Ford Motor Company: the Strategic Issues - Case Study Example

?Ford Case Study Table of Contents Question 3 A Brief Discussion of the Strategic Issues 3 Question 2 3 Similarities and Differences between Old & New Mission Statements 3 Question 3 4 PESTEL Analysis 4 Question 4 5 Porter’s Five Forces Model 5 Question 5 6 Internal Analysis of Ford 6 Question 6 6 Corporate Strategies 6 Operational or Functional Strategies 7 Question 7 7 Leadership of Alan Mullaly 7 Question 8 7 Analysis of Ford’s Strategic Challenges 7 Question 9 7 SWOT Matrix 7 Question 10 9 Identification of the Lessons 9 Works Cited 10 Question 1 A Brief Discussion of the Strategic Issues Ford Motor Company is regarded as one of the world renowned American based multinational companies in the automotive industry sector. There are certain imperative strategic issues that have been discussed in the case. The different strategic issues of Ford have been described hereunder (Hitt, Ireland, and Hoskisson, 127-132). One of the decisive strategic issues of Ford that has been identified was regarding the offering of its 10.2 million shares in the year 1956 for sale to the public in order to cope up with the vulnerable business position in the global automotive industry (Hitt, Ireland, and Hoskisson, 127-132). Another strategic issue that has been recognized in the case was relating to elimination of its 4, 000 to 5000 employees in the year 2001 by employing early retirement incentive schemes with the intention of mitigating its suffered business losses (Hitt, Ireland, and Hoskisson 127-132). In the year 2006, Ford decided to cut 25,000 to 30,000 hourly jobs along with 12 percent of different management positions as a part of huge restructuring plan that can be considered as crucial strategic issue for the company (Hitt, Ireland, and Hoskisson 127-132). In the year 2006, Ford also faced certain strategic issues regarding decrease in market demand and increased competition in the international market (Hitt, Ireland, and Hoskisson 127-132). The other strategic issue of Ford was identified to be the announcement that made by the company relating to keep much attention profitable sales rather than on production volumes (Hitt, Ireland, and Hoskisson 127-132). Question 2 Similarities and Differences between Old & New Mission Statements Similarities The earlier vision statement of Ford was mainly focused upon developing as well as maintaining unity among the members within the company. It has been viewed in this similar context that each and every member of Ford was considered as an integral part on global basis. The company remained much committed towards serving the best quality brands to its customers by a significant level. Furthermore, Ford emphasized upon complying with the needs as well as desires of its valuable customers by offering them with their preferred quality products The modern vision statement of Ford has been observed to work as a team as well as serving the best quality product along with top service to its worldwide customers The earlier mission of Ford was to become the world’s largest car selling company. The company realized that it should manufacture its different products on the basis of customers’ preferences (Ford Motor Company, “Annual Report”). The modern mission of Ford is to deliver new as well as advanced products with distinct features to its customers. Giving more importance to the customer’s preferences as well as their values has been recognized to be one of its most significant missions (Ford Motor Company, “Annual Report”). Dissimilarities The earlier vision as well as mission statements of Ford was to deliver attractive facilities to its customers around the world as well as creating values among the employees in order to raise its business along with operational standards. Moreover, the early vision and mission statements of the company focused upon creating unity amid the workforce along with enhancing the company’s’ brand value and image towards the customers (Ford Motor Company, “Annual Report”). In contrast, the modern vision of Ford remains much concern about maximizing profit by reducing the operating costs. In the modern vision of Ford, more attention is being paid upon the significant aspect of leadership. This particular feature was observed to be lacking in the previous vision statement of the company. In relation to identify the earlier mission statement of Ford, it has been viewed that the company performed effective duties in order to satisfy the requirements of the customers. Higher returns to the shareholders were considered to be an imperative mission of the company. On the other hand, the new mission statement of Ford is to enhance its profitability by providing new stylish as well as well-designed cars to its valuable customers Profit maximization rather than satisfying the shareholders interest can be regarded as the new mission statement of the company (Ford Motor Company, “Annual Report”). Question 3 PESTEL Analysis The PESTLE analysis of the macro-environment of the US auto industry has been provided hereunder. Political factors The government of the US has taken significant steps in order to preserve the environment by reducing the carbon emissions that generates from the vehicles. In this regard, the Energy Policy and Conservations Act states that the carbon emission should be reduced by 90 percent within next six years. The United States Department of Transportation has set a list of regulations as well as safety standards especially for car manufacturers such as Ford that ultimately affected the US auto industry by a considerable level (Scribd Inc., “Ford Motor and Auto Industry Analysis”). Economic Factors The economic slowdown in the western countries harmfully affected the automotive industry of the US at large. It has been noted that the Automobile industries have been losing the shareholders interest due to sluggish economic conditions (Scribd Inc., “Ford Motor and Auto Industry Analysis”). Social Factors The consumers are considered to be the most stimulating factors that can significantly affect the automobile companies as well as the industry as a whole. It can be stated that the customer’s preferences can vary due to changes in their income level. By taking into concern this important aspect, the US automotive industries realized that they should produce the cars on the basis of customer choice (Scribd Inc., “Ford Motor and Auto Industry Analysis”). Technological Factors Proper use of technological factors can reduce the production cost as well as it can ensure better production technique. Design, quality and performance are the key factors that can enhance the sales volume by a greater extent. These features can be ensured by adopting advanced technologies. The automotive industries of USA adopted advanced production techniques that greatly imposed significant impact upon their business along with operational performances (Scribd Inc., “Ford Motor and Auto Industry Analysis”). Environmental Factors With regard to the environmental factors, the government of USA has formed definite rules and regulations about lessening carbon emissions that generates from the vehicles. It has been observed that the different automobiles companies of USA are emphasizing more upon producing cars that produces low carbon emission rates (Scribd Inc., “Ford Motor and Auto Industry Analysis”). Legal Factors There are certain legal factors such as licensing policies and governmental regulations regarding carbon emissions that greatly impact upon the US auto industry by a greater extent (Scribd Inc., “Ford Motor and Auto Industry Analysis”). Question 4 Porter’s Five Forces Model A detailed understanding of the U.S. auto industry environment can be attained by focusing upon applying different aspects of Porter’s Five Forces Model. The different features of this significant model have been provided hereunder. Rivalry The competition level in the US automotive industry is quite low due to various important reasons. These include greater fixed costs, scarcity of available resources, increased level of government regulations regarding environmental policies and larger costs of switching companies (Scribd Inc., “Ford Motor and Auto Industry Analysis”). Suppliers A few of the suppliers are present especially in the US industry that ultimately makes them reliant upon the automakers such as Ford in order to purchase their necessary products (Scribd Inc., “Ford Motor and Auto Industry Analysis”). Customers Customer’s bargaining power is quite greater as compared to the supplier’s in the US auto industry. This is owing to the fact that the customers in present day context are much technology-savvy ever before and searches for acquiring better products (Scribd Inc., “Ford Motor and Auto Industry Analysis”). Substitutes A large number of substitute’s are available in the US auto industry. People often prefer alternative modes of transportation such as bus and train apart from using their own vehicles due to rising fuel costs. Thus, it can be affirmed that the US auto industry face with significant threat of substitutes at large (Scribd Inc., “Ford Motor and Auto Industry Analysis”). Question 5 Internal Analysis of Ford Ford Company has been leading the US automobile market for a long time. The tangible resources of the company are identified to be its deliverance of quality products, infrastructure as well as implementation of advanced production techniques (Ford Motor Company, “Annual Report”). Conversely, the intangible resources of Ford are recognized to be the goodwill that it possesses worldwide and effectively handling the processes relating to human resource management. The efficient production techniques with respect to the prevailing market conditions and efficiently performing various business activities are considered to be the major capabilities, core competencies and competitive strengths as compared to its chief rivals. The advanced production techniques, attractive product designs and execution of effective methods for diminishing operating costs are regarded to be the competitive advantages of Ford. The aforementioned competitive advantages of the company are sustainable as the company desires to incessantly develop as well as maintain its capabilities and core competencies in order to attain its predetermined business goals (Ford Motor Company, “Annual Report”). Question 6 Corporate Strategies The corporate strategies of Ford include creating awareness among the employees to work as a team and preparing result oriented plan for improving the operational procedures of the organization. Moreover, developing product quality and maintaining effective production standards are also considered to be its major corporate strategies that ensure better customer satisfaction (Ford Motor Company, “Annual Report”). Operational or Functional Strategies The operational or functional strategies that have been articulated in the case or by Alan Mulally include minimizing the operational costs by employing effective business strategies and improving the quality of the products through utilizing innovative production techniques (Ford Motor Company, “Annual Report”). Question 7 Leadership of Alan Mullaly In terms of Alan Mulallys’ experience, personality, management style, foresight, people as well as implementation skills, it can be affirmed that he seems to be a better strategic leader possessing two important elements such as vision and execution. This can be justified with reference to the fact that he identified lack of global synergy as one of the major problems of the company. This recognition of the problem that made by Mullaly ultimately considers him to be a better strategic leader (Hitt, Ireland, and Hoskisson 150). Question 8 Analysis of Ford’s Strategic Challenges According to the case, United Auto Workers (UAW) President Bob King affirmed that the extra profit of the automotive companies must be shared with the workers and trade wages should be raised for delivering significant benefits to the workers. The Board of Directors of Ford should manage the problem relating to compensation of the workers in order to diminish the negative impact that is likely to have in its operating costs. In this similar context, in order to mitigate this challenge, the management group of the company taken significant measures to solve this issue in terms of increasing hourly wage rates of its workers (Hitt, Ireland, and Hoskisson 150). Question 9 SWOT Matrix Ford’s SWOT Analysis Strengths – S 1. Strong brand value. 2. Innovation techniques in production. 3. Wide distribution channels. Weaknesses – W 1. Decreasing market share. 2. Increase in operating costs. 3. Product recall. Opportunities – O 1. Business expansion in India as well as China. 2. Launching new models. 3. Rising demand of dual-fuel vehicles. SO strategies 1. Prepare plans in order to expand business in Asian market. 2. Emphasise upon innovation. 3. Production of greater quality brands to meet the changing customer requirements. WO Strategies 1. Recognise suitable distribution channels 2. Enlarge brand equity 3. Raise spending in direct marketing Threats – T 1. Strong competitors like General Motors and Toyota. 2. Strong government regulations. 3. Economic slowdown ST Strategies 1. Effectual use of Resources 2. Redefine products or services 3. Maintain useful value propositions WT Strategies 1. Develop operational as well as business processes 2. Advance policies to minimise conflicts 3. Identification of the specific customers Question 10 Identification of the Lessons Strategic issues have been creating problems in the business and operational performance of Ford. Closing of plants as well as job layoffs has been performed in order to minimize the operating costs. The mission of the company has been transformed to focus more upon profit maximizing. Although Ford is considered to be one of the market leaders in the US auto industry but companies like General Motors and Chrysler are viewed to be the major competitors of Ford. The rules and regulations relating to the workers under the guidance of UWA might adversely affect the operational effectiveness of Ford. Ford Car Company might avail the opportunity to expand its business in India as well as in China. Ford employs operational or functional as well as corporate strategies in order to attain its predetermined business objectives (Hitt, Ireland, and Hoskisson 150). Works Cited Hitt, Michael A, Ireland, R. Duane, and Hoskisson, Robert E. Strategic Management: Competitiveness & Globalization: Cases. United States: Cengage Learning, 2012. Print. Ford Motor Company. Annual Report, 2011. Web. 11 Dec. 2012. Scribed.Inc. Ford Motor and Auto Industry Analysis, 2012. Web. 11 Dec. 2012. Read More