Company Analysis of the Ford Corporation - Essay Example

? Company Analysis - Analytical Report Company Analysis of the Ford Corporation Executive Summary Henry Ford launched the Ford Motor Company in 1903, in Dearborn, Michigan, with the aim of equipping every American citizen with an automobile (Geyer, 2011). Even though Henry Ford had great skill and craftsmanship in building cars, his skill was not enough to propel him into success. The Ford Motor Corporation was established with the assistance of the then president of the German- American bank, John Gray, and a coal dealer known as Alexander Malcomson. Alexander Malcomson encouraged his own business partners to invest in Henry Ford’s recently established business which was mainly viewed with skeptcism by the public. It was only the efforts of Malcomson that allowed Ford to be registered as a legitimate business. At its first stockholders’ meeting, John Gray was elected as the company’s chairman while Henry Ford took over the vice-presidency. Moreover, the three initial starters of Ford would not long remain friends and partners. Subsequent disagreements led to John Gray resigning his post and Henry Ford taking over as president of the company. While Henry Ford was quite successful in managing the company, the real profits came with the outbreak of World War One. As a pacifist, Henry Ford joined other leaders in Europe in trying to avert the outbreak of war. Even though his efforts were unsuccessful, his reputation as a pacifist served him well when the Allied Powers turned to American car manufacturers for military vehicles for the war. Ford’s phenomenal success would continue right through the First World War, but would start to wane before the Second World War because the company was being run as a personal fiefdom and not a multinational corporation. In addition, Henry Ford did not pay much attention to the needs of customers, but was more interested in building vehicles that were to his tastes. In addition, the great Depression suffered by America in the late 1920s affected Ford. To keep afloat, the Ford Corporation had to implement cutbacks and fire many employees. During the Second World War, Henry Ford would be criticized for allowing the Ford Corporation’s branches in Germany to produce war machinery for the Nazis; even though he also supplied engines for the Allied forces. Moreover, from a business point of view, Ford was merely trying to stop his German plants from being nationalized by Adolph Hitler. Ford suffered from low sales after the Second World War due to national economic issues as well as problems caused by internal strife, but still managed to remain afloat. To a great extent, Ford’s survival through the years has also been the result of financial assistance received from the American government during its worst crises. Today, more than a hundred years after the Ford Corporation was launched, it is the second largest manufacturer of automobiles in the world. Ford has been able to maintain its position in spite of issues such as globalization, and aggressive competition. In the early years, American car manufacture was basically the forte of Henry Ford (Geyer, 2011). Ford’s method of mass production was copied by many recognized industries of that era, and was soon also adopted by other industries around the world. Global Overview of Issue The Ford Corporation today has branches in Asia, Europe, Africa, South and Central America, the Middle East, and the Caribbean (Geyer, 2011). When Ford first launched operations outside the United States, the newly established foreign branches were only authorized to deal in sales and distributions. The economic integration that was brought by the initial episodes of globalization allowed Ford to be able to produce and distribute vehicles from 108 branches stationed across six continents (Geyer, 2011). Ford's operations in foreign nations allowed it to retain its customers while acquiring new ones from some of its business rivals. Ford’s operations in foreign nations today are free to operate in ways that they deem as being most relevant to them, but they are still subject to the main office in America. Globalization has had different effects on Ford’s national and international operations. Ford has had to invest more in its research and development department in order to remain relevant in the highly competitive vehicle manufacture industry. Many nations have reduced trade barriers that formerly affected the procurement of all products, which is something that has accelerated globalization (Economy Watch, 2009). Global amalgamation is something that has positive effects for automobile corporations that are interested in expanding their marketing operations. Moreover, all automobile corporations are also exposed to more competition and have to carry out continuous adjustments in order to take in the legal procedures of the nations in which they launch operations. The emergence of international labor necessitates an assessment and restructuring of corporate operations in foreign nations. It also compels companies in competitive industries, such as the automobile industry, to continuously re-examine their technological practices in order to keep up with the most recent technical inventions. Therefore, globalization presents challenges as well as opportunities for the Ford Corporation. Description and Analysis of Ford’s Options In the recent past, Ford has engaged in various operations that are meant to cut costs so as to increase its profit margins. Less than a decade ago, Ford saved $1 billion by using standardized car-parts for the manufacture of its various car models (Greenber, 2003). Making use of standardized parts allowed Ford to reduce the quantity of inventory parts it usually used in production operations. This meant that Ford assembly facilities would not need to be shut down when the stores ran out of inventory parts; a move that would save money. Ford has also made use of reverse engineering in the creation of different car parts such as those of the Taurus. In creating this car, Ford made a comprehensive assessment of all the models that were created by business rivals to rival the Taurus so as to determine the best parts for the car. Ford then improved on the best parts, and used them to create a new Taurus model. The resulting model was easily the best make in the market and propelled Ford ahead of its business competitors in the family sedan class. Ford has been at the fore front of utilizing the most recent technological developments in the production of new car models. Ford has also made use of technologically advanced methods of communicating such as online networks that allow workers in different geographical locations to be able to share novel ideas, collectively construct actual car-part designs, combine the designs, and assemble and test prototypes through computer simulations (Geyer, 2011). To control costs, Ford has also recently included Voice over IP phones. Being at the forefront of implementing such changes is a move that is of great for beneficial for Ford. This is something that allows the company to improve sales. The only disadvantage of implementing such new innovations is in the cost. Any major changes in the manufacturing system of a corporation usually cost a lot of capital (Lung, 2004). Such innovation is also quite risky because there are many times when technological innovations do not work well or resonate with other companies systems and operations. When this happens, there is obviously a massive loss of capital as more money has to be used to acquire other innovations or restore the former ones. Globalization also costs companies in terms of expansion. Whenever a company relocates to another nation or seeks to establish a new branch in a different nation, the process is not only time consuming, but also quite costly. Moreover, for large corporations such as Ford, moving away from domestic production is unavoidable. Many times, this decision is not only due to corporate objectives to expand, but is also the result of high inflation in America as well as stagnating levels of earnings that bar people from spending more on luxury utilities such as extra vehicles. Simultaneously, there is growing competition within the vehicle industry. Recommendations In today’s competitive business sector, the needs of consumers change more often than was the case in the past. Moreover, they remain as the main determinant of what corporations manufacture. In the past, the needs of car consumers for the most part remained stagnant when compared to the needs of clients in other industries such as the electronic gadgets industry. However, this is slowly beginning to change. The car enthusiasts of different models today have their different needs. Car manufacturers can no longer use single models to meet the requirements of their diversified clients. Indeed, the different markets for different car models may even result in corporations customizing cars according to geological regions (Lung, 2004). This will obviously affect the decision to keep using standardization because an obvious shift is required to deal with this changing pattern of market dynamics. In future, the Ford Corporation may be forced to customize options in order to remain competitive. In addition, Ford has to come up with better ways of supporting communication among its far flung workers who are located in different parts of the world. This is a vital but often overlooked feature in most multinational corporations. In many cases, the plans and strategies of companies with foreign branches are not appropriately communicated among all the workers of the companies. This is not just because it is difficult to ensure that all workers in all branches understand all the policies that are passed on a monthly or weekly basis, but also because it is not seen as being important. Ford has to ensure that even the workers who might be viewed as being junior or semi skilled, understand the organizational objectives and know how they will be implemented. Ford may also have to merge some of its divisions in order to save on costs. Standardization will also require a flatter organizational structure. In a flat organizational structure, every role in the institution has a clear purpose and set of accountabilities (Geyer, 2011). Roles are not associated in any way with the workers who fill them, but are viewed as being separate. If any proposed project does not align with the set objectives, meetings are held to resolve the underlying issues and find out if the proposed action can be adjusted to suit the corporate objectives without necessarily altering its essential aim. This means that there is much more transparency about the responsibilities of different workers and the function of decision making (Sturgeon, Memedovic, Van Biesebroeck, & Gereffi, 2009). Flat organizational structures are also efficient as they easily realize the functions that are necessary in a competitive industry. For instance, the dynamism that a flat structure allows will make it possible for an organization to be able to take on new projects or make changes whenever they are required, even if they were not previously envisioned. An entrepreneurial firm like Ford Corporation which has workers all over the world will incorporate the flat structure if it perceives flexibility as a critical aspect (Geyer, 2011). The benefits of using the flat organizational structure are also found in increased communication between the corporate executives and the workforce. This structure enables the company to development tactical teams which can then hire especially skilled workers from numerous fields so as to improve job on performance (Maxton, 2004). The flat organizational structure also encourages the development of team spirit among a company’s employees, as the hierarchical structures that support non-communication and unquestioned obedience to supervisors are done away with. A reduction in company bureaucracy at Ford will allow the company to be able to take advantage of globalization by facilitating faster decision making which makes the company more cost efficient. Ford also needs to make the most of its new car models entering the market by conducting aggressive advertising campaigns. Globalization exposes car manufacturers to unexpected competition. Most car manufacturers suffered a temporary setback when they were first exposed to competition from foreign car makers. More than 50 years ago, for instance, Ford was one of the three car manufacturers that dominated the American market. It accomplished this through advertising and feeding into the myth of realizing the American dream. Only eccentrics and wealthy Americans had cars made by foreign corporations. Moreover, the high cost of American cars, lack of variety, rise in fuel costs, and poor quality in comparison with foreign- made cars allowed foreign car manufacturers to reach new American clients. Ford has for the most part been able to overcome its challenges on the globalization front by importing car parts such as transmissions and engines among other car parts from different foreign based companies. Moreover, such changes mean that there are more complications in communication between various branches of Ford and its externally based suppliers. In such joint ventures, there is an increased margin for error. There has to be clearer communication systems as there will be different requests from workers and customers from all over the world. With this type of operation, the flat organizational structure is the most efficient as it provides more room for the improvement of communication between workers. Ford also has to ensure that it remains sensitive to the tastes of all its varied markets with regard to car models. References Economy Watch. (2009). Mixed economy. Retrieved from http://www.economywatch.com/world_economy/world-economic-indicators/mixed-economy.html Geyer, G. (2011). Ford Motor Company: The greatest corporate turnaround In U.S. history. New York: CreateSpace Independent Publishing Platform. Greenber, K. (2003). Automakers steering drivers into evolution revolution. Brandweek. Lung, Y. (2004). "The Changing Geography of the European Automobile System." International Journal of Automotive Technology and Management, 4(2/3). Lung, Y. (2004). Cars, Carriers Of Regionalism. Basingstoke: Houndsmills. Maxton, G. P. (2004). Time for a Modle Change: Re-engineering the Global Automobileindustry for the 21st Century. New York: Cambridge University Press. Read More