The Basic Strategic Management Tools - Essay Example

? Business Case Study of the of the Number Business Case Study On the basics Strategic management can be defined as a set of decisions determining long term growth and performance of an organization. Answer a Strategic management includes strategy formulation, implementation, environmental scanning, control and evaluation. Firms which follow strategic management outperform those which do not implement the same. It is known as an evolution as it helps in sharpening of the vision as well as focus of the organization. It is also known as destination because in a rapidly changing business environment, a strategic management will work best. The evolution of strategic management can be better understood through real time systems and positioning systems. These are the basic strategic management tools used by the earlier companies. The strategic management process is the one which requires a basic conversation for turning goals and visions into act. It demands corporate culture which is intensive and adaptive. Lastly, the sense of corporate mission should be strong and should reach every corner of the organization, thus, it is touted as the destination. Answer b Ford has recently implemented various strategic management activities. Example 1 A clearly defined corporate mission statement is the first sign of the good and effective strategic firm. Though the corporate mission statement of the organization is extremely short, it is clearly explained through various sub-headings. Example 2 The company went for a lean management strategy in 2006. Ford started cutting costs, improving designs and increasing their efficiency levels to increase their overall brand appeal. In order to cover increasing pension costs and maintain the cash flow, the company introduced strategic operations into its management (Khan and Pillania 1510-1520). New and advanced machines took over and production increased dramatically. Example 3 Workforce diversity is another strategic management activity implemented by the firm. In terms of dealers, suppliers and employees, the organization has maintained diversity and inter-cultural infusion. This shows the adaptability of the organization and its commitment as well as ability to keep up with the pace (Alexander and Doherty 15-19). Answer c The mission statement of Ford is “One team, one plan and one goal” (“Mission and Vision”). One team represents the workforce of the car manufacturing brand. The company works together as a global and lean enterprise for leadership in automobiles as well as satisfaction of its employees, dealers, customers, suppliers, investors, council/union and communication. It is under a single plan that the company aims for aggressive restructuring in order to operate in a profitable manner and take control of the current demands. With one goal in mind, the organization expects to deliver growth which is profitable for all. The overall goal for the year 2014 is to create worldwide profitable growth. The company aims to cash on the changing business environment in the countries as well as markets where the company has established. Ford will be inventing research and development in order to find out the likes and changing perceptions of its target consumers. Accordingly, the company will be establishing strategies and tactics. The objective of the company for the year 2014 is to produce first class vehicles and establish itself as one of the finest and most preferred car making company across the globe (“Our Strategy”). 2. On corporate governance Corporate governance is a system created with the objective of controlling and directing corporations around the globe. Answer a Three traditional roles of board of directors are: Providing continuity for the firm through setting up legal or corporate existence and representing the point of view of the organization to every interested and involved entity in the external environment. These include customers, investors, suppliers, governments, employees and communities. In order to do this, the board of directors is involved in establishing vision, mission and goals of the organization. They are also responsible for setting up overall corporate strategy and mission for the organization. The board of directors is involved in controlling, supervising and monitoring of the top management. They are also responsible for hiring and firing chief executive officer of the organization. They are responsible for delegating authority to the top management as well as monitoring and evaluation of the strategies, policies and business decisions taken by the top management. Board of directors is positioned directly above the top management and it is through them that they are able to understand the lower management as well as external business environment. So clear and continuous communication is another area where the board of directors is responsible. Establishing policies and strategies for the interest of the organization is another traditional role of the board of directors. They are responsible for the establishment of policy based system of governance. Answer b The major philanthropic initiative by Ford has been adopted from Carroll's Pyramid of Corporate social responsibilities. It is based on the modern CSR definition. According to this pyramid, a corporation expects to complete four types of responsibilities. The lowest on the pyramid is economic responsibility or to be profitable. Since it is kept in the lowest level, it is expected that the organization takes utmost care of its customers. In order to achieve this responsibility, Ford used advanced technological and effective operational strategies so that top-class vehicles are available to consumers at affordable price as well as profits of the company are maintained. The annual sustainability plan of the organization is especially made as an effort to minimize costs and maximize efforts. The next responsibility in the pyramid is legal responsibilities or obeying the laws and order. Legal responsibilities expect a firm to act in a manner which is consistent with the law and government expectations. Ford Company has always been strict in terms of maintaining law and order as well as discipline in its state, federal and local regulations. The third in the pyramid is ethical responsibility that is to be ethical towards the organization as well as its external shareholders. It includes proper conduction of business, following rules and regulations and not involving in any misconduct for personal profit. Ford is committed to use of good quality and premium raw materials. Also, the company claims to produce least amount of waste products from its factories. The company has joint several pacts for lower carbon emissions and the global quality operating system ensures that world class vehicles are manufactured from the plants. The company has been recognized as one of the most ethical ones worldwide by Ethisphere Institute, which is a business house ranking companies on the basis of their ethical contributions. The last and highest in the pyramid is Philanthropic responsibilities or being a good and responsible corporate citizen. The company has established Ford Britain Trust through which the company provides funds to education of local children and various non-for profit projects. 3. On Competition & Porter’s five Forces Competition can be defined as seller’s rivalry with the objective of achieving goals such as increased market share, sales volume and profits. Porter’s five forces analysis can be defined as a framework to analyze business development strategies and the industry. Answer a Through various strategies and implementation procedures, the company has been able to create sustainable competitive advantage over its arch rivals. Every company has its own sets of strengths and weaknesses as well as USPs (Unique Selling Proposition). The major competitive advantages as well as core competencies of the firm are its operations, timing and positioning. Operations In order to overcome the slowdown, the company launched various new strategies in order to focus on the current trends. This new strategy was aimed at increasing production, increasing market share and production of smaller cars with higher fuel efficiency. In order to do this, the brand implemented centralized system of decision making. This has helped the organization to concentrate on the target market opportunities in both local and international arenas (Terpstra and Sarathy 140-150). Thus, the higher management became more engaged and involved in the developments of various designs and products for the satisfaction of customer expectations in various target markets. Ford also adopted cost cutting strategy in order to minimize operational costs. The plants started using online manufacturing process which focused on one process at a time. This strategy not only established cost advantage but also helped the organization to achieve competitive advantage in terms of lower costs (Gagnon 127-135). Legacy The organization has been able to enhance its market positioning through a number of factors. The legacy of the company goes back in time when the company went bankrupt and was refused any funding from the government, unlike its competitors then. This increased consumer trust for the company and its brands to manifolds. The company is committed to provide smart and efficient cars and value for money to their customers that make them loyal towards the company (Walters 710-720). Timing There is a rising demand for economic cars with better fuel efficiency. As a result of the ever rising prices of fuels, customers are expecting vehicles with more power and less fuel wastage. Also with the increasing expenditure and overall living standard of the people around the globe, Ford has modified its global productions. They will be known as world cars and will be equipped with high-end technology. Answer b Ford’s Porter model can be describes as follows; Bargaining power of buyers The level of competition is high among suppliers which ultimately reduces the prices for big producers. This acts positively for the organization. There is similar in the production of critical inputs and thus bargaining power in low. Bargaining power of customers The company has a very large base of customers and it is continuously expanding to newer markets. Ford as a brand is particularly cherished among its customers. Thus, their bargaining power is low. Existing rivalry The size of the industry in which Ford operates is huge and mature. Also the growth rate of the industry is very fast. Thus, the threat of existing rivalry is high. Threat of new competitors For establishing an automobile company, high capital investments, advanced technology and economies of scale are required. Also, the brand name plays an important game in this industry. Thus the threat of new competitors is less. Threat of substitutes Newer forms of fuel such as, Biogas are being used in cars now-a-days. Though they are a potential replacement for diesel and petrol, mass production is still a long way to go. Threat of substitutes can be considered low. The sixth force according to Wheelen and Hunger, is the relative power of stakeholders apart from customers. In Ford’s case, the unions play an important role is maintaining smooth flow of their operations. 4. On the Value Chain Value chain can be defined as a complex chain of activities which an organization performs in a specific industry with the objective of delivering valuable service and products in the market. Answer a An organization’s business model is the one which describes how the firm is earning money and making profits. Ford is a very old organization and since its inception, the company has been following various business models, adapting to different business and economic scenario. However, the business principles or models which define the organization are innovation, time and the legacies following the company. The company has maintained a good image of workers’ safety and union-friendly firm. Though petitioning is sometimes difficult, the company has always been able to pass them as its major market consists of high end customers. During the recession, the company was hit as much like other manufacturing giants. However, the company has been able to maintain its business level though various brand extension and cost-cutting strategies (Croom, 109-110). Over years, the brand has increased its advertising spends in order to spread the message that the company is exciting as well as innovative. Through brand extension, the company is now targeting new demographics such as parents and women. Thus with the help of innovative strategies and perfect timing, Ford has been able to maintain competitive advantage and define a unique business model for itself. Answer b The overall structure of Ford’s value chain is similar to other manufacturing companies in the automobile sector. In order to improve its supplier relations and meet arbitrary customer demands, the company has taken new approach to rediscover its value chain process (“Our Value Chain and Its Impacts”). The company has focused majority of its value chain strategy in procurement processes. The company is now working in close tandem with its major suppliers in order to eliminate waste and lower costs for both company and suppliers. Design phase of Ford is another high value stage. Efficient market research has helped Ford to understand exact consumer demands and the inputs are utilized in form of successful and modern technologies. The company has also started making tailor-made design models due to high demand in public. Another important aspect of Ford’s value chain analysis is its marketing strategy. The company has been working with its dealers in order to create marketing tactics and strategies and boost sales. At present, the company needs to strengthen its service strategy. After-sales service is an important aspect in automobiles companies and is often the most neglected one. By providing smoother after-sales service, the company can easily achieve sustainable competitive advantage as well as brand loyalty from its customers. The Current quarterly target profit margin for Ford is 3.24%. 5. On general Strategy Strategies can be defined as planning and implementation of activities with the objective of bringing a desired future such as goal achievement, finding solution to a critical business problem etc. Answer a Current business strategies of Ford Company are as follows; Aggressive restructuring in order to establish profitable operations in the current changing model as well as meeting customer demands. Accelerating the pace of development and design of new products which the customers value and want. Implementing efficient financial plans and improving the overall balance sheet of the organization Working together in an efficient way and as one team. The overall business strategy of the company aims to encourage teamwork, and focus on a single approach which is global and aligns its employees in a common effort to success. The goal is to achieve and maintain satisfaction of consumers, employees and important business partners such as suppliers, dealers, unions, councils, investors and communities in which the organization operates. Current Corporate Strategies As the global political pressure for a greener economy is getting intensified, the company is diverting its major sales towards more fuel efficient and productive vehicles. The current corporate strategy of Ford is to diversify its product portfolio into new markets. The company is planning to utilize its high tech advanced technological solutions in order to meet the customer criteria at a price affordable to the mass. Answer b Major strengths of the strategies lie with its strong positioning across the globe well as its one team approach. Proper communication down the line ensures that the business and corporate strategies properly gel with the individual goals and accomplishments of company employees. However, the company has a poor record in terms of environmental issues. This might hamper the organization while achieving its corporate and business strategies. Few of the European operations have turned out to be unprofitable and the company will have to mend its strategies in these markets in order to regain lost share. Answer c In order to ensure competitive sustainability of the company, the company will need to enter into new emerging markets. As competition is getting intense in developed economies and markets are getting matured, it is time for Ford to look for newer avenues. Apart from delivering high design and personalized vehicles for its customers, the firm will also need to design cars with the objective of one size fitting all. Even though the company is lately losing some of its shares in US market, continuous use of lean manufacturing techniques, advanced technical and operational strategies, cost cutting measures as well as marketing strategies will ensure that Ford stays as a flexible and creative auto company (David 75-109). Works Cited Alexander, Nicholas and Annie Marie Doherty. “International Market Entry: Management competencies and environmental influences.” European Retail Digest, Vol. 42(2004): 14-19. Print. Croom, Simon."Business Success: A Way of Thinking about Strategy, Critical Supply Chain Assets and Operational Best Practice", International Journal of Operations & Production Management, Vol. 18.4(1998): 409 - 410. Print. David, Fred. Strategic management: Cases and concepts (13th ed.). Florence, South Carolina: Pearson, 2011. Print. Gagnon, Stephane. "Resource-based Competition and the New Operations Strategy", International Journal of Operations & Production Management, Vol. 19.2(1999): 125 - 138. Print. Khan, Arif and Rajesh K. Pillania. "Strategic Sourcing for Supply Chain Agility and Firms' performance: A study of Indian manufacturing sector", Management Decision, Vol. 46.10(2008): 1508 - 1530. Print. “Mission and Vision”. Ford. Ford Motors. 2013. Web. 22 October 2013. “Our Strategy”. Ford. Ford Motors. 2013. Web. 22 October 2013. “Our Value Chain and Its Impacts.” Ford. Ford Motors. 2013. Web. 22 October 2013. Terpstra, Vern, and Ravi Sarathy. International Marketing. Chicago IL: Dryden Press, 2001. Print. Walters, David. "Developing and Implementing Value-Based Strategy", Management Decision, Vol.35.10 (1997): 709 - 720. Print. Read More