Wednesday, May 06, 2009

Ford's interesting strategic success

What has Ford been doing right recently? While most of the automotive news has been about the poor prospects for the American auto industry with the current severe recession, the focus has been on Chrysler with some news of General Motor's plans for restructuring. Ford has been quietly chugging along, selling fewer vehicles than in previous years, but not taking reductions in sales as bad as most automotive companies worldwide. While Chrysler is on life support and is being taken over by Italian Fiat and the Federal Government and General Motors does not yet seem to have decided what kind of automotive company it will be beyond just "Much Smaller", Ford has pushed past Toyota this year to regain its position as the second largest car company in America.

Roland Jones of MSNBC has a good story that explains what has given Ford its strength in this current severe bear market. It comes down to the fact that they went into this recession in a very good cash position (must not have been suckered into borrowing big bucks by fee-happy Wall Street bankers who just want to line their own pockets) and have an extremely competitive attractive and fuel-efficient product line.

Both advantages are the direct result of far-sighted top strategic managers who observed the trends and prepared Ford to ride the right ones. They built on their strong points and protected their weak ones. They built on existing models, developing models like the Ford fusion and Mercury which are at the top of the automotive pack for fuel efficiency, stylish and comfortable to passengers without spending too much, and at the same time built up a strong cash position back before the irresponsible over sized banks went south and brought down the world financial markets. Now, when the market is headed down for automakers worldwide, Ford is in the process of gaining market share from its less-prepared rivals such as GM, Chrysler and Toyota.

All is not rosy, however. Jones sees a somewhat difficult possible future since Ford is "counting on a significant recovery in sales at the end of this year" while analysts anticipate the actual numbers will be significantly lower than Ford's apparent expectations. That may well be the case, but considering Ford's successes at preparing for the current economic downturn better than almost any other car maker, what do you want to bet that Ford's strategic managers are prepared to ride out lower-than-publicly-anticipated sales better than their rivals?

This article at MSNBC is quite interesting. I am not an automotive analyst so I am summarizing what Jones wrote, But I wonder how many other worldwide automakers are doing better than the others as Ford seems to be? Is Fiat, for example, really doing better than most, or are they expanding world-wide and biting off more than they can chew? And who else is doing well?Anyone? It seems very probably that the world wide automotive industry very soon will look quite different from what it has and the broad outlines of that new industry are just now coming into focus. Right now it looks like Ford will be one of the leaders in that new industry.

No comments: