Businessmodel of Ford Motor Company

Customer Segments

Fords serves a range of customers within the automotive sector, with its end-users largely comprising general consumers and commercial businesses.

The majority of Ford’s sales of vehicles, parts and accessories are made to its worldwide network of Ford and Lincoln dealerships. The Company also sells vehicles to automotive and parts distributors and commercial fleet companies, such as car rental providers, government bodies, and industrial and contracting companies.

Ford primarily provides automotive financing products and services to dealers in order for them to finance the purchase of vehicle inventory, working capital and improvements to dealership facilities. It also provides commercial financing products to business customers.

The US is by far Ford’s largest market, accounting for more than 60% of the Company’s total 2015 revenue. The Company’s other large national markets are the UK, Canada and Germany.

Value Propositions

Ford provides value to its customers in the following ways:

• Its established and respected brand name, with the Company being one of the most recognisable names in the automotive sector, and manufacturing some of the most popular automotive models across numerous jurisdictions;
• The quality and reliability of its products, with the Company having a string track record of producing reliable and efficient vehicles, both for consumers and for commercial operators;
• Its international sales and marketing reach, with the Company operating a broad network of Ford and Lincoln-branded car dealerships, reaching global customer base, with a significant market share in jurisdiction across the Americas and Europe;
• Its industry expertise and experience, with the Company being one of the oldest automotive manufacturers in the world, and maintaining the ability to attract well-trained specialist personnel and experienced industry executives. ### Channels

Ford operates a website at www.ford.com – as well as numerous international domains such as www.ford.com.ph and www.ford.co.uk – through which customers are able to browse the Company’s portfolio of vehicles and find information of its network of dealerships. Customers are also able to build their own Ford vehicles, choosing colours and models, and get a quote through the Ford website. Ford also operates a website for its financing business, www.credit.ford.com, through which customers are able to apply for credit.

All of Ford’s vehicles and parts are sold through its network of dealerships and through third-party distributors. The Company has a network almost 11,000 Ford dealerships, and more than 1,000 Lincoln and combined Lincoln/Ford dealerships worldwide, the vast majority of which are independently owned. Sales to dealerships and distributors are handled by the Company’s direct sales force, which is organised geographically.

Ford also operates a separate. direct sales force for its financial services through its Ford Credit subsidiary.

Customer Relationships

While Ford allows customers to view its automotive products online, as well as build personalised models of its cars on the Company’s website, customers are not able to purchase these products on a self-service basis. Customers can, however, apply for credit and financing on a self-service basis, sales though must be completed through Ford Credit representatives.

Ford sells its products primarily through independent dealerships, with which it maintains close relationships, consulting with these customers and providing various support services. Consumers are able to purchase Ford vehicles through these dealerships, receiving a personalised service and bespoke Ford models. The Company also provides customisable lease plans that can be tailored to meet the individual needs of its commercial clients.

Ford offers support and maintenance services to its customers, including extended service contracts, and provides an online chat support service. It also provides support to its financing clients over the phone, online and by mail.

Customers are also able to interact directly with Ford through its social media accounts, including with Twitter, Facebook, YouTube, Instagram and Vine.

Key Activities

Ford is a global automotive and mobility company. It principal business comprises the design, manufacture, marketing, financing, and servicing of Ford and Lincoln-branded, trucks, sports utility vehicles, and electric vehicles.

The Company operates two separate but related business segment: Automotive, comprising the manufacture, marketing and sale of Ford vehicles across North America, South America, Europe, Middle East and Africa, and Asia Pacific; and Financial Services, comprising the Company’s automotive financing, credit, and commercial leasing services, primarily provided through Ford Credit.

The Company has more than 70 manufacturing plants across the world, and sells vehicles to consumers through a network of more than 10,000 independently-owned dealerships.

Key Partners

Ford partners with a range of companies throughout the design, manufacture and sale of its products and services, extending and supplementing its own offerings. These partners include:

• Supplier Partners, comprising suppliers of resources, suppliers of tools, and suppliers of services that assist the Company in the production and distribution of its vehicles and services;
• Affinity Partners, comprising companies that participate in the FordPass program that provide services, products and discounts to members as part of a reward scheme; and
• Strategic and Alliance Partners, largely comprising technology companies, that provide integration for Ford products, share technology and resources, and collaborate with the Company on joint-venture projects. Ford’s Affinity Partners include high-profile companies such as McDonald’s, 7-Eleven, Spotify and BP. The Company has also launched a partnership with Amazon to develop driverless cars, and with Jose Cuervo to make car parts out of agave plants.

Key Resources

Ford’s key resources are its technologies and intellectual properties, its design and manufacturing facilities, its logistics and distribution channels, its sales and marketing facilities, and its personnel.

Ford holds approximately 38,500 active patents and pending patent applications globally, and licenses a range of third-party technologies for its products. The Company’s patents have an average age of just over five years. In addition to this intellectual property, Ford also relies on proprietary knowledge and ongoing technological innovation to develop and maintain its competitive market position.

Searches of records published by the US Patent and Trademark Office identified numerous patent applications filed in Ford’s name, including applications entitled ‘Vehicle front side lower bumper cover’, ‘Vehicle mirror, trim, and door handle’ and ‘Composite proton conducting electrolyte with improved additives for fuel cells’.

Cost Structure

Ford incurs costs in relation to its research and development activities, the management of its supply chain, the operation of its manufacturing facilities, the marketing and distribution of its products, the management of its partnerships, and the retention of its personnel.

Ford’s automotive costs and expenses for 2015 amounted to $134.5 billion, the majority of which were material and commodity costs – relating largely to raw materials, with structural costs also contributing a significant portion. Engineering, research, and development expenses for 2015 amounted to $6.7 billion.

Ford also accrues substantial administrative and general costs in relation to the payment of salaries and benefits to its global workforce, as well as the payment of rental and utility fees across its network of offices and facilities.

Revenue Streams

Ford generates revenue through its two operating segments: Automotive and Financial Services. This principally comprises:

• revenue derived from the sale of vehicles, vehicle parts, and automotive accessories; and
• revenue derived from the payments made under retail installment sale and lease contracts and payments made under dealer financing programs. In 2015 Ford generated $149.56 billion in annual revenue, an increase on the $144.08 billion recorded by the Company in 2014. The vast majority of the Company’s revenue is generated by its core automotive manufacturing business, accounting in 2016 for more than 96% of the Company’s total revenue for the year.