Ford Business Strategy

Ford Business Strategy

Ford Motor Company is one of the largest car manufacturers in the planet because of its world sales and an effective marketing strategy. Behavioral organizations, culture, business environment, and organizational strategies influence fords performance, customer service satisfaction, and competitiveness in an ever changing business sector.

In June 1903, Henry ford incorporated and established Ford Motor Company in Dearborn, Michigan. Some of the firm’s auto brands include Mercury and Lincoln in the United States, Land Rover and Jaguar in the United Kingdom, and Sweden’s Volvo. Besides, Ford owns a third of Mazda’s shares. Today, Ford is the second largest Auto Maker in the United States with a Market share of 18%. Annually, Ford Corporation manufactures nearly 7.4 million cars in approximately120 auto plants across the globe. Ford utilizes the procedures of large scale assembly line management and vehicle production (Henderson et al., 2014).

Graph 1: Fords annual Car Production Statistics Since 2012

Issues and Opportunities

The Automotive industry is ripe for competition. Cheap Cars flood the global market from countries such as China, India, and the United States. Besides, new market entrants from Eastern Europe and South Korea escalate the competition level for Ford. In addition, there is a great risk in the fluctuating prices of raw materials like fuel, rubber, glass, and steel. Important Economies such as the United States, Pacific states, and Europe are experiencing volatility, market shocks and slow down, thus denting the overall performance of car manufacturers including Ford. Sustainability is also an important factor to consider. Pressure is mounting on motor vehicle manufacturers to adopt a green strategy and to phase out the old engine design that gallops fuels and emits excess carbon to the atmosphere. A need exists for Ford to overhaul its car design and to forge for business process redesign to accommodate sustainable fuels such ethanol, vegetable oil, electricity, and sunlight. There is uncertainty whether Ford's customer base, investors, and stakeholders will be receptive or the revolutionary measures in the long run (Klepper, 2012).

Ford Motors currently strives to raise its global market share especially in car sales where there are unprecedented downturns in Europe and the United States. It reviews how it employs the advances in information technology and communication to gain a competitive advantage over its rivals such as General Motors and Toyota (Kangas, 2014). Ford’s management also understands the importance of establishing healthy and cordial working relationship between employees and other stakeholders result in proper planning and smooth flow in business operations hence attraction of a larger customer base for increased product sales.

Resource Audit Concept

Shifting focus and expansion of Ford to a wider global market such as Middle East, Africa, and Asia implies that the organization has to deal with operational challenges. The best way to approach this issue is to apply resource audit concept.

A resource refers to a basic element controlled by a corporation to ensure effective organization of operational processes (Stonehouse et al., 2013). Resources are vital tools for creating competitive advantage. It is because of this reason that resource audit in Ford is vital and mandatory. In fact, Ford's sustainability and competitive advantage rely on the rate at which its resources can be substituted or imitated. A combination of resources results in capabilities and competency formation.

Resource Audit in the Case of Ford

Financial Resources

Although Ford suffered full-year losses during years prior to and after 2008 financial crisis, the organization has a century-old track record of resilience and ability to rebound from downturns to profitability. In 2014, it made a $6.3billion profit which is a testament to its healthy recovery. However, dismal performance in its North America subsidiary drags down the financial improvements in the developing world and China.  Other negative factors include impairment charges for long-lived Land Rover / Jaguar operational long-lived assets and high cost incurred in programs aimed at reducing the number of personnel. Ford generates its automotive sector revenue cash and income primarily from vehicle sales to its distributors and dealers. On the other hand, the organization generates its finance service sector revenue mainly from interests imposed on financial receivables. Ford intends to minimize the operational costs by reducing the cost of healthcare, personnel layoffs, and material cost actions.

Human Resources

Ford boasts of more than 280,000 employees working in more than 110 plants globally. While this is a sharp decrease from a decade ago, it is worth noting that the company has traded off some of its subsidiaries including Hertz and Visteon.  Furthermore, Ford is automating most of its production process, hence resulting in massive layoffs that have at times sparked employee protests in the United States, Germany, and the United Kingdom. Minimizing the number of human resources ensures efficiency in service delivery, accountability, and optimization of employee performance.

Physical Resources

In addition to its 120 plants, Ford has GERS (global engineering release system). It is a digitized worldwide communication network conceived in 1989 to improve coordination between affiliates and subsidiaries. Currently, more than 30,000 Ford employees can use this computerized system to share manufacturing and design information as they innovate new products. It is not Ford’s choice to rationalize its operations on a global basis or to execute operational expansion in low-cost production sites.

Intangible Resources

Ford has a global strategy of forming alliances with Mazda and other small automakers in Asia to jointly design, engineers, and market vehicles both in the US and other parts of the world. Partnerships are necessary in maintenance of competitive position, especially in the international market.

Key Managerial Implications

Over the past decade, Ford’s management has experienced challenges in coordinating activities and tracking use of resources as the organization expands to the developing world. Other countries such as China, Brazil, and the Middle East exhibit different business cultures as compared to the United States. Therefore, there is a need for a development of strategies that ensure less interference on resource management in these regions. One of the options that can be considered is the absorption of local talents that have understanding and experience in working those business environments. Specifically, there is a sharp contrast that exists in the management of human resources in highly populated regions with cheap labor as compared to the West.

Link to Other Concepts

Value Chain Analysis

A value chain is a tool that identifies and analyzes the origin of competitive advantage. Formation of alliances with other firms enables Ford to improve its competitiveness while engaging in the international trade. The management is tasked with brainstorming of ideas on how to launch an effective competition against emerging firms from South Korea and Europe and other parts of Asia. There is also a mounting stiff competition within the local market in the United States as global corporations penetrate US markets. As the word becomes a global village, Ford’s management is faced with a risk of losing its share of the market unless the business process is redesigned and reengineered for integration of Technology and its benefits.

Core Competencies

Brand management is the core competency of Ford. For over a century, Ford has developed its brand to become one of the most dominant in the world today. However, the firm’s current position in the globe today can fade quickly unless concrete steps are considered to maintain its competitive advantage (Stonehouse, 2013). Supply chain is another core competency that is vulnerable to market shifts, political instabilities, and managerial skills employed. Ford sources its raw materials and inputs from all parts of the world, thus a need to ensure proper logistical procedures to ensure JIT delivery and minimization of production costs.

SWOT Analysis

Any corporation that intends to strategize on its long-term performance should conduct a SWOT analysis to review the market situation. Ford’s strength lies in its intricate network of global brands. In addition, the firm has established alliances with other Motor vehicle giants. Therefore, it is upon the management to optimize the benefits of partnerships to improve corporate competitiveness and to tap into available opportunities in new markets. Ford’s weakness is the slow adoption of information technology and new business strategies to meet the evolving customer needs (Stonehouse, 2013).

Managerial Agenda

Ford needs to rejuvenate its strategies, policies, and the overall corporate goal. To do this, the leadership should allocate a sizeable amount of financial resources for research and development activities. It is hard for an organization to launch effective competition without investing in the latest technology and innovation (Kangas, 2013). Return on investment will be higher if the organization succeeds in introducing revolutionary products to the markets. Furthermore, it is imperative for the decision makers to benchmark from the best performing rivals in different regions of the globe to understand factors that influence their success. In this way, the organization averts costly reinvention of the wheel.

Cutting on the operational cost should be a fundamental point in the overall agenda. It involves lay off of incompetent workforce and hiring young, energetic and creative employees from all parts of the world as replacements to foster diversity and to embrace a global status through an even representation. The organizational structure should also be restructured to accommodate the management of subsidiaries and to ensure clarity on the chain of command, hence improvement in horizontal and vertical communication. Lastly, the organizational leadership should have little influence over regional management to encourage conception of new organizational culture. 

Bibliography

Henderson, R., Gulati, R., & Tushman, M. (2014). Leading Sustainable Change. An Organizational Perspective. Corby, Oxford University Press.

Kangas, K. (2013). Business Strategies for Information Technology Management. Hershey, Pa, IRM Press.

Klepper, S., 2012. The Capabilities of New Firms and the Evolution of the US Automobile Industry. Industrial and Corporate Change, 11(4), pp.645-666.

Stonehouse, G. and Houston, B., 2013. Business Strategy. London: Routledge.