Question

Critically evaluate and recommend a term project for implementation. Place yourself in an organizational context. Understand the environment in which this organization functions. Describe the real or fictitious strategic context for your project topic. You may: Explain about the industry, the organization and other environmental factors. For example, IBM is a corporation that develops hardware, software and provider information technology services. Write about its history, the way the company has changed, the evolution of the industry, current industry trends, etc. Present a SWOT analysis on the selected industry/organization. Choose a business area for your project topic. Focus on, and explain a specific area within the organization such as marketing, information technology, finance, etc. Analyze your options and recommend your project topic. This will be a project in the chosen business area. Calculate and share the ROI and payback period for the recommended project.

Answer 1

Introduction

Ford Motor Company became the fifth largest automobile manufacturer in the world. The mission statement of the companies guides the strategies which are needed to attain or to exceed its market position. A Ford Motor mission statement explains the varieties of actions which are needed to achieve the organizational goals. In contrast, Ford’s vision statement drives its global organization to reach higher performance levels. A company’s vision statement stipulates the desired future situation or condition of the business.

Ford Motor Company’s Vision Analysis

Ford’s vision statement:

“People working together as a lean-global enterprise for automotive leadership.”

Ford Motor Company explains its vision as automotive leadership is scaled through the satisfaction obtained by the customers, employees, stakeholders, suppliers, dealers and societies. Ford Motor’s vision statement has the following major points:

1. Becoming global leadership
2. Stress on stakeholders
3. Efficient business model

The vision statement of the Ford Motor which clearly indicates that company wants to be one of the top companies in the global automotive industry. Currently, Ford Motor is in the fifth place in the world and second largest automotive manufacturer in the U.S. market as they are behind only General Motor. Then again, the vision explanation's accentuation on partners is accomplished through Ford's upgraded HR approaches, and additionally corporate social duty techniques for workers, clients, financial specialists and others. Company's vision articulation likewise highlights lean business operations, which the organization as of now accomplished through its sequential construction system strategies. Along these lines, in light of its present condition, Ford Motor Company needs to take a shot at developing its deals to accomplish worldwide authority and satisfy its vision proclamation.

Mission Statement Analysis of Ford Motor Company

Ford Motor’s mission statement:

“One Team. One Plan. One Goal.”

Ford Motor Company’s mission statement articulates “One Ford” mission which was revealed in 2008 under the leadership of CEO Alan Mulally. Ford Motor describes that the extended form of its mission statement is as follows:

• One Team: “People who are working together as a lean,global-enterprise for automotive-leadership, as measured by Employee, Supplier, Dealer, Customer, Investor, Council/Union, and Community-Satisfaction.”
• One Plan: “Aggressively restructure to profitably operate at the changing model mix and current-demand; Accelerate innovation of new products which our customers value and need; Finance our plan, enhance our balance-sheet; Work effectively together as one team.”
• One Goal: “An exciting and viable Ford Motors, delivering profitable growth for all.

SWOT Analysis for Ford Motor:

Strengths

• Established their expertise in the manufacturing, research and development and significantly in automobile marketing.
• Ford Motor’s expertise in domains of manufacture and marketing of light commercial vehicles, specifically vans.

Weaknesses

• Ford Motor is heavy reliable on U.S. and European markets. Most of the experts consider future growth in sales of cars will be in developing markets, for example, China and India.
• The reputation of the Ford Motors as a brand for working-class or middle-class, which makes it tough to market automobiles to the upwardly automobile.

Opportunities

• New car technologies, for example, self-driving or independent autos. These could build interest for new models and deals. The attention created new advancements could likewise build enthusiasm for auto buys.
• Expanded levels of online business, which could build the interest for light business vehicles that are utilized for conveyance. Portage produces a standout amongst the most prevalent conveyance vehicles: the Transit Connect work van

Threats

• Extensive adoption of electric cars could force costly advancements to plants and expensive cost of the R&D department. This could reduce Ford’s profits.
• Dropping down fuel prices can limit the demand for costly alternative fuel cars such as hybrids cars and electrics cars.

Porter Five Force Analysis

Porter Five Forces analysis, indicates that competitive rivalry is one of the major issues for the Ford Motor Company. Ford should prioritize their strategic solutions to develop a critical competitive advantage. For example, Ford can concentrate on innovative products which can lift the company’s sales.

Competitive Rivalry with Ford

Ford Motor Company undergoes from fierce competition as most the competing companies are influencing the industry. The following are the factors which contribute to the high competitive rivalry such as great aggressiveness of firms and exit barriers in the industry. Ford must capitalize on its competitive advantage to extend the external factors associated with competition.

Bargaining Power of Buyers

Influence or bargaining power of customers are considered moderate as some the external factors like moderate switching costs, availability of substitutes and moderate size of purchase by an individual which contributes to the relatively moderate bargaining power of the customer. Ford Motor Company should capitalize on customer satisfaction to the extent the factors for bargaining power of buyers in the Five Forces analysis.

Bargaining Power of Suppliers

Suppliers exercise moderate power on Ford Motor Company. The impact of bargaining power of suppliers and their demands on companies in this industry is considered in the Five Forces analysis. The following external factors such as a moderate number of suppliers and low chances of forwarding integration contribute to the restrained bargaining power of suppliers. Ford should consider the substantial but narrow external factors linked to suppliers’ effect on the companies which is analyzed in five forces model.

Threat of Substitutes

Ford Motor experiences the modest effects of the substitutes to its product as it substitution threatens the enterprises in the industry. External factors such as moderate availability of substitute and switching cost contribute to the moderate threat of substitution. Ford Motor required giving suppliers second priority as substitute threat is more important to resolve.

Barriers to Entry

Ford Motor Company senses the effects of new players in industry. The impact of new companies in the industry is considered as one of the aspects of the Five Forces model. The external factors such as high capital cost and brand development cost seem to contribute to the weak threat of new players against Ford Motor. Mentioned earlier costs are one of the important barriers to entry in the industry. So, it weakens the threat from new entries in the business.

Ford Generic Competitive Strategy and Focus

During the period of recession in developed countries in early 2000s automotive industry faced challenges due to increase in material cost, labour cost going up and fall in demand. Ford cut jobs in North America and shut down some plants and put away some 30,000 employees. Same was the case of its main competitor GM.

Oil prices started going up globally and expensive cars weren’t any more affordable to consumers. At that time, Toyota and Honda arrived in the USA and launched low cost hybrid models. Their market share increased and Ford started losing its market share.

During period of economic crisis, the business strategy was diversification with different operational practices followed for different market segments and dissimilar standards and product specifications. Ex. – Ford’s famous model explorer was different for USA and Europe.

This differentiated operational plans for different markets incurred them huge costs of parts, different R&D centres for different markets and products, inefficient cycle of production and knowledge asymmetry among strategic business units. This resulted in companies formed inside company instead of synergies and this strategy led to huge costs and during the period of low demand and huge rivalry this caused them loss of revenue.

To stay competitive, profitable and cost-effective Ford tossed their Globalization 2000 plan that made them profitable once again and help them to sustain their position as a market leader. According to this plan, they closed some plants and adopted the standardization as strategy, and that strategy helped to reduce cost in R&D terms. Research and Development done at one location and on a single product and was applied everywhere, thus making the production efficient as after fracturing of Aston Martin, Volvo and Jaguar they shared knowledge and made production more profitable and lean by adopting each other's best processes. Part procurement cost was reduced via global purchase system as this increased their bargaining power over suppliers. This paved their way for Low Cost Strategy with a broad focus.

The strategies of cost leadership and diversification can also be derived from the strategies of standardization or aggregation and adaptation. Aggregation has been used from the initial production era, and the basic philosophy of it is to design a standardized product or service for all target markets, along with one marketing plan that remains unchanged for varied market segments.

It gives the company the benefit of economies of scale and thus core cost leadership strategy is derived from aggregation and competition is on the basis of price. Apart from bargaining power over suppliers, another benefit is associated with distribution channel that standardized products are easily and cost effectively distributed.

Adaptation follows that needs vary from market to market and decisions are influenced by economic forces to cultural variable and thus every product can’t be sold to each one and everywhere without bringing valuable changes in it and customising the marketing plan.

Although adaptation increases the operating cost but it also enhances the overall customer understanding with brand and eventually results in increased profit. Today no company depends entirely on a single strategy, and there is a mix of aggregation and adaptation followed by numerous global companies.

Ford has changed their strategy purely from adaptation to mix of standardization and adaption. The motive of such a strategic shift was to decrease the high cost that it was incurring because of adaptation and was negatively impacting profitability of Ford. By launching their Globalization 2000 plan they shut down some plants, merge departments and made standardized processed and products for all markets with a little differentiation as per laws and basic customer needs. By following this strategy they have created synergies in different SBUs and diverted their efforts towards single goal and almost one marketing plan for the global market. This strategy has reduced the operational costs and enhanced their profitability.

Ford adopted One Ford Plan in 2007 under the leadership of CEO Alan Mulally as an innovative business strategy. It incorporates a 4-point business plan strategy into it. This is a unique thing that about Ford has helped it to remain profitable even in 2009-10 auto crises when companies like GM filed for bankruptcy.

Organization Structure of Ford Motor Company

Hierarchy - The basic structure of Ford Motor Company is a basic line structure. It replicates the structure of any global automotive company. But it is the strength of structure’s effectiveness in supporting its business growth. There are 40 Vice Presidents reporting to company CEO Mark Fields. Every department is broken down into-sub departments who are looked after by Executive Director, Chief, Managers, and Engineers. The Span of Control varies among different branches of the company. Thus, there is traditional top-down approach.

Geographic Structure – Ford Motor Company’s structure is divided into 3 regional divisions based on geography. These helped in integration of business strategies with ease. The main divisions are (a) America, (b) Europe, Middle East, and Africa, (c) Asia Pacific. An executive Vice-President heads each division.

Functional vs Divisional - Within a single plant the structure is mainly functional that represents a specific business function. A VP heads each function. These functions are Global Product Development, Global Purchasing, and Finance etc.

Ford’s structure has the disadvantage or peril of ignoring the important unique conditions or requirements of national markets.

Diversification and Internationalization

Ford started in 1903 and ever since its inception, Ford started diversifying its product offerings in various market segments. Just after it released its Model T car, in 1917 Ford diversified into Model TT Trucks, airplanes and anti-submarine patrol boats. Diversification has been the strength for Ford and its motivation at different stages.

Vertical Integration:

During 1910s to 1920s, Henry Ford realized that Ford was responsible for the entire production of its products, right from the purchase of raw materials to the point the finished product was sold to the end consumer. In the year 1922, Ford acquired Lincoln Motor Company and used it to produce luxury cars of high aesthetic value. In 1928 he built a new plant in Michigan so that he could consolidate all the activities at one place. He developed strong supplier networks and went on to purchasing and acquiring railways, coal mines, rubber plantations, ships and glasswork plants. The company was then producing the Model T cars and that was a huge success. Ford has full control on the entire manufacturing cycle of its products.

Related Diversification: Different cars

Ford diversified into many related units like auto-body plants and material factories. This way Ford had both process and assembly line manufacturing facilities. Later on Ford also entered into parts sales and repair and replacements of auto parts which helped it create an aftermarket. Ford also acquired Jaguar in 1989 to expand in the luxury cars market. In 1954, Ford launched its first elite car, the ThunderBird and then they started producing number of such luxury cars. They also launched electric vehicles in the year 1996, as part of reducing the environmental impact of their products.

Unrelated Diversification: Airplanes, trucks, warrior equipment

The most profitable part of Ford is “Ford Credit”, a finance firm in UK, which helps buyers finance their purchase of cars. During World War II, Ford started manufacturing military vehicles for US army by halting production of its civilian vehicles. It also started a third business line of electronics. Ford diversified into a lot of different product portfolios and in 2009 started producing turbocharged engines.

International Business: Expansion

Ford started its operations in Canada, and in no time spread across Britain. By 1965, it had entered into UK and Germany markets as well. In 2006, Ford started retrenching in North America by cutting down its production by 21 percent and shutting down 10 plants. But now, it is looking for prospects in developing markets like China and expanding its operations there. Ford has distributors in Germany, Belgium, and Spain etc. and has opened a sales branch in Buenos Aires. In 1908, Ford set up a plant in Paris, to supervise its European operations. In 1911, it began assembly productions in England to Argentina, and then to Denmark. By 1939, Ford expanded assembly line production in 18 countries, including India.

We can see that Ford used all four diversification strategies and implemented them very well. But in spite of being successful after such huge diversification, Ford concentrated on a single business and achieved great success in that.