Case Study - Ford Motor Company

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Ford Motor Company was founded in 1903 by Henry Ford and eleven business associates. The company was responsible for the innovation of the moving assembly line where employees would remain in the same place while performing the same task on each automobile that move along the assembly line. Ford Motor Company has been a prominent car producer for over 100-years – an icon of U.S. manufacturing. However, the company has reached a pivotal impasse where timely planning has become crucial. Hence, to reestablish the brand and Henry Ford’s original vision to produce “cars that were affordable to the masses” (What Would You Do? Ford Motor Company, n.d. p. 1). This case study will examine four options; the first option is whether to close down older plants in an effort to realign production and sales. The second option is to re-engineer the company to produce smaller cars eliminating or sharply reducing the SUV and truck lines. The third option is to take the unprecedented step of dramatically reducing North American presence and focus the company efforts on international markets where the company has been very successful. The fourth option is to sell the entire Premier Automotive Group (PAG). To determine what the criterion for the Ford Motor Company four options are, Ford’s management team should collectively utilize the rational-decision making model that is define as “a systematic process in which managers define problems, evaluate alternatives, and choose optimal solutions that provide the maximum benefits to their organizations” (Williams, 2010, p. 85). In addition, management should utilize the SWOT (acronym for Strengths, Weaknesses, Opportunities, and Threats) analysis, to identify their internal strengths and weaknesses and their external opportunities and threats. Ford can use the SWOT analysis for assessing their strategic position in its internal and external environments. Rational decision-making and the SWOT analysis will allow Ford to obtain and ascertain key issues to determine what strategic plans to implement. The case outlines four strategic options Ford is pursuing to increase its profitability. Describe each of the four options. For each option list two criteria, you would use to evaluate the option. Option number one recommends closing older plants to realign production and sales. Closing the older plants managers would have to evaluate how these closures will affect their internal environment, employees will lose their jobs; the company will be obligated to buy out each employee. In addition, the company has to evaluate their external challenges; how will the closure of these plants affect the community. The plants are currently producing more cars (supply) than the consumers are purchasing (demand). Therefore, Ford Motor Company’s has to create and implement a tactical plan that denotes how the internal threat of buying out the employee’s will occur, hence buying out the employees will reduce Ford Motor Company’s operation expense and maximize their internal opportunity because there will be more resources (cash) to invest in other areas of the business. In addition, the company could sell their supply to employees at a discounted price and offer the consumers in the community this same discount at a point lower to achieve goodwill in the community, thus minimizing their external challenges. Option number two is eliminating or sharply reducing the SUV and truck lines and concentrating on the production of smaller cars. The company managers should determine the strength of this option, the company would need to evaluate the following: can fuel economy be realized in these particular vehicle lines without significant cost being passed on to the consumer; will there be a continuing market for SUVs and how will reducing or eliminating truck lines affect overall sales. Therefore, to evaluate these challenges I propose managers review their industry forces that address the...
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