Ford Motor Corporation in Terms of Business Policy and Strategic Management since the Year 2006 - Essay Example

number and submitted: In the business world policy is described as the scope or spheres within which resolution or judgment is taken by the subordinate in a corporation. Business policy allows the lower level management to deal with arising issues without consulting the higher management every time for decisions. Business policy also deals with the acquisition of resources with which corporation goals and visions can be attained. It is the study of the functions and responsibilities of higher management, the substantial issues impacting corporation achievement and decision impacting corporation in long-run (Vlasic, & Bill 19). On the other hand, strategic management deals with identification and description of the strategies that mangers carry out to attain better performance and a competitive advantage for their corporation. A corporation is recognized to have a competitive advantage if its profitability is larger than average profitability for all corporations in its industry. That being said, this paper focuses on Ford Motor Corporation in terms of business policy and strategic management since the year 2006. Throughout the account of Ford Motor Corporation, inclusion has been the key part of the corporation’s success as exceptional products. Ford is a leader inclusion and diversity, and both remain chief Ford business strategies. Ford is recognized to sustain diversity at all ranks of the company, from the boardroom to design studio level, form plant levels to the engineering bodies. The corporation diversity makes Ford be a better corporation, a stronger organization, by bringing in new ideas, perspectives, life responsibilities, and experiences, and also by fostering a genuine collaborative workplace. Ford Motor Corporation sells and offers purchase financing all around the world. Ford had generally made a determination to exploit on potential economies of scale attainable from its size, until in the early 2008 when CEO Alan Mullay revealed One Ford turnaround strategy. The strategy involved the Global Product Development system; a process of sharing designs and improvement worldwide and between markets, with the objective of creating global process more effective. Advancing world has grown wealthier, and higher energy prices have globally gone up for better fuel economy (Crumm, & Thomas 231). Ford strategy anticipated developing less automobile models that can be sold worldwide with few changes: coined world cars. Ford’s plan was to develop more world cars with the aim of making a similar vehicle proving in all of its market across the globe. Despite declining government bailout, Ford came out stronger, and as lean as its bankrupt competitors. Ford’s chief advantage was that the corporation was able to take the benefit of the lenient economic and political climate meant for bankrupt US automakers such as GM and Chrysler (Brown, & Williams 119). Ford took this benefit while it was functioning under neither condition (government influence and bankrupt). As an outcome, the corporation was able to divest non-core brands, slash capacity, reserve treasured tax assets, renegotiate healthcare, and cut debt. All this items were simpler to do with US government and United Auto Workers more compliant to reserve the company rather than dealing with another bankrupt auto builder (Hiraide, & Chakraborty 53). Coming out of the TARP era, Ford Motor Company distorted itself into an intense and highly levered bet on the retrieval of US light vehicles. Ford Motor Company anticipated that the US automobiles will not be the gas-guzzling vehicles that were manufactured by auto builders such as Hummer for GM. Ford placed itself to take on impending government of up surging MPG and market desire for smaller cars (“2002 Ford Thunderbird world debut”). However, other international brands, particularly Honda and Toyota Company had a head start as they did not agonies the structural disaster that the other Big Three Auto companies experienced in the past years. In addition, smaller cars would not only lessen emissions but also lessen profits; for instance, both Japan and Western Europe, two markets that desire eco-friendly and compact vehicles are reliably one of the smallest profitable geographic segments for auto builders. Though Ford Motor Corporation anticipated the storm, it still faces enormous challenges from the modifying US commerce and foreign competitors (“Corporate disasters”). Ford’s shares have been enlightening yearly since it had a loss per share since 2006 to 2008. In the month of November 2008, Ford Motor Company experienced the lowest share price ever in the history. The corporation stock dropped of all the inflation low of $ 1.8 per share with outstanding shares of $ 2.38 billion. The market capitalization during this period of low shares was $ 4.3 billion. Currently Ford Motor Corporation runs its business across the world. The corporation trades its products in Europe, North America, Japan, Africa, and Middle East. This has enabled the corporation to increase in its shares. Currently, Ford Motor Company has outstanding shares of $3.93 billion at a share price of $ 12.9. Its current market capitalization is $ 50.7 billion. Based on the present assessment as the shares for approximately $ 12.5, with low earnings price and low free-flow price ratios, Ford stock has a potential margin of safety factored in ("North America automobile sector bottom of 'world sustainability league”). However, all that being said, the question is how did Ford Motor Corporation survive during the financial crisis without any governmental funds or help? Ford came up with various strategies as discussed in the following paragraphs. Ford Company employed strategic options for investment. It planned for an investment of about $ 14 billion in the U.S. on products and advanced technologies to enhance fuel efficiency in the future years. From the company’s largest light duty trucks to its smallest vehicles, Ford Company anticipated enhancing the fuel economy of its fleet an average of 14% for 2009 models, 26% for 2012 models and 36% for 2015 models. In other words, the company strategized to attain cumulative gasoline fuel savings from enhanced technology vehicles of 16 billion gallons by 2015 (Shiell, Leslie, & Robin 340). Another strategy by Ford Company was to cut down its total labour cost. In 2007, Ford engaged into negotiations with UAW. The aim of negation was to further reduce its cost structure and get rid of the remaining labour expenses gap that existed between ford and the transplant (“Potential failure mode and effects analysis”). In addition, Ford strategized the closure of two additional plants in the year 2008 and closure of four other plants between 2009 and 2011. Also, during this time of disaster the company planned to close or sell what were to be four remaining ACH plants, Ford planned to continue aggressively match producing capacity to real demand ("North America automobile sector bottom of 'world sustainability league”). Lastly, Ford Company came up with the strategy to continually reduce its dealer and suppliers base to upsurge efficiency and enhance mutual profitability. Ford in its strategy estimated that it would consist of 3, 790 U.S dealers: a subtraction of 606 dealers overall by the end of 2008. In addition, the company planned to diminish the number of suppliers qualified for main sourcing from 3,400 to about 1,600 by the year 2013 ("North America automobile sector bottom of 'world sustainability league'.”). In conclusion, Ford Company is the world’s fifth largest automobile producer by production volume. The company comprises only two brands denoted as Lincoln and Ford brands. It has historically sustained a heavy North America focus, appealing that higher income U.S customers buy more often and seem to buy upscale. As discussed above, Ford plan is One Ford campaign, which strive to save design and production costs by offering a single fleet of cars for all markets around the globe. How Ford accomplishes to take advantage of this trend, will be of significant to the corporation’s long term growth. Works Cited 2002 Ford Thunderbird world debut: January 8, 2001 North American International Auto Show, Detroit, Michigan. S.l.: Media Information Center, 2001. Print. Brown, Orice Williams. Financial assistance ongoing challenges and guiding principles related to government assistance for private sector companies. Washington, DC: U.S. Govt. Accountability Office, 2010. Print. Corporate disasters: what went wrong and why. Detroit: Gale, Cengage Learning, 2012. Print. Crumm, Thomas A. What is Good for General Motors? Solving America's Industrial Conundrum. New York: Algora Pub., 2010. Print. "North America automobile sector bottom of 'world sustainability league”. Transportation Business Journal 22 Nov. 2009: 45-76. Print. "North America automobile sector bottom of 'world sustainability league'.” NewsRx Health & Science [New York] 22 Nov. 2009: 220-55. Print. Potential failure mode and effects analysis (FMEA): reference manual.3rd ed. Grays: Adare Carwin, 2001. Print. Shiell, Leslie, and Robin Somerville. Bailouts and subsidies the economics of assisting the automotive sector in Canada. Montreal, Que?bec: Institute for Research on Public Policy, 2012. Print. Vlasic, Bill. Once upon a car: the fall and resurrection of America's Big Three automakers--GM, Ford, and Chrysler. New York: HarperLuxe, 2011. Print. Hiraide N, Chakraborty K. “Persisting the Universal Recession and the Demand for Auto commerce in The U.S.”. International Journal of Economics and Finance 4.3, (212): 135-78. Read More