Challenges Faced by Ford Motors Company - Case Study Example

Focus of the final Paper Introduction The capability of an association to achieve its determined goals does not depend exclusively on the power of a particular great leader, and neither upon the usefulness of the organization’s sequence of grasp. These possessions are significant, but they themselves help to understand why some organizations succeed where others fail. The integer or rather the quality of personality leaders has often been examined to determine organizational success; however, the aptitude of formal and informal leaders imposes a mutual influence for the sustenance of organizational achievement that eventually augments the dissimilarity in terms of the performances of the two organizations operating in similar industrial settings. It is in this context that various challenges and shortcomings are witnessed in relation to the strategies developed for effective organizational management which further requires greater degree of rationality among the leaders (Zaccaro & Klimoski, 2002). An illustration of a practical scenario shall be quite helpful to describe the significance and criticality of effective leadership within the 21st century business context. With this concern, this discussion will intend to describe, analyze and subsequently understand the effectiveness of leadership in Ford Motor Company. Notably, the company had to witness serious obstacles recently before the occurrence of 2008 economic crisis when the strategies implemented by the Corporate Executive Officer (CEO) Mr. Alan Mulally proved to be quite helpful in redirecting the organization towards a healthier growth. However, the current situation is also not without any challenges for the company which indicates towards the necessity to reconsider the business strategies practiced by the company (Hitt, Ireland & Hoskisson, 2009). About Ford Motors Company Ford is renowned as one of the leading brands in the international automotive industry which is engaged with manufacturing and distributing a wide range of automobiles and accessories. Ford is universally well-known having its manufacturing and distributing branches located all over the world. There are currently altogether nearly 90 manufacturing and distributing plants located in globally. From its inception, the company had to face severe ups and downs in the competitive market. Ford also relates with the financial services industry being associated with rendering loan and vehicle insurance facilities to its customers worldwide. Working in such versatile environment, Ford was able to successfully secure a leadership position within the global automotive industry obtaining sustainable profits over the years. However, it had to witness severe crisis situation during the early decade of the 21st century, incurring a record debt in its history depicting a position of financial instability and limited sustainability. Contextually, to rule the market once again and to regain its sustainability, Ford had to overcome number of challenges over the recent decades. In order to overcome such a crisis situation, Ford had to consider drastic changes in its operations being largely focused on its consumer needs and wants. It was during this period, that the organization witnessed a leadership change, where the then newly recruited Corporate Executive Officer (CEO) Mr. Alan Mulally implemented drastic financial and managerial strategies which ultimately assisted the organization to recover from the situation. This particular scenario can be regarded as quite illustrative too reflect upon the significance of organizational leadership to secure competitiveness, sustainability and growth of the company in today’s 21st century context (Hitt, Ireland & Hoskisson, 2009). Being a global and hugely diversified organization, Ford has a large number of primary stakeholders which include customers, suppliers, dealers, employees’ communities and investors or shareholders. Ford has been significantly focused on its brand recognition and reputation amid its stakeholders. For instance, the most vital concern in the relationship was the Corporate Social Responsibility approach of the company towards the society, which involved Non Governmental Organizations (NGOs), government agencies and academia. The leadership of the company even motivated the stakeholders to participate in the decision making process which especially focused on the sustainability issues of Ford (Ford Motor Company, 2008). The mission and vision of the company also directs it towards effective diversity management which again contributes to the core competencies of Ford. For instance, the vision and mission statement of the company is framed as “One Team; One Plan; One Goal” (Ford Motor Company, 2013). Ford has constantly developed itself with well-defined and precise principles of ethical behavior in relation to the business dealings. The institutions of its ethical motives have been presented in “Policy Letter No. 3” describing that “a good reputation is a priceless business asset that can be earned only through consistently trustworthy behavior”. Moreover, “Policy Letter No. 3” also directs that “…Transactions of the Company should be properly accounted for on the Companys books. This is essential to the integrity of the Companys financial reporting” (Ford Motor Company, 2003). It also stated that Equal rights and Diversity will treat the coworkers through faith and respect always, therefore securing an enthusiastic and productive working environment (Ford Motor Company, 2007). Apparently, the ethical principles of the company focused on ensuring long-run sustainability and its effective brand recognition within the stakeholders. Mr. Alan Mulally took these principles as vital strengths of the company in its brand recognition and implemented it in his turnaround strategies. Challenges Faced By Ford Motors and the Role of Organizational Leadership One of the most vibrant challenges faced by the organization in its recent operations was the debt crisis scenario of 2008, especially due to the occurrence of the global economic turmoil. It is worth mentioning in this context that being recruited in the third quarter of the financial year 2006, Alan Mulally was able to forecast such issues to arise in the near future. Following the leadership of CEO Alan Mulally, Ford was able to recover successfully from its dipping position and regain its market shares in the later period. The reports depict that when Mr. Alan Mulally was recruited from Boeing Airlines to Ford Motors in the year 2006, the company was already witnessing challenges of inevitable financial loss in its preceding financial year which was anticipated at the value of $12.7-billion. The company was also facing limitations in its market position, losing its second rank in the US automotive industry to Toyota Motors. Simultaneously, poor management of its resources and ineffective brand positioning strategies contributed to its weaknesses during this period (Reed, 2012). Quite apparently, the newly appointed CEO, Mr. Alan Mulally had to take risks in rejuvenating the company’s market position and assisting it to recover from the inevitable crisis situation. To overcome these challenges, Alan Mulally had to take enormous liabilities. During his course of leadership, especially in the period from 2006 to 2009, Alan Mulally deciphered vital strengths and significances of organizational leadership in taking over several radical procedures to protect the company, regain its profitability and increase the self-confidence of the investors and other stakeholders. One of the most apparent leadership qualities deciphered by Alan Mulally was his anticipation skills and analytical behaviour to consider both the pros and cons of the situation. It was in this context that recently after joining the organization, Mr. Mulally was able to identify the probable recession in the near future and thereby decided to opt for a loan of around $23.6 billion, keeping some of the company’s assets as mortgages. Notably, the company was, during the period, already into huge debt of $12.7-billion and therefore, the strategy to keep company assets as mortgages can be considered as a risky strategy from an overall perspective. However, from a long-run perspective and with due consideration to the then environmental scenario of the economic context, this strategy not only assisted the company to run in profit during the recession in 2008, when its competitors had to witness huge losses and therefore offer Ford with greater competitive advantages. Furthermore, Alan Mulally was able to identify the internal issues related to the organizational strategies including its brand management strategies and organizational behaviour related practices. With this concern, the CEO decided to redevelop its product line in the major markets of Ford along with valuing the recommendations from every level of the organizational structure. For instance, he often used to hold board meetings and formal as well as informal meetings with productive employees to gain a better in-sight of the industry trend and the operations of the company which further assisted him to reframe the entire organizational process with greater efficiency and innovation (Taylor III, 2012; Kiley, 2009). Another major characteristic of the leadership strategies adopted by Alan Mulally was his concern towards utilising company strengths to overcome the anticipated challenges of the future. During his leadership, Alan Mulally also identified that Ford manufactured greater variety of products than that compared to its competitors which further added to its advantages in terms of economies of scale A greater focus on the company’s targeted consumer buying behaviour trends, also assisted Alan Mulally to understand the growing preference for smaller fuel efficient automobiles which further motivated him to innovate the ‘EcoBoost’ technology (Hoffman, 2012; Bender, Slade &Thorpe, 2009). Notably, despite its admirable performance during the recessionary period, the company is still facing certain challenges in relation to its market exposure. For instance, current reports depict that the company is losing its market share in the European market which might lead to the wind-up of various plants in the UK and Belgium affecting the long-run sustainability of Ford in that particular economic region. A dip in its aggregate retail sales can also be witnessed in the US market which again negatively influences the market position of the company which is currently recorded to be in the third position. Additionally, with its competitors in a recovery state, has been observed to offer similar products to that of Ford at a cheaper incentive which in turn facilitates lower market prices, and thus, negatively influencing the competitive advantages of the company. Consumers of Ford have further reported to suffer technology glitches which again inhibit brand loyalty of the company (Taylor III, 2012). Recommendations It can be apparently observed from the above discussion that Alan Mulally took certain measures which facilitated a better growth of Ford in the global scenario ensuring sustainability along with competency in the long-run (Hitt, Ireland & Hoskisson, 2009). With his strategies, Alan Mulally was undoubtedly successful in recovering the company from its financial challenges, but lacked in ensuring long-run market competitiveness. It is certainly owing to this fact that today the company is facing significant challenges in relation to its competitive market positioning in the global market that can be identified in terms of fierce competition, pricing strategies and customer loyalty degradation. In this regard, it is essential for the organization to primarily identify the sole reasons which contribute to the declination of its sales revenue in the international markets (e.g. the European) along with its home country. With this concern the company should undertake research process by surveying the customers’ perceptions in the targeted markets. This is likely to render the company with greater knowledge regarding customers’ buying trend and therefore assist the leader in developing effective marketing strategies ensuring better customer loyalty and increasing sales. It is worth mentioning in this regard that customers have been witnessed to decipher lowering preference towards the products marketed by Ford, fundamentally owing to its technology limitations. Therefore, the organizational leaders should also focus on identifying and subsequently managing the technological inefficiencies of Ford. The company also needs to energize its customer relationship aspects owing to which Ford can emphasize upon better after sales services and customer assistance facilities. It is furthermore quite important for the company to incessantly analyze and develop its marketing strategies to ensure long-run profitability and success (Zaccaro & Klimoski, 2002). From an overall perspective, it can further be recommended that the leader must consider its employees as a vital part of the entire system and simultaneously, as an alternative of other tangible as well as intangible assets. A crucial module of management leadership behavior stresses upon an edifice as well as upon an atmosphere in which all the employees attempt spontaneously to develop and excel. Organizational leadership therefore complies with the budding process to manipulate and impel the group’s hard work towards the accomplishment of the organizational objectives and ultimate goals. Leadership is a significant task of supervision that helps to capitalize on efficiency as well. Creating self-confidence is another significant feature which can enable to achieve all the way through expressing the labor towards their subordinates, enlightening them towards their roles and responsibilities, and directing them through well defined strategies. Hence, it can be apparently witnessed that organizational leaders play a major role in assuring the effective performance of an organization with proper management of the resources, both tangible and intangible in nature by identifying, rationalizing and overcoming the obstacles present on the way (Zaccaro & Klimoski, 2002). Conclusion Apparently, the 21st century context presents a fiercely competitive business environment for the organizations which are operating in the global platform. Challenges and continuous alterations in the global business environment has today become a common phenomenon which has been affecting the operations of various giant market players, including Ford. Hence, Ford must make itself prepared for the constant examinations in terms of competition to overcome the challenges with greater efficiency. It is in this context that organizational leadership emerges as a sole concern and certainly a vital aspect to ensure long-run company sustainability and successful accomplishment of the determined goals. The organisation, i.e. Ford has been operating in the global platform as a giant automotive company being supported with strong brand recognition and competitive advantages as a leading market share holder. However, the company still needs to face significant challenges in terms of its market sustainability and competitiveness being significantly influenced by external business environmental elements including customer buying behaviour and the economic changes. It is in this context that the organization needs to focus on gaining better competitiveness through efficient marketing and financial strategies. Concerning the current challenges faced by the organisation, it is quite important for Ford to reconsider its customer relationship strategies and simultaneously identify its limitations in relation to its marketing strategies. References Bender, D. R. Slade, B. &Thorpe J. (2009). OASIS Consulting. Retrieved from: http://economics-files.pomona.edu/jlikens/SeniorSeminars/oasis/reports/F.pdf Ford Motor Company. (2003). Code of Ethics for Senior Finance Personnel. Retrieved from http://corporate.ford.com/doc/senior_finance_code_of_ethics.pdf Ford Motor Company. (2007). Code of Conduct Handbook - Ford Motor Company. Retrieved from http://corporate.ford.com/doc/corporate_conduct_standards.pdf Ford Motor Company. (2008). Blueprint for Sustainability. Retrieved from http://corporate.ford.com/doc/sr07-ford-sustainability.pdf Ford Motor Company. (2013). One Ford Mission and Vision. Retrieved from http://corporate.ford.com/innovation/innovation-detail/one-ford Hoffman. G. B. (2012). American Icon: Alan Mulally and the Fight to Save Ford Motor Company. New York: Crown Publishing Group Hitt, M. A., Ireland, D. R. & Hoskisson, E. R. (2009). Strategic Management: Competitiveness and Globalization: Cases. United States: Cengage Learning. Kiley, D. (2009). Alan Mulally: The Outsider at Ford. Retrieved from http://www.businessweek.com/stories/2009-03-04/alan-mulally-the-outsider-at-ford Reed, J. (2012). How Alan Mulally rescued Ford. Retrieved from http://articles.latimes.com/2012/apr/15/business/la-fi-books-20120415 Taylor III, A. (2012). Fords smooth CEO succession - plus a few bumps. Retrieved from http://money.cnn.com/2012/11/01/autos/mulally-ford-succession.fortune/index.html Zaccaro, S. J. & Klimoski, R. J. (2002). The Nature of Organizational Leadership: Understanding the Performance Imperatives Confronting Todays Leaders. California: John Wiley & Sons. Read More