Ford Case Report

Executive Summary

I recommend to senior executives apply Virtual Integration as a new approach to interact with our suppliers. The ultimate goal of this recommendation is to ensure better return on shareholder value, increase average stock price, achieve greater market capitalization, enjoy higher return on sales, and grow revenues faster than expenses.

As our sales is going down continuously due to high gas price and public awareness of environmental protection. Fuel efficient cars will be the top selling vehicles in consumer market. Therefore, we should invest more into R&D, work closely with suppliers to reduce OTD and large inventories, connect with our consumers to obtain information on sales trend, break their traditional perception of American cars, and achieve higher turnover.

In order to make my decision more workable, I would re-evaluate our existing supply base. Suppliers with adequate IT capabilities, commit to high quality standard and technology would have our first consideration in the selecting process, since Virtual Integration requires a very high cooperative level in terms of information sharing and manufacturing. After screening our supplier base, we would propose our long term commitment to these suppliers. Meanwhile, we should develop close customer relationships by offering competitive market price, providing better after sales service, providing sponsorship to NGO for protection and conservation of the environment, for example Greenpeace, and commit to corporate social responsibility.

Key assumptions

Customers favor Japanese cars over American cars due to better fuel efficiency and reliability.

Statement of issues

The main issue is that we have many physical assets but still we generate less revenue, return on sales, market capitalization, and small increase in stock price. (see Exhibit 1, comparative metrics of Dell and Ford). This issue is important because the cost of maintaining physical assets is high. We are...