Ford Motor Company: A Business Analysis
Mary J. Richardson
January 30, 2012
Developing sound strategic plans to address the changing business climate is crucial to organizations operating in today’s global environment. Throughout its history, Ford Motor Company has developed effective strategic plans to adapt the business to the changing economy while addressing the needs of their customers and employees. By analyzing the company’s strategic planning, along with its financial standing, an investor can make an informed investment decision.
“Global strategy involves thinking in an integrated way about all aspects of a business- its suppliers, production sites, markets and competition. This approach considers all activity centres in the supply chain as one entity, not just looking at bits of it. It involves understanding and accommodating local variations and cultures, striving for open “world” standards and understanding international issues. All this needs to be part of the process and product design of the organization, not added as an afterthought when seeking entry into a new market. A good example of a global attitude is at Ford Motor Company. Their “global car” concept consists of a basic engineering design, accompanied by regional variations to suit local tastes. Final assembly of models is postponed where possible to react effectively to local demands.” (McAdam, McCormack, 2001). Ford has embodied vision and forward thinking when addressing the needs of a global economy. They have embraced innovative concepts and philosophies to better serve competition, many CEOs view innovation as critical to corporate success. Williams Ford Jr., chairman and CO of Ford Motor Co., recently announced that, “from this point onward, innovation will be the compass by which the company set its direction” and that Ford “will adopt innovation as its core business strategy going forward.” (Sawhney, Wolcott, Arroniz, 2006). Ford has set the mark for innovation in business throughout the years, adapting their brand message, tailoring their product to suit the needs of the consumer and restructuring the organization to reflect the changing environment. “When a company identifies and pursues neglected innovation dimensions, it can change the basis of competition and leave other firms at a distinct disadvantage because each dimension requires a different set of capabilities that cannot be developed or acquired overnight.” (Sawhney, Wolcott, Arroniz, 2006).
“By strategically outsourcing and emphasizing a company’s core competencies, managers can leverage their firm’s skills and resources for increased competitiveness.” (Quinn, Hilmer, 1994). Ford has looked at the costs of producing their products in whole and part and analyzed the production costs from insourcing versus outsourcing and made decisions reflecting that analysis. “Ford Motor Company found that many of its internal suppliers’ quality practices and costs were nowhere near those of external suppliers when it began its famous “best in class” worldwide benchmarking studies on 400 subassemblies for the Taurus-Sable line.” (Quinn, Hilmer,1994). Deciding how to manage a company globally is a top strategic issue for managers today. “Product development costs can be reduced by developing a few global or regional products rather that many national products. The Ford Motor Company’s “Centers of Excellence” program aims to reduce these duplicating efforts and to exploit the differing expertise of Ford specialists worldwide. As part of the concentrated effort, Ford of Europe is designing a common platform for all compacts, while Ford of North America is developing platforms for the replacement of the midsized Taurus and Sable. This concentration of design is estimated to save “hundreds of millions of dollars per model by eliminating duplicative efforts and saving on retooling factories.”(Yip, 1989).
Ford has also approached the global...
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