Organizational Structure of Ford Motor and Volkswagen - Case Study Example

International Management: Organizational Structure of Ford Motor and Volkswagen Worldwide Operations Student Name Institutional Affiliation International Management: Organizational Structure of Ford Motor and Volkswagen Worldwide Operations Introduction Every multinational company tries to drive down costs by getting its goods and services to the market in the most efficient way. Good examples include auto firms such as Ford Motor and Volkswagen, which have worldwide operations. In recent years Ford has begun expanding into Europe and VW has begun setting up operations in Latin America. By building cars closer to the market, these companies hope to reduce their costs and be more responsive to local needs. At the same time, this strategy requires a great deal of organization and coordination. An Overview of Ford Motor Company Ford Motor Company is a multinational automaker that has its headquarters in Michigan, United States. It was established in 1903 by its founder Henry Ford. The company markets automobiles and vehicles and has a wide global market reach (Banham & Newman, 2002). Most of its products, especially commercial vehicles and automobiles are sold under Ford brand, while its luxury cars are sold under Lincoln brand. The company also owns Troller, which is a Brazilian SUV manufacturer, as well as FPV, which is a performance car manufacturer. In addition, Ford Motor also owns a 2% stake in a Japanese company, Mazda, a 15% stake in Aston of United Kingdom, as well as a 50% stock of Jiagling of China. What is more, the company has various joint ventures, on which 2 are in China that include Ford Lio HO and Changan Ford Mazda, 1 in Turkey known as Ford Otosan, 1 in Thailand known as AutoAlliance Thailand, and 1 in Russia known as Ford Sollars. Ford Motor is listed in the NYSE and is mainly controlled by Ford family although it has minority ownership. Economic analysts describe the company as the most essential industrial company in the United States history (Rhett, Bill & Thorpe, 2009). Most importantly, Ford Motor is an old company in the industry, and was the first to introduce the methods of large scale vehicle and automotive manufacturing, as well as the large scale industrial workforce management through the use of elaborately engineered manufacturing series typified through moving assembly lines. In fact, by 1914 these mass production and management of industrial workforce technique was recognized as Fordism across the world (Pietrykowski, 1995). Ford Motor is the 2nd largest automaker in United States, and the 5th largest in the world in respect to sales volume. It is also the 5th largest automaker across European countries. What is more, Ford Motor is ranked 8th overall as the largest company based in America in respect to revenues. The company produces more than 6 million automobiles each year and employs above 300,000 employees in more than 90 facilities and plants established worldwide (Ford , n.d). In summary, the products of Ford Motors include automobiles, commercial vehicles, luxury vehicles, as well as automotive parts. It also offers services like vehicle leasing, automotive finance and vehicle services. The company has total revenue of about US$150 billion and receives a net income of about US$6 billion. Most of its successes over the years have been as a result of its outstanding organization structure and business strategies. An Overview of Volkswagen Company Volkswagen Company is also a multinational automotive company that has its headquarters in Wolfsburg, Germany. It is the 2nd largest automotive company across the world in respect to revenue. Volkswagen Company develops manufactures, designs, and markets commercial and passenger vehicles, engines, turbo-machinery, as well as motorcycles. The company also offers other business related services such as leasing, financing, and fleet management (Baumann, 2010). In the recent times, the company is known for being among the largest producer of motor vehicles in the world, along with Toyota and General Motors. In addition, it has maintained the biggest market share in European countries for the last 2 decades. Fortune Global 500 listed Volkswagen Company as the 9th largest company in the world in 2013. Essentially, Volkswagen Company markets passenger cars under various brands, including Audi, Bugatti, Porsche, Bentley, Skoda, Lamborghini and Volkswagen Marques. The motorcycles are marketed under Ducati brand while commercial vehicles are marketed under Scania, Neoplan, MAN, as well as Volkswagen brands. The company operations are divided into 2 divisions, which include the financial service division and the automotive division, and have more than 350 subsidiary companies. More importantly, the company has established operations in roughly 150 countries worldwide and operates about 100 production plants in 30 countries. Furthermore, Volkswagen Company holds a 20% non-controlling stake in Suzuki and has got 2 major joint venture businesses in China, which include Shanghai Volkswagen and FAW Volkswagen (Datamonitor, 2008). Volkswagen Company was established in 1937 with a focus of manufacturing a car known as Beetle. Production in the company grew rapidly during the 1950s and 60s. It acquired Auto Union in 1965, which consequently produced the 1st the Audi models. In addition, in 1970s Volkswagen Company launched new model of front wheel drive cars, which included Polo, Golf, and Passat. The operations of the company in China have grown swiftly in the past recent years, and the country has become its largest market. What is more, Volkswagen Company is a public Firm or company and is listed in the Frankfurt Stock Exchange, which is its primary listing, as well as London Stock Exchange, New York Stock Exchange, Luxembourg Stock Exchange as well as Six Swiss Exchange, which are secondary listing (Honeywill, Scoltock & Bickerstaffe, 2009). As of 2012, the Lower Saxony government held 13% of the company’s stock, which gives it 20% of the total corporate voting rights. In summary, the products of Volkswagen Company include commercial vehicles, automobiles, motorcycles, engines, as well as turbo-machinery. It also offers related services such as insurance, banking, fleet management, leasing, and financing. It has total revenue of US$274 billion, and achieves net income of about US$30 billion annually. This significantly indicates that, although Ford Motor is among the oldest company in the automobile industry, Volkswagen Company has surpassed it by far in regard to the number of employees, revenues, as well as net income. Organizational Structure of Ford Motor Worldwide Operations  Ford Motor is more of a family business than a public company as it is mainly controlled by Ford family. It has its operations all over the world, including North America, South America, Europe, Oceania, Africa, West and South Asia, as well as East and Southeast Asia regions. Its products and services include automobiles, trucks, tractors, buses, automotive components, financial services, sport cars, and touring cars, among others. The mission of Ford Motor is that it is a global family with a proud heritage that is greatly committed on providing mobility around the world. In addition, the company usually anticipates consumer needs in the industry and moves fast to deliver outstanding products and services with a focus of improving people’s lives. The vision statement of the company is to become the leading consumer company of automotive products and services across the world (Davis, 2003). The company is attributed to an effective organizational structure, which comprises of management executive board, which includes directors and regional managers. In addition, the company’s management executive board comprises of the chairman, who is also the CEO of the company, several vice presidents, chief operations officer, chief financial officer, chief technical officer, R&D director, marketing manager, as well as directors of various target markets, including North America, South America, Europe, Oceania, Africa, West and South Asia, as well as East and Southeast Asia regions (Rafique, 2010). The company’s vice presidents are assigned to deal with procurement affairs, HR affairs, corporate service quality, legal affairs, labor affairs, manufacturing affairs, as well as launching of new models, all of which they set out strategic policies to be followed by the subordinate levels of management tactically (Ursula, 2013). What is more, there is also a vice president office that is assigned to liaise with the company’s affiliated companies where it has bought some stock or has a joint venture arrangement including Mazda, Aston Martin, Jiagling, AutoAlliance Thailand, Ford Lio Ho, Changa Ford Mazda, Ford Otosan and Ford Sollers. This vice president acts in accordance with corporate framework outlined in the joint venture or acquisition corporate policy. More importantly, the organization structure in its global operations is mainly centralized and mechanistic in nature (Kaipa & Kriger, 2010). The organization structure of Ford Motor does support inclusion of participative culture, in which all organization members and other stakeholders are encouraged to participate in strategic decision making. In this regard, its organization structure really supports an open communication system that promotes participative culture (Greenhalgh, 2000). With this attribute, the company is enhanced to have a shared corporate vision, values and direction among all organization members and other stakeholders globally. Throughout the company’s history since its inception, inclusion oriented organization culture has been a major contributor to its success through benefiting from pooled knowledge among its diverse workforce. In addition, the organization culture of Ford Company is people oriented. It exhibits an adaptive culture, in which company managers show care to their employees, clients and shareholders. Essentially, Ford Motors Company treats its employees as its most important asset along with technology. Employees’ contributions to the strategic decision making are highly valued and always encouraged. In specific, employees’ contributions and opinions are encouraged through participative model, and the organization structure offers them an opportunity to air their views and have them incorporated in the organizations business strategies and policies (Friedman, 2001). Organizational Structure of Volkswagen Worldwide Operations  Volkswagen Group develops, designs and markets vehicles, automotives, and components of the group’s brands, including light commercial vehicles and passenger cars. In its operations as a parent company, Volkswagen Group have indirect and direct interests in SEAT S.A., AUDI AG, Scania AB, SKODA AUTO, Porsche AG, MAN SE, Dr. Ing., Volkswagen Marque, as well as Volkswagen Financial Services and other numerous companies in Germany and across the world (Wiese, 2009). Therefore, the organization structure of Volkswagen Group is very wide for it is attributed to many affiliated companies; it has gained interests through joint ventures and acquisitions. In addition, each affiliate company is managed separately as a distinct brand. This is as opposed to the case of Ford Motor, which has a narrower organization structure. Volkswagen Group has located its global headquarters in Wolfsburg, Germany. The company has another major headquarter meant to serve American market, which is located in Virginia, USA. The mission statement of Volkswagen Group is basically to serve the good of the people on the basis of innovation, quality and sustainability in the international market. Furthermore, it aims at enthusing its clients across the world with innovative, reliable and environment friendly vehicles, and also provide excellent services with a focus of obtaining the best results. The vision statement of Volkswagen Group is to attain the leadership in providing the best solutions in the automotive and vehicle manufacturing industry. In addition, the company’s vision is further extended to include ‘continuous improvement of company’s processes, as well as promoting excellent mindset among collaborators and commercial partners through fulfilling the requirements of national, international and Volkswagen Group in respect to products and service quality, preventing environment pollution, and embracing health, safety and job security. The company’s values are geared for success and pursue high performance, which are guided by innovation and quality production for better customer satisfaction. Through effective organization structure, which has significantly helped in enhancing strategic management, leadership and efficient communication, Volkswagen Group has really accomplished on adapting its products and services to fit real time market necessities, implementing an effective customer relationship management system, as well as developing hybrid cars that are environment friendly (AutoBlog, 2012). The company’s board of management is the ultimate body that is responsible for all management practices. The company has also a supervisory board that is responsible for appointing, monitoring and advising the board of management. In specific, supervisory board is consulted directly on strategic decisions, which are of fundamental significance to the company (Volkswagen, 2012). More importantly, companies affiliated to Volkswagen Group are managed distinctly by their particular managements. Nevertheless, the management of each individual company takes into consideration the overall interests of Volkswagen Group besides the interests of their own brands and companies, which is in accordance with corporate framework outlined in the corporate policy. Worth noting, the extent to which the group’s interests will be considered mainly depends on the level at which the company has invested in those respective companies. Such include SEAT S.A., AUDI AG, Scania AB, SKODA AUTO, Porsche AG, MAN SE, Dr. Ing., as well as Volkswagen Marques. For instance, the company has 75% stock in MAN SE and 100% stock in Ducati Motor Holding, which makes it have significant voting rights. In the worldwide operations, the organization structure of Volkswagen Company is highly affected by numerous laws and political factors of Germany and other global international markets. In specific, there are many legal requirements regarding development, designing, production, and marketing, which also include tax, capital market, commercial and company law, as well as banking, labor, energy, insurance and state aid regulations (Carmona, 2013). In general, the company has put in place effective organization structures that enables it have strong linkages with all its affiliated companies, which is actualized through the use of information technology and shared values. Board of management has been the key to enhancing them work together as one group while allowing each pursue their specific strategies based on the nature of their target market and brand position. Most importantly, the entire organization structure is designed to support efficient communication among all organization members and stakeholders, use of advanced technology for product development and designing, as well as effective human resource development (Wagner, 1998). Conclusion From this comparative analysis, it can be seen that both Ford Motor and Volkswagen Company are international brands that are very popular worldwide. The organization structure of Volkswagen Group is very wide for it is attributed to many affiliated companies, it has gained interests through joint ventures and acquisitions. These include SEAT S.A., AUDI AG, Scania AB, SKODA AUTO, Porsche AG, MAN SE, Dr. Ing., Volkswagen Marque, as well as Volkswagen Financial Services. In addition, each affiliate company is managed separately as a distinct brand. This is as opposed to the case of Ford Motor, which has a narrower organization structure. Although Ford Motor has various joint ventures and affiliated companies it has bought stocks, its organization structure is narrowed on production management of automobiles, trucks, tractors, buses, automotive components, financial services, sport cars and touring cars, among others that it markets using Ford brand. Its joint ventures and affiliated companies include Mazda, Aston Martin, Jiagling, AutoAlliance Thailand, Ford Lio Ho, Changa Ford Mazda, Ford Otosan, and Ford Sollers, which are all overseen by one of the company’s vice president based on corporate framework outlined in the joint venture or acquisition corporate policy. Although Ford Motor is among the oldest company in the automobile industry, Volkswagen Company has surpassed it by far in regard to the number of employees, revenues, as well as net income. This is mainly because of the company’s broader range of brands, as well as products and services. Its only marquee is the Volkswagen passenger car, and all the others are subsidiaries including Audi, Lamborghini, Bugatti, SEAT, Skoda, Bentley and Porsche where it controls them through the stakes it has acquired. Ford Motor has total revenue of about US$150 billion, and receives a net income of about US$6 billion, while Volkswagen Company has total revenue of US$274 billion, and achieves net income of about US$30 billion annually. This also reflects how Volkswagen Company has a larger organization structure as compared to Ford Motor. Another main difference that can be noted in the analysis is that Ford Motor Company, as a public company, is only listed in New York Stock Exchange, while Volkswagen Company is listed in the Frankfurt Stock Exchange, London Stock Exchange, Luxembourg Stock Exchange, as well as New York Stock Exchange, as well as Six Swiss Exchange. Worth noting, it has its primary listing in Frankfurt Stock Exchange while the other stock exchanges are its secondary listing. Conclusively, much of successes of both Volkswagen Company and Ford Motor Company have greatly been derived from their well designed organization structure in their global operations. Ford Motor has been surpassed by Volkswagen Company in terms of revenues and growth mainly because of its more robust pursuance on growth through joint ventures and acquisitions (Rosevear, 2013). It also appears that Ford Motor’s organization structure seem to maintain the family members of the company founder at the highest management executive ranks, and Ford family has enjoyed the leadership and control of the company since it was established. Retention of this management control could be one of the reasons that make it restraint from expanding its organization structure vigorously. Nevertheless, organization structure of both companies are designed to support efficient communication along all managerial levels, use of advanced technology for product development and designing, as well as effective human resource development and inclusion in strategic decision making processes. References AutoBlog. (2012). How Volkswagen is run like no other car company. 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