Compare and Contrast of Ford Motors and General Motors (GM) - Research Paper Example

Compare and Contrast of Ford Motors and General Motors (GM) Abstract The paper highlights the managerial, operational and financial issues of two reputed automobile manufacturers such as Ford Motors and General Motors (GM). Apart from these, it also focuses on various social, legal and economic factors which influenced the growth and profitability of both Ford Motors and GM. Moreover, it also affirms the culture, decisison making process, leadership style, communication styles, and management styles among others which highly influences the corporate culture and brand image of the organizations in the market. Furthermore, both the internal and external factors of both the organizations (i.e. Ford Motors and GM) are also highlighted to determine the changing trends of the market. Moreover, the impact of changing patterns is also discussed in a brief way. Compare and Contrast of Ford Motors and General Motors (GM) General Motors Company (GM) is a transnational automobile manufacturer with its headquarter situated in the region of Detroit of the United States. It operates in more than 157 countries with a distinctive brand image and identity in the market of automobile. On the other hand, Ford Motor Company is also the other renowned conglomerate operating in the similar sector i.e. automobile. Similar to GM, Ford Motor Company also has its headquarters in Dearborn region of United States. Legal Factors In this era of globalization and industrialization, the most significant issues which should be maintained in an apposite way are safety and eco-friendliness. These are essential in order to sustain in the market among others in the long run. Therefore, the government of the US introduced varied rules such as ‘National Traffic and Motor Vehicle Safety Act of 1966; Federal Motor Vehicle Safety Standards (FMVSS)’ in order to improve the safety standards of the passengers. The FMVSS introduced numerous laws, namely shoulder belts for the travelers setting in the front seats, head manacles and energy-sucking navigation columns among others in order to enhance the safety of the passengers (National Association of State Directors of Pupil Transportation Services, 2011). Along with this, the government of the US also launched certain regulations namely Clean Air Act, Vehicle Air Pollution and Control Act (The National Association of Clean Air Agencies, 2003) and also restricted the utilization of leaded fossil fuels in order to reduce contamination and global warming (United States Environmental Protection Agency, 2012). Thus, in order to sustain in the market of the US, both GM and Ford introduced electric cars running on electric energy measures in order to prevent the ozone layer from getting harmfully affected. Moreover, both the companies also followed the underlined safety measures in order to retain and enhance their market shares in the market of the US. Social Factors Apart from the legal factors, the other significant factor affecting the growth and the profitability of automobile industry is the social aspect. According to Hofstede, the dimensions of individualism and masculinity are higher in the US, therefore, personal preference and predilection highly influences the society (Greet Hofstede, n.d.). Moreover, low gender biasness and extreme fondness for luxury cars have improved the market share of automobile sector (Bradley, Bruns, Fleming, Ling, Margolin, Roman, 2005). Along with these, high income trends of US$ 49,445 in 2010 also played a major part augmenting the revenue of the automobile manufacturers (U.S. Census Bureau, 2010). Furthermore, high individualism made a significant impact upon the consumer decision making aspects which also enhanced the sale of the automobiles in the market of the US. Economic Factors In addition to the above discussed factors, economic factors also offer a noteworthy impact on the automobile sector of the US. The price fluctuations of oil highly influenced the sales of automobile industries thereby hampering the profitability (ESCAP, 2012). Thus, in order to cope up with this challenging issue, both GM and Ford introduced electric cars in order to enhance the inclination of the consumers. In addition, fluctuation of oil prices declined the market share of automobile producers as well as affected the Gross Domestic Product (GDP) of the economy (OECD, n.d.). Analysis of the Managerial, Operational, and Financial Issues Impacting the Organizations General Motors (GM) is one of the largest automobile producers of the world. The culture of GM is one of the major factors which helped to enhance its corporate image and sustainability in this competitive era among others in the market of the US. The prime objective of GM is to enhance the quality of the workforce. This can be possible, only with the help of diverse employee skills, knowledge and experiences that have improved the profitability of GM among others in the market of the US (General Motors Company, 2012). Apart from these, high affection towards the customers and the stakeholders also augmented the distinctiveness of GM in the market (General Motors, 2012). This is due to the comprehensive environmental and the managerial culture that provide a prospect to develop efficiently and proficiently. This would facilitate in acquiring the objectives of the organization. Hence, diversity became one of the strengths of GM and as a result, the profitability enhanced by 62 percent in 2011 as compared to previous year (General Motors, 2012). Along with this, GM also earned returns of US$ 7.6 billion from the markets of North America (The New York Times, 2012). This is possible only due to its uniformity and consistency among the hierarchical structure. On the other hand, Ford Motor Company is also a worldwide automotive manufacturing leader with approximately 325,000 workers and 110 plants operating worldwide (PR Newswire Association LLC, 2012). In order to sustain in the competitive market, Ford Motors also enhances the diverse international talent to improve the distinction and quality of the vehicles among others in the market (Ford Motor Company, 2012). Thus, skill, dedication and commitment of the employees of Ford Motors augmented the brand image. Hence, the diverse culture enhanced the profit by US$2.55 billion in the initial quarter of 2011, which is approximately 22 percent increase from the previous year (2010) in the similar period (The New York Times, 2011). Moreover, both the companies namely GM and Ford Motors utilize online advertising in order to promote their innovative car products to enhance the awareness of the customers (General Motors, 2012). In addition, they also utilize emails, electronic newsletters and company websites among others (Ford Motor Company, 2012). Besides, in order to enhance its market share and quality, both GM and Ford Motors, involve employee participation while taking any strategic decisions as ‘human resource’ is one of the most vital features for an organization. This helps to perk up employee morale thereby augmenting the turnover of the organization (Barney & Wright, 1997). Moreover, as employee participation is also utilized in decision making process i.e. participative decision making style is followed by the management of both GM and Ford Motors (Doughty, n.d.). As all the employees are involved in the decision making practices so it can be said that democratic management style is followed in both GM and Ford Motors. This facilitated to reduce the cultural diversity and improve uniformity among the employees (Doughty, n.d.). This signifies that participative or democratic leadership style is followed by the management of both the organizations (Branch, 2002). In addition, the communication style followed in Ford Motors and GM is assertive style, in which the employees are free to provide varied information and decisions. It helps in improvement of employee confidence thereby enhancing the dedication towards work (Bowman, 2004). In order to sustain in this competitive market, an efficient strategy utilized by majority of the organizations is SWOT analysis. The prime strengths of Ford Motors are strong brand image, modernization in technology, high dedication of employees and strong engineering ability that facilitate Ford Motors among others in the market (Blitterswij & Karadzhov, 2009). On the other hand, the main strengths of GM are high brand identity, extreme involvement in research and development, large scale business and effective employee involvement that help to improve the growth and profitability. Similarly, the decline of the market share as a result of oil fluctuations acted as one of the prime weaknesses of Ford Motors. Along with this, lack of variation in products has also affected the corporate image of Ford Motors. Similarly, the prices of oil also influenced GM which reduced their financial position in the market. Apart from strengths and weaknesses, varied external factors such as opportunities and threats also influence the image of an organization. The opportunities of Ford Motors and GM are introduction of hybrid cars and electric cars. Moreover, there are high opportunities for Ford Motors is to endorse the powerful Volvo vehicles in rising markets whereas the GM also includes soaring opportunities of launching innovative models in the budding markets. Besides, there are certain threats affecting the image Ford Motors which include deprived customer services, insufficient infrastructural amenities and security rules (Blitterswij & Karadzhov, 2009). On the other hand, the threats of GM comprise of increasing competition in the markets, rise of the price of raw materials and declining preference of light vehicles that certainly diminish the ‘brand portfolio’ of the organization. According to the above discussion, it is apparent that operational strategy framework is essential in order to sustain in the market among others. Thus, both Ford Motors and GM should enhance all operations of the organizations. Both the organizations, should establish total quality management strategy (TQM) which involves improvement in every sphere i.e. from raw material selection to the development of final product along with selling of the products to customers (Hendricks, 2000). It helps to develop varied quality products in order to cope up with the changing tastes and preferences of customers. Hence, it can be affirmed that quality improvement would help to enhance the operational framework thereby improving the brand identity. Thus, the discussed factors provide an immense impact on the managerial, operational and financial issues of an organization. Analysis of the Impact of Potential Change Factors In this age of globalization, the external factors are continuously altering due to the changes in tastes and preferences of customers. Thus, there are varied factors which influence the decisions of management which may be beneficial as well as detrimental at times. In case of both Ford Motors and GM, the innovation of hybrid and electric cars would help to enhance the market share but it requires involvement of high cost. Along with these, low customer support also reduces the brand image of organizations. Therefore, in order to adapt these changes of the environment, it is essential to improve the operational policies. Hence, appropriate managerial decision making is necessary to adopt these changes (Wiley, n.d.). References Bradley, D, Bruns, M, Fleming, A, Ling, J, Margolin, L, Roman, F. (2005). Automotive industry analysis. Retrieved from http://www.srl.gatech.edu/Members/bbradley/me6753.industryanalysis.teamA.pdf Barney, J. 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