Sustainability Mapping Framework for Ford Company in UK - Assignment Example

Table of Contents 1.0. Introduction 2 2.0. Identification of Sustainable Features 3 3.0. Analysing Context of the Country (United Kingdom) 4 4.0. Analysis 8 4.1. Sustainability Mapping Framework 8 4.2. Triple Bottom Line Analysis: People, Planet and Profit 15 5.0. Benchmarks and Good Practices 16 6.0. Recommendation 17 7.0. Conclusion 19 References 20 1.0. Introduction Ford Motor Company is the leader in the global automotive sector headquartered at Dearborn, Michigan, USA. However, for this study the Ford Motor Company of the UK will be taken into account. The company manufactures as well as distributes automobiles in six continents. The company has around 198,000 employees and 90 plants all over the world. The automotive brands of the company are Ford, Mercury, Volvo and Lincoln (Ford Motor Company, 2011). The financial services of the company are provided through Ford Motor Credit Company. Starting from providing small cars to highly capable and adaptable crossovers as well as utilities so that Ford Tough trucks can be built, it has been evident that the company is leveraging its strengths as well as technical expertise in global product development so that it can deliver fuel efficient, safe and fun-to-drive vehicles to the customers all around the globe. It has been evident that in order to enhance the balance sheet, the company aims at bringing major changes to its manufacturing capabilities. Instead of relying on the regional suppliers, the company has also been focusing upon the international suppliers so that it can establish consistent levels of quality and craftsmanship (Ford, 2011). In addition, the company can also drive cost efficiencies by focusing its attention towards the international suppliers. It can be observed that big companies are generally focused upon the purpose as well as profits. Therefore, the company feels proud since it assists in improving the lives of people by providing them world class quality products. It further aims at providing affordable fuel economy to millions of customers which are not just expensive but also low-volume niche vehicles. 2.0. Identification of Sustainable Features It had been evident that since many years researchers as well as planners have been struggling hard to define the concept of sustainable development. However, the definition has been too general. It can be said that the goals need to be quite specific and this might vary in order to reflect different conditions and national development policies across countries. The nation’s objective for the environmentally sustainable development plays a vital role in this regards (Hoole & Et. Al., 1995). Considering the definition of sustainability, there are three fundamental aspects namely employment and income generation, people participation and empowerment and conservation of environment and natural resources. The priorities set may be different while implementing each of these aspects and tends to express different attitudes towards nature, society and ethical decisions involved (Mansvelt & Mulder, 2002). It can be evaluated that the challenges of the sustainable development for the policy are quite different in comparison to other policy problems. The differences tend to arise from comprehensive nature of sustainable development and emphasis that is laid upon the welfare of the future generation. Differences may also arise from the emphasis provided to the sustainable development considering it as a process of change where the utilisation of the resources, the trend of the technological development and change as well as the direction of the investment are made consistent with the needs of the future and the present. It can further be revealed that the sustainable development policy needs to be based upon institutions and decision making structures leading to sustainable outcomes. Another important criterion for the sustainable development is that the choice of the policy needs to be guided by economic efficiency. The reason behind this is that if the criterion of economic efficiency is not taken into account, the companies may run the risk of stifling economic growth and compromising environmental policy (The Treasury, 2002). 3.0. Analysing Context of the Country (United Kingdom) Legislation or Law Context Various safety regulations in the UK protect the country from uncertainties and accidents. The country also imposes Euro NCAP safety test on all the cars. In addition, road tax bracket as well as insurance group may also affect proper functioning of the automobile industry (Bai & Et. Al., 2009). Thereby, Ford must be more concentrated on the safety part of its customers. This in turn, shall enhance its corporate social responsibility operations benefiting the community to a larger extent. Social Context The current socio economic environment of the UK comprises of a larger population of young generation. At an increasing rate the social trends of the economy are also witnessed to grow more attentive towards the environmental hazards. This certain aspect has forced the corporate giants to provide more emphasis on the sustainability facet while designing their strategies. The recent global downturn has also affected the social environment of the economy. As a consequence, the income is recorded to be lower which can raise the challenge to serve the customers with sustainability and at the same time with cost efficiency (National Statistics, 2009). Political Context The British political environment is headed by the monarchy. However, the power of the monarch as the head of the state can be considered as ceremonial. Generally, there are three arms of the state namely the executive, the legislature and the judiciary (Bai & Et. Al., 2009). Due to the extensive amount of environmental hazards and climate change, the political environment of the UK is also growing to be stricter in terms of carbon emissions and pollutions caused by the automobile sector. In this regard, the political environment has set targets to reduce carbon emissions and increase the usage of renewable energy as well as the utilisation of renewable materials (Riding, 2009). Figure 1: Political Intervention to Reduce Emissions Source: (Riding, 2009). This shall largely affect the operations of Ford in the UK economy which in turn will force the automobile giant to ensure sustainable practices towards environment. Economic Context It has been analysed that after the country emerged out of recession, there has been a shift of people towards the sustainable lifestyle. The UK security of wildlife along with water supplies is being threatened because of the increasing population and demand for larger homes. Therefore, in this regard, it can be said that public concern about the green issue may decline because of the fact that more people live in towns. As a result, people will not be able to experience natural beauty (Meikle, 2010). It can further be analysed that the rise in the price of the oil may severely affect consumers’ buying. It is also a known fact that the UK had experienced longer recession. According to the economic report of July-September 2009, there had been decline in the GDP rates by 0.4%. The lower interest rate, i.e. 0.5% that has been set by the Bank of England affects the consumer savings to a great extent. However, the third quarter of the year 2010 experienced rise in the GDP by 0.7%. The consumers’ spending had also increased by 0.3% in 2010 (Office for National Statistics, 2010). This indicates several challenges for the company as it is quite apparent that the economic trends in the UK currently are unstable to a large extent due to a lowered growth rate after the recent economic downturn. This may most probably cause lowered demand. However, the growing market scenario, although at a lowered rate can be advantageous in a long-term perspective for the company. Environmental Context The changing climate is one of the serious issues among the people worldwide. Because the issue is quite serious, everyone has a role to play in order to reduce the impact of the changes that includes the company such as Ford Motors as well. There has been lack of the natural resources because of which companies are shifting their preferences towards hybrid cars. In addition, there has been a global shift to cut CO2 emissions, therefore the companies are focusing more upon greener lifestyle (Bai & Et. Al., 2009). Figure 2: Source of Emissions Source: (National Statistics, 2009) 4.0. Analysis 4.1. Sustainability Mapping Framework According to the sustainability mapping framework three aspects should be taken into consideration with the purpose to analyse the sustainability behaviour of a company, i.e. initiatives undertaken, issues related to the sustainability of the company and the integrated outcomes and models (Hodgman, 2006). Initiatives Undertaken The company is committed at helping and supporting its communities in which it operates. The company has planned a special programme in order to promote equal opportunities as well as tolerance. It also aims at actively supporting social and environmental protection programmes. It has been apparent that Ford Motor through its Ford Britain Trust provides grants in order to fund the local education and many other not-for-profit projects. The company has been the first car manufacturer which had achieved ISO 14040 certification which is an international standard for all its plants worldwide. It has also been noticed that Ford Motor Company has been acknowledged as one of the most ethical companies in the world by a leading business think tank, Ethisphere Institute (Ford Motor Company, 2011). The company is committed at providing reasonable fuel efficiency to millions of customers by making use of advanced technologies which includes EcoBoost, hybrids and electric vehicles and six-speed transmissions (Ford Motor Company, 2011). Issues With the change in the internal and the external perception of social equity, increase in market share through innovation and positive brand recognition, the prospect of cost reduction and many other factors are slowly but noticeably prompting companies and businesses to adopt strategies that have been founded on sustainable principles. Firms such as Ford Motor Company has begun to think and act globally, but has also taken into account the sensitivity of the local sustainable development issues in pursuit of long term profit (Dernbach & Environmental Law Institute, 2002). It can be analysed that cost reduction can be one of the important reasons for companies such as Ford Motor Company to undertake the sustainable issues. In addition, regulatory requirement, risk management as well as brand enhancement are among the main drivers (KMPG, 2010). The internal drivers are those drivers that are internal to the firm such as top management orientation towards sustainability. However, the external drivers are somewhat different than the internal drivers. The external drivers are those factors that can be categorised into local institution networks and regulations. The external drivers come from environmental groups, customers, communities, regulators, activists and competitors (Cavicchi, 2011). However, the key drivers for the Ford Motor company can be listed below: Regulations Government has been trying to increase the pressure on corporations at most level to measure as well as evaluate the effect that their operation has on the environment. It can be stated that legislation is becoming more active and innovative and has been trying to cover wide range of activities. Customers In spite of the fact that the opinion of public as well as customers preference are considered to be more abstract, however it has been noted that they exercise significant influence on companies, specially for those companies that are consumer-oriented. Through their brand loyalty as well as purchasing choices, customers influence the company’s reputation. This factor has forced the firms to provide the customers more information regarding the products, the supplier that produces them and the product’s environmental effect from creation to disposal. Employees Employees working for a company tend to bring particular pressure towards an organisation to take sustainable measures and thus they act as a good citizen. NGOs and Media The reaction of the public arises not only from customers but also from advocates and media that help in shaping the public opinion. Internal Drivers Corporations being public citizens realise the fact to create a reliable sustainable policy along with performance measures. Stakeholders are demanding sustainable reporting strategies along with a proof of the results. Along with the stakeholders, CEOs of the company also demand sustainability reports since they consider social and environmental policies as important elements for corporate success. Investors It has been a recognised fact that investors would prefer to know about the company in which they invest. They would want to know if the company is responsible and follows sustainable approaches. The Carbon Disclosure Project was developed in response to the demand of the investors (Economist Intelligence Unit Limited, 2010). It has been evident in the above paragraphs that the company benefits from investing in sustainability. However, it has also been found that company’s reputation and growth might be at stake if they don’t involve themselves or invest into sustainability. It can be analysed from the above study that most of the companies transparently report about their sustainability performances since it enhances companies’ reputation for honesty, strengthens the relation of the company with the stakeholders, builds on stakeholders trust, educates the employees on the issues, brings constructive change in the management of the sustainability issues and also aligns the organisations on areas of needed improvement (Blackburn, 2007). Integrated Outcomes and Models It has been noted that motor vehicles have a positive impact upon the society in which we live. It tends to improve the quality of the lives of the people in several ways. The automobile sector is the victim of its own success and its increasing popularity is leading to legitimate concerns over its environmental impacts. With the increase in the number of vehicles, concerns also tend to increase such as emissions, overcrowded roads and upon the usage of energy. It has been evident that Ford Motor recognises these concerns as well as the need to find a proper solution without putting the benefits at risk that the automobile tends to bring. The company has been a leader in recognising these concerns and has a long history of excellence in environmental stewardship. The company aims at becoming the model of being socially responsible for the automobile industries. It works with advanced technologies in order to reduce the environmental impacts of its product (Kirklees, n.d.). 4.2. Triple Bottom Line Analysis: People, Planet and Profit Evidences reveal that sustainability investment also tends to bring constructive cultural change and infuses organisational discipline for improvement. One of the risks that the company may face in case of not providing for adequate sustainability is that of missing the opportunity of serving the people and the planet and to do right things for them. Since the world is facing with issues such as climate change, poverty and depletion of the resources, the organisations are in a unique position to do something so that they can mitigate their contribution to these problems. In light of this fact, it can be revealed that if the companies put off the solution for future generation then it might be quite late. The tangible risk also has an equal impact on the companies. Loss of human health and lives are tragic events in industrial accidents. If the companies do not take safe precautions in order to prevent from such kind of tragedies then it may be at risk. It has been analysed that in case of environmental accidents, it leads to medical cost, legal fines and cleanup cost. If it is found that the company is sued, then the damage awards and the legal fess associated with it may be large. This may also ruin the public confidence and the reputation of the company may be hurt. Furthermore, the other risk of avoiding the sustainable development may be that it may allow the human right abuses to persist in the organisation (White & White, 2009). 5.0. Benchmarks and Good Practices In order to understand the benchmarks and good practices it would be better to have a comparative study of two companies. Benchmarking can be defined as a widely used strategic management tool through which comparison of the specific aspects of the organisational performance against the competitors in order to evaluate the adoption of industry’s best practice can be accessed. The two companies chosen for the study are Toyota and Ford Motor Company of the UK. The top priority concerns for Toyota are the protection of the global environment. It has been made evident that at every stage of the vehicles’ lifecycle, the company tries to protect the environment by reducing the energy use and minimising waste. The environmental policy of the Toyota Manufacturing UK reflects global earth charter. It has come to the notice that Toyota’s first overseas plant and UK’s first car manufacturer received ISO14001 certification. The other point to consider is that it was Toyota’s first overseas plant to use waterborne paints and it was first UK car plant which achieved zero waste to landfill. The company in the UK has also set its target to reduce plant produced CO2 emissions. It has been apparent that the company has made use of the Key Performance Indicators for each of the most significant impacts of production. In addition to these, the company at the UK also engages at political lobbying at all levels such as local, national and regional in order to support the fulfilment of its business objectives (Toyota Motor Manufacturing (UK) LTD, n.d.). It has also been noted that Toyota manufacturing unit in the UK is a member of the Business in the Community which is the UK’s leading benchmark of responsible business (Toyota Motor Manufacturing (UK) LTD, 2008). However, the Ford seems to have been working out in order to achieve benchmarks in comparison to Toyota and other motor companies. It has been evident that the company tackles both long term as well as short term sustainability challenges. The company is using EcoBoost engine technology in order to enhance fuel efficiency by 25%. Since the sustainability report of Ford stated that by the year 2050, the population of the earth is estimated to be nine billion, therefore providing the consumers with this technology can be seen as one of the good practices of the company (Winston, 2010). 6.0. Recommendation In light of the advantages provided by the sustainability management, it would be recommendable for Ford Motor Company to invest in the sustainability in order to save the additional cost arising from the environmental damages. If the company undertake the environmental initiatives then the profits will automatically improve. It can be recommendable that the company should look to engage itself in the sustainable development programs in order to gain sustained benefits. In this regard, the company can ensure greater emphasis on its production process, as it seems to have a stronger impact on the environment than other operations of the company. Ford should also consider the interests of its employees and customers with great significance to attain an accelerated sustainable growth. 7.0. Conclusion In the modern era, business firms can be identified striving for higher competency and stimulated growth. One key factors which can ensure such growth is referred to as the sustainability practices performed by companies with due consideration to the interests of the community, its stakeholders, customers and the natural environment on the whole. Ford Motor Company should realise the fact and provide greater emphasis on its corporate social responsibilities, especially in the UK market. It is due to the fact that in comparison to other nations the environmental factors of the UK are tending to be more concentrated on the social and environmental hazards caused by the automobile industry. Therefore, to strengthen its business sustainability the company should consider re-investing in its sustainable activities not only in its production system but also in its community services. References Bai, B. & Et. Al., 2009. Market Strategy Presentation. BMW Efficient Dynamics. [Online] Available at: http://www.docstoc.com/docs/18234417/BMW-Strategic-Marketing-Plan [Accessed March 22, 2011]. 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