Strategic Leadership in a Changing World - Essay Example

STRATEGIC LEADERSHIP IN A CHANGING WORLD-FORD MOTOR COMPANY Strategic Leadership in a Changing World-Ford Motor Company Ford Motor Company is a global automotive industry leader based in Dearborn, Michigan (Niemann 2012, p. 2). Henry Ford and 11 business associates established this company in 1903 where it manufactures and distributes Ford and Lincoln brand vehicles across six continents (Dornbach-Bender 2009, p. 4. In the recent times, the company expanded to many countries where it operates about 70 plants across the globe and employs more than 166, 000 employees (Niemann 2012, p. 2). At the time of establishment, U.S hosted 87 other car companies and Ford was seemingly a luxurious, expensive, and a car for the wealthy people. Henry Ford recognized the fact that the company can use the right technology to avail quality cars to the public at an affordable price. With an efficient production line, Ford manufactured many cars at lower costs. The company relied on innovation to become the most successful car-producer in the U.S (Niemann 2013, p. 2). Today, the company aims at delivering the world’s best cars, utilities, and trucks, including a lineup of vehicles that are more sustainable in how they make them and how they operate (Niemann 2013, p. 4). The company depends on its employees to deliver its mission that includes building great products that contribute to a better world (Niemann 2013, p. 4). The company abhors sustainability by adopting strategies and goals that minimize environmental impacts, including reducing contribution to climate change (Niemann 2012, p. 5). Moreover, the company plays a role in developing and implementing solutions to the global water challenge (Niemann 2012, p. 5). The company enhances vehicle safety by giving customers peace of mind and making the world safer by developing advanced safety technologies and making them available across a wide range of vehicles (Niemann 2013, p. 6). As such, the company continues to gain competitive market advantage by reducing the environmental impact of our products and facilities, supporting positive social change, and ensuring economic viability for long-term growth (Niemann 2013, p. 7). Indeed, Ford Motor Company manufactured the best-selling brand in America where it sold more than 2 million cars in 2012 (Niemann 2013, p. 4). Moreover, the company introduced six new choices of electrified vehicles and by March 2013, the company was the second leading seller of these vehicles in America with a 15 percent of the hybrid sales. However, it is quite notable that Ford Motor Company faces strategic issues and options in the global market and in the motor vehicle industry. Indeed, during these volatile economic times, Ford Motor Company faces many strategic challenges (Dornbach-Bender 2009, p. 3). Ideally, Ford Motor Company stands out as the most financially sound American car manufacturer and has enough capital to survive through the global recession (Dornbach-Bender 2009, p. 3). Indeed, financial analysts ascertain that Ford may not seek for government funding like major car companies who face serious financial challenges. However, while the financial challenges encountered by other car companies like Chrysler and/or General Motors may lead to their bankruptcy, Ford should be wary of such financial trends since they derive serious risks to the company (Dornbach-Bender 2009, p. 3). Indeed, this strategic issue will help Ford establish strategic leadership in a changing world. In fact, Ford must consider the fact that the government may choose a winner from the bankruptcy, Chrysler and/or General Motors may emerge from bankruptcy with a significant cost advantage, and the bankruptcy may disrupt the supply chain to the disadvantage of Ford (Dornbach-Bender 2009, p. 3). Indeed, the bankruptcy of many suppliers may cause disruption of the company’s supply chain (Dornbach-Bender 2009, p. 14). Another strategic issue and opportunity relates to the ‘One Ford’ strategy (Niemann 2013, p. 2). If the management implements the strategy in an effective manner then Ford will record immense success in North America However, the company must beware that this strategy can also fail since the standardization across regions can predict the success of this strategy since it depends on the consistency of consumer tastes across the region (Dornbach-Bender 2009, p. 14). As such, failure to address the dynamics in different regions will limit the success of the strategy. To avert this possibility, Ford should continue to execute the ‘One Ford’ strategy and differentiate its products from those of its competitors. The ‘One Ford’ strategy is a significant strategic issue since its failure would be disastrous to the success of the company in the global market (Pope 2012, p. 1). Another strategic issue that affects the company relates to expansion to foreign markets. Indeed, Ford should consider shifting its production from America and the Euro Zone to Mexico and Eastern Europe (Dornbach-Bender 2009, p. 4). This will help the company to lower production costs and establish a wide market in the competitive world. The company should also exploit the market opportunities in China and India and apply capital to ramp up its sales and market share (Dornbach-Bender 2009, p. 4). The other strategic issue that influences Ford is the immense competition in the automotive industry within the United States market. Indeed, some of the major competitors include GM, Toyota, Chrysler, Honda, and Nissan (Dornbach-Bender 2009, p. 7). As such, the company must adopt a strategy that will differentiate its products and ensure that it remains competitive and profitable in the global market (Dornbach-Bender 2009, p. 3). Indeed, the company was initially focusing on UV and truck lines that were more profitable while losing money on its smaller vehicles. However, this strategy is no longer viable subject to the recent changes in the global market demand. As at now, Ford Car Company is still losing huge amounts of money on many automobile lines in America thus demeaning the company’s profitability (Dornbach-Bender 2009, p. 13). This will force the company to change its marketing strategy and marketing penetration strategy. Ideally, the company should focus on expanding its market penetration to China and India, which have great marketing opportunities (Dornbach-Bender 2009, p. 4). However, this raises a strategic issue in that the company is facing reducing track sales, which may limit the company’s capacity and timing to shift production to China and India to meet changing demand (Dornbach-Bender 2009, p. 14). Another fundamental strategic issue that the company faces is the challenge of selling durable cars during the global recession (Dornbach-Bender 2009, p. 13). This relates to the fact that the company is incurring huge costs in manufacturing and attracting low selling prices, which amounts to great, loses. Such poor financial results are exposing the company to great capital strains (Dornbach-Bender 2009, p. 14). Indeed, unless the financial trends stabilize, the company might have to seek government financial assistance. This forces the company to establish an effective financial strategic plan. Another strategic issue that Ford faces relate to climate change and renewable energy, which is the most dominant sustainability issue for the company (Ford 2013, p. 1). Ideally, the company has a science-based climate policy that seeks to stabilize CO2 concentrations in the atmosphere at a level that avoids the adverse effects of climate change (Viera 2012, p. 3). As such, the company designs its manufacturing process towards achieving this goal. Indeed, most of the cars manufactured by the company are leaders in fuel economy and reduce CO2 emissions across the global product portfolio. The company’s climate goal resides in on Ford’s Science-Based CO2 Targets where the company aims at contributing to climate stabilization (Ford 2013, p. 1). Indeed, the company has been implementing renewable energy projects. However, climate change remains a major strategic challenge since the company lacks a specific target for renewable energy generation or sourcing at the present. Indeed, although Ford has made significant efforts in addressing climatic conditions in its production and operations, the company has the potential to improve such efforts. In fact, the company should improve the fuel economy of its vehicles across the globe. Moreover, the company should establish a greenhouse reduction policy and commit itself to sourcing more renewable energy (Ford 2013, p. 1). The company’s response to climatic disasters is also questionable. Nevertheless, the company responded well to the Hurricane Ike that wreaked havoc across Texas where it offered Ford Motor credit offers to the victims. The company should enhance this response mechanism in its strategic plan to ensure that it safeguards its customers from disasters. Water is another strategic challenge that Ford Car Company faces. Indeed, the company prioritizes water and recognizes the human right to water. The company integrates water into its operations. This emanates from the fact that the company is a direct water consumer and a large purchaser of water-intensive materials, parts, and components, which exposes the company to serious risks. The company seeks to address these risks by working towards achieving water efficiency in all our facilities and prioritize major facility water-reduction investments based on local needs and conditions. Since water is a great resource in this company, Ford seeks to produce vehicles that are more water efficient as an environmental priority (Ford 2013, p. 1). In doing this, the company expands its evolving water strategy, uses water efficiently, and analyzes water-related risks. The fact that the availability of high-quality water that address the needs of all persons is a fundamental issue that relates to global sustainability, Ford need to institute a strategy that will enhance the availability of such water (Niemann 2013, p. 5). Indeed, Ford has the potential to develop a sustainable mechanism to address the issue of water in this industry. Another strategic issue that Ford is facing is Europe. Europe plays a fundamental part in Ford’s business because it forms a large portion of its market though it has been losing significant amounts of money in the recent past. Indeed, subject to economic recessions in Europe, Ford incurred over $1.7 billion loses in 2012 and over $ 462 million loses in the first quarter of 2013 where loses are likely to persist (Rosevear 2013, p. 1). The economic recession in Europe lowered new-car sales and the situation may get worse (Niemann 2013, p. 4). Notably, Ford is the second-biggest auto brand in Europe and the company sought to protect its market by adopting a comprehensive turnaround plan for Europe where the company sought to reduce production costs by closing one factory in Belgium and two in the U.K (Rosevear 2013, p. 1). Moreover, adopted the strategy of introducing new global products in the European market and focused on more profitable retail sales over sales to rental-car fleets. At the same time, Ford Car Company aimed at cutting back on discounts, in an effort to make sure that it is maximizing the profits on the cars it does sell. With these measures entailed in the strategic plan, Ford remains hopeful that it will regain its market presence and profitability or break even by the end of 2015 (Rosevear 2013, p. 1). In the meantime, the company enjoys huge sales and market dominance in the U.S subject to its strategic approach. The company will establish many opportunities if this strategic approach materializes in Europe in the appropriate time. Notably, the company’s strategic approach resonates well with Wall Street because it leads to huge success in the U.S market (Rosevear 2013, p. 1). Wall Street and Ford hopes that this approach will yield good results in the European market. However, there is no certainty on the success of this strategic approach since it is a complicated and the company stakeholders must monitor and adjust the plan where necessary to ensure that it achieves the purpose. Managing the impact of a growing business is another strategic issue that Ford Car Company faces. Notably, the company’s turnaround plan and the company’s global growth in has been China and India has recorded immense profits in the last five years (Ford 2013, p. 1). However, the company faces the challenge of ensuring that it manages the environmental and social risks that relate to increasing operations in Asia and addresses the environmental implications that relate to the continued growth in the automobile industry across the globe (Ford 2013, p. 1). Ford Car Company adopts climate and water strategies as seen above for purposes of addressing the growth dynamics in the industry. The company discusses the expansion to new markets and analyzes the limitations on growth and new products with an aim of enhancing overall customer satisfaction. Ideally, Ford has an opportunity to address the environmental and social issues that relate to increasing operations in Asia and the continued growth in the automobile industry across the globe (Ford 2013, p. 1). Public policy is a strategic issue that can address this strategic challenge facing Ford. As such, the company is experiencing a challenge in ensuring that it adopts policies that will address environmental and social issues related to the growth and expansion of the company and the entire industry. Moreover, the company must engage in industry associations and use the influence of trade unions to ensure that such unions comply with the requirements and standards for sustainable growth (Ford 2013, p. 1). The facts that the company is participating in public policy discussions and abhors public values that enhance sustainable growth offer a strategic opportunity for the company’s success (Ford 2013, p. 1). Quality is another strategic issue that Ford Car Company must address. According to reviewers, Fords new cars and trucks are huge improvements over the old models (Rosevear 2013, p. 1). However, the quality of such cars is demeaning according to quality surveys. Indeed, while Ford’s cars are having low quality marks, General motors, which is it greatest competitor is enjoying high marks in the quality of its products (Rosevear 2013, p. 1). Moreover, consumer reports have also been lamenting the quality of Ford’s products. Notably, the company has been facing great challenges in launching new products where the suppliers led to faulty parts on all-new vehicles (Rosevear 2013, p. 1). The faulty parts have led to numerous recalls and poor rates in the quality standings. In an effort to resolve this anomaly, the company is establishing closer working relationships with the suppliers and is changing the manufacturing process (Rosevear 2013, p. 1). This ensures that the launching of the new products takes place in an effective manner and meets the quality standards (Rosevear 2013, p. 1). However, customers are encountering huge problems with the MyFord Touch system, which is lowering the company’s quality rankings (Rosevear 2013, p. 1). Indeed, although the MyFord Touch system sought to enhance the functionality of the products, the user interface of the system is prone to malfunctioning and hence its quality wants (Rosevear 2013, p. 1). Nevertheless, the company has the capacity to update the software with speed although the system is yet to reach its maximum utility (Rosevear 2013, p. 1). As such, car owners are experiencing inefficiencies while using their cars. Therefore, Ford Car Company must address quality as a strategic issue that is affecting the company’s position in the global market and in the automobile industry. Another strategic issue that Ford Car Company is facing is the challenge of communicating to investors (Maynard 2013, p. 1). Ideally, sustainable development of any industry depends on the companies’ presence in the capital markets. However, such sustainable development will rely on the capital allocated to the reference companies and projects that conserve the environment and maximize the opportunities to enhance the overall value of the companies’ stakeholders. As such, Ford Car Company should seek for such opportunities with an aim of showing its shareholders how its efforts towards sustainable development are boosting the share value. Ideally, the company uses the sustainability report to communicate the business value of the company’s sustainability strategy and performance (Ford 2013, p. 1). This information helps the investors to decide on whether to invest on the company, which creates growth opportunities for the company (Maynard 2013, p. 1). Indeed, the company’s sustainability report has been including the financial performance of the company for the last eight years. Moreover, the report entails the resultant benefits of addressing sustainable development and financial performance thus helping the company and the investors to make informed business decisions. Indeed, the 2012 Ford Annual Report entails specific areas of sustainable development that the company will address (Ford 2013, p. 1). Moreover, the management of the company has been making significant efforts towards informing the investors and other interested parties on the sustainability and financial performance of the company. This increases the opportunities for capital allocations and sustainable growth in the company. The company has a duty to establish effective and attainable goals, targets, and performance data. Notably, the company has established various water, climate, and waste goals that seek to achieve sustainable development and growth in the industry (Ford 2013, p. 1). However, although the company has defined goals there is need to establish more goals that will depict the company’s commitment to diversity and developing a sustainable supply chain. At the same time, the company faces the challenge of disclosing its market trends towards achieving the set goals. Ford Car Company has established defined goals related to supply chain sustainability, which increases the growth opportunities for the company. Through these goals, the company encourages its main suppliers to adopt codes that ensure compliance to the set quality, corporate responsibility, and working conditions standards (Viera 2012, p. 2). This enhances the company’s compliance to international standards. In light of enhancing compliance and achievement of the set goals, Ford should derive a strategic plan that will support the training and assessment of suppliers (Ford 2013, p. 1). The company should enhance its reporting on supplier training to ensure that the company maximizes the available opportunities presented by supplier sustainability. The company faces numerous energy resources and other large-scale resource challenges. The company should establish a strategy that will guarantee enough fuel for future sales growth in the company. Notably, fuel is a fundamental issue affecting Ford Car Company and the entire automotive industry. As such, the company should seek representation in the materiality matrix (Ford 2013, p. 1). The company should also consider hiring more engineers in the U.S and enhancing health and safety regulations in the company to motivate employees and foster teamwork for the good of the company. Notably, the company has been advocating for ethical business practices by adopting a strong anti-bribery policy to address eminent corruption in the industry (Ford 2013, p. 1). However, the company faces the challenge of demonstrating how the company is responding to ethical challenges that relate to the company’s expansion in China and India (Ford 2013, p. 1). As such, it is worth noting that Ford Car Company is facing various issues that form public debates. The investors and interested stakeholders are advocating for the address of these strategic issues since this would guarantee sustainable growth in the company and in the entire industry. 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