Research Report: Ford Motor Company (Research Paper Sample)

Research Report: Ford Motor Company Student’s Name Affiliation IMGT3650: Introduction to International Management Instructor April 8, 2023 Ford Motor Company Introduction Ford Motor Company is an American multinational automobile manufacturer headquartered in Dearborn, Michigan, United States. Henry Ford, the company’s founder, developed his first experimental car, the Model A, in 1896 behind his home in Detroit. In 1903, Ford Motor Company was incorporated with Henry Ford and twelve other investors (notably Johan and Horace Dodge, who would later found their own automobile company) as the directors (Ford Motor Company, 2021). During its early years, the company produced just a few cars a day at its Mack Avenue Factory. However, the introduction of the Model T in 1908 completely changed the company’s prospects. The car experienced high demand, leading the company to expand and develop large-scale vehicle manufacturing methods. In 1911, Henry Ford established a branch production plant in Kansas City, Missouri, the first in the U.S. automobile industry. This was soon followed by an overseas branch, established in 1912 in Walkerville, Canada. In 1913, Ford built the first moving assembly line for cars in which parts at one end were turned into finished cars at the other. The assembly line was revolutionary; it enabled the production of cheap, easy-to-drive cars. By 1923, Ford was producing nearly half of the automobiles on American Roads, and by 1927, the company had more than twenty overseas assembly branches in Europe, Asia, and Latin America. By the end of the 1920s, Ford had established itself as one of the leading global car automakers. The company went public in 1956, although the Ford family retained majority voting rights (Ford Motor Company, 2021). The Ford Motor Company is not only one of the world’s industrial icons but is also one of the most successful examples of family-owned businesses. William Clay Ford Jr., Henry Ford’s great-grandson, is the current Chairman of the company’s Board of Directors, while Jim Farley serves as the current Chief Executive Officer (CEO). Today, Ford is the second-largest automobile company in the United States (behind General Motors) and the world’s fifth-largest automaker. With a revenue of $44 billion and over 186,000 employees globally, Ford is one of the world’s largest and most profitable companies (Ford Motor Company, 2021). The company sells vehicles under two brands: commercial vehicles and automobiles under the Ford brand and luxury cars under the Lincoln brand. It produces over 50 different car models, including hatchbacks (Focus, Fiesta, Figo, and Ka), sedans (Figo, Escort, Taurus, and Mondeo), Sports Utility Vehicles or SUVs (Edge, Bronco, Bronco Sport, Escape, Equator, Eco Sport, Evos, Expedition, Everest, Kuga, Territory, Explorer, Puma, and Mustang Mach-E), pickup trucks (Ranger, Maverick, F-series, and Transit), minivans and vans (S-Max, Galaxy, Transit Courier, E-Series, Transit Custom, and Transit Connect) and heavy commercial vehicles (F-series, F-Max, and Super Duty) (Ford Motor Company, 2021). Given the global consumer shift to electric and hybrid vehicles, Ford started electrifying some of its iconic products; the F-150, Mustang, and Transit. In 2022, Ford started the construction of a $5.6 billion, 3,600-acre mega-complex in Stanton, Tennessee, United States, that will be fully dedicated to the production of electric vehicles (Ford Motor Company, 2021). Besides manufacturing and selling motor vehicles, Ford ventured into the financial services sector in 1959 when it established the Ford Motor Credit Company. Ford Credit, a wholly-owned subsidiary of Ford Motor Company, provides a wide variety of automotive financing to its customers and dealers. Ford has manufacturing operations worldwide with a presence in over 125 countries. International Operations Ford Motor Company has an extensive international operation spanning five continents and 125 countries. Its international expansion strategies include direct investments (Greenfield investments), joint ventures, and acquisitions. In North America, Ford is present in Canada and Mexico; in Europe, it is present in Germany, United Kingdom, Romania, Turkey, and Spain; in Asia, it is present in China, India, Taiwan, and the Philippines; in South America, it has operations in Brazil, Argentina, and Venezuela; and in Africa, it is present in South Africa (Ford Motor Company, 2021). The table below presents a summary of Ford’s international operations. Country Year Established Form of Ownership Operations Europe   Germany 1925 Wholly-owned subsidiary Ford-Werke GmbH operates two large manufacturing facilities; one in Cologne and another in Saarlouis. The company also operates a research center in Aachen. United Kingdom 1909 Wholly-owned subsidiary Ford of Britain operates two major manufacturing sites in the UK; in Dagenham (diesel engine production) and Halewood (transmissions). Ford also operates a research and development facility in Dunton, Essex. Spain 1976 Wholly-owned subsidiary Ford Valencia Body and Assembly located in Almussafes, Valencia assembles Ford vehicles using imported parts. Romania 1935 Wholly-owned subsidiary Ford acquired Daewoo Automobile Romania from the Romanian government in 2008. The factory, located in Craiova, was acquired by Ford Otosan (Turkey) in July 2022. Turkey 1977 Joint venture Ford Otosan is the principal global producer of Transit and Transit Connect brands. It operates 5 facilities in Turkey, producing vehicles, engines, powertrains, and gearboxes. North America   Canada 1904 Wholly-owned subsidiary Ford of Canada is based in Oakville, Ontario. It assembles and manufacturers Ford vehicles and engines. Ford of Canada acquired Ford patent rights and selling privileges to all parts of the British Empire except Great Britain and Ireland Mexico 1964 Wholly-owned subsidiary The Cuautitlán Stamping and Assembly Plant manufactures the Mustang Mach-E (including the EV version) for global markets, including the United States. Asia   China 2012 Joint venture Changan Ford manufactures Ford passenger cars for the Chinese market. Ford also runs a joint venture with Jiangling Motors. Taiwan 1972 Wholly-owned subsidiary Ford Lio Ho Motor manufacturers and is the primary dealer of all Ford vehicles in Taiwan. South America   Argentina 1961 Wholly-owned subsidiary Ford Argentina S.C.A runs the General Pacheco Assembly Plant in Buenos Aires. The plant produces the Ranger pickup truck. Venezuela 1962 Wholly-owned subsidiary The Valencia Assembly assembles the Fiesta and Explorer Africa   South Africa 1967 Partially-owned subsidiary Ford Southern African operates two plants. The Silverton plant in Pretoria assembles the Ranger and Everest while the Struandale plant in Port Elizabeth manufactures engines. Analysis The Ford Motor Company has had over 100 years of success. It survived the two World Wars, the Great Depression, the 2008 global financial crises, and, most recently, the COVID-19 pandemic. From its early years, Ford grew exponentially to become a massive corporation with global interests and a healthy chunk of both local and international markets. In FY2022, it recorded a revenue of $158 billion from the sale of 4.2 million vehicles worldwide, a 15.95 percent increase from the previous year. As of March 2023, Ford had a market capitalization of $45.88, making it one of the world’s most valuable companies. Ford owes much of its success to innovation and geographical diversification (internalization). Over its long and rich history, it has created many new car models, the company has played a part in the creation of new industries and new methods of production. For example, in 1913, Ford created the first ever moving automobile assembly line enabling cars to be produced at a much faster pace and also introduced safety belts into vehicles in 1979 (Snow, 2013). In recent years, Ford has ventured into the production of electric and hybrid vehicles, autonomous vehicles, and mobility solutions (Ford Motor Company, 2021). Geographical diversification has also played a critical role in Ford’s success. Unlike many automobile companies that rely on their home markets to generate most of their sales, Ford has a more diversified revenue stream, making it less susceptible to economic, political, and demographic risks than its rivals. Ford has a major impact in the countries it operates. It spurs the local economies through its investments, creation of thousands of jobs, business support (through local supply chains), and drives social change through its corporate social responsibility (CSR) programs. Despite its tremendous success, Ford Motor Company has faced numerous challenges, criticisms, and controversies, including financial difficulties, failed products, failed businesses and acquisitions, worker exploitation claims, and environmental sustainability issues (Mattera, 2015). One of its major product failures was the Ford Pinto. The car had a substandard fuel tank that raptured in rear-impact collisions, causing fires and the deaths of hundreds of people (Lee, 2017). Regarding failed businesses, the company has invested billions of dollars in different countries only to exit the countries after several years. Some of the countries where Ford has discontinued operations include Indonesia (2016), Japan (2016), Oceania, that is, Australia and New Zealand (2016), Malaysia (1980), Belgium (2010), and Brazil (2021). In 2022, Ford lost $2.2 billion as it wrote off investments in Rivian, an electric truck maker, and Argo Ai, an autonomous vehicle producer (Rosevear, 2023). However...