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Figure 3, Statista Database that specializes in brake components. 24 This supplier, located in Mexico, works with Ford as well as many of their competitors including General Motors and Toyota. Rassini SAB C.V. has six suppliers of their own exemplifying the complexity of one small part of Ford’s supply chain. Ford uses a third-party to audit current and future suppliers to ensure that they are complying with Ford standards. Since 2003, Ford has conducted over 900 audits of Tier 1 suppliers on issues relating to human rights and working conditions. Ford’s main focus is building strong relationships with their suppliers while supporting human rights and working conditions at their supplier sites. These relationships help to achieve lower costs and improve quality. Additionally, Ford is committed to diversity among their suppliers making an effort to support minority and women-owned businesses. Even throughout their supply chain, Ford stays true to their company values. Competitive Analysis We have identified Ford’s main competitors as General Motors and Toyota. Similar to Ford, General Motors is an American company based in Detroit, Michigan. Toyota is a foreign company based in Japan. Toyota currently dominates the Japanese market with about a 47% share. 25 Ford’s global automotive market share is only about 7.6% as of 2014, while General Motors holds 8.2% of the market and Toyota holds about 11.6% (See Figure 3). In terms of liquidity, Ford is less liquid than GM and Toyota based on both the quick and current ratios of each company. In 2014, GM was the most liquid with a current ratio of 1.27 and a quick ratio of 1.07. Next, Toyota had a 1.07 current ratio and a 0.94 quick ratio. 24 Rassini SAB C.V. FactSet Supply Chain Relationships. 25 MarketLine 10
Lastly, in the same year Ford had a current ratio of 1.01 and a quick ratio of 0.81. 26 A more extensive discussion of Ford’s liquidity is located in our internal financial analysis. In terms of inventory, Ford is more efficient than their competitors. In 2014, Ford turned over its inventory every 19 days while GM turned over their inventory every 31 days and Toyota turned over their inventory every 26 days. Turning over inventory more frequently is especially important in the automotive industry because vehicles lose value quickly. Lastly, in terms of profitability, Ford is making the least amount of profit. In 2014, Toyota recorded a net income of $17B, GM recorded $4B and Ford recorded $3.2B. Toyota’s success is largely based on their capture of the market in Asia. Due to this and Toyota’s increased expansion efforts, they are a real threat to Ford. GM is a threat to Ford because of the similarities in their businesses. Both companies are America born, have similar shares of the market, and produce similar models of vehicles.
- Spring '14
- ........., Ford Motor Company