INTRODUCTION

J ohn 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 January
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 Recession, the One Ford Plan
had been further refined to help Ford aggressively pursue emerging opportunities 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 utilizing 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

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 metropolitan transport systems and growing smartphone adoption, made India an
ideal environment to test the pilot. If successful, it could serve as a model for creating 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 meeting that afternoon. What criteria were most
important in determining who Ford should partner with, and did any of the identified prospects best
fit Ford’s needs? What characteristics would ensure a successful launch of Dynamic Shuttle in India?

FORD MOTOR COMPANY

Founded 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, through a variety of unique production and
employment practices that transformed the automobile industry and positioned Ford at the
forefront of technological 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 competitors. Then in
1914, Ford began offering a standardized 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 products they helped
produce for the first time.

In the 1920s Ford purchased the Lincoln Motor Company, a competitor, and moved most of
the combined 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 production from the Mack Avenue facility’s original output. Ford also played a vital role in
assisting the Allied forces during the Second World War. Suspending 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 massproduction 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. Throughout the next several decades, Ford
continued its global expansion. By the 1990s, the company refocused its attention on automotive
concerns and financial services. 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 acquisitions. 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 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 producer 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 consortium of investors and car enthusiasts for nearly $850 million, and the following year sold
Jaguar and Land Rover to Tata Motors Ltd., an Indian conglomerate. When the Great Recession
crippled markets in 2008–2009, the American automobile industry centered 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 government relief, it
was not completely exempt from needing 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
conceptualized 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 compromised nearly 94 percent of that revenue.2 Ford Motor Company’s income statements
for 2013 through the second quarter of 2016 are presented in Exhibit 1. The company’s balance
sheets for 2013 through 2015 are presented in Exhibit 2.

The Modern Automobile Industry

The modern automotive industry was one of the largest 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 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 industrialized 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 especially 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 production basis, but other major competitors
included

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

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

General Motors (also U.S. based, in Detroit), Toyota (a Japanese automaker, whose portfolio
also included the Lexus luxury car brand), and Volkswagen (a German manufacturer that also owned
Audi). While Ford primarily operated in the mid- to lowerpriced 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 facilities have traditionally been required in order to achieve economies of scale. As
attitudes on environmental impact have evolved, so too have more stringent regulations 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 globalized. Asian automakers such as
Honda and Toyota 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 emphasized
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 infamously merged in 1998 with Daimler-Benz, the
producer of luxury brand Mercedes, and then later took controlling interest in Japanese
manufacturer Mitsubishi in 2000. GM, which had purchased controlling 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 markets have been developed countries with significant middle-class
purchasing power, developing nations, with larger populations overall and growing percentage 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

FORD MOTOR COMPANY’S STRATEGY IN THE 21ST

CENTURY
Following the Great Recession, Ford’s global strategy had largely been focused on returning the
company 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 capitalize on economies of scale. The company
began to launch more products off fewer platforms, and revamped older vehicle families with
technological 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 bestseller, 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 unprecedented in manufacturing at such high
volume.7,8

Much of Ford’s strategy shifts had been in response to the rapidly evolving external
environment 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 autonomous (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
competitive automobile landscape. In 2015, Fields hired John Casesa, a long-time automobile
industry 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 Strategy 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 business, including design, development,

manufacturing, 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 combine Ford’s great products with great
experiences customers want and value

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 Concept

A key component of Ford’s Smart Mobility platform was assessing the strategic markets and
locations 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 ondemand shuttle that could be accessed via a
user’s mobile phone, and be dispatched either directly to the requesting customer (usually in
developed markets), or to a pickup location within a short walk that aggregated multiple customers
for pickup (potentially in more rural areas or areas with poor infrastructure). The pricing of the
shuttle was usually at 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 countries 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.
Competitors 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 services.10 Yet for the most part, no ride-hailing smartphone-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 MARKET

Emerging economies, with large populations, densely populated urban areas, overcrowded
streets, and clogged transport and infrastructure systems, presented a unique challenge for a shuttle
concept. In considering which developing economy to launch Dynamic Shuttle, Ford considered two
options. One obvious choice was China, but for many reasons, including the need for unique joint
venture agreements mandated by the Chinese government, Casesa’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 transport for millions of people daily. The Indian transport system consisted of multiple
modes, including walking, 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 transportation was often
limited, if not impossible. Besides the overcrowded public transportation, India’s tropical 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 CENTURY

One of the most prevalent competitors to traditional taxi cabs in the ride-hailing industry
was Uber. Founded in California in 2009, Uber primarily functioned as a car-hailing mobile
application, via which users could request car services from their smartphones. 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
and the total estimated ride), distance, and demand. Uber’s pricing structure could either be less
expensive 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. Statistics related to smartphone and ride-hailing services usage in India are presented in
Exhibits 5-7.
 As mentioned, despite its dominance over competitors 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
acceptance 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 environment described above, indicated
India would be a ripe market for a smartphone-based ride applications.19,20 As noted, however,
neither Uber nor Ola had successfully piloted the concept of a massscale ride-hailing shuttle in their
Indian business model. For this reason, Ford’s Global Strategy Team ultimately selected India as the
pilot country for the launch of its Dynamic Shuttle pilot program.

FORD’S INDIAN MARKET ASSESSMENT

The 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 conversion rates, was used as a baseline for
calculations, as basic profitability for most ride-hailing and ridesharing 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 statistics of Indians living in
urban areas (nearly 500 million), and then specifically drilled down by income segmentation into
those who made between approximately INR 90,000–200,000 per annum (roughly defined as
“seekers”), and those who made between INR 200,000–500,000, (roughly defined as “aspirational
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 alternatives 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 mileage traveled by seekers and aspirational workers in a given
year using Dynamic Shuttle was thought to be in the range of 65–90 billion miles. With an average
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 Corporation (Ford’s financial and lending arm) would provide
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 vehicles themselves), a strain on the company’s
overall capital. The second option identified was to organically 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 Selection Ford’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 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:

1. Business Model: Would the shuttle have defined stops (B2C) or offer on-demand services?
2. Are rides shared (usually with 1 other person) or a true shuttle (up to 12 passengers)? ∙
3. Customer Strategy: Who is the primary competitor, and where does demand come from? ∙
4. Scalability of Algorithms: What is the number of cities the partner currently operates in? ∙
5. City Relationship: Has the partner cultivated relationships with cities to operate the
business? ∙
6. Physical Products: Who actually owns the vehicles 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? ∙
7. User Experience: Is customer feedback and/ or research on the partner’s ability to deliver on
promised experience positive? ∙
8. Growth Potential: What are the partner’s plans for growth? ∙
9. Applicability and Flexibility of Algorithm: Can the partner’s technology (mapping and
algorithms) adapt to different needs and new locations?
10.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 potential 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?

EXHIBIT 3 Market Sizing Analysis and Revenue Projections for

Dynamic Shuttle in India