The Profit Motive of the Ford Firm and Risks in the Market - Case Study Example

Ford case study Despite the general rule that employment relationship is ‘at will’ and can be called off anytime, without reason or cause, there are a couple of exceptions to such a rule. It is not ethical to lay off workers. The economy is much suppressed and looking for alternative jobs is very difficult. Moreover, the stakeholder and human rights principle comes into play because Ford should consider the consequences after reducing the number of employees. The profit motive of the firm will be fulfilled but too much unemployment in the nation will weaken the economy as well. Even though most of the reductions will be made through attrition and retirement, employee retirement funds will be ended as well. Therefore, employees will not receive many benefits after their early retirement. The utilitarian rule says that everyone should benefit from any activity and it should not be one man’s benefit against another mans loss. Whereas, Ford is only planning to restructure itself keeping in mind the competitive aspect and profit motive. Reduction of 35000 employees is enough to cause unemployment hype in an economy. Labor force feels pressurized and insecure, especially those employed on a monthly salary as their stability is shaken and confidence hurtled. To conclude, I think it was not ethical of Ford to think of firing 35000 employees. 2) It is Fords responsibility to notify its employees well in advance if they are to be laid off. Instead of ‘firing’ them, they should resign themselves and look for suitable other jobs. Ford should actually help them look for another stable job and give good recommendations for the employees for the ease of their next employment. However, it is understood that Ford cannot officially set up a department and facilitate these human resource activities because they are already tight on money reserves. Instead, Ford should think about other alternative ideas asides from restructuring entire operations. No I don’t think Ford has the same responsibility for the employees of its suppliers because directly employing someone is separate than working with people employed by other firms. The suppliers are contracted a certain amount of time to provide parts and raw materials and it’s a pure business deal. If, for any reason the contract doesn’t exist anymore, Ford has nothing to do with its employees. They can look for other contracts and its all on a temporary basis anyway. Demand also fluctuates depending on the release of models and demand for cars. 3) Keeping in mind Fords status in the world as the number 2 automaker and coping up with intense pressure from its competition, it had to immediately take steps to revitalize its profits. Asides from only freezing salaries of executives and abolishing retirement plans, they could’ve focused on reducing raw material cost. Money could’ve been saved by changing suppliers for tires or changing the design of SUVs after heavy consultations to reap profits in the future. Instead of this massive restructuring, prevention steps could’ve been taken to fix the structure of the SUVs. This might’ve increased the reputation of the firm instead of completely getting rid of an entire range of models. Before making these restructuring plans, Ford should make sure that closure of several plants will disrupt ties with worker unions and can lead to a negative perception of the company socially as well as economically. Hence, Ford should’ve heavily consulted experts before announcing major restructuring plans in order to plan other money reducing activities. 4) Ford took immediate action in response to a failure of its SUV models due to a technical fault in it. As seen from one point of view, this action would save a number of lives from accidents. However, all the actions have been from a pure profit motive to cut down costs as soon as possible by closing down factories, freezing salaries and firing employees. Therefore, these ideas don’t prove Ford to be socially responsible. However, Ford could still be ‘socially responsible’ by indulging in CSR activities which will hold Ford globally accountable for them. In order to be successful, Ford needs to be environmentally and socially responsible. It should be identified that the vision of sustainability comes with long term strategic priorities and along with restructuring, the public relations of the firm should be intact with its overall status in the market. In order to reduce resource use, developing ‘green’ and safer products is a viable option (CSR Case study- Ford, 2011). Reducing exhaust car emissions can be practically done by inventing convertors that will block any pollution from disseminating in the environment. Instead of pressure groups hampering the business agenda it is better to use innovative technology to become more socially responsible. Pollution from factories disrupts the environment by a great level and therefore alternate efficient renewable energy should be used such as wind turbines. Working with a variety of stakeholders like household members living nearby and neighborhood will attract positive media coverage. In reality, Ford has been actively involved in CSR activities. In 2005, it published a report on the implications of business on climatic changes and was one of the few automotive industries to implement a code of working conditions for employees. 5) In January 2010, Toyota announced a technical fix for its sticky gas pedals. There was problem in the acceleration of the car and it didn’t just happen overnight. Such a problem was occurring since months but quality control wasn’t in check in the heavy competition and aggressive race of supplanting General Motors. It stopped the sales and production of 8 of its top selling cars in the United States. Toyota recalled more than 9 million cars worldwide and faced heavy losses of billions of dollars. One of the top brands in the world faced a heavy hit and sudden bump in its operations. It was a critical period of the company and simultaneously maintaining a good corporate reputation is indeed a tricky task. Therefore, both the companies, Ford and Toyota faced losses as a result of a technical fault. These companies mostly just assemble cars with parts made from other firms. The gas assembly was made by a company called CTS in Indiana. It was said that it is even more embarrassing for the company when the outsourced component is defective as it shows the weakness of the company. There is some mismanagement in the supply chain management and monitoring is a critical factor for companies relying on suppliers. The difference between the two cases is evident. Ford entirely restructured its company by shutting down factories, freezing employee salaries, increasing health premiums and firing 35000 employees. This affects the direct stakeholders and creates further hype in the market. However, Toyota didn’t fire any worker, not to any public notice at least, but the company didn’t have much choice either. The reality is that Toyota is positioned for recovery and even though competitors would capitalize on this misfortune, the reputation for quality products and CSR has been maintained since a prolonged time (Connor Michael, 2010) which will definitely give it an edge in the market. Also, the truth is that aggressive growth can create such risks in the market worth billions of dollars and in order to compete in the rat race of outshining one another, quality control is pushed to outer limits. Works Cited "CSR (corporate social responsibility) Case Study - Ford." CSR, sustainability & governance consultants. N.p., n.d. Web. 12 Dec. 2011. . Connor, Michael. " Toyota Recall: Five Critical Lessons | Business Ethics." Business Ethics | The Magazine of Corporate Responsibility. N.p., n.d. Web. 12 Dec. 2011. . Read More