Strategy Planning for Ford Company - Case Study Example

 1 10 July 2010 Ford Ltd Strategic Planning Ford Ltd has reconstructed it operations in 2007, using a reconstruction plan called One Ford. This reconstruction is focused on lifting barriers between different divisions of the company and developing new customer-valued products. This transition has proved a significant step in company’s recovery but as William Clay Ford, Executive Chairman Ford Ltd said “…journey is far from over”. In this report I shall discuss whether the strategies are taking the company to its objective of being profitable again or not. The plan is targeted to influence and improve four key areas, these are operations, product development, finance and resource management. We shall discuss every area in detail with its potential long- and short-term effects. Operations: Company has defined its operational strategy as: Aggressively restructure to operate profitably at the current demand and changing model mix. This type of strategy is termed as Business Process Re-construction in usual business language. In Ford Ltd this strategy hits the areas which range from supply chain management to workforce management. To reconstruct supply chain management One Ford had set targets regarding their suppliers and distributers. They are reducing the number of suppliers, thus holding them more accountable than before. This strategy seems to be successful as the company has achieved objective of this strategy, greater reliability. This part of wide-ranging strategy also hits the strategic implementation key of team management. And again for this key the strategy appears fruitful. Because the company has successfully managed its suppliers as a co-operative and reliable team. By implementing this strategy company is also able to manage its resources efficiently, as less management time is required to appraise and manage suppliers. Same is true with respect to distributers. 2 Reselecting and consolidating distributers will help fix the broken core process of distribution. By consolidating the dealers will be able to provide more efficient and cost-effective sales. By developing them the company will be able to achieve greater loyalty from its dealers, so it can build up a more appropriate and task-oriented team. Another example of fixing broken core process is gathering globally scattered operations at a single plat form. This strategy will help the company getting more knowledgeable about the customer needs and factor conditions of different regions of the world. The company is also eliminating communication barriers between its customers (mainly end consumers) and its core business personnel, by developing body shops along with its assembly plants. This enhanced communication will make company more and more aware of customers’ need. To re-organize its work force the company is considering reducing positions at Ford Credit. This will help in cost-cutting. But the dark side of the issue is that it will create a negative impact on company’s reputation and on retained employees’ morale. This negative image should be turned into a co-operative one by selling the strategy (communicating the issue to public and pursuing its acceptance). The company should motivate employees, so they accept the change with greater assigned responsibility. The workforce should be motivated to accept more competition and goal-congruence. This can be done through proper consultation and communication. And the involvement of enthusiastic leadership style. As the company is able to retain workforce interest in the company its morale high, we can conclude that appropriate leadership style is playing its role. 3 Product Development: The company in its new strategy termed as One Ford is now-a-days more concerned with developing new products than it was ever before. Its strategy regarding new product development is defined as follows: Accelerate development of new products our customers want and value. So the next goal set by the company was to speed up its innovation process. This goal is supported by various tactics including research and enhanced development process. These tactics are discussed below in further detail: First of all the company has brought together all its resources on one platform, so that the company can better understand the needs of its world-wide customer base, with particular attention being given to regional and/or local needs of customer-base. This understanding will enable (/is enabling) the company to become more customer-oriented. Barriers between customers and the product development staff (as discussed earlier) are lifted by providing body shop facilities on its assembly plants. In this way the company has fixed the broken core process of communication. The company by bringing together customers (with their perception about quality) and developers has facilitated building a team to innovate in order to improve the comfort offered by the Ford’s products. The company is defining a culture of customer-oriented quality. Moreover it is focusing on its responsibility as a social citizen and is trying to adopt policies which is consistent with this responsibility, example is the idea ‘Drive Green’. This objective will act as a good communication tool for the company and it will define the company’s positive image. 4 Finance: The company has significantly restructured its financing resources, by repaying, rescheduling, or restructuring its debt. It has summarized this strategic plan as follows: Finance our plan and improve our balance sheet. The company has restructured its financial resources significantly. This can be seen from the move company has taken with VEBA loans. Part of loan provided by VEBA is repaid in the form of financial assets, and part of it is converted into equity. The company is trying to pursue a strategy of lower gearing, this is apparent from its moves regarding debt repayments. Although it has issued debt, this debt is lower than the equity issues during the period. Moreover the company is trying to convert its issued debt into equity. This shows a change in financial structure which in turn shows a shift towards a more equity based culture. It is apparent from the report that the company is under a strong leadership as it has well define financing policies. It has managed an optimum level of gearing which is needed to remain in operation on one hand, low enough to remain out of financial distress on other hand. It has succeeded in minimizing its liabilities at the same time keeping its debt reduced. Team Utilization: The company has defined its last objective, which can be taken as the best representation of the spirit of One Ford strategic plan. This strategy is to gather all the resources and core competences of organization at one point so as to maximize the return. This strategy is defined by the company in the following words: Work together as one team, leveraging our global assets. 5 This strategy has proved a number of positive results, including better management of resources as well as better management of people. The company is quick in reviewing its performance, this timely appraisal gives the company opportunity to locate discrepancies in existing working environment. Moreover, the enhanced environmental scanning process, which the company is operating, has facilitated in forecasting the future culture pursued by the customers and society. This will enable the company to accomplish the goals its has set-to develop products customers want and value. The company’s final report shows an ongoing constant communication with its customers. But does the company communicate with other stakeholder, is the next main issue. The company is in constant contact with its shareholders, this is apparent from the support provided by shareholders and potential shareholders of the company. The company also have communication with its loan-providers, again apparent from their co-operation. Public is also given the importance which it deserve, this can be seen from the events arranged and support provided by the company to facilitate welfare of the world/environment. Moreover the company is concerned with the environmental issues, which is apparent from the steps it has taken to reduce CO2 emission of its products. So it is apparent that the company knows the significance of communication, and is using it as a tool to overcome the difficulties it is facing during the complicated process restructuring. The company is defining its culture based on the concept of innovation, with customer support and company’ restructured communication channel and business processes, achieving this objective is not a big task. Read More