford Motor Company has had to increase interest rates just like

other companies because of the economy. The sales in the automotive

industry have fallen also because of what is being called a recession.

Research and Development

Ford Motor Company is more concerned with actual task performance rather

than the output therefore being process-oriented. By focusing on quality

during product development and manufacturing, vehicle sales have proven

to increase, thus allowing success in the objective of gaining market share.

Employees create and plan product cycles which assist forecasters on how to

approach different markets. Analysts determine new the vehicle productions

and the designers and engineers conclude the needs of the market.

Research and Advanced Vehicle Technology teams decide what new

technologies to develop and implement and Strategic Infrastructure

Engineering provides management for the research and development of new

technologies in an article found in mycareer.ford.com under Product

Development.

Ford’s recent developments include:

Smart Gauge with Eco-Guide- this innovation is a digital instrument

created to teach Ford hybrid drivers how to maximize fuel efficiency.

Electric Power Steering- software-based system that offset drivers

pulling or drifting that may occur due to an uneven road.

Virtual Technology- a combination of motion-capture technology with

human modeling software that assists engineers in analyzing and

redesigning assembly lines; thus reducing physical stress amongst

workers(www.ford.com/innovation).

Ford has also come up with a “Greener Way to Paint Vehicles” according to

an article on Ford.com. The new paint technology used by Ford reduces

greenhouse gases by 15 percent as well as cuts the production costs. This

could save Ford a substantial amount of money per vehicle as well as with

the overall process of painting the vehicles.

Another concern for Ford Motor Company is to re-establish top safety picks

for their vehicles. According to media.ford.com, “the Insurance Institute for

Highway Safety (IIHS) named the 2009 Ford Escape, Mercury Mariner and

their hybrid models as “Top Safety Picks”.” This is very important for Ford to

be able to offer for their customer base. To Ford, high ratings in safety and

fuel efficiency is a way to regaining the customers they once had.

Operations

Core competencies adhere to mass production of automobiles at an

affordable price. The founder of Ford Motor Company, Henry Ford, created

this concept with the birth of an assembly line in the year of 1902. He paid

his workers high wages and sold inexpensive cars, allowing the average

person the ability to own a vehicle. The ability to lower cost permitted the

development of technical and business innovations. Ford Motor Company

continues the legacy of its founder through the use of powertrain control

systems and calibration, which are methods created to provide flawless

drivability.

In addition to the current recession, an increase in the interest of more fuel-

efficient vehicles has caused a reduction in the amount of cars currently

being produced. Many plants are at a halt, waiting to receive word on what

to do next. This is aiding in the increase of costs and decrease of income.

Human Resources

As an area that seeks change agents to assist in the transformation of Ford

Motor Company into a leading consumer business with an automotive focus,

the Human Resources department is dedicated to the company’s objectives

and continuous improvement. This is accomplished in part by providing

company-paid training to new hires and current employees dedicated to

furthering their education.

Although Ford experienced a strike that lasted 99 days due to not meeting

24 needs of its workers, the company has proven the ability to benefit from

negotiating. On March 12, 2009, the United Automobile Workers (UAW) and

Ford’s top management reached an agreement regarding buyout packages

that saves Ford Motor up to $500 million a year (Aguilar).

In an effort to decrease cost, outsourcing has increased. An estimated

30,000 jobs were outsourced to Mexico City in 2008 which was justified by

the need to accommodate development of its new fuel-efficient “global car”

and upgrade two of Mexico’s local warehouses at the expense of $3 million

(Roig-Franzia). Ford Motor Company has announced its inability to meet

profitability, thus more layoffs are to be expected.

Information Systems

Viewed and accepted as Ford’s competitor differentiator, information

systems are of high standards coupled with pride. Primary focus is on

leadership and the ability to utilize reengineering techniques within every

part of the company. Ford works with three groups in order to remain a

leader of innovations; Process and Technology Group (PTG), Application

Development Services (ADS) and Information Technology Infrastructure

Group (ITI).

PTG works individually with each unit to determine particular information

technology needs, ADS are responsible for maintaining and providing

support during the products life cycle, and ITI provides hosting, deskside,

and telecommunication services based on an article found in the Career

Programs section under www.mycareer.ford.com.

V. ANALYSIS OF STRATEGIC FACTORS (SWOT)Situational Analysis (See SFAS within Apendix)

VI. STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY

A. Strategic Alternatives

Retrenchment – Turnaround Strategy

In this type of retrenchment strategy, Ford could make a plan of

transformation and reconstruction to turnaround how this company works.

One step they have already made is to focus on their core brand by selling

off Land Rover and Jaguar to Tata Motors. Closing dealerships is another

option for this strategy. The company has too many dealerships making it

hard to maintain a valuable dealer network. Another reconstruction theory is

to focus more on the “Green” effort of the business. Being in the times

today, hybrid vehicles, the EcoBoost engine, saving greenhouse gases to

paint vehicles can lead to a safer environment.

[Pros] With reconstructing the Ford business, Ford is able to focus more

on the Ford brand and strive to provide excellent customer service and

profitability in the future. By focusing on the economy, this will serve all

areas that are key factors to Ford Motor Company; customers, economy and

company image. Closing some of the Ford dealerships, this will help regain

some of the profits within the company.

[Cons] As any new development for any new type of technology comes

a price of research and development as well as testing. It can be costly to

develop the environmentally safe products, especially when the company is

one of the first to use these new innovations. Closing dealerships could

prove to be a bad idea because of injuring company image. This could cause

workers to be laid off and affect consumers who may have to drive further

distance to reach a dealership.

Stability – Pause/Proceed with Caution Strategy

Through use of this corporate strategy, Ford could make only slight changes

to strategic plans and stay with focusing on the currently developed hybrid

vehicles. This strategy is a temporary pause before a company decides to go

towards growth or retrenchment. Only slight changes are made to until the

situation can improve. Some changes that Ford could make would be hiring

freezes, pay cuts, budget cuts, and cut costs for research and development.

Implementing a temporary hiring freeze would reduce projected labor

budgets. Cutting or reducing other budgets like the marketing budget could

free up money to use for other needs until the economy can pick back up

again. The Ford brand is an established brand so the Ford advertising

department needs to focus more on showing consumers how they can help

in these economic times instead of trying to market the brand. Putting a

temporary hold on research and development on new products would be a

good way to cut costs until the economy can be rebuilt.

[Pros] This strategy could help Ford maintain business without having

to use government funding. Ford would also not have to cut jobs, thus

saving employee morale as well as maintaining the customer’s perception of

the brand. This being a temporary fix, once the economy has been rebuilt,

Ford could choose a better corporate strategy to follow.

[Cons] The sales for Ford Motor Company have already started to

decline. With the dropping sales, this strategy might not prove to be enough

to bring the company through the struggling economy. Putting a hold on

R&D could end up hurting the future strategic plans for Ford because new

development, especially towards a better “Green” technology.

Growth – Horizontal Growth Strategy

This type of growth strategy can be used to grow by expanding its products

into other geographic locations and increase the range of service in the

location areas that Ford has locations in. Ford could expand to countries to

become the automotive leader in the industry. They could also plan on the

possibility of acquiring small companies that produce motor bikes. This

could prove to be a growth opportunity for the company.

[Pros] Expanding into more international locations will reach Ford’s

objective of become more of a global leader within the industry. By joining

the motorcycle industry, Ford Motor Company could produce a brand of

motorcycles that could prove to produce a profitable idea.

[Cons] In expanding and new ideas of new products, cost is always

associated. The cost that would go along with opening new locations as well

as producing motorcycles is too significant to risk.

B. Recommended Strategy

The recommended strategy is the turnaround retrenchment strategy. Ford

Motor Company has already started on implementing this plan by selling

Jaguar and Land Rover to put more focus on their core brand. In their

business plan submitted to Congress, they have proposed that they will have

a 14 percent reduction in dealers since 2005. Ford’s effort in going “Green”

will lead the company to a better future and life for their customers.

This strategy will prove to be the best strategy for Ford Motor Company

because it will allow Ford to serve their customers as they always have with

quality vehicles with a loyal brand name. By restructuring the way Ford does

business, the future of Ford will be brighter because of all the new

innovations to make a better, stronger company. The impact of this

strategy falls right in line with what Ford is looking for to reconstruct their

business and provide their customers with the quality brand everyone knows

and trusts.

VII. IMPLEMENTATION

At Ford, the current state of business calls for immediate and direct business

analysis and action to make sure Ford achieves a financial breakeven point.

Ford has decided as stated above that it is focusing on its core competencies

which will help them a strong and stable position which will improve long-

term performance. The strategic business unit that represents the

corporation in United States, Top Management, and the Board of Directors

should be the responsible for the analysis and implementation of the

recommended strategy. As innovations within improving inefficiencies arise,

new procedures and processes will need to be developed and documented

by the appropriate business units.

Here are several of the overall retrenchment type strategies that Ford has

decided to implement, which is outlined within their business plan submitted

to Congress:

Based on current business planning assumptions, Ford expects both its

overall and its North American Automotive business pre-tax results to

be breakeven or profitable in 2011

Ford provided initial details of an accelerated vehicle electrification

plan for a family of hybrids, plug-in hybrids and battery electric

vehicles.  The plan includes a Ford full battery electric vehicle (BEV) in

a van-type vehicle for commercial fleet use in 2010 and a BEV sedan in

2011

Ford’s plan calls for an investment of approximately $14 billion in the

U.S. on advanced technologies and products to improve fuel efficiency

during the next seven years

Ford said it will sell its corporate aircraft as part of its overall cash

improvement plan

The financially feasible steps, which are based on the information gathered

during this project, are as follows:

Transform leadership: The Top Management of Ford will need to be

evaluated within long term strategic plans.  Ford will have to define those

methods in which resulted in failure and make the decision makers aware

that these things are to be avoided for long term profitability.

Redefining Strategic Focus: Ford has reviewed their portfolio on the basis

of long-term profitability and growth prospects; they determined to go

“green”. The largest piece of Ford’s future strategy is focusing on R&D of

those types of vehicles and reinvest into itself since it is in a very mature

industry.

Selling and Divesting Assets: Ford has already been engaged in selling

off assets such as brand names (Land Rover & Jaguar), corporate jet fleet,

and closing dealerships. Regional dealership evaluations should be done to

determine low or negative profitable locations to see if consolidation or

closing is an option in that area. If the situation worsens lay-offs and more

restructuring may be needed. They need to reduce the scope and focus on

core business needs to get back to black.

Mend and Improve Profitability: Ford has to take extreme steps.

For example:

1. Transfer profit accountability to divisions

2. Acquiring labor saving equipment

3. Restructuring human assets and laying off when needed

4. Tightening finance controls and reducing overhead

No or Careful Acquisitions:  Ford needs focus on its core business and

keep acquisitions on the backburner. Rebuild, restructure, and renew!

VIII. EVALUATION AND CONTROL

A management system could be used to monitor the savings per vehicle for

every new "Green" innovation implemented as well as reporting to monitor

all reconstruction efforts to proceed with their "One Ford" vision. Most

reporting information is based on customer reviews and reports so some

reporting is not timely and is based on quarterly and even yearly reporting.

Ford compares results against other automotive industries both in the U.S.

and in the foreign markets.

Ford has adequate control measures to make sure that the strategic plan

that is chosen is followed and measured appropriately. The automotive

industry already offers awards for quality, service, and good performance as

well as many others every year to many of the different companies.

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Aguilar, Louis. “Union to save Ford $500M”. The Detroit News-detnews.com. 9 April 2009.<http://www.detnews.com/article/20090312/AUTO01/903120359/0/SPECIAL/Union+to+save+Ford+$500M >

Allen, Scott. “Henry Ford - Founder of Ford Motor Company and Assembly Line Innovator”. About.com: Entrepreneurs. 9 April 2009. <http://entrepreneurs.about.com/od/famousentrepreneurs/p/henryford.htm>

Brown, Steven Phillip. "Forces and Trends in Business". EzineArticles.com. 9 April 2009. <http://ezinearticles.com/?Forces-and-Trends-in-Business&id=708724>

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APPENDIX

Exhibit 1 – Board of Directors

Director Position

William Clay Ford Jr. Executive Chairman, Ford Motor Company Internal

Stephen G. Butler Retired Chairman and Chief Executive OfficerKPMG, LLP External

Kimberly Casiano President and Chief Operating OfficerCasiano Communications, Inc. External

Anthony F. Earley, Jr Chairman and CEO of DTE Energy External

Edsel B. Ford II Director and Consultant, Ford Motor Company Internal

William Clay Ford Director Emeritus Internal

Richard A. Gephardt President and CEO of the Gephardt Group External

Irvine O. Hockaday, Jr. Retired President and CEOHallmark Cards Inc. External

Richard A. Manoogian Executive Chairman and Chairman of the BoardMasco Corporation External

Ellen R. Marram President, The Barnegat Group, LLC External

Alan Mulally President and Chief Executive OfficerFord Motor Company

Internal

Homer A. Neal Director, ATLAS Project, Professor of Physics, Interim President Emeritus, and Vice President for Research Emeritus

External

Gerald L. Shaheen Retired Group PresidentCaterpillar Inc.

External

John L. Thornton Professor and Director, Global Leadership Program, Tsinghua University, Beijing, China External

Exhibit 2 - Top Management

William Clay Ford, Jr.Executive Chairman

Alan MulallyPresident and Chief Executive Officer

Michael E. BannisterExecutive Vice President(Chairman & CEO Ford Motor Credit Company)

Lewis W. K. BoothExecutive Vice President and Chief Financial Officer

Mark FieldsExecutive Vice President and PresidentThe Americas

John FlemingExecutive Vice President(Chairman and CEO, Ford of Europe)

John G. ParkerExecutive Vice PresidentAsia Pacific and Africa

Thomas K. BrownGroup Vice PresidentGlobal Purchasing

Susan M. CischkeGroup Vice PresidentSustainability, Environment and Safety Engineering

James D. FarleyGroup Vice PresidentMarketing and Communications and U.S. Marketing, Sales and Service

Felicia J. FieldsGroup Vice PresidentHuman Resources and Corporate Services

Bennie W. FowlerGroupVice PresidentQuality

Joseph R. HinrichsGroup Vice PresidentGlobal Manufacturing

Derrick M. KuzakGroup Vice PresidentGlobal Product Development

David G. LeitchGroup Vice President and General Counsel

J C. MaysGroup Vice PresidentDesign and Chief Creative Officer

Ziad S. OjakliGroup Vice PresidentGovernment and Community Relations

Nicholas J. SmitherGroup Vice President and Chief Information Officer

Peter J. DanielSenior Vice President and Controller

Darryl B. HazelSenior Vice President(President, Customer Service Division)

Joseph BakajVice PresidentProduct Programs & Product Development

Stephen E. BiegunVice PresidentInternational Governmental Affairs

Ken CzubayVice PresidentU.S. Sales & Marketing

Raymond F. DayVice PresidentCommunications

Robert J. GrazianoVice President(Chairman and CEO, Ford Motor China)

Ken MacfarlaneVice President - ManufacturingFord of Europe

Paul A. MascarenasVice PresidentNorth America Engineering

Martin J. MulloyVice PresidentLabor Affairs

Stephen T. OdellVice President(President and Chief Executive Officer, Volvo Cars)

Barb J. SamardzichVice PresidentPowertrain Operations

Neil M. SchlossVice President and Treasurer

Gerhard SchmidtVice PresidentResearch and Advanced Engineeringand Chief Technical Officer

Robert L. ShanksVice President and Controller, The Americas

Philip G. SpenderVice PresidentExecutive Vice President, Mazda Motor Corporation

Ingvar SviggumVice PresidentMarketing, Sales and Service, Ford of Europe

James P. TetreaultVice PresidentNorth America Manufacturing

  STRENGTHS WEAKNESSES

SWOT Matrix (TOWS)

S 1

Brand name

W 1

Financing segmentS 2 Customer loyalty W 2 Falling salesS 3 Quality (Q1) W 3 Too many dealersS 4 Service and parts W 4 Balanced portfolios

OPPORTUNITIES     SO STRATEGIES     WO STRATEGIESIncentives O 1 Introduce product innovations that

improve safety, Re-establish the brand by offering the best automotive value

   Negotiate contracts with UAW for lesser compensations amounts, restructure to offer customers better deals on financing and vehicles.

UAW Contract O 2    EcoBoost engines O 3    K-bag (airbag) O 4    

THREATS     ST STRATEGIES     WT STRATEGIESGas prices

T 1Build competence in hybrid vehicles, Market EcoBoost engine and "Green" technologies

   

Selling off some of the dealerships to use that money to focus more on new innovations

Foreign competitors T 2    Substitute products T 3    Bankruptcy T 4    

  STRENGTHS WEAKNESSES

SWOT Matrix (TOWS)

S 1

Brand name

W 1

Financing segmentS 2 Customer loyalty W 2 Falling salesS 3 Quality (Q1) W 3 Too many dealersS 4 Service and parts W 4 Balanced portfolios

OPPORTUNITIES     SO STRATEGIES     WO STRATEGIESIncentives O 1 Introduce product innovations that

improve safety, Re-establish the brand by offering the best automotive value

   Negotiate contracts with UAW for lesser compensations amounts, restructure to offer customers better deals on financing and vehicles.

UAW Contract O 2    EcoBoost engines O 3    K-bag (airbag) O 4    

THREATS     ST STRATEGIES     WT STRATEGIESGas prices

T 1Build competence in hybrid vehicles, Market EcoBoost engine and "Green" technologies

   

Selling off some of the dealerships to use that money to focus more on new innovations

Foreign competitors T 2    Substitute products T 3    Bankruptcy T 4    

PERIOD ENDINGDec-08 Dec-07 Dec-06 Dec-05

FINANCESIncome Statement

Operating Revenue (Revenue/Sales) 146,277,000 172,455,000 160,123,000 177,089,000

Total Revenues 146,277,000 172,455,000 160,123,000 177,089,000

Cost of Sales 116,644,000 129,519,000 132,350,000 138,222,000

Cost of Sales with Depreciation 128,977,000 143,255,000 148,869,000 144,944,000

Gross Operating Profit 29,633,000 42,936,000 27,773,000 38,867,000

Selling, Gen. & Administrative Expense 21,430,000 21,169,000 19,180,000 24,652,000

Operating Income b/f Depreciation (EBITDA) 8,203,000 21,767,000 8,593,000 14,215,000

Depreciation 12,333,000 13,736,000 16,519,000 6,722,000

Operating Income After Depreciation -4,130,000 8,031,000 -7,926,000 7,493,000

Interest Income * 1,161,000 1,478,000 1,249,000

Earnings from Equity Interest 163,000 389,000 421,000 285,000

Other Income, Net * * * 612,000

Other Special Charges * -2,400,000 -241,000 *

Special Income/Charges * -2,400,000 -241,000 *

All numbers in thousands

Total Income Avail for Interest Expense (EBIT) -3,967,000 7,181,000 -6,268,000 9,639,000

Interest Expense 10,437,000 10,927,000 8,783,000 7,643,000

Pre-tax Income (EBT) -14,404,000 -3,746,000 -15,051,000 1,996,000

Income Taxes 63,000 -1,294,000 -2,646,000 -512,000

Minority Interest 214,000 312,000 210,000 280,000

Income before Income Taxes -14,404,000 -3,746,000 -15,051,000 1,996,000

Net Income from Continuing Operations -14,681,000 -2,764,000 -12,615,000 2,228,000

Net Income from Discontinued Ops. 9,000 41,000 2,000 47,000

Net Income from Total Operations -14,672,000 -2,723,000 -12,613,000 2,275,000

Income from Cum. Effect of Acct Chg * * * -251,000

Total Net Income -14,672,000 -2,723,000 -12,613,000 2,024,000

Normalized Income -14,681,000 -364,000 -12,374,000 2,228,000

Net Income Available for Common -14,681,000 -2,764,000 -12,615,000 2,228,000

Income Statement - Year-to-DateRevenues Year-to-Date 146,277,000 172,455,000 160,123,000 177,089,000

Income Year-to-Date fr. Total Ops. -14,672,000 -2,723,000 -12,613,000 2,275,000

PERIOD ENDINGDec-08 Dec-07 Dec-06 Dec-05

Balance Sheet - Assets

Cash and Equivalents 22,049,000 35,283,000 28,894,000 31,499,000

Marketable Securities 17,411,000 15,515,000 26,728,000 11,044,000

Accounts Receivable 93,484,000 109,053,000 106,863,000 *

Other Receivable 6,073,000 8,210,000 8,772,000 114,497,000

Receivables 99,557,000 117,263,000 115,635,000 114,497,000

Raw Materials 3,016,000 4,360,000 4,604,000 4,056,000

Finished Goods 6,493,000 6,861,000 7,989,000 7,224,000

Inventories Adjustments & Allowances -891,000 -1,100,000 -1,015,000 -1,009,000

Inventories 8,618,000 10,121,000 11,578,000 10,271,000

Current Deferred Income Taxes * * * 5,881,000

Other Current Assets * * * 26,950,000

Total Current Assets 147,635,000 178,182,000 182,835,000 200,142,000

Land & Improvements 579,000 764,000 820,000 697,000

Building & Improvements 12,560,000 14,402,000 13,803,000 12,833,000

Machinery, Furniture & Equipment 43,633,000 45,303,000 59,824,000 45,680,000

Construction in Progress 1,355,000 2,031,000 2,307,000 2,736,000

Other Fixed Assets 8,675,000 10,300,000 269,000 11,378,000

Total Fixed Assets 66,802,000 72,800,000 77,023,000 73,324,000

Gross Fixed Assets (Plant, Prop. & Equip.) 66,802,000 72,800,000 77,023,000 73,324,000

Accumulated Depreciation & Depletion 38,237,000 36,561,000 38,518,000 32,617,000

Net Fixed Assets (Net PP&E) 28,565,000 36,239,000 38,505,000 40,707,000

Intangibles * * 1,098,000 5,945,000

Cost in Excess 1,593,000 2,069,000 5,839,000 *

Non-Current Deferred Income Taxes 3,108,000 3,500,000 4,950,000 *

Other Non-Current Assets 37,427,000 59,274,000 45,327,000 22,682,000

Total Non-Current Assets 70,693,000 101,082,000 95,719,000 69,334,000

Total Assets 218,328,000 279,264,000 278,554,000 269,476,000

Balance Sheet - Liabilities, Stockholders Equity

Accounts Payable 14,772,000 20,832,000 23,549,000 22,813,000

Short Term Debt 63,662,000 28,275,000 27,676,000 *

Accrued Liabilities 28,728,000 23,579,000 24,287,000 72,977,000

Deferred Revenues 3,667,000 4,093,000 4,708,000 *

Total Current Liabilities 110,829,000 76,779,000 80,220,000 95,790,000

Long Term Debt 90,534,000 140,255,000 144,373,000 154,332,000

Deferred Income Taxes 2,035,000 3,034,000 2,744,000 5,275,000

Other Non-Current Liabilities 31,046,000 52,147,000 53,523,000 *

Minority Interest 1,195,000 1,421,000 1,159,000 1,122,000

Total Non-Current Liabilities 124,810,000 196,857,000 201,799,000 160,729,000

Total Liabilities 235,639,000 273,636,000 282,019,000 256,519,000

Common Stock Equity -17,311,000 5,628,000 -3,465,000 12,957,000

Common Par 24,000 22,000 19,000 19,000

Additional Paid In Capital 9,076,000 7,834,000 4,562,000 4,872,000

Retained Earnings -16,145,000 -1,485,000 -17,000 12,461,000

Treasury Stock -181,000 -185,000 -183,000 -833,000

Other Equity Adjustments -10,085,000 -558,000 -7,846,000 -3,562,000

Total Capitalization 73,223,000 145,883,000 140,908,000 167,289,000

Total Equity -17,311,000 5,628,000 -3,465,000 12,957,000

Total Liabilities & Stock Equity 218,328,000 279,264,000 278,554,000 269,476,000

Cash Flow -2,339,000 11,013,000 3,906,000 8,997,000

Working Capital 36,806,000 101,403,000 102,615,000 104,352,000

Free Cash Flow -34,000 12,286,000 -57,442,000 11,393,000

Invested Capital 73,223,000 145,883,000 140,908,000 167,289,000

PERIOD ENDING

Dec-08 Dec-07 Dec-06 Dec-05

Cash Flow From Operating Activities

Net Income (Loss)

-14,672,000 -2,723,000

-12,613,000 2,228,000

Depreciation 12,826,000 13,052,000 16,453,000 6,667,000

Amortization -592,000 578,000 * *

Amortization of Intangibles 99,000 106,000 66,000 55,000

Deferred Income Taxes 1,954,000 -5,477,000 * 787,000

Operating (Gains) Losses 1,332,000 1,524,000 101,000 6,720,000

(Increase) Decrease in Receivables 1,091,000 45,000 2,221,000 -1,058,000

(Increase) Decrease in Inventories -358,000 371,000 -695,000 -76,000

(Increase) Decrease in Payables

-12,647,000 1,348,000 6,553,000 -347,000

(Increase) Decrease in Other Curr Liabs. * * * -629,000

(Increase) Decrease in Other Working Capital 3,689,000 4,539,000 -9,271,000 473,000

Other Non-Cash Items 7,108,000 3,752,000 6,796,000 6,854,000

Net Cash from Continuing Operations -170,000 17,115,000 9,611,000 21,674,000

Net Cash from Discontinued Operations -9,000 -17,000 * 5,000

Net Cash from Operating Activities -179,000 17,098,000 9,611,000 21,679,000

Sale of Property, Plant, * * 5,120,000 7,937,000

Equipment

Sale of Short Term Investments 62,046,000 18,660,000 18,456,000 6,154,000

Purchase of Property, Plant, Equipment -6,696,000 -6,022,000 -6,848,000 -7,517,000

Acquisitions 6,841,000 1,210,000-

59,737,000 -2,031,000

Purchase of Short Term Investments

-64,754,000

-11,423,000

-23,678,000 -6,278,000

Other Investing Changes Net 348,000 -8,825,000 41,823,000 9,192,000

Cash from Disc. Investing Activities -928,000 -83,000 * *

Net Cash from Investing Activities -3,143,000 -6,483,000

-24,864,000 7,457,000

Issuance of Debt 42,163,000 34,032,000 58,258,000 24,559,000

Issuance of Capital Stock 756,000 250,000 431,000 325,000

Repayment of Debt

-51,419,000

-39,431,000

-42,426,000

-44,671,000

Repurchase of Capital Stock * -31,000 -183,000 *

Payment of Cash Dividends * * -468,000 -738,000

Other Financing Charges, Net -604,000 -62,000 -339,000 -126,000

Net Cash from Financing Activities -9,104,000 -5,242,000 15,273,000

-20,651,000

Effect of Exchange Rate Changes -808,000 1,014,000 464,000 -496,000

Net Change in Cash & Cash

-13,234,000 6,387,000 484,000 7,989,000

Equivalents

Cash at Beginning of Period 35,283,000 28,896,000 28,410,000 23,510,000

Cash at End of Period 22,049,000 35,283,000 28,894,000 31,499,000

Foreign Sales 67,136,000 91,581,000 78,968,000 80,325,000

Domestic Sales 62,030,000 80,874,000 81,155,000 96,764,000

Auditor's Report (Aud. Name & Aud. Op.) UQ UQ UQ UQ

* = Data not available