Assignment On Strategic Management

Anoop Koshy IV Sem MBA MIIM

Ford India in 2009: Need for a Strategy Change

Ford motor company, a century old manufacturer of automobile, was one of the global leaders in automotive industry, but it lagged competitors in the Asian region. The company entered the Indian market in 1995 and introduced mid-sized car models, its sales growth had not kept pace with the growth in the market. Unlike the US market, Indian market for passenger cars was dominated by small cars. Ford India tries to implement an aggressive and comprehensive growth strategy for the Indian market. The aim of the aim of the strategy is to drive out the domestic sale and export potential. The vision of the company is to raise the output level and to provide employment to 25 million people by 2016. Ford Company was founded in 1903 and had a global presence as of 2009 with about 90 manufacturing units employing about 213000 people. It marketed the cars under various brands. The subsidiary company, the Ford Motor Credit Company provide loans to consumers for purchasing and leasing cars and business loans to dealers to stock and sell the companys cars. The company had its presence all around the world. But the companys revenue from Asia was only 5% of its total revenue. The study shows that the company doesnt register any significant growth in the passenger vehicle market in India. The sales of the company dropped and this resulted in increased loses. While comparing the sales of Maruti Suzuki and Ford India, we can see a large variation in sales with respect to Ford. The main reason for its low sales volume in India was its lack of presence in the small car segment. During 2009, passenger car sales itself contributed to 16% of total sale of automobiles in India. India was the 9th largest producer of passenger car in the world. More than 70% of the cars sold in India were small cars and India was the second largest producer of small cars in the world. During 2009, Maruti Suzuki was the market leader in small car segment followed by HMIL and Tata Motors. The Indian Governments Automotive Mission Plan 2006 -2016 created a regulatory and business environment conducive to the manufacture, sales and export of small cars. As per this plan the government must provide a favorable and predictable business environment, attracting investments and promoting R & D. According to the analyst of CSM worldwide, the cost of manufacturing a small car in India was 90% lower than in the US or Europe. This is because the raw materials in India cost lower prices by 11% compared to US and Europe.