Discussing the Issues Concerning Ford Company - Case Study Example

On Functional Strategy- Pertaining to your CEO Project Company Functional strategy is defined as a plan of activities or tasks that each functional area (e.g. marketing, financial, operational, etc.) has to take in order to achieve its company and business unit objectives through increasing its resource productivity (Kazmi 436). Corporate strategy pertains to the direction to where a company is heading to and concerns on how the whole operations of business function in achieving goals and objectives successfully (Thompson 1). Business strategy involves a long term plan of activities for the achievement of goals and objectives (Campbell, Stonehouse and Houston 3). a. Among all the functional divisions of Ford, the operations division has been facing a burning issue of meeting the order demands of customers. Due to high customer demands, the company is facing a problem of production incapacity. High demand for car models, like Focus and Fusion, has increased rapidly since 2006. Aside from production incapacity, the company has also been in short supply of production workers that will aid in the manufacture of cars (Nair), which concerns the human and resource division of the company. i. The two functional areas to be discussed further below are operations and human resources. 1. For 2014 the essential goal for operations is to meet the high demand of customers while human resources aim to employ 12,000 people to its production area. 2. To fulfill the operations’ goal of meeting the high demand for cars in the market, it needs to invest more in procuring physical resources like machines and equipment to make the production of cars more faster. It needs to add more production lines in its factories and rent more space to shelter all additional equipment and production lines that can no longer fit in the usual factories of the company. More people have to be employed, as well in order to operate all these new machines and work in new production lines to produce more cars in the market. Most importantly, the company has to invest more capital to have all these recommendations to be fully realized. On the other hand, the human resources’ goals of employing more workers need financial resources to materialize its activities in hiring more jobs in the company. To disseminate this job hiring information to qualified individuals, the human resource division has to use physical resources like information technology, in posting jobs online and use other means like newspapers and television. 3. The success of the operational strategy can be measured in a way wherein at the year end of 2014, the company has increased its productivity and revenues. If more cars are sold in the market, it means that more cars are produced in the market to meet its high demand. It can also be determined through the number of output produced periodically. If there is an increase in output produced then it implies that the company has been at level with the demand in the market. On the other hand, the realization of the human resource management strategy can be measured through the increase in the number of employees hired. 2. On Strategy Implementation A way refers to any method or manner of performing anything (“Way”). Winning is title of the book on management, which Jack Welch, former Chief Executive Officer of General electric (GE) published, and co-written with Suzy Welch in 2005 (“About the Book”). A good strategy pertains to an effective action plan developed to attain a long-term goal (Rumelt 1). a. Jack Welch, has build the reputation of Six Sigma as an effective business strategy in improving the operations of a company (Eckes 15). To someone like Welch, Six Sigma means an improvement tool that helps a company gain competitive advantage by continuously looking for ways in improving existing processes. He also believes that Six Sigma can aid the company gain operational efficiency, high productivity, and minimize costs. He notes that this tool is associated with quality improvement, which increases customer satisfaction, minimize production costs, and shape effective leaders. He remarks that this business strategy eliminates waste and inefficiency and helps construct processes that deliver the needs of customers (“Book Summary and Outline” 6). i. To improve the quality performance of GE, the company has used Six Sigma for the modification of its quality processes. The company has faced quality problems due to lack of a potent quality management system in 1995. In order to resolve this, Welch adopted Six Sigma in revamping production processes by eliminating the nonperforming business segments of the company. Activities that do not add value to the product are eliminated to simplify the production process. Through these developments, the company was able to improve its quality and productivity at the same time. Savings were incurred as a result of the modification process for up to $12 billion (J. Welch and S. Welch 52). ii. One of the strengths of Six Sigma is its proven success of implementation. Its success has been proven by GE through its implementation by Welch in 1995, which had garnered a savings of $8 billion. It is effective in maximizing sales, share value, and individual growth. On the other hand, one of the weaknesses of Six Sigma is its requirement of overall participation, which makes it difficult to practice in the company. The success of this philosophy lies on the cooperation of all staff in the company, so a non-participation of a few people to this practice will result to failure (Webb). b. Recently, one of the burning issues faced by Ford is its product recall of sedans due to faulty steering shafts in United States and Canada (Plume). This issue needs an implementation of Six Sigma to improve the process of producing accurate designs of steering shafts for sedans. A fault on this car part means that there is a wrong process that needs to be identified and modified in order to produce accurate ones. The company finds it difficult to implement a good strategy to address this issue because the steering shafts are manufactured by its suppliers. Although the design of steering shafts is developed by Ford, its production lies on its suppliers. This makes it difficult to identify the problem that resides in its production process. 3. On Evaluation and Control Balanced Scorecard (BSC) is a business strategic system that aids a company in aligning its business operations with its goals and strategy. It enhances the company’s inside and outside communications and keeps track on its performance in regard to its goals. It consists of four components, namely, mission, perspectives, objectives, and measures. There are four perspectives that an organization has to focus on this type of model: financial, internal procedures, education and growth, and customer (Balanced Scorecard Institute). Objective refers to any desired result that an organization wants to accomplish in a given period of time and resources (“Objective”). a. The mission of Ford is to sell more quality cars to its customers. To fulfill this, the company has to align its activities in the accomplishment of its mission by going through the four perspectives of BSC, such as financial, education and growth, customer, and internal procedures. For financial perspective, the objective is to acquire more sales. This can be measured by the amount of revenue incurred by the company. To sell more cars, the company needs to design a production process, which increases productivity and quality through internal procedures perspective. This can be measured through number average outputs produced and the number of defects produced. In order to prepare the employees in operating new production processes, training is provided, which refers to education and training perspective. This can be measured through the number of employees trained. Furthermore, meeting the demands of customers is related to customer perspective, which can be measured through customer surveys. b. Shown in Figure 1 below is an illustrative model of the BSC of Ford. Figure 1: BSC Model of Ford Figure 1 shows the BSC model of Ford, which illustrates the plan of activities and strategies that need to be accomplished in order to fulfill its mission of selling more cars than its competitors, Chrysler Group LLC and Toyota Motor Corporation, in the market. The strategies and measures correspond to each perspective of BSC, namely, financial, education and growth, customer, and internal procedures. 4. On Good Strategy/ Bad Strategy & The Strategist Kernel refers to the main core of three elements that makes up a good strategy. The three elements of kernel consist of diagnosis, directing policy, and series of coherent activities. Diagnosis determines and describes the characteristics of the challenge. A directing policy provides procedures on how to cope and overcome the challenge. A series of coherent activities refer to the execution of strategies that must be carried out to resolve an obstacle in conformance to the directing policy (Rumelt 25). a. The obstacle faced by Ford is its inability to produce the required number of cars demanded by its customers (Nair). The diagnoses of the company consider its production incapacity as the reason why it is unable to meet high demand of cars. There are few production lines and fewer employees, who can produce the required number of cars. A strategy plan to increase its productivity is developed by the company, which serves as its directing policy in meeting the high volume of cars demanded by customers in the market. A series of coherent activities, which makes up the strategy, including an addition of more production lines, employment of more workers, and elimination of unnecessary process to speed up the production are implemented to resolve its obstacle of producing more cars that are demanded in the market. b. A good strategy is described as a rational action supported by reasoning, a combination of idea and action projected by a kernel. A strategy is considered to be good if it is able to address the three elements of kernel in solving an obstacle of business performance, namely, diagnosis, directing policy, and a series of coherent activities. While a good strategy identifies the challenge through a diagnosis, a bad strategy fails to perform this task. A bad strategy also fails to set up realistic business activities, unlike a good strategy, which designs a directing policy to set up realistic resolutions to solve an obstacle (Rumelt 26). For Ford, a good strategy implemented was its resolution to solve the problem of production incapacity. The plan to add production lines, employ more workers, and modify the process addressed the challenged accordingly. On the other hand, the bad strategy implemented by the company was its inability to address the problem properly on product recalls. This has been an ongoing problem of the company but there was no solution has been developed to avoid product recalls. This led to revenue loss and a bad reputation to the company. c. The organization brings an efficient method of producing quality cars to the market through mobile assembly lines. This eases the labor of employees while maintaining a conformance to the quality standards of the company. This difference matter because unlike all other automotive companies, Ford is the one who started this trend of production process. This does not only contribute to efficient production, but it also adds another breakthrough in production design. This method is difficult to duplicate because its operation needs expertise, which can only be manifested by its workers and no other company can efficiently copy it for its own good. I believe that what we are doing today is what we need to do to matter tomorrow because we have introduced a new method of producing cars more efficiently and effectively. Since we pioneer this production method, we can be confident in meeting more customer demands in the future. It can also be benchmarked by other companies, but the edge in expertise and knowledge level lies with our company because we champion this production method in the automotive industry. This gives us a competitive advantage over our rivals in the business because we are capable of meeting more demands from customers in the future. Works Cited “About the Book.” HarperCollins Publishers. n.d. Web. 27 Nov. 2013. Balance Scorecard Institute. “Balanced Scorecard Basics.” 27 Nov. 2013. Web. 28 Nov. 2013. “Book Summary and Outline from Jack Welch’s Book, Winning.” n.d. Web. 27 Nov. 2013. Campbell, David, George Stonehouse, and Bill Houston. Business Strategy: An Introduction. 2nd ed. Woburn, MA: Butterworth-Heinemann, 2013. Print. Eckes, George. Six Sigma Team Dynamics: The Elusive Key to Project Success. Hoboken, NJ: John Wiley & Sons Inc, 2003. Print. Kazmi, Azhar. Strategic Management and Business Policy. 3rd ed. New Delhi: Tata McGraw-Hill, 2008. Print. Nair, Nandagopal. “Ford Has a Problem That Most Companies Would Kill to Have.” Quartz. 8 Aug. 2013. Web. 27 Nov. 2013. “Objective.” BusinessDictionary. n.d. Web. 28, Nov. 2013. Plume, Karl. “Ford Recalls 370,000 Lincoln, Mercury, and Ford Sedans.” Reuters. 31 Aug. 2013. Web. 27 Nov. 2013. Rumelt, Richard. Good Strategy/ Bad Strategy: The Difference and why it Matters. London: Profile Books Ltd., 2011. Print. Thompson, John. Understanding Corporate Strategy. London: Thomson Learning, 2001. Print. “Way.” The Free Dictionary. n.d. Web. 27 Nov. 2013. Webb, Candace. “The Strengths & Weakness of Six Sigma.” Chron. n.d. Web. 27 Nov. 2013. Welch, Jack, and Suzy Welch. Winning. New York, NY: HarperCollins Publishers LLC, 2005. Print. Read More