Business and Sustainability of Ford Motor Company - Case Study Example

Business Sustainability Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Lecturer Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 11th April, 2012. Brief overview of the Ford Motor Company The Ford Motor Company of Australia was founded in Geelong Victoria back in 1925 as a constitute branch of Ford Motor Company Canada. It is the longest established and the largest automobile manufacturer in Australia and the only automotive company which fully designs, develops, and builds a number of automobile locally (Hiriyappa 2007, pp. 7). Ford Australia employs over 5100 workers in design, manufacturing, assembly, development, administration as well as sales and it possess assets worth approximately AU$ 1Billion. Ford Australia headquarters are located at Broadmeadows in Melbourne. It has other working places scattered all over Australia such as in Geelong which is about 80 kilometres southwest of Melbourne and other casting, engine and stamping facilities. It has over 225 dealers in Australia. Ford Australia manufactures a wide range of vehicles such as Falcon, Mazda-built Laser and Escape, T-series, the European based Ka and Explorer, Cougar & Mustang of USA among other such brands. The company has joined hand with other automobile manufacturing companies such as TVE i.e. Tickford Vehicle Engineering Pty Limited which is located near the headquarters in Broadmeadows (FMCAL 2005, pp. 45). Nature of business operations Retail/trading Australia Ford has many retailing outlets all over Australia as well as all over the globe. With 225 dealers across Australia and at least one dealer in every foreign country mostly those with purchasing power of the machines. Some retailers belong to other manufacturers but they retail Ford products through business ventures (Nevins et al. 1989, pp. 23). Service Ford Australia has wide range of services other than manufacturing vehicles. For example, they offer after sales services to customers, they sell spare parts to mechanics and other ford users. They also give maintenance services to other loyal customers so that their vehicles look as good as new. Manufacturing As mentioned above, ford Australia manufactures a wide range of vehicles, by assembling chassis, engines and body building. The range of vehicles and models includes; Fiesta, Mondeo, Focus, Falcon & G series MKII, Territory, New FORD Kuga , Escape, Transit, Ranger, Ranger (all-new). The engine manufactured is cost effective and the overall body design and the inside of the vehicle are design to the comfort of the user for example the sport utility vehicle (SUVs) Mixed business Ford Australia has ventured and joined hands with other engineering groups like Prodrive and Ford performance vehicles. Ford Australia has a combination of business such as selling engines of each model which is in the market, selling body parts such as windscreens and doors, and selling other vehicle accessories as well as complete vehicles (Nevins & Winner 2002, pp. 35). Stake holders Ford Motor Company Australia has established long lasting relationships with several stake holders. These stake holders include; employees, suppliers, dealers, communities and investors. In addition, it has relationship with government agencies, academia and non-government organizations. Finally the company has customers who form part of their stake holders. Research methodology The data collected in this research is used to establish the sustainability of Ford Motor Company in Australia. The data is gathered from previously conducted research in the same company and though the objectives of the research may defer, the information provided is relevant in the two researches. The information is in quantative data in form of charts and tables. The data compares the company’s performance with the performance of other automobile manufacturing companies in Australia and in some cases across other countries with manufacturing companies that have a competitive hand over the company. The information also compares between different models and different manufacturers. The qualitative data provides information about the company’s internal culture i.e. the relationship of company’s management and other stake holders. The tables and the charts are provided in the appendices. Sustainability Practices Sustainability practices of any company run from internal to external business practices that influence the running of business either positively or negatively. The business structure of Ford Motor Company is constructed in a sustainability of the company through teamwork, sound governance and management that facilitates for transparently and accountability of every stake holder (Wheelen & Hunger 2011, pp. 56). During the years Ford Motor Company Australia has strengthened its sustainability governance and integrated sustainability into business processes all in the aim of reinforcing the running of the company. It that respects, to oversee that the sustainability has prevailed, the Ford Australia management implemented some policies. One of the policies requires that every department of sustainability, safety engineering or environment to report to the chief executive officer of the company. In term of resources, the company has around 4950 employees and over AU$... worth of both tangible and intangible assets. For example, total sales revenues for the year 2001 was precisely AU$2.8 Billion. The physical resources of the company include; garages, assembly houses, stores, show rooms and the administration block. Such assets are in every sub-branch of the company and each is run individually depending on the kind of engineering they are assigned. Furthermore, the company has countless machines that aid the company with labour. The working culture of the company is characterized by teamwork spirit to improve the productivity of every worker (Baron 2009, pp. 67). The location of all Ford Motor Company Australia constitute branches are located in strategic places with good infrastructures which facilitates for development. The external environment is the main determinant of any company’s sustainability. The company has a number of potential competitors such as Toyota, Nissan, and General Motors. Though the cost of manufacturing within the automobile companies is rising, production input such as labuor, energy, materials, water and logistics constitute to cost structures of all manufacturing companies. Ford has been leading in incorporating principles of designing for sustainability and other life-cycle management approaches. These process begun back in 1990s and have gradually evolved to a complex sustainability project. Ford Motor Company Australia highly competitive market The company has grown to one of the most competitive automobile manufacturing companies not only at domestic level but also at international levels, which has being necessitated by the customer demand for quality, performance and value. At domestic level, the market is much of world platform with many completing vehicle companies mostly from the well-established automotive markets from Germany, USA, and Japan. Australian based Ford has become increasingly segmented and originates much of its competitive character from its range of brands and products. Unlike other business like aviation, telecommunications and retailing, Ford and other automotive companies are faced with the challenge of suppliers in the market (Easdown 1987, pp. 15). This is evident since the automobile market leader in the recent years has achieved not more than 22% of the new vehicle market. The wide range of brands and products in the automotive market can be further demonstrated by the nearly 52 different brands and around 320 distinct models on sale. Furthermore, the models and brands come from 20 different countries which range from the automotive powerhouses like Japan to the relatively new manufacturers like South Korea and emerging producers like South Africa. The total value of automotive imported to the country for example from South Korea is modestly increasing from AU$ 22Million to AU$ 564Million within a period of 5 years. The competitiveness intensity for Ford Australia has been engineered by other factors beyond the models and brands. As a matter of fact, most the engineering factors have driven for diversity. These factors include but not limited to; marketing, pricing, low entry value, and affordability (Nevins & Winner 2002, pp. 39). Market Apart from housing, the market for vehicles is unique in the sense that it involves both used brands and new products. Nevertheless, it is viewed as a single unit which is made up of series of intertwining sub-markets at different pricing levels. A single change of any one of these sub-market alters the entire market for the products and brands. For example, low price in Korean light cars can affect the pricing of used vehicles. Pricing The pricing for Austrian based Ford is among the most competitive in the globe characterized by affordability as dictated by the other manufacturers pricing. However, the automotive sold in Ford generally incorporate high level of standard equipment. This is so because of the following factors; wide range of products, strong value of products like Ford Falcon, and low pricing from other manufacturers. Affordability The affordability for Australian motorist has increases in the recent past years. For example, to purchase a Ford Falcon it can take 38 weeks to work earnings as compared to 44 weeks in a period of 10 years. The affordability has resulted from mixed competitive and regulatory factors such as intense market competition and new low cost cars. Value equation of a new car has also contributed to the affordability in the sense that cars incorporate higher levels of feature content than before. Though there has been improvement in affordability, there is still a room for improvement if only the producers can ensure diverse needs of demand in the market place. Australia Ford Motor Company Life Cycle From the fact that are complex in the sense that they consist subsystems each with its unique substantial development. In that sense, they must be updated regularly to meet both corporate and government standards and regulations. In ford, vehicles are categorized within new product, major freshening and minor freshening depending on the degree of change of the product. For example, a 1997 model with a 12 year life cycle undergoes minor freshening after probably 4 years and a major freshening after 8 years from the date of manufacturing after which the product will be replaced at the end of 12 years. Due to cyclical nature of the products, very extensive planning is required in the beginning of the product design in order to allow for flexibility during mid-cycle changes without accruing much cost. In the past years, ford Australia product development system was absorbed on enhancing cost for the first product. But since Ford 2000 and the need for affordable business structure, there has been a shift from the traditional way of product cycle to the product cycle profitability. This follows realization of the need to make new products to ensure lower mid-cycle profitability. The management has also realized that the capital expenditures may be required during the initial program if in any case, can reduce mid-cycle freshening cost. Ford 2000 also changed the financial system to more individual cost element. These ways the company aims at increasing sustainability and profitability for ford as a single entity (Esty & Simmons 2011, pp.56). Conclusion The finding shows that Australian based Ford Company has put in place sustainable measures both at domestic and international levels. The sustainability is to make the company thrive in the globally competitive market. The marketing strategies for Ford Company is geared to make the products they manufacture have a competitive edge over other equally high standard and up to the state of the art products. The SUVs Jaguar model gives a good example of the Ford highly competitive products (Bowen et al 1994, pp. 35). Marketing is done in a way that the company will gain relatively high income from the revenues collected. On the same point, the market for ford has greatly been influenced by the number of dealers and other show rooms not only in Australia but also in the world. Joining hands with other competitor has also shown some positive effects on the marketing strategies of the company. For the product life cycle, the company has adopted a working strategy for modifying and changing their products after a span of approximately 4 years. The products also undergo a complete over whole after 12 years from the date of manufacturing. This way, the company aims at always being at the up hand of the market, giving the customers the products they demand for and in addition ensuring that they have a significant market share. Again the company has adopted a strategy of producing a wide range of products which have different features at an affordable price to make the customers feel with the products and to meet the demand. Furthermore, the company does this to be at per with other manufacturers so as not to be left behind. Finally, the data reveal that though the ford company is the Australia leading manufacturers of automotive, globally they are among the last since other countries like Japan and Germany they are leading. Recommendations Due to competitive nature of the automotive market, Ford Australia has to put in place targets to meet the ever growing demands for their products. These can be achieved through entering into free trade agreement with countries with which Ford can develop its competitive advantage (Lowitt 2011, pp. 55). These countries should have free trade negotiations such as cooperation council, the association of Southeast Asian nations and South Africa. At domestic level, since there is still room for making purchasing of vehicle affordable, Ford Australia should work at fulfilling this potential making product affordable hence surpassing the other competitors in market share? In addition, the company should join hands with big companies like Toyota and Nissan not forgetting General Motors and make products the way they do in order to have the knowledge of how to manufacture competitive products hence have a competitive advantage. In terms of overall sustainability, the company should employ a working force with the current technology knowhow in order to manufacture state of the art vehicles. By so doing, the company will have cost reduction is the labour force hence overall high returns of to the company. It is worth noting that, if the product life cycle is narrowed down to say 6 years, the company will yield more returns since the products will be redesigned again hence new features and new customer demands. References Baron, D 2009 .Business and Its Environment. New Yolk: Prentice Hall. Bowen, H. K. et al 1994. The perpetual enterprise machine UK: Oxford University Press. Easdown, G 1987.Ford: A History of the Ford Motor Company in Australia. Australia: Golden Press. Esty, D & Simmons, P 2011 .The Green to Gold Business Playbook: How to Implement Sustainability Practices for Bottom Line Results in Every Business Function. New Jersey: Wiley. Hiriyappa, B 2007.The Business Guide to Sustainability: Practical Strategies and Tools for Organizations. Amazon: Createspace. Ford motor company of Australia limited. 2005. Submission to the productivity commission review of post 2005 automotive policy arrangements [Online] at: http://www.pc.gov.au/__data/assets/pdf_file/0003/25779/sub041.pdf Retrieved on 10th April 2012. Lowitt, E 2011.The Future of Value: How Sustainability Creates Value through Competitive Differentiation. New Jersey: Jossey-Bass. Nevins J & Winner, R 2002.Ford Motor Company’s. Investment Efficiency Initiative: A Case Study. Australia. [Online] at: http://www.ict.griffith.edu.au/~bernus/taskforce/Detroit97worksh/presentations/fordcase.pdf Retrieved on 10th April 2012. Nevins, J. L. et al. 1989.Concurrent Design of Products and Processes: A Strategy for the Next Generation in Manufacturing. New York: McGraw-Hill. Wheelen, T & Hunger, J 2011.Concepts in Strategic Management and Business Policy: Toward Global Sustainability. New Yolk: Prentice Hall Appendices Ford Australia sources Australia Market 20 source countries 52 different brands 320 different models Ford Australia models Ford Australia –Key models Ford Falcon (all derivate) Australia 72,944 Ford Laser Japan 15,374 Ford Courier Thailand 6,587 Ford Escape Japan 2,842 Ford Transit Europe 2,388 Ford Ka Europe 1,982 Ford Explorer USA 1,387 2011 Sales Data Australia Ford Suppliers Ford Australia – some key Suppliers Venture Plastic Components Vic BTR Transmissions NSW Spicer Rear Axles NSW Bosch Electronics Vic PBR Brakes Vic Walker Exhaust Systems SA Plexicor Trim/moulding Vic Autoliv Air Bags/ Seat Belts Vic Hella Lightening Vic ACL Engine Parts Tas Ford Australia locations Ford Australia Geelong product Engineering Iron and Aluminium Casting Engine Manufacture Stamping Chassis & Component Manufacture Lara Climate Laboratory Emission Laboratory Proving Grounds Broadmeadows Research Centre/Design Studio Training Centre Assembly Plant FCSD Parts Warehouse Head Office Fordstar Broadcast Studio Read More