Ford Motor Company - Case Study Example

“Ford Motor Company (Ford), incorporated on July 9, 1919, is a global automotive and mobility company. The Company's principal business includes designing, 3 manufacturing, and marketing, financing and servicing a line of Ford cars, trucks, sports utility vehicles (SUVs), and electrified vehicles, as well as Lincoln luxury vehicles. The Company operates in two sectors: Automotive and Financial Services. The Automotive sector includes North America, South America, Europe, Middle East & Africa, and Asia Pacific segments. Its Financial Services sector includes Ford Credit and Other Financial Services segments. Its vehicle brands include Ford, Ford-Lincoln and Lincoln. The Other Financial Services segment includes holding companies, real estate, and the financing of some Volvo vehicles in Europe. The Company has over 70 plants across the world. Through its wholly owned subsidiary Ford Motor Credit Company LLC (Ford Credit), it provides automotive financing products to and through automotive dealers throughout the world.

Automotive Sector:

The Company's North America segment includes the sale of Ford and Lincoln vehicles, service parts, and accessories in North America (the United States, Canada, and Mexico). The South America segment includes the sale of Ford vehicles, service parts, and accessories in South America. The Europe segment includes the sale of Ford vehicles, components, service parts, and accessories in Europe, Turkey, and Russia. The Middle East & Africa segment includes the sale of Ford and Lincoln brand vehicles, and related service parts and accessories in the Middle East and Africa region. The Asia Pacific segment includes the sale of Ford and Lincoln vehicles, service parts, and accessories in the Asia Pacific region. All of its vehicles, parts and accessories are sold through distributors and dealers, which are independently owned. The Company sells vehicles to its dealerships for sale to fleet customers, including commercial fleet customers, daily rental car companies and governments. Ford also sells parts and accessories, primarily to its dealerships (which in turn sell these products to retail customers) and to authorized parts distributors (which in turn primarily sell these products to retailers). It also offers extended service contracts.”

Task 1

In the past two decades the economic crisis has affected the automotive industry since their products are luxury goods and with the economic crisis affecting the entire world, the automotive industries had their worst sales in the early 1990s and middle of the 2000. Ford being one of the biggest motor company experienced economic constraints during these economic crises to a point that the company was on its way to collapsing but the U.S. government bailed it out among other companies (10K). In 1994, the company registered high revenues and profits but the profits did not represent the success of the company as the automotive category was facing huge losses at the time. The company thus implemented the Ford 2000 strategy to improve its business and compete favorably with its major competitors namely GM and Japan auto companies. The company also closed some of the production companies to reduce cost and start its build up process from scratch. The main shortcoming of the strategy was dividing the geographical regions’ companies under the organization where each manufacturing company from different companies worked independent from the others (ALEXY & REITZIG, 2012, p. 3). This led to the organizations competing against each other for instance the branch in Germany competed with that in England making it difficult for Ford to compete and gain competitive advantage over the competitors. In 2006, under new CEO Alan Mulally, the company adopted a new strategy One Ford. The strategy is currently in use and focusses on uniting the company in all geographic regions, departments and staffs, enabling cost reduction and ensuring customer satisfaction.

One Ford Strategy

The CEO noted that the organizational structure and positions in management was built on the senior managers hoarding information and blaming others for the inefficiency of the company. The strategy was the best ground for the needed changes and realigning the company into a global resource. It would enable the dynamic comparative landscape that would capitalize on efficiency and quality of the products. One Ford strategy main objective was redesigning the purchasing and supply operations base. It would also enable the easier management of the supply chain while reducing the vehicle components from over 2000 to 750 supplies (FORD MOTOR COMPANY, 2015). It would enable the company develop the unity needed thus work in one team, under one plan to accomplish the main goal of the company. The company’s strategy ensured that the company branches in different geographical regions worked together to design, produce and market the cars.

Ford’s organization Structure

The company is divided into four major geographical regions namely North America, South America, Europe and Asia Pacific Africa. Each geographical region is headed by the executive vice president who reports directly to the CEO of the entire company. The company has a hierarchical organization structure which is similar in all regions based on functionality. The middle managers for instance the accounting, sales, marketing, purchasing and other departments for instance IT department are under the senior managers of the regions (LICHTENTHALER, HOEGL & MUETHEL, 2011, P. 46). The operation managers on the other hand are answerable to the middle managers and they include team leaders and supervisors who monitor the workers directly. Although the structure is hierarchical, it is complex and makes it hard for effective communication which takes both downward and upward structure. The information system of the company has enabled profit increment but the embracement of technology is still wanting as the company forge towards making the company more effective in the communication to help improve the running and production of all the branches. The One Ford strategy enables video conferencing of the top managers weekly to convey their ideas. The CIO who is the head of all IT system helps the company information and innovations of the company.

retrieved from: Ford Company-Business Architecture

The above structure illustrates the many departments in Ford under the One Ford strategy. It illustrates that all the departments are different according to their functions but since the factors are interdependent the company has to have a system that it boosts the information. The company has undertaken more efforts on enabling embracement of technology thus invested huge resources to enable the customers’ access of information from the internet via the company’s websites. The website has contributed to the ordering of cars by the clients and enable the company to manufacture or produce the cars needed and deliver in 15 days. This illustrates that the customer support system passes the information effectively to the design and operation team to enable the production within the set date (BALTZAN & PHILLIPS, 2010, p.12). The finance department also gains information from these departments to ensure that all supplies are available while also ensuring the use of cost-effective method of production. The support department is responsible in surveying the market with the support of the marketing and product service to enlighten the planning department on the tastes and preferences of a given area or culture.

In India, the company faced many challenges by trying to standardize its production according to the domestic or American and Europe preferences since there were ineffective information sharing and data collection in the market thus leading to huge losses when the company use Ford 2000 strategy (GUPTA, 2011, p 17). These failures made it important for the company to work together towards a similar goal thus the use of tele-conferencing in all stages in the bid to enable cost-effective strategy while ensuring quality improvement. The marketing, design and distributive department work together to advertise its products and services and ensure that the creativity needed to attract customers is available and products are distributed effectively (BOOTH, ROBERTS, & SIKES, 2011, p. 6).

During the use Ford 2000, the lack of unity led to companies having different goals and competing against each other but the One Ford strategy enables all regions to work together towards attaining the main goal. It was hard for the human resource manager to motivate the employees and the company mainly benefited from the individual talent but under the current strategy, the company is working as a team and ensure that individual talents and weaknesses are complemented by others in the team (BUELEN, 2009, p. 277). Under the hierarchical organization structure, information is passed via both vertical and horizontal method whereby the senior most manager who heads the entire company receives information and passes his decision to the senior geographical regions manager, who get their information from the middle managers. Middle managers can pass information horizontally as earlier illustrated but also from the operation managers who are below them.

The above chart illustrates the needed information systems to enhance communication in the hierarchical structure which will be discussed later in the paper. The executives need the information to plan for the future of the company, senior managers need the information to help predict the future and make the needed decisions to enhance the progress of the company. Middle managers need the information to ensure the smooth running and management of the company whereas the workers or operation managers collects and decode information for the daily running of the company.

Task 2

Technological advancement has led to the improvement of all processes and functions in all industries but the most essential function in the success of any business is effective communication. The need to channel cost effective channels of communication is essential in all functions of a business and with the global community embracing it, companies have embraced technology to enable quality and fast production of their products and easier ways to market their goods. The organizations also gain from the feedbacks of the customers to enable improved service/product delivery to the satisfaction of the customers’ tastes and preferences. This information is essential in the production and quality of goods as they increase profits. Information being the key has led to the adoption of various information system depending on the company’s need thus some systems are simple whereas others are complex and advanced (CHUI & FLEMING, 2011, p. 29).

The aim of any system is to share the information and work towards the achievement of the main goal. The main characteristics of any system are based on designing the system to attain a predetermined objective, the systems must be interdependent to ensure the organization works as one body and it should be based to ensure that the main objective of the company is given the first priority and it should be secure and confidential. Since systems are interdependent, they enable information serving all the departments and ensure effective communication under all organizational structures (JARUZELSKI, & DEHOFF, 2011, P. 13). They help in the planning, organizing and controlling the running and management of the organization.

Types of Information Systems

The designing and choice of any information system should be based on the information needed and the different levels of management and the information they need. There are many types of information systems but this paper mainly focusing on Ford Motor Company the most appropriate category to discuss should be based on the organizational structure of Ford and since computers are becoming the most essential in the current ICT, the paper intends to discuss the computer based information systems.

Management Information Systems (MIS)

Computers being the most significant devices in management, have several systems that help in the operation of organizations. The level of management is also essential in determining the kind of information need in the decision making and problem solving (KLEINER, 2012). The lowest level of the hierarchical management needs detailed internal information for the daily running of the company rather than the structural control information (CEDARCRESTONE, 2009, p.11). Higher level management on the other hand require information to plan for the future objectives thus they require summarized information from the various sources to help in the planning of the future. MIS is defined as a person-machine system and a highly integrated group of information. It consists of processing functions designed to enable the management with a vivid picture of all specific operations. It is the combination of information systems that helps in the daily operations and handling of inquires as fast as possible when received (CEDARCRESTONE, 2010, p. 34).

It provides file definition, maintenance, transactions, updating and inquiry processing under one or more data bases. The key element of MIS is the database which is a non-redundant collection integrated data items that can be processes through application programs and available to many users. It enables many users to use the same files at the same time and information is accessed through a data base management system (DBMS) (JARUZELSKI, & DEHOFF, 2010, P. 7). The main advantages of the data system are the sharing of centralized files accessible via all applications, reduction of processing time, elimination of storage space duplication and secure storage and access of data stored when needed. The main shortcomings are cost of specialized personnel and lack of privacy of sensitive data from unauthorized access.

Although MIS is quite informative, it is primarily used by middle and top management. The middle and top managers use MIS to forecast, analysis of the company and when providing range plans and periodic reports. Although operation managers use MIS, they use them for short-term planning, exceptional and periodic reports whereas the support staff can use it for special analysis and reports needed to help the top management in planning and control (LAUDON & LAUDON, 2012, P. 39). The main weaknesses of the current MIS reports are their nature to represent historical and dated information. Many installations lead to having databases that are not in line with the requirements of the user thus lack of congruent with the real world. Inadequate data updates jeopardize the reliability for all users.

Decision Support System (DSS)

MIS may be informative to the management but it has limited support in decision making. DSS on the other hand advances capabilities of MIS thus assisting managers in decision making. DSS stands for decision, support and system whereby decision emphasizes on decision making problem situation rather information processing or retrieval (JARUZELSKI, & DEHOFF, 2008, P. 12). Support portrays the requirement of computer-aided decision situation and System stands for the integrated nature of problem solving man, machine and decision environment. It shows the interactive computer systems to help the users use data and models to solve unstructured problems. There are different views of DSS where some see it as an extension for MIS, some as a subset of MIS but it is mostly viewed as a second generation MIS. It is used by top managers to answer the what if questions in the need to forecast and predict the future or solving the anticipated risks. It relies on evaluation of problems via the evaluation of variables and their relationships. It provides intelligence via information retrieval and statistical packages. It also looks and evaluates the alternatives of any decision thus leading to better decision making. It is most effective where uncertainty as the manager is able to evaluate the different output of any choice or decision.

Transaction Processing Systems (TPS)

These are systems mainly used by the operational-level management as they help in providing the key data required in the supporting the operations management. The data under this system is derived from automated and semi-automated tracking activities and the basic transactions. They data is based on validating, merging, updating, listing and other low-level management to generate detailed reports, lists, summary reports and action reports that help the middle managers. The major examples of TPS are order processing systems, payroll, funds transfers and stock controls. TPS enable the production of information for other systems and are based on efficiency of the workforce.

Executive Information System (EIS)

They are used senior most managers and executives as they help them analyze environment both internal and external to determine long-term trends. EIS are designed to be operated directly by the executives without the need of intermediaries as they are easily tailored for individual usage and understanding. The information is summarized and simulated thus helping in summary reports and forecasting.

Applicability in Ford Motor Company

As earlier stated, Ford uses a hierarchical mode of management. The discussed information systems can be used to improve the communication and improve all the functions of different management levels and functions. Since the CEO and the regions executives are the top most managers, the company should implement the EIS to enable the executive plan for the future and ensure better investments (OZ, 2009, P. 75). The executives will help coming up with the best strategies to enable longer and higher marketing of the key brands as the company has suffered from their innovations peaking for short periods.

The senior managers or heads of the departments are the decision makers in the running of the company thus they should adopt DSS to ensure that the choices they make are justifiable and they are able to choose from all the alternatives to make the best decision to reduce the risks (LUCEY, 2004, P. 15). The case of India’s entry of the company could have been smoother if the company used DSS to predict the challenges likely to be faced as the company would have planned for the challenges thus mitigate their effects or impacts.

Middle managers are important in the daily running of the company thus they should implement MIS to enable effective communication from the low-level managers to the higher-level managers. MIS will enable better sales, inventory, managing reporting, personnel management and budgeting system.

Lastly TPS is most suited for the supervisors and team leaders as they are responsible to oversee smooth running of daily activities. These are the operation managers who oversee the works perform their duties and ensure that payments are made at the right time.

Task 3

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The graph above is an illustration of Ford’s Vehicle sales illustrating that the most recent brands are more purchased in Europe compared to the earlier models. The rate of the sales of the new models to that of the old illustrate a wide gap meaning that Ford’s marketing strategy is wanting and their models are losing market within a short-time. The information can be used by both the operational and middle managers (O’BRIEN & MARAKAS, 2011, P. 44). The operational managers will use the data to identify the main models dominating the market to ensure the workers produce more Fiesta, Focus, C-Max, and Kuga whereas the middle managers will analyze the market trend to enable them identify the major changes needed to improve the older models and make them competitive in the market again. They will report in the weekly and monthly reports to create awareness to the top and executive managers on the need to redesign the products.

Alternative Methods of Solving Performance Problems

Performance problems are based on many issues but the paper intends to analyze the most suitable methods to solve problems based on conformance, unstructured performance problems, product design problems, efficiency problems and process design problems since they all lead to performance problems and low sales due to the diminished quality of the product and increases costs of production.

Conformance Problem

This is a problem or situation in a high structured system with standardized inputs, processes and output performs unacceptably from the product users’ standpoint. It results to poor quality due to the deficiencies in control activities, assembly lines and mainly involves a situation whereby the system has worked in the past to produce high quality products but for reasons unknown it no longer perform as required or supposed to. It involves one or many aspects performing differently or deviating from the usual standards thus leading to poor output. This problem is identifiable via statistical process control although the method is not effective in identifying other problems. Identification of the main deviating aspect is difficult thus the necessity to use diagnostic efforts aided by cause and effect diagrams. The most used method is the Kepner-Tregoe method and why-why diagrams as there are no general procedures to identify and solve the problem (O’BRIEN & MARAKAS, 2011, P. 78). Once identified it is easier to solve the problem and enhance the quality of the output.

Unstructured Performance problems (UPP)

This is a non-standardized task where the procedures are not clearly specified thus leading to poor output and poor performance for instance sales shortfalls may illustrate the unsatisfactory sales system. The cause of UPP can be due to various poor performance thus the company needs to make better judgments when solving them as they are difficult to effectively solve even when the problem is known. The multiple and diverse causes of the problem mean that an analysis is required about the situation and it is important to change the strategy to solve it. It commonly solved by adding incentives and significant quality improvement.

Efficiency Problem

This is one of the rarely anomaly in the quality movement when the company aims at improving the quality of the products while reducing costs to maintain customers’ satisfaction. It is compounded on all issues regarding quality of a product, costs, workers’ safety improvement and customers’ satisfaction. It involves the company prioritizing on the quality and customers’ satisfaction rather than the interests of the shareholders (ALEXY & REITZIG, 2012, P. 5). The solution to this problem involves creating a clear internal objective that will serve the stakeholders and customers’ interests.

Product Design Problems

These problems result from the lack of having a system that cannot perform a certain task as required. The problem is solved by purchasing or revising the system to suite the design thus produces high quality output. The key task in product design is the requirements determination and identification of the user needs and the other demands that the artisan must satisfy. This calls for the artisan to have the needed tools or system to complete the task as failure to which he will fail in the task.

Process Design Problem

Process design is the task of devising processes to achieve a particular goal or goals. The main cause of process design problem is the having process inadequacies that may be due to internal factors thus leading to the need for elaborating new process alternatives. The problem is solved using flowcharts to represent the processes, which are then analyzed to improve the processes or reengineered to devise new processes to adapt to complete the task at hand (RUGMAN & COLLINSON, 2008, P. 61)

Application in Ford Motor Company

The rate of poor performance in the company has significantly reduced over the years but as technology improves and the tastes and preferences of the people change, Ford should be aware of the challenges lying ahead as people will demand for different types of cars and tires (MORRISON, 2008, P. 23) The competition from GM and Japan automotive companies and other companies from Europe may result into challenges that need change of the designs and structures. Global warming is also leading to the need for environmental friendly vehicles thus making it mandatory to known the alternative methods of performance problems solution to ensure they remain competitive.