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After analysis of population demographics and profitability estimates, Casesa’s team had decided to create a Dynamic Shuttle pilot in India. The large urban population, including a subset of aspirational workers that Casesa believed would be ideal Dynamic Shuttle customers, as well as the overcrowded met-ropolitan transport systems and growing smartphone adoption, made India an ideal environment to test the pilot. If successful, it could serve as a model for cre-ating Dynamic Shuttle programs in other countries. Ford, however, could not develop the program alone. It would need a partner that had the right business model and similar aspirations for growth potential and scalability, along with the willingness to expand into the Indian market. The team had found five potential candidates to partner with but had yet to determine the most appropriate one.

Casesa reviewed the agenda for his team’s meet-ing that afternoon. What criteria were most impor-tant in determining who Ford should partner with, and did any of the identified prospects best fit Ford’s needs? What characteristics would ensure a success-ful launch of Dynamic Shuttle in India?

FORD MOTOR COMPANYFounded in 1903 by Henry Ford and a group of 11 investors, the Ford Motor Company had modest origins, launching in a converted factory on Mack Avenue in Detroit that produced only a few cars per day. Ford quickly differentiated itself, however,

INTRODUCTION

John Casesa, group vice president of Ford Motor Company’s Global Strategy team, gazed out from his office window at Ford’s corporate headquarters in Dearborn, Michigan, on a cold Janu-ary day in 2016. The warm and tropical climate of Mumbai seemed worlds away from snowy Dearborn but Casesa’s attention had been on India for some time now. Hired the year previously after nearly 25 years as an investment banker in the automotive industry, Casesa had been charged with the implementation of new initiatives under the One Ford Plan. Originally designed to help Ford return to global profitability in its core automotive business after the Great Reces-sion, the One Ford Plan had been further refined to help Ford aggressively pursue emerging opportuni-ties that were an extension of the Ford brand.

A key facet of this plan was the introduction of Smart Mobility, which reflected Ford’s intent to branch out from its core automotive market. Smart Mobility sought to position Ford as a company that embraced technological innovation and a leader in connectivity and mobility, while leveraging its existing strength as a global automotive powerhouse. Casesa’s team had devised an idea called Dynamic Shuttle, a taxi-like service at prices similar to mass transit and enabled by smartphone access. While other application-based ride-service companies typically moved 1 or 2 people per ride, Dynamic Shuttle had the aspirations of uti-lizing shuttles to transport up to 12 people per ride, and was thought to be an ideal solution for emerging economies with large urban populations who cannot afford personal transportation.

Nicole DanielTuck School of Business at Dartmouth

Thomas LawtonTuck School of Business at Dartmouth

Ford Motor Company: New Strategies for International Growth

CASE 18

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automotive division in 1999, and Britain’s Land Rover brand of sport-utility vehicles in 2000. All four brands were placed in the newly created Premier Automotive Group. Ford also made a significant investment in the more economically priced Japanese automobile pro-ducer Mazda, rounding out its profile of global brands and automobiles that appealed across the spectrum to all types of drivers.

Despite these investments in global growth, Ford struggled as it entered the 21st century, and sought to shrink its portfolio. By 2007, the company had divested the majority of Aston Martin to a con-sortium of investors and car enthusiasts for nearly $850 million, and the following year sold Jaguar and Land Rover to Tata Motors Ltd., an Indian conglom-erate. When the Great Recession crippled markets in 2008–2009, the American automobile industry cen-tered in Detroit was hit especially hard. Through the Troubled Assets Relief Program (TARP), the U.S. government made over $13 billion in government loans available to struggling automobile makers. Although Ford had secured a $23.6 billion lending facility a year earlier and thus did not require govern-ment relief, it was not completely exempt from need-ing to downsize through the recession. The company closed 13 plants and laid off more than 50,000 of its nearly 200,000 employees to decrease capacity. In 2010 the automaker announced an agreement to sell Volvo to the Chinese automotive conglomerate Zhejiang Geely Holding, and later announced it would discontinue its Mercury line, a brand first conceptu-alized in the 1930s to bridge the price gap between the Ford and Lincoln brands. By the end of fiscal year 2015, Ford’s total revenues were $149.6 billion. The 6.7million cars sold globally in that year com-promised nearly 94 percent of that revenue.2

Ford Motor Company’s income statements for 2013 through the second quarter of 2016 are pre-sented in Exhibit 1. The company’s balance sheets for 2013 through 2015 are presented in Exhibit 2.

The Modern Automobile IndustryThe modern automotive industry was one of the larg-est in the world; in 2015, industry experts anticipated that nearly 90 million vehicles were sold globally.3 The U.S. auto market was approximately 10 percent of that worldwide total, with 7.7 million passenger cars sold in 2014, and the industry in the United States comprised the largest single manufacturing

through a variety of unique production and employ-ment practices that transformed the automobile industry and positioned Ford at the forefront of tech-nological innovation. The 1908 launch of the Model T, later voted as the Car of the Century by a panel of industry experts, revolutionized manufacturing production globally.1 Produced on the world’s first assembly-line production model, the Model T was assembled by individual workers who remained in one place on the line and performed the same task every shift as vehicle parts passed before them on a conveyor belt. The implementation of the assembly line and conveyor belt, and the scale opportunities it afforded, allowed Ford to quickly surpass its com-petitors. Then in 1914, Ford began offering a stan-dardized wage of $5/day to its factory employees, vaulting many of its low-skilled workers into the middle class and enabling them to afford the prod-ucts they helped produce for the first time.

In the 1920s Ford purchased the Lincoln Motor Company, a competitor, and moved most of the com-bined company’s production operations to the Ford Rouge Complex in nearby Dearborn, Michigan. By the end of the decade the company was producing 1.5 million cars annually, a huge ramp-up in pro-duction from the Mack Avenue facility’s original output. Ford also played a vital role in assisting the Allied forces during the Second World War. Sus-pending automobile production for the duration of the war, the company converted its assembly lines to churn out B-24 Liberators at the rate of 1 per hour, or nearly 600 every month, utilizing the same mass-production techniques first piloted by the Model T 30 years earlier.

The 1950s and 1960s witnessed the introduction of some of Ford’s most iconic vehicles and family lines, including the Mustang and the Thunderbird, which quickly became international symbols of American consumerism in the postwar era. Through-out the next several decades, Ford continued its global expansion. By the 1990s, the company refocused its attention on automotive concerns and financial ser-vices. Organic growth, in the form of newly opened Asian operations and the establishment of the Ford Motor Credit Company, the firm’s financial arm, was complemented by a series of high-profile acquisi-tions. In 1989–1990, Ford purchased Jaguar, a British manufacturer of luxury cars, and in 1993 added Aston Martin. Later acquisitions in the 1990s included rental car company Hertz Corporation in 1994, Volvo’s

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EXHIBIT 1 Ford Motor Company Quarterly and Annual Income Statements, 2013 – Second Quarter 2016 (in millions except per share amounts)

2nd Quarter 1st Quarter 2015 2014 2013

06/30/2016 03/31/2016

Automotive revenues $ 36,932 $ 35,257 $ 140,566 $ 135,782 $ 139,369

Financial services revenues 2,553 2,461 8,992 8,295 7,548

Total revenues 39,485 37,718 149,558 144,077 146,917

Automotive cost of sales – 30,281 124,041 123,516 125,234

Selling, administrative & other expenses 2,661 3,823 14,999 14,117 13,176

Financial services interest expense – 658 2,454 2,699 2,860

Financial services provision for credit & insurance losses – 141 417 305 208

Total costs & expenses 37,267 34,903 141,911 140,637 141,478

Automotive interest expense 212 200 773 797 829

Automotive interest income & other income (loss), net 389 404 1,188 76 974

Financial services other income (expense), net 82 91 372 348 (348)

Equity in net income (loss) of affiliated companies 398 541 1,818 1,275 1,069

Income (loss) before income taxes 2,875 3,651 10,252 4,342 7,001

Provision for (benefit from) income taxes 903 1,196 666 559 577

Net income (loss) 1,972 2,455 7,371 3,186 7,148

Less: loss (income) attributable to noncontrolling interests (2) (3) 200 154 –

Net income (loss) attributable to Ford Motor Company $ 1,970 $ 2,452 $ 7,373 $ 3,187 $ 7,155

Weighted average shares outstanding – basic 3,973 3,970 3,969 3,912 3,935

Weighted average shares outstanding – diluted 3,997 3,996 4,002 4,045 4,087

Year end shares outstanding 3,902 3,973 3,970 3,956 3,944

Net income (loss) per share – basic $0.50 $0.62 $1.86 $0.81 $1.82

Net income (loss) per share – diluted $0.49 $0.61 $1.84 $0.80 $1.76

Cash dividends declared $0.15 $0.40 $0.60 $0.50 $0.40

Source: Ford Motor Company 10-K and 10-Q reports, various years.

enterprise in terms of total product value, value added by manufacturer, and the total of wage earners employed throughout the industry.4,5 For other indus-trialized nations with strong automobile industries, including countries in the European Union, Japan, and South Korea, the dominance of the automobile

industry on gross domestic product (GDP), and espe-cially on exports, had grown exponentially over the latter half of the 20th century.

Ford Motor Company was one of the leading car manufacturers on both a profitability and pro-duction basis, but other major competitors included

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in Japan had pioneered a “just-in-time” inventory method whereby noncritical component parts were outsourced to independent suppliers producing close to assembly plants and then sent back to the production facility at the time needed. Toyota had also pioneered a production method known as kaizen, now adopted by many industries ex-automobiles globally, that empha-sized continuous process improvement throughout the organization.

Ford was not alone in adopting an international acquisition strategy at the end of the 20th century. Major domestic competitors like Chrysler infa-mously merged in 1998 with Daimler-Benz, the pro-ducer of luxury brand Mercedes, and then later took controlling interest in Japanese manufacturer Mit-subishi in 2000. GM, which had purchased control-ling interests in Saab (Sweden) and Subaru (Japan), began to look toward overseas consolidation as a method for keeping production costs lower and diversifying into new markets outside the United States. While traditionally the most profitable mar-kets have been developed countries with significant middle-class purchasing power, developing nations, with larger populations overall and growing percent-age of middle-class workers, have become greater consumers. In 2015, Chinese consumers purchased more vehicles than in the United States (21.1 million passenger cars), although at lower margins.6

General Motors (also U.S. based, in Detroit), Toy-ota (a Japanese automaker, whose portfolio also included the Lexus luxury car brand), and Volkswa-gen (a German manufacturer that also owned Audi). While Ford primarily operated in the mid- to lower-priced end of the pricing spectrum, it had also owned stakes in more luxury brands such as Land Rover and Jaguar, as noted. Major competitors of these brands included producers like BMW and Daimler-Benz (also German manufacturers), Acura (the luxury arm of Honda in Japan), and at an even higher price point, boutique manufacturers like Porsche, Ferrari, and Maserati.

Consolidation and decentralization were two of the major trends of the industry. Part of this was due to the overall capital intensity of the industry; heavy investments in equipment and large production facili-ties have traditionally been required in order to achieve economies of scale. As attitudes on environmental impact have evolved, so too have more stringent regu-lations been placed on the industry that require greater costs on the part of the manufacturer. Ford, as noted, was a pioneer in the industry in the United States due to its innovative production facilities and creation of the assembly-line process, aimed at lowering overall production costs. These savings, however, were being offset by higher transportation costs as the industry glo-balized. Asian automakers such as Honda and Toyota

Source: Ford Motor Company 2015 10-K.

EXHIBIT 2 Ford Motor Company Balance Sheet Data, 2013–2016 ($ in millions)

12/31/2015 12/31/2014 12/31/2013

Cash & cash equivalents $ 14,272 $ 10,757 $ 14,468

Marketable securities 20,904 20,393 22,100

Receivables, net 101,975 101,975 101,975

Inventories 8,319 7,866 7,708

Other current assets 59,480 48,496 37,477

Fixed assets, net 19,975 19,040 18,298

Total assets $ 224,925 $ 208,527 $ 202,026

Total current liabilities $ 188,591 $ 195,645 $ 179,373

Total long-term liabilities 7,677 (11,950) (3,763)

Total equity (deficit) 28,657 24,832 26,416

Total liabilities and shareholders’ equity $ 224,925 $ 208,527 $ 202,026

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competitive automobile landscape. In 2015, Fields hired John Casesa, a long-time automobile indus-try analyst and former investment banker, to lead the newly created Global Strategy team. Casesa had been tasked with accelerating the implementation of the One Ford Plan, and revamping the Global Strat-egy team’s mandate.

In early 2016, CEO Fields championed updating the One Ford Plan to better reflect Ford’s business needs. These refined initiatives included:

∙ Strengthening and investing in Ford’s core busi-ness, including design, development, manufactur-ing, and marketing of great cars, trucks, SUVs, and electrified vehicles

∙ Aggressively pursuing emerging opportunities through Ford Smart Mobility, Ford’s plan to be a leader in connectivity, mobility, autonomous vehicles, the customer experience, and data and analytics

∙ Transforming the customer experience to com-bine Ford’s great products with great experiences customers want and value9

Fields’s vision for Ford as it entered the third decade of the 21st century was to transform Ford into both a strong automotive and mobility company. The company had rededicated itself to “delivering smart mobility solutions at the right place and the right time, and transforming the way that people move, as Henry Ford did when he started the company back in 1903.”

The Smart Mobility Platform and Dynamic Shuttle ConceptA key component of Ford’s Smart Mobility plat-form was assessing the strategic markets and loca-tions where the program could be implemented. Ford began to pilot a concept known as the Dynamic Shuttle program in Dearborn and one other city in the United States, with the aim of expanding the program on a global scale.

The concept of the Dynamic Shuttle was an on-demand shuttle that could be accessed via a user’s mobile phone, and be dispatched either directly to the requesting customer (usually in developed mar-kets), or to a pickup location within a short walk that aggregated multiple customers for pickup (poten-tially in more rural areas or areas with poor infra-structure). The pricing of the shuttle was usually at

FORD MOTOR COMPANY’S STRATEGY IN THE 21ST CENTURYFollowing the Great Recession, Ford’s global strat-egy had largely been focused on returning the com-pany to profitability in each of the markets it operates in. Under then-CEO Alan Mulally, the company developed the One Ford Plan, as noted earlier. The four elements of the One Ford Plan included:

∙ Aggressively restructure Ford to operate profitably at the current demand and changing model mix

∙ Accelerate development of new products Ford’s customers want and value

∙ Finance out the plan and improve Ford’s balance sheet

∙ Work together effectively as one team

Under the One Ford Plan, Ford shifted from having many regional platforms to a focus on fewer, more global production platforms to better capi-talize on economies of scale. The company began to launch more products off fewer platforms, and revamped older vehicle families with technologi-cal improvements designed to win over new buyers. The Fiesta, originally a supermini car first sold in Europe and Latin America in the 1970s, launched in the United States in 2010, followed by the launch of the Brazil-based mini-utility vehicle the EcoSport in India and Europe. Ford transformed its global best-seller, the F-series, a line of pickup trucks produced since the postwar era and the bestselling vehicle in the United States for 34 years running (1981–2015), switching from steel to aluminum, a feat unprece-dented in manufacturing at such high volume.7,8

Much of Ford’s strategy shifts had been in response to the rapidly evolving external environ-ment for automotive companies in the 2010s. The emergence of ride-share companies like Uber and Lyft in the United States, Didi in China, and Ola in India, and participation by technological giants such as Google and Apple in the development of auton-omous (otherwise known as driverless) cars had caused automakers to reconsider how to compete in what had developed into a completely different world from the Detroit of Henry Ford. Mark Fields, Mulally’s successor to the CEO position in 2014, recognized the need to adapt in an increasingly

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obvious choice was China, but for many reasons, including the need for unique joint venture agree-ments mandated by the Chinese government, Cas-esa’s Global Strategy Team decided to investigate the feasibility of a Dynamic Shuttle launch in India. Should Dynamic Shuttle launch successfully there, Casesa’s team was confident it could act as a test case for other densely populated countries coping with mobility issues that had a need for a program like Dynamic Shuttle.

India was anticipated to have a population of nearly 1.5 billion residents by 2020.11 As one of the most populous and densest countries in the world, India faced the challenge of needing to facilitate trans-port for millions of people daily. The Indian transport system consisted of multiple modes, including walk-ing, bicycling, various forms of rickshaws, bus and metro systems, and regional railways.

In densely populated urban areas of India, demand for public transport often exceeded capacity. Trains in Mumbai, the most populous city in India, carried over 7.5 million riders per day, a sixfold increase over the last 40 years, while daily capacity on its trains had only doubled.12 Yet for a city as densely populated as Mumbai, with its 20 million residents, continuing to build new infrastructure and extending the woefully inadequate means of public transporta-tion was often limited, if not impossible. Besides the overcrowded public transportation, India’s tropi-cal climate could lead to uncomfortable traveling experiences. Research in cities like Mumbai found that some customers would pay at least a 25 percent premium to ride in air-conditioned cabs versus ones without air-conditioning.13

RIDE-HAILING APPLICATIONS IN THE 21ST CENTURYOne of the most prevalent competitors to tradi tional taxi cabs in the ride-hailing industry was Uber. Founded in California in 2009, Uber primarily func-tioned as a car-hailing mobile application, via which users could request car services from their smart-phones. Revenue was generated by charging users a fare for accessing and using the service, and then split between Uber and the driver, who was often viewed by the company as an independent contractor. Fares were calculated through a proprietary algorithm that takes into account time (both for the driver to arrive

a premium to mass transit in the market but a cost save compared to a taxi service or a ride-hailing service (such as Uber, Lyft, and Ola). Additionally, unlike a traditional bus service, dynamic shuttling’s algorithms and “learning capability” offered much greater flexibility in pickup and departure times and locations.

The program had multiple goals. It aimed to exist as a new transport ride-sharing platform in the space between scheduled (mass-transit) and private transport, enabled by smartphone development and penetration. Less expensive than a taxi, it expected to offer a more comfortable and convenient experience than mass transit. Typically, the shuttle anticipated serving between 4 and 6 people in developed coun-tries and up to 12 passengers in developing countries per ride. In developing countries, Dynamic Shuttle could also be used to connect riders from their home communities to mass-transit routes, if passengers lived long distances from a major transit line.

Some startups had started dynamic shuttles in cities like New York, Chicago, and Helsinki. Com-petitors like Uber and Lyft, through their analogous UberPOOL and Lyft Line services, had also begun to experiment with their own conceptualization of shared, or pooled, rides, and by mid-2015 over 50 percent of Uber’s fares and 60 percent of Lyft’s in the San Francisco market were based on carpooling ser-vices.10 Yet for the most part, no ride-hailing smart-phone-based app service was at the carrying capacity of a full shuttle, as Ford intended, and most pilots in developed countries were too small in size and scale compared to the possibilities already offered in many developing nations. Ford’s hope was to experiment with the shuttle to learn as much as possible from both a technological and operational perspective, but eventually the company hoped to quickly scale and enter into markets where mobility and movement of people are true problems.

THE INDIAN MASS-TRANSIT MARKETEmerging economies, with large populations, densely populated urban areas, overcrowded streets, and clogged transport and infrastructure systems, pre-sented a unique challenge for a shuttle concept. In considering which developing economy to launch Dynamic Shuttle, Ford considered two options. One

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ultimately selected India as the pilot country for the launch of its Dynamic Shuttle pilot program.

FORD’S INDIAN MARKET ASSESSMENTThe Ford team assessed a number of key variables, including population statistics, income levels, and daily mileage traveled to calculate a potential market share for Dynamic Shuttle. Total available mileage, rather than number of potential customers or conver-sion rates, was used as a baseline for calculations, as basic profitability for most ride-hailing and ride-sharing programs are calculated on a mileage basis (i.e., not per customer). It was essential, however, to determine an appropriate customer base for the pilot. Casesa’s team first analyzed total population statis-tics of Indians living in urban areas (nearly 500 mil-lion), and then specifically drilled down by income segmentation into those who made between approxi-mately INR 90,000–200,000 per annum (roughly defined as “seekers”), and those who made between INR 200,000–500,000, (roughly defined as “aspira-tional workers”). Seekers and aspirational workers could not afford personal transportation and were in most instances still likely to use mass transit for their professional commutes, yet had the disposable income available to potentially pay a premium for an easier ride. This population yielded approximately 280 million potential shuttle riders.

The team then considered the different modes of transportation available to riders in major cities. Approximately 70 percent of the miles traveled by Indian commuters in cities on a daily basis were through mass transit, an obvious target, but the team also considered the miles traveled by commuters on motorcycles as a possible customer segment that could be converted to Dynamic Shuttle. On the high end of estimates, approximately 73 percent of the miles traveled by Indian commuters on a daily basis were thought to be within Dynamic Shuttle’s target market. The team next deliberated the transport alter-natives already available to commuters, including two-wheelers, trains, buses, and shared modes like rickshaws and taxis, and broke out the percentage usage rate by a variety of income levels. With these factors in mind, and the assumption of an 8 percent conversion or take rate, the estimates for annual mile-age traveled by seekers and aspirational workers in a

and the total estimated ride), distance, and demand. Uber’s pricing structure could either be less expen-sive or at a premium to the local taxi market. The company had experienced explosive growth in its first six years, raising over $10 billion in capital, completing 1 billion rides, and spreading to nearly 70 countries and 360 cities.14,15 Major competitors with similar business models included Lyft in the United States, BlablaCar in France (a ride-sharing app), Didi Kuaidi in China, and Ola in India. Statis-tics related to smartphone and ride-hailing services usage in India are presented in Exhibits 5-7.

As mentioned, despite its dominance over com-petitors in major metropolitan cities throughout the world, Uber was not the only ride-hailing app in India, nor did it even occupy the dominant position in the Indian domestic market. In mid-2015, the company injected over $1 billion in investments in its Indian operations, with the goal of handling over 1 million rides on a daily basis, similar to its current capacity in both China and the United States.16 Yet while Uber could be found in over 22 Indian metropolitan areas by the end of 2015, its ridership statistics were much less impressive, with the company citing on average only 250,000 rides per day.17 Instead, the dominant ride-hailing app-based company in India, Ola, was speculated to actually achieve Uber’s goal of over 1 million rides on a daily basis spread across the 350,000 vehicles in its platform, and could be found in over 102 Indian cities. Through aggressive tactics more suited to the Indian market, including accep-tance of cash instead of credit-card smartphone-based payments, better utilization of rickshaws and cheaper modes of transportation, and diffusion of the business to second- and third-tier Indian cities, Ola was able to outpace Uber in the Indian ride-hailing market. As of December 2015, Ola, Lyft, Didi Kuaidi, and GrabTaxi (a Southeast Asian app) had also pledged to allow customers of each company to use their local apps in different markets, in an attempt to continue to block Uber’s growth.18

Smartphone usage in India, projected to grow to nearly 317.1 million users by 2019, combined with the population statistics and competitive envi-ronment described above, indicated India would be a ripe market for a smartphone-based ride applica-tions.19,20 As noted, however, neither Uber nor Ola had successfully piloted the concept of a mass-scale ride-hailing shuttle in their Indian business model. For this reason, Ford’s Global Strategy Team

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team identified five potential partners. A matrix is provided in Exhibit 4 with details on how each partner aligned with the goals and competencies needed to successfully execute on the project. Key considerations for the team included:

∙ Business Model: Would the shuttle have defined stops (B2C) or offer on-demand services? Are rides shared (usually with 1 other person) or a true shuttle (up to 12 passengers)?

∙ Customer Strategy: Who is the primary com-petitor, and where does demand come from?

∙ Scalability of Algorithms: What is the number of cities the partner currently operates in?

∙ City Relationship: Has the partner cultivated relationships with cities to operate the business?

∙ Physical Products: Who actually owns the vehi-cles in operation?

∙ Operating Franchise Model: Can the partner quickly develop a franchise model?

∙ Willingness to Accept Investment: To what degree could Ford be a controlling stakeholder?

∙ User Experience: Is customer feedback and/or research on the partner’s ability to deliver on promised experience positive?

∙ Growth Potential: What are the partner’s plans for growth?

∙ Applicability and Flexibility of Algorithm: Can the partner’s technology (mapping and algorithms) adapt to different needs and new locations? How easily is it replicated?

Partner Selection Casesa and his team had answered the basics: identified the market for Dynamic Shuttle’s first international pilot (India); defined the business model necessary to execute on the pilot; deliberated on specific strategic initiatives and imperatives needed for a hypothetical partner. Their focus now shifted to evaluating the five poten-tial partners Ford could align with to bring Dynamic Shuttle to India. As he sat down to review the agenda for his next meeting with the Global Strategy Team, the key discussion item remained:

Which partner would be the best match for Ford in terms of business model, growth, technology, and operational efficiency to successfully launch a Dynamic Shuttle pilot in India?

given year using Dynamic Shuttle was thought to be in the range of 65–90 billion miles. With an aver-age rider cost of $0.30 per mile, Ford calculated a potential annual revenue of $19–26 billion. (See Exhibit 3 for further details on the team’s analysis.)

Dynamic Shuttle Business Model and Partner Selection

Business Model Once the market potential for Dynamic Shuttle in India was estimated, Casesa’s team deliberated on the best path for market entry. Ford had established plants in India in the late 1920s, and Ford India had operated as a wholly owned subsidiary of Ford Motor Company since 1995, with manufacturing facilities in Chennai and Gujarat.21

The team assessed three different options for the Dynamic Shuttle rollout. In the first model, Ford Motor Company and Ford Motor Credit Corpora-tion (Ford’s financial and lending arm) would pro-vide the vehicles, financing, and parts and servicing. This solution was more complete and enabled more in-house control, but operating its own fleet on the ground would incur heavy capital requirements, as Ford would have to own the overall assets (the vehi-cles themselves), a strain on the company’s overall capital. The second option identified was to organi-cally develop the technology in-house and sell it to companies already in operation to help them create this business. This option was ultimately rejected due to the slower speed of development, especially in light of the necessity of starting operations and scaling the business model quickly. The model ultimately selected was for Ford Smart Mobility to choose a partner that would establish operations on the ground in India. With this partner, Ford would establish a franchise model, which would facilitate the platform, payment system, and create a joint business model.

Strategic Imperatives for Partner SelectionFord’s vision for Dynamic Shuttle was to choose a partner whose current business model most closely aligned with their view of the offering. The team considered key questions and solutions that each partner would need to satisfy, provided below. After thinking through these key imperatives, the

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EXHIBIT 3 Market Sizing Analysis and Revenue Projections for Dynamic Shuttle in India

Step 1: Indian Population Segmentation

Total Indian Population 1,311,051Number living in urban araas 419,939

Income Segmentation % INR Income

Rich 3% > INR 1,000,000

Strivers 6% INR 500,000 to 1,000,000Seekers 25% INR 200,000 to 500,000

Aspirational Workers 40% INR 90,000 to 200,000

Deprived 26% < INR 90,000

Total # Seekers and Aspirational 272,960

Step 2 – Travel MethodologyMode of Transit

What kind of travel would Dynamic Shuttle replace?Total Miles/Yr %

Personal Vehicle 593 25.79%

Taxi/Uber 17 0.74%Motorcycle 123 5.35%Mass Transit 1,565 68.07%Total 2,299 100.00% of total miles for customer segment 73.42% (High End Estimate)

Alternative – Mumbai-Metro Area Specific Income

Vehicle Type 90,000,000 180,000 300,000 420,000 540,000 660,000Car 1.00% 2.00% 6.00% 13.00% 21.00% 24.00%Two-Wheeler 5.00% 8.00% 9.00% 9.00% 10.00% 12.00%Train 22.00% 28.00% 30.00% 29.00% 21.00% 23.00%Bus 12.00% 13.00% 15.00% 15.00% 15.00% 15.00%Shared Mode (Rickshaw, Taxi) 4.00% 4.00% 5.00% 6.00% 8.00% 9.00%Walk/Bike 56.00% 45.00% 35.00% 28.00% 28.00% 17.00%Total Highlighted Modes of Travel 43.00% 53.00% 59.00% 59.00%% of total miles for customer segment 53.50% (Low End Estimate)

Step 3 – Mileage & Revenue Calculations

Total Transit Miles/Year in Urban Areas 2,299 billionMiles/Urban Dweller 0.0055 billion# Seekers & Aspirational 272,960 billion

Total mileage Seekers & Aspirational 1,494 billion

% total miles of customer segment

Low end estimate (53.5%) 799 billion

High end estimate (73.42%) 1,097 billion

8% Uptake rate assumptionLow end estimate 64 billionHigh end estimate 88 billion

Assumed cost/mile $ 0.30

Revenue calculationHigh end estimate $ 19.19 billion USDLow end estimate $ 26.33 billion USD

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EXHIBIT 4 Competency Matrix for Dynamic Shuttle Prospective Partners

Partner Business Model

Partner Customer Strategy

Increase/augment access to mass transit.

Competing with existing mass transit – replace, value prop = more upscale

Taxi-like business; replace taxi hailling

Taxi- like business;

replace taxi hailling

Shuttle (Defined Stops)

2 Cities currently3 Cities currently

City Relationships ( # cities type of relationship, ride sharing v. dynamic shuttle)

Physical Products (Who Own the Vehicles)

Operating Franchise Model

Expressed interest to franchise

Very mature, expansion plans may not include franchise model

Faling Business

None since seed funding 54 mil

Series B closed $ 37 million total

Wholly owned by transportation company

$ 50 millionOver $ 1 Billion

Strong app, people interested in the purpose- built vehicles. Benchmark experience showed service not consistent

Strong UX, strong focus on customer acquisition and customer data

Very customercentric in data presentation. 30 employees, 50/50 in operation and tech. 1 million riders per year, 250 drivers, up to 1200 mid 2016

On-demand Can flex in real-time. Operate 6:30 to 9. Closest to Ford model of dynamic shuttle

Similar to on-demand model by Ryderz, but with a less 1 fleible algorithm

Dynamic but only from one rider to another

Has true dynamic capability as demonstrated by package pick up/drop o�

Higher maintenance, high growth potential 50% month over month growth

Mature, ability to impact the business is di�cult. Low maintenance

Take over failing business Resource intensive to get involved with.

App is not as polished, unclear the goals of service

Mature and strong app – drivers incentivized to provide good user experience

App design is good, but business model is failing service TBD

25 employees, aim for 100 by end of 2015, Adapting to di�erent cities. 5% wk/wk growth. Constrained by ability to grow

Complex algorithm aggregates people to go to set destinations. Operates during rush hour. Limited dynamic functioning. Usually within 5 min walk On-demand and pre-book

OTHER COMPETENCIES

Fleet Management

Customer Support / Help Desk / CRM

Customer Scale & Insights (incl. Analytics)

Y R

Y Y

R R

G G

Willingness to Accept Investment

User Experience (App and Service)

Growth Potential (# employess, growth curve, #customers)

Applicability of Algorithm/Flexibility

City and small fleetsPurpose built vehicles (Vans)

Drivers or Small fleets Indvidual Drivers. Large SUVs.

Indvidual Drivers. Large SUVs.

3 US major cities Understand regulations but also developed relationship with the city

2 US major citiesUnderstand regulations but also developed relationship with the city

1 US major city due to number of cities, more ridesharing, haven’t had to develop relationships with cities

50+ Cities. ride-sharing. haven’t had to develop relationships with cities.

8 Cities. Ride-sharing haven’t had to develop relationships with cities

1 City Very scalable Very scalableHow Scalable Are Partner Algorithms

On Demand Shuttle On Demand Shuttle Shared Ride Services Shared Ride Services

Vrigg Ryderz Car-Go

DYNAMIC SHUTTLECompetency Matrix

Shuttlex Qquark

Final PDF to printer

CASE 18 Ford Motor Company: New Strategies for International Growth C-247

tho32789_case18_C237-C248.indd 247 12/05/16 04:12 PM

EXHIBIT 5 Smartphone Usage in India (millions) from 2013 to 2019

2013

123.3

167.9

204.8

243.8

279.2

317.1

art

e u

ers

in m

illio

2014 2015 2016(Pro-

jected)

2017(Pro-

jected)

2018(Pro-

jected)

2019(Pro-

jected)

EXHIBIT 6 Daily Completed Rides by Uber and Ola in India as of December 2015

Ola (includes auto rickshaws)

Uber

200,000 400,000 600,000 800,000

Source: Uber, Ola, atlas.qz.com/charts/NJ3EKY2R.

EXHIBIT 7 Uber’s Reach versus the Competition as of September 2015

400

350

300

250

200

150

North America India Southeast Asia China

100

Uber Others

Source: atlas.qz.com/charts/NJdXd64C.

Final PDF to printer

C-248 PART 2 Cases in Crafting and Executing Strategy

tho32789_case18_C237-C248.indd 248 12/05/16 04:12 PM

ENDNOTES8 Eve P., “Ford F-Series Trucks Number One for 35 Years Running,” social.ford.com/content/fordsocial/en/articles/quality/fo/22086-ford-f-series-trucks-number-one-for-35-years- running.html (accessed March 18, 2016).9 “One Ford Card,” www.at.ford.com/news/cn/Pages/One%20Ford%20Card.aspx (accessed March 18, 2016).10 Ellen Huet, “The Case for Carpooling: Inside Lyft and Uber’s Quest to Squeeze More People in The Backseat,” Forbes, August 18, 2015, www .forbes.com/sites/ ellenhuet/2015/08/18/inside-lyfts-and-ubers-carpooling-quest-uberpool-lyft-line/#4b1b7d5c11a5.11 United Nations, Population Division, “World Population Prospects 2015,” esa.un.org/unpd/wpp/Graphs/Probabilistic/POP/TOT/ (accessed March 18, 2016).12 Julien Bouissou, “Mumbai’s Rail Commuters Pay a High Human Price for Public Transport,” The Guardian,October 29, 2013, www .theguardian.com/world/2013/oct/29/india-mumbai-population-rail-accidents.13 Deven Jadav, “Various AC and NON Air-conditioned Taxi Fares in Mumbai—Fare Rate Chart,” Mumbai 77.com, last modified Novem-ber 1, 2011, www.mumbai77.com/city/1918/travel/taxi-fare-rates/.14 Uber Technologies Inc., PrivCo. (accessed March 18, 2016).

1 James G. Cobb, “This Just In: Model T Gets Award,” The New York Times, December 24, 1999, www.nytimes.com/1999/12/24/automo-biles/this-just-in-model-t-gets-award.html.2 “Ford 4Q and Full Year Earnings Review and 2016 Outlook,” Ford Motor Co., last modi-fied January 28, 2016 (preliminary results),” corporate.ford.com/content/dam/corporate/en/investors/investor-events/ Quarterly%20Earnings/2015/2015-4Q-earnings-slides-20160127.pdf.3 OICA, “Worldwide Vehicle Sales from 2005 to 2015 (in Units),” www.statista/statistics/265859/vehicle-sales-worldwide/.4 kfz-betrieb, “Revenue of the Leading Automo-tive Manufacturers Worldwide in 2014 (in Billion Euros),” www.statista.com/statistics/232958/revenue-of-the-leading-car-manufacturers-worldwide/.5 Encyclopædia Britannica, s.v. “automotive industry,“ www.britannica.com/topic/automo-tive-industry/The-modern-industry (accessed March 11, 2016).6 CAAM, “Automobile Sales in China from Janu-ary 2015 to January 2016 (in 1,000 Units).”7 Kelly Pleskot, “The 15 Best-Selling Vehicles of 2015: Ford F-Series Keeps Its Crown,” Motor Trend, January 5, 2016, www.motortrend.com/news/the-15-best-selling-vehicles-of-2015-ford-f-series-keeps-its-crown/.

15 Sriram Sharma, “Uber vs. Ola in India: How Do They Stack Up?,” Gadgets 360, last modi-fied February 5, 2016, gadgets.ndtv.com/apps/features/uber-vs-ola-in-india-how-do-they-stack-up-798608.16 Jon Russell, “Uber Is Investing $1B to Grow Its Business in India to 1M Rides Per Day,” Tech Crunch,July 31, 2015, techcrunch.com/2015/07/31/one-billllllllllllion/#.fb5p9ub:mWyk.17 Jon Russell, “Ola, the Company Beating Uber in India, Raises $500M at a $5B Valuation,” Tech Crunch,November 17, 2015, techcrunch.com/2015/11/17/ola-the-company-beating-uber-in-india-lands-500m-in-fresh- investment/.18 Ibid.19 Ingrid Lunden, “Lift, Didi, Ola and GrabTaxi Partner in Global Tech, Service Alliance to Rival Uber,” Tech Crunch, December 3, 2015, techcrunch.com/2015/12/03/lyft-didi-ola-and-grabtaxi-partner-in-global-tech-service-alliance-to-rival-uber/.20 Cindy Liu, “Worldwide Internet and Mobile Users,” eMarketer, August 17, 2015.21 “Ford India—Corporate Profile,” Ford Motor Co. website, www.india.ford.com/about (accessed March 18, 2016).

Final PDF to printer

CaseFordMotorCompany.pdf

CaseFordMotorCompany.pdf

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