Ford vs Toyota

Ford vs. Toyota Presented by : Group No 8 Anirudh G

18

Shruti Jain

27

Gopalakrishnan

28

History of Ford Motor Company  Henry Ford's first started with a company named Henry Ford Company on November 3, 1901, which became the Cadillac Motor Company on August 22, 1902, after Ford left with the rights to his name  Ford Motor Company was established by Henry Ford on June 16, 1903 which is now the world's fifth largest automaker based on vehicle sales  1908: Henry T was a historic model which revolutionised the automobile manufacturing industry  1930: Ford introduced the Model A, the first car with safety glass in the windshield and in 1932, Ford launched the first low priced V8 engine powered car  The Ford Mustang was introduced in 1964 followed by introducing seat belt reminder alert in 1965

 It is also one of the largest family-controlled companies in the world, which has been under continuous family control for over 100 years

History of TOYOTA Motor Company  Established by a Japanese automaker Kiichiro Toyoda in 1937, is headquartered in Toyota city, and currently is the eleventh largest company in the world by revenue  Toyota was started in 1933 as a division of Toyoda Automatic Loom Works devoted to the production of automobiles under the direction of the Kiichiro Toyoda  Its first vehicles were the A1 passenger car and the G1 in 1935

Introduced small sized cars under brand name ‘ Toyopet’ Entered the American Automobile market in 1957 with Crown – initial failure due to lower acceptance

 In 1982, the Toyota Motor Company and Toyota Motor Sales merged into one company, the Toyota Motor Corporation In 2012, it was the largest automobile manufacturer in terms of production and eleventh largest company in the world by revenue

FORD’s AcquisitiOns, DivestituRes, stRAtegic AlliAnces  Ford once owned 5 luxury brands – Mercury(1938), Jaguar(1989), Aston Martin(1994), Volvo(1999) and Land Rover(2000) but now it encompasses only two brands Ford and Lincoln with total asset worth of 196bn  Jaguar and Land Rover were sold to Tata Motors in March 2008

 It is spread across North America, Europe, Asia Pacific, South America, Africa and Middle East

Ford has produced trucks since 1908, also involved in the manufacturing of tractors, buses  Also offers automotive finance, sells aftermarket parts and recently acquired Software Company Livio to Further Advance In-Car Connectivity Leadership  Internationalization through strategic alliance with Mazda, Japanese manufacturer to counter competition from other Japanese companies and to learn about quality production and other technological information

tOYOtA’s mAjOR AcquisitiOns AnD stRAtegic AlliAnces 

Toyota brands include Scion, Daihatsu and Lexus forming a part of the Toyota Group

 Acquired Hino in 1967 which is a manufacturer of diesel trucks, buses 

They also own a stake of 16.7% of Fuji Heavy Industries(engine technology) and 5.9% of Isuzu Motors Ltd (diesel technology)

  Toyota also established a commercial dealership called Toyota Diesel Shop from 1957 until 1988, that sold various commercial platform trucks, buses, and forklifts 

A JV with GM in 1982 , New United Motor Manufacturing, Inc. (NUMMI) , which eventually ended in 2009

 In 2002, Toyota managed to enter a Formula One works team and establish joint ventures with French motoring companies Citroën and Peugeot

Related Diversification strategies Ford Motor Company

FORD Acquired automobile companies – Lincoln

TOYOTA

Manufactured Trucks, tractors, buses

Automotive Finance

Acquired S/w Company Livio to Advance car technology

Toyoda Automatic Loom Works

Toyota Motor Company

Acquired automobile companies – Scion & Lexus

Manufactured diesel Trucks, buses

Toyota Financial Services

Stakes in companies that have superior engine and diesel technology

Vertical/HORIZONTAL Integration of FORD  Ford through its ONE Ford Plan has tried to implement its growth and renewal strategies  In order to reduce the inventory costs, Ford motor company integrated both forward and backward to become its own supplier as well as distributor  Horizontal integration by means of collaborating with companies in the same business such as Aston Martin, Jaguar and the like

Vertical Integration of TOYOTA  Toyota on the other hand is also vertically integrated in both the directions but without full ownership  Toyota rigorously screens its suppliers for quality and financial health, and then spends time and money to ensure their efficiency and survival by taking minority stakes  It is to create a supply chain with the stability and efficiency of vertical integration but with some of the flexibility of looser networks of suppliers  This approach is also cheaper than the traditional vertical method of owning suppliers outright, a virtue at a time when cash and credit are rare

Creating Corporate Advantage

Corporate strategies FORD’s business strategy is their ONE Ford plan, wherein they would,

 Aggressively restructure to operate profitably at the current demand

 Accelerate development of products as per customer needs

new

 Work together effectively as one team  The company has a specialized set of resources that compete in a narrower range of business i.e. automobiles

Toyota's

corporate encompassed by :

strategy

is

 Specialized resources working for an organization wherein the focus is not on diversifying the portfolio but on quality production  Adding value to the organization by developing its people  Recognizing that continuously solving root problems drives organizational learning

The corporate advantage of these companies lies in the tight fit among the resources, businesses and the organization

1. Alliances for Market access: Market Entry Alliances in developing countries such as India and Pakistan 2. Global leverage alliances: For acquiring Diesel technology know how, Robert Bosch(injection technologies), Fiat for efficient diesel engines and Volkswagen for higher range diesel engines 3. Component sourcing alliance with DENSO, GM, VW

Sustainability : Roadmap to future Ford through its One Ford plan strategy is building capabilities for sustainability such as:

Toyota through its Toyota way strategy is building capabilities for sustainability such as:

 Delivering high quality vehicles

Commitment to quality

 Working towards profitable growth for all

Exceed expectations of customers

 Exploring solutions to the changing transportation landscape

Constant innovation in the products being offered Future of mobility

 Making affordable fuel technologies available to everyone

Safest and most responsible way of moving people

 And finally ONE Ford, one team And challenging goals

Ford – A Dynamic View Perspective Competitive Strategy Analysis and Comparison using the Dynamic View Framework Business Under Consideration: Automobile Manufacturing of Ford

RESOURCE ENDOWMENTS

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RESOURCE COMMITMENTS

Human Resources Platform optimization Cash Flows Technology New Capability Development

 Focus on core competencies  One Ford One IT synergy  Newer facilities  Top Management commitment

Platform optimization keeping in mind external environment changes

ACTIVITIES

Offering One Car to the World

Ford – Competitive Strategy Analysis 

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ONE FORD Strategy 

Focus on core-competencies – restructuring to operate profitably – changing external environment

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Conceiving products that customer wishes to own – co-creation

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Financial improvements – stronger balance sheet

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Teamwork – One Ford –One Team – One Plan – One Goal

Strategic Approach : Single Global Approach 

Concept of World Car

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One product for multiple markets approach

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Capability brought in through CEO’s experience from Boeing

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Geographic scope expansion: 1/3rd revenues from emerging Asia-Pacific African region by 2020

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Building ‘Great Products’, ‘Strong Business’ & ‘Better World – through sustainability’

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Competitive Positioning: 

Low-Cost Leadership through platform consolidation

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Aided by global scale and efficiency – ‘Hub and Satellite’ Approach

Resources 

Global Management Team

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Technically driven human resource with top management commitment

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Synergy of One Ford Strategy with One IT – centralized IT department

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Value chain partners – creation of synergies

Capabilities 

Efficient platform optimization at a global level – from 27 to 9 core platforms globally (2007-2014)

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Product design – dedicated design studios for cars such as Lincoln

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Sourcing through common suppliers – consolidation efforts

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Enterprise data consolidation – building newer facilities – upping assembly line speed

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Flexibility – retooling operations – volume flexibility to meet the external environment changes

Distinctive competency 

Concentration on core brands – Strategic alliances and global supply network – unmatched

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Cars engineered to accept full technology range – meeting unique customer preferences

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Cost efficiency going hand-in-hand with revenue enhancement

Toyota – A Dynamic View Perspective Competitive Strategy Analysis and Comparison using the Dynamic View Framework Business Under Consideration: Automobile Manufacturing of Toyota

RESOURCE ENDOWMENTS

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RESOURCE COMMITMENTS

Toyota Global Vision TNGA Efficient Human Resource Technology

ACTIVITIES

 Employee stability  TPS  Supply Chain  Efficiency relationship improvement

New Capability Development

Continuous Quality improvement for Sustainability

Toyota – Competitive Strategy Analysis 

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Toyota Global Vision 

Medium – long term initiative: Refine corporate culture – joint ventures with companies

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Monozukuri - conscientious marketing

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Emerging Markets concentration – meeting local needs – product design keeping local needs in mind

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Reforming of Car development structure – Toyota New Global Architecture (TNGA)

Toyota New Global Architecture (TNGA) 

Enhances Toyota’s international competitiveness

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Foundation of grouping development  improving efficiency

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Competitive Positioning 

Cost-leadership strategy achieved through process differentiation

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Economies of scale – TNGA – bringing technologies together – standardization across value chain activities

Resources 

Empowered human resource – high level of employee stability and loyalty

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Coordination and cooperation – supply chain partners

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JIT inventory system – expertise in robotic technology

Capabilities 

Toyota Production System – capability to competitive advantage

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Improvements in processes – employee contributions : 10 per employee per year (99% implementation)

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Extended partner relationships and development of exceptional teams and leaders in-house

Distinctive competency 

Lean Manufacturing – Long term sustenance

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Higher value creation through well-designed products with cost-price balance

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Robust Human Resource philosophy in line with overall organization philosophy

Analysis through the 7S Framework STRATEGY

Ford     

Low – Cost strategy through activities that offer economies of scale and scope Product offerings that cater to global markets – One product for the world Reinvesting Savings – to better manage the platforms and strive towards greater efficiency Focus on profitability driving brands – restructuring to operate at greater profitability Strengthening bottom line and balance sheet

Toyota  Differentiated process – reforming production technology based on the Toyota New Global Architecture (TNGA)  Business unit optimization will be under the purview of the individual SBU  Research and production to engage in face-to-face interaction – transforming the activities to serve the markets  Developing better cars – location dependent perception – design and development specifically catering to those markets

STRUCTURE

Ford  Centralized Leadership structure with decentralized policy implementation  Integrated global structure – from a regionally focused structure  Hub and satellite approach – coordination from regional centers – maintaining the overall DNA of Ford

Toyota  Automotive business : 4 SBUs – Toyota No:1 for developed markets, Toyota No:2 for emerging markets  Empowered manager decision making – genchi genbutsu – on-site and hands-on experience  TNGA planning – medium to long term product strategies & Product and Business planning – marketbased product strategies  Lexus international unit – a separate unit – establishing it as a Japanese brand globally

SYSTEMS

Ford  Scorecards to track performance – part of the annual business planning process  Compensation levers: a. Individual goals and performance evaluation b. Company wide progress and annual targets  Weekly Business plan review at the corporate level – sustainability scorecard  Adoption of management systems – adhering to standards – both at the corporate and supplier level

Toyota    

Toyota Production System – TPS - problem solving solution Continuous process flow – standardized systems and processed – with employee empowerment Consensus based decision making – relentless reflection and continuous improvement Competitive position when it comes to human resource management

STAFFING

Ford  Employees from diverse backgrounds – integrating people processes into ONE FORD  Career Management: Pulse process survey – candid feedback from employees to be incorporated into business planning review  Inclusion- major factor for workforce recruitment at each level in the organization  Skill based recruitment – with employees aligned with the overarching organization strategy

Toyota  Staff viewed as ‘Knowledge workers’ – ideation from shop floor to boardrooms  Quality People value stream model – selecting the right people  Fosters contradictory viewpoints as a deliberate attempt to enable employees find solutions for business problems  Recruitment aligned with organization strategy

SKILLS

Ford  Employees from diverse backgrounds – integrating people processes into ONE FORD  Career Management: Pulse process survey – candid feedback from employees to be incorporated into business planning review  Inclusion- major factor for workforce recruitment at each level in the organization  Skill based recruitment – with employees aligned with the overarching organization strategy

Toyota  Robust production process with expertise in hybrid vehicle design and development  Operational efficiency – globally standardized with increased employee involvement  Supply chain management – receiving benefits of specialized suppliers

STYLE

Ford  Alan Mullaly – CEO – Visionary leadership style – taking the external environment into consideration  ‘No-Fail’ Attitude – motivation across the organization - focus driven  Change Management – not just people but also cars – expertise in turning a company around

Toyota  Management practices – transitioning from Japanese style to a more westernized style – coping with the changes in the global scenario  Traditional slow response – to faster response – change in leadership as board members from diverse backgrounds were appointed  Importance towards corporate governance increasing – global organization

SHARED VALUES

Ford  Community initiatives: SUMURR – catering to rural citizens as a part of community engagement  Driving Skills for Life – Ford’s vision of safety and standards communicated to young drivers – in line with organization  Water conservation – refining the value chain – adding value to the community at the same time eliminating loss of value from the corporate’s perspective  Cluster engagement – Operation Goodwill – empowerment, training and sustainable development

Toyota  Contribution through sustained development – societal enrichment – environment, traffic safety, education and culture  Low-carbon society establishment – recycle based – battery-to-battery recycling  Environmental education – Forest of Toyota and Shirakawa Go-Eco intitute

Strategic Challenges - Ford 

Recessionary conditions in Europe

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Europe is a big part of Ford's business, and lately it has been losing a ton of money

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Recessions in Europe have clobbered new-car sales: They're now at lows not seen in 20 years, and they may fall further before things start to improve

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Product / Technology Challenges

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Quality issues related to Ford's complicated in-vehicle technologies newer technologies associated with Sync and MyFordTouch

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Ford has also experienced bugs with its touch screen technology and glitches in MyFordTouch

Strategic Challenges - Ford

Leadership Challenge

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Alan Mullaly is likely to quit by end of 2013 or beginning of 2014

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So, sustaining the transformations and leadership activities done by Mullaly in terms of the culture or strategies such as ‘One Ford’ strategy will be the biggest challenge faced by Ford

Strategic Recommendations for Ford 

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Green Vehicles  Due to increased emphasis on the manufacturing of eco-friendly cars, it has become important for every car maker to make more fuel efficient cars and emit less smoke  Honda’s Civic GX is a green car and won the title of greenest car of 2011 from American Council  Ford has taken initiative with the production of Fiesta SFE but it should produce more eco-friendly cars in alignment with the Ford’s sustainability strategy Pricing  Small world cars intended to be sold in developing markets which are price sensitive  Produce cars which are not only better in terms of features, performance, fuel efficiency but also in terms of low pricing

Strategic Recommendations for Ford Innovation

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Main competitors are Toyota, Honda offering products that are low priced, nice features

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Ford should invest more in R & D and focus on removing the glitches from the existing software

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It should focus on improving the design of the vehicles

Strategic Challenges - Toyota Geographic Challenges

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North America accounts for about a fourth of Toyota’s sales but because of the weakening of the macroeconomic environment caused by fiscal cliff, global sales may drop. Also, competitors like Ford and Honda coming up with new hybrid and refreshed models

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Sales in Japan accounts for 30% of the total sales volume

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But due to natural calamities like earthquake, tsunami in 2011, the government provided tax incentives to buy cars. So, buyers rushed to purchase new vehicles before the subsidies ended in September. With its expiry, the market is expected to fall by 20%

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In China, due to anti-Japanese backlash, Japanese automakers have suffered

Strategic Challenges - Toyota

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Toyota’s value proposition has been built upon quality and reliability. Its culture, defined by the Toyota Production System, completely supports that value proposition.

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It has set the standard for quality and reliability in its industry and rose to the top on these core competencies.

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Operational effectiveness of Toyota has been matched by its competitors in terms of quality and reliability

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Now it must develop new competencies in design, innovation, and customer engagement to remain the industry leader.

Strategic Challenges - Toyota Regulatory Challenges (Government)

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There are stricter government regulations on safety, emissions and fuel consumption, and rising customer demand for vehicles with “green” and luxury features

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So, cars are becoming increasingly sophisticated both in terms of how they are designed and how they are manufactured

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This has led to growing technical complexity of today’s vehicles

Strategic Recommendations - Toyota Eco-friendly cars

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One of the most powerful and reliable products that Toyota has is the Hybrid cars, which helped the company to recover from it crisis.

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So Toyota should meet the demand on the environmental cars by finding new and creative environment friendly cars such as the electric car. Geographic recommendations

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Toyota went to its first loss in its operating income in its life due to the mortgage crisis in the United State.

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The company was obviously affected very badly by a crisis that happened in one country.

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Toyota shouldn’t focus in one market and neglect other important and rapidly growing markets such as China, India

Strategic Recommendations - Toyota Organization Structure

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Decentralized structure is a good structure for Toyota. It can bring more coordination within the organization, having more effective communication among head managers, division managers and employees

Resolving cultural mismatch

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There are issues due to the culture mismatch between companies in America and Japan

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Toyota Japan, a high-context company, needs to have training for American executives, so they can be aware of difference between two cultures and understand Japan's collective culture