The Ford Motor Company, often referred to simply as “Ford”, is a US-based multinational automaker headquartered in Dearborn, Michigan, a suburb of Detroit. In 2018, Ford’s market share amounted to 6.3% with 61 factories operating globally, 32 – domestically, and 6.6 million vehicles sold (Smith, 2020). According to the business analytics dashboard provided by the New York Times, Ford is an absolute leader among the world’s auto and truck manufacturers with a market capitalization of $35 billion (“Auto & truck manufacturers,” 2020).
Despite these impressive statistics, a closer look at Ford’s performance reveals some concerning tendencies. For instance, in 2018, Ford’s net income has been the lowest since 2010 (Smith, 2020). Overcoming this difficulty might require discovering new market segments or emphasizing those already targeted by the company. This essay explains how environmentally aware customers and status seekers might be the best market segments to pay attention to for Ford.
Segment: Environmentally Aware
A brand new era of sustainability is on the rise, and big manufacturers cannot ignore it any longer. The World Health Organization (n.d.) reports that around 12.6 million people die each year of environmental issues; the latter is also accountable for up to 25% of the global burden of disease. The negative impact of environmental issues is becoming common knowledge and a cause for concern for many customers. 81% state that they care whether a company whose products or services they are choosing is environmentally friendly (“Global consumers seek companies that care about environmental issues,” 2018). The level of care and awareness ranges depending on the generation: while only 65% of the Silent generation supported the cause, 80-85% of Millennials and Gen-Zs express their concerns.
A new market segment consists of young people living in urban areas in developed countries (Moser, 2015). In the United States, 21% of the population, or 44 million people are adults between the ages of 19 and 35; 85% of them, or 37 million of them are potentially environmentally concerned.
They prefer to make well-informed decisions and uphold their own ethical standards (Moser, 2015). This implies that before making a purchase, they are likely to research a company’s background and compare alternatives. One downside of targeting this market segment is that the customers may not be exactly financially stable (Moser, 2015). For the most part, they cannot afford environmentally friendly vehicles from the luxury segments.
Lately, one of Ford’s objectives has been investing into green initiatives and reducing its environmental impact,. As Dearborn (2019) reports, the Carbon Disclosure Project (CDP), a nonprofit organization specializing in environmental reporting, has given the Ford Motor Company an A grade for its water security efforts. Ford’s endeavors to slow down climate change have been recognized too: the company received an A- grade for the third year in a row.
Water management has earned Ford an A from the CDP for the fourth year in a row. As one may readily imagine, acting on these values must have helped Ford to build a certain reputation that should be attractive for the discussed market segment. However, Thompson (2015) argues that the company’s intentions to invest more into electric vehicles are somewhat belated. When it comes to actual environmentally production, Ford might be lagging behind its contenders.
Segment: Status Seeking
Many purchases that people make are not just practical: they signal a certain status that the consumer seeks to attain. As Siu, Kwan, and Zeng (2016) put it, accumulation, possession, and spending money become the forces driving the modern market. Making purchases transcends the physical and becomes psychological, especially when it comes to emerging markets. For instance, in South East Asia, the public sentiment is slowly turning to accepting the Western values – hedonism and individualism. Siu, Kwan, and Zeng (2016) add another dimension to the status seeking market segment: they argue that face-saving, one of the main characteristics of Asian culture, makes consumers take into account social beliefs.
To sum this up, it is safe to say that the status-seeking segment resides primarily in developing countries such as China and Malaysia. They are young adults in their mid to late twenties and early thirties. Together, they constitute the first generation that has not seen the deficit and that has grown up in relative abundance of goods and services. Consumers belonging to this market segment want their purchases to be indicative of their ambition and desired social image.
At the same time, this individualism is moderated by the need to take into account peers’ opinions. Entering the Asian market and targeting this exact segment for Ford opens a lot of opportunities. First and foremost, the Chinese market is the largest in the world, and Chinese economy has been on a steady rise since the beginning of the 2010s. Between 2013 and 2017, the growth was fluctuating between 6 and 8% (Amadeo, 2019). Another telling metric is the observable significant growth of the purchasing power in China (Index-Mundi, 2017).
Ford is known for its luxury vehicles – it has an entire brand, Lincoln, launching upscale models. Besides, Ford is a company with a history spanning for over a century, and older models are attractive to those collecting them and the fans of vintage cars. Interestingly enough, Ford makes sure that its luxury line stays in line with modern trends and meets customers’ changing tastes and preferences.
For instance, as Valdes-Dapena (2020) reports, the US-based company has been investing into Rivian, a Michigan startup that develops electric vehicles. The result of their collaboration will be a luxury plug-in hybrid, which is expected to find its market fit with environmentally aware, affluent customers. Rosevear (2018) attributes current low sales numbers to the American company’s inability to strike an emotional connection with the Chinese customers. It seems that new models that target the status seeking segment might solve Ford’s problems in China at least partly.
Recommendations
Ford might want to consolidate its efforts and resources to gain an edge in the competition. Firstly, it should appeal to the environmentally aware market segment consisting primarily of young people who wish to make conscientious choices and also purchase affordable products. This is especially important when Ford’s main contenders such as GM and Volkswagen are launching electric and hybrid vehicles at prices comparable to those for regular cars. The second recommendation would be to appeal to the Asian segment characterized by status-seeking consumption. To meet their needs, Ford might want to promote luxury models as well as those that fall in line with current trends.
Conclusion
Ford is an American car company that is an absolute leader in market capitalization in the automotive industry and one of the most recognizable brands in the world. In recent years, Ford has seen declining net income and sales numbers in particular regions. Apparently, to face the new challenges and overcome them the company might need to reach out to new market segments. Firstly, it might want to consider those who are environmentally aware and strive to make ethical choices.
Their needs might be met by offering them affordable, “green” products while maintaining a good reputation. Another potential market segment is the status seekers of East Asia: they like to signal that they can afford luxury and also save face before their peers. They might be attracted to both luxury car models as well as those that are in line with current tendencies such as environmentalism.
Moser, A. K. (2015). Thinking green, buying green? Drivers of pro-environmental purchasing behavior. Journal of Consumer Marketing, vol. 33, no. 4, pp. 245-256.
Rosevear, J. (2018). This is why Ford Is fading in China. Web.
Siu, N. Y. M., Kwan, H. Y., & Zeng, C. Y. (2016). The role of brand equity and face saving in Chinese luxury consumption. Journal of Consumer Marketing.
Compensation refers to the rewards that employees receive on a regular basis for their contribution to the growth or operation of a company. A compensation package is “a total reward system that includes non-monetary, direct, and indirect rewards” (Wemer, Schuler and Jackson 52).
Direct compensation refers to the salaries, wages, or any performance-oriented pay that employees receive periodically. Indirect compensation includes the benefits obtained from programs such as retirement plans, paid leave, and health insurance. Compensation is an important determinant of the competitiveness of every company (Wemer, Schuler and Jackson 53).
It determines the ability of a company to recruit and retain the best talent in its industry. Moreover, it influences the level of employees’ motivation, satisfaction, and performance (Wemer, Schuler and Jackson 54). Companies with effective compensation systems often have low labor turnover and high financial performance. Consequently, most companies are focusing on improving their compensation systems in order to bolster their competitiveness.
However, developing an effective compensation system is often expensive to employers. Besides, employees are interested in a variety of rewards rather than just monetary compensation. In this regard, most companies provide compensation packages that include monetary and non-monetary rewards in order to satisfy their employees. This paper analyzes Ford Motor Company’s compensation system. It will shed light on the extent to which the system helps Ford Motor Company to motivate and to retain its valuable employees.
How Does Ford Treat Their Employees?
Ford is one of the leading car producers in the United States. The company also operates in several countries in Africa, Asia, and Europe. Ford owes its success to its talented and committed workforce that produces high quality products for every market (Ford Motor Company). Ford uses a performance-based compensation system in which its employees’ pay depend on their performance.
In the last decade, the company focused on paying its employees based on the extent to which they achieve predefined performance targets. The targets set for each employee are based on the company’s corporate level strategy. Ford’s corporate level strategy is to develop “one team that executes one plan to deliver one goal” (Ford Motor Company). The aim of this strategy is to enable the company to maintain its profitability by assigning specific responsibilities and performance targets to every employee.
Ford’s compensation philosophy is “…compensation and benefits programs are an important part of the company’s employment relationship, which includes challenging and rewarding work, growth, and career development opportunities” (Ford Motor Company). As a multinational corporation, Ford has developed a compensation system that is cost-effective and conforms to international best practices. Rewarding performance is an integral element of the company’s compensation philosophy.
Thus, Ford rewards its employees for maintaining exceptional performance and improving its competitiveness in various markets. The objective of Ford’s compensation system is to “attract, retain, and motivate, as well as, to reward achievement of business results” (Ford Motor Company). Moreover, the strategy aims at improving employees’ income security.
Ford’s compensation system is guided by the following principles. First, the system is expected to enable the company to develop a pay-for-performance culture that motivates employees to achieve their targets (Ford Motor Company).
Second, the compensation system is meant to enable the company to position itself competitively by attracting, motivating, and retaining the best talent in the car manufacturing industry.
Third, the company must be able to afford the compensations in the medium-term and long-run. Additionally, the compensations should not be adversely affected by short-term changes in the external environment (Ford Motor Company).
Fourth, the compensation system is expected to take into account the diversity of Ford’s employees and their financial needs (Ford Motor Company). Finally, the company expects to achieve efficiency and effectiveness through its compensation system. In particular, the system is expected to create economies of scale and to reduce the cost of compensating employees. Additionally, it must have clearly defined metrics, which are used to determine the rewards that each employee should receive.
Based on the principles discussed in the foregoing paragraph, Ford has developed a compensation mix that consists of both direct and indirect rewards. The direct rewards include base pay, incentive bonuses, and stock options (Ford Motor Company). Base pay includes the salaries or wages paid to the company’s employees, whereas incentive bonuses include additional payments that are made occasionally, to acknowledge exceptional performance.
Stock options give the company’s employees an opportunity to own its shares (Ford Motor Company). The indirect compensations provided by Ford include retirement benefits, perquisites, and social security benefits. Taken together, these rewards help the company to attract, retain, and to motivate its employees.
How Does Ford Motivate Their Employees?
Salaries
Ford’s employees earn salaries that commensurate with their performance. The salaries vary with employees’ skills and positions within the company (Ford Motor Company). Ford’s compensation committee is responsible for determining the salaries of the most valuable employees such as the company’s executives. The company uses salaries to motivate and to retain its employees in the following ways. First, it ensures that the salary received by each employee fairly reflects his or her effort (Ford Motor Company).
In order to ensure fairness, the compensation committee takes into account several factors before raising the salary of an employee. To begin with, the committee considers the responsibilities assigned to the employee and his achievements in the last financial year. This ensures that each employee is paid according to the responsibilities assigned to him, as well as, the effort he channels towards performing his duties.
As a result, the company is able to avoid exploiting its employees by underpaying them. Moreover, paying employees according to their performance motivates them to improve their performance. For instance, the company provided a merit salary increment of 3.1% to its employees in 2012 in order to motivate them to maintain exceptional performance (Ford Motor Company).
The committee also considers salaries paid to individuals with similar responsibilities within the company before increasing salaries (Ford Motor Company). This improves internal equity in compensation among employees, thereby eliminating the dissatisfaction that might arise because of pay discrepancies.
Similarly, the compensation committee takes into account the salaries paid to employees in a particular position in different companies. The aim of this strategy is to ensure that the salaries of the company’s employees are equal to or better than those of its main competitors (Ford Motor Company).
Thus, the company is able to retain its employees by providing competitive salaries. For instance, the salaries paid to Ford’s executive officers in 2012 exceeded those paid to nearly all motor companies in North America (Ford Motor Company). The compensation committee also ensures fairness by considering employees’ job tenure and skills. By considering skills, the committee ensures that employees are rewarded for their effort to improve their expertise.
This motivates the employees to improve their expertise through higher education and on-the-job training programs. Furthermore, the committee considers the time since last salary increment to ensure that employees with similar responsibilities have comparable salaries (Ford Motor Company). Generally, ensuring fairness in compensation helps the company to reduce employee dissatisfaction. This motivates employees to improve their performance and to continue working for the company.
Second, Ford motivates and retains its employees by improving their financial security (Ford Motor Company). In particular, the company pays high salaries to its valuable employees throughout the business cycle. Accordingly, it cushions its employees from the negative effects of economic decline that often results into a reduction of their variable pay. This leads to income certainty among Ford’s employees.
Generally, employees are likely to continue working for a company if the certainty and reliability of their income is guaranteed (Wemer, Schuler and Jackson 78). In addition, providing income stability, especially, during economic decline is likely to reduce employee turnover significantly. It is against this backdrop that Ford focuses on improving its employees’ financial stability through high salaries.
Incentive Bonuses
Ford uses annual incentive bonuses to motivate and to retain its employees. The compensation committee has identified several metrics to help it determine the amount of incentive bonus that should be paid to each employee.
These include profit before tax, market share, cost reduction, sales, and product quality (Ford Motor Company). The employees receive incentive bonuses that commensurate with the extent to which they achieve the targets associated with the aforementioned metrics. In this regard, the compensation committee uses a sliding scale to compute the employees’ bonuses.
For instance, 35% of the incentive bonus paid to the company’s executive officers depends on profit before tax targets, whereas the sales and cost reduction targets account for 35% and 10% of the bonus respectively (Ford Motor Company). In 2012, the company’s executives achieved 75% of their performance targets, which involved improving sales in Europe. Consequently, they were paid 75% of the total value of the incentive bonus that they were promised (Ford Motor Company).
In this case, the incentive bonus system motivates the executives to improve their performance so that they can earn more. Since most employees are interested in increasing their earnings, they will strive to exceed their performance targets in order to earn the highest level of bonus. Currently, the compensation committee has set the highest level of incentive bonus at 200% in order to motivate employees to exceed their targets.
Apart from incentive bonuses, Ford awards incremental bonuses to its valuable employees. In 2012, the company established a performance fund, which it uses to reward its executive officers for individual achievements (Ford Motor Company). Under the incremental bonus system, the employees set their personal performance targets in every financial year and strive to achieve them.
At the end of the financial year, they receive incremental bonuses that correspond to the extent to which they achieve their targets. Thus, incremental bonuses also play an integral role in motivating Ford’s employees to achieve their targets. The incremental bonus system motivates employees to set challenging personal targets that lead to improvement of the company’s overall performance.
For instance, the senior management employees who were awarded incremental bonuses in 2012 had exceptional performance that led to an increase in the company’s value and profitability (Ford Motor Company). Apart from setting challenging targets, incremental bonuses motivate employees to focus on innovation in order to improve their performance. As a result, the employees’ commitment to the company improves, thereby reducing labor turnover.
Despite their potential to motivate employees, the bonus systems discussed in the foregoing paragraphs are likely to reduce employees’ motivation. For instance, employees who achieve the minimum level of performance are not entitled to any bonus. In this case, underperformers are likely to have little or no motivation to continue working hard, especially, if their failure is attributed to external factors (Wemer, Schuler and Jackson 86).
In addition, employees who are not able to achieve their targets are likely to leave the company since they will not be able to improve their income by receiving bonuses. In order to address this challenge, the company ensures that all its employees have equal opportunities to perform according to their abilities in order to achieve their targets.
Performance Unit and Stock Option
Ford’s equity-based compensation package consists of performance unit and stock option grants (Ford Motor Company). The equity-based compensations are used to reward the company’s senior management team.
Half of the employees’ total equity-based compensation consists of performance unit, whereas the remaining half consists of stock option. The company believes that equity-based compensation is one of the best ways of ensuring that the executive management team remains focused on achieving short-term, medium term, and long-term objectives of the business (Ford Motor Company).
Ford’s stock option scheme vests over a period of three years. In addition, the stock option plan has a term of ten years, which makes it suitable for use as a long-term incentive scheme. The stock option plan plays an important role in retaining employees since their award is subject to the three-year vesting requirement. In particular, the employees are required to work for the company for at least three years in order to receive the rewards (Ford Motor Company).
In addition, the company uses the stock option plan to motivate its executives to focus on achieving its long-term objectives (Ford Motor Company). For instance, developing new car models and gaining market share in new markets requires a lot of time. Thus, employees have to stay with the company for a long time in order to achieve long-term goals such as developing new cars. In this regard, awarding stock options with a ten-year term helps in influencing the employees to continue working for the company.
The performance units “are earned based on a one-year performance period, but are paid out in service-based restricted stock units, which vest over a two-year period” (Ford Motor Company). The one-year period requirement helps the company to motivate its employees to concentrate on achieving essential short-term business objectives.
In addition, it motivates the employees to focus on continuous improvement of their performance in the short-term. The two-year vesting period requirement plays a key role in retaining the company’s senior management team. To elucidate, the executives have to work for the company for the two years in order to receive the performance unit compensation (Ford Motor Company).
In order to motivate employees to improve their performance, the company awards the equity-based compensations according to the employees’ achievements. The employees receive the equity-based compensations according to the percentage of their targets that they are able to achieve in a given financial year. Thus, employees who achieve 100% of their targets receive the highest level of equity-based rewards, whereas those who fail to achieve their targets are not rewarded (Ford Motor Company).
The company also awards incremental incentive grants to some of its employees who are responsible for the achievement of important business objectives. The incremental incentive grants are mainly used to motivate employees since they are directly tied to performance. In this regard, an employee receives the full amount of the grant if he or she achieves a predetermined performance target (Ford Motor Company).
However, the company does not award any incremental incentive grant if the employees fail to meet their targets. Generally, the equity-based compensations enable employees to be involved in the company as shareholders. As a result, they are likely to improve their commitment and to continue working for the company in order to enhance the returns on their investments. This leads to high retention rate among employees who receive equity-based compensation.
Perquisites and other Benefits
Ford provides a wide range of perquisites and other fringe benefits to its most important employees, which include the following. First, the company provides personal travel allowance to its chairperson and chief executive officer (Ford Motor Company). This involves paying the charter costs when the executives travel on private aircraft for official or personal trips.
The company also pays the travel costs of the executives’ family members. Second, the company provides its managers with at least two cars which they use free of charge. Third, Ford provides home security services to some of its managers. It also pays up to 75% of the managers’ counseling and real estate planning services (Ford Motor Company).
Finally, the company provides tax reimbursements to its employees who are transferred to other countries or regions. The reimbursements are expected to help the employees to meet the costs of relocating to their new workstations. These benefits help the company to motivate and to retain its employees in several ways.
To begin with, the benefits improve the comfort of the employees, which in turn improves their wellbeing. For instance, providing home security services enhances the safety of the most important employees and their families.
Similarly, paying for counseling services enables the company’s senior managers to access professional guidance on personal challenges that may lead to stress (Ford Motor Company). Several studies have established a positive correlation between improved employee wellbeing and staff motivation. Thus, Ford’s employees are likely to be highly motivated as the company improves their wellbeing.
The benefits also make the employees feel appreciated by the company. For instance, paying for the private travelling costs of the executives and their family members is a token of appreciation for their contribution to the company. This improves the employees’ commitment to the company, which in turn reduces labor turnover (Wemer, Schuler and Jackson 104). The benefits also play an important role in improving the employees’ work conditions.
For instance, the managers are able to travel in a cost-effective and comfortable manner by using the company’s cars. Undoubtedly, work condition is one of the major determinants of employees’ motivation and retention (Wemer, Schuler and Jackson 107). Employees are likely to be highly motivated and to continue working for companies that provide excellent work conditions and vice versa (Wemer, Schuler and Jackson 109).
Retirement Plans
Ford has a general retirement plan, which enables its employees to enjoy tax-qualified benefits upon retirement (Ford Motor Company). Moreover, the company provides nonqualified retirement schemes for some of its employees.
These include the benefit equalization plan (BEP) and the supplemental executive retirement plan (SERP) (Ford Motor Company). In 2004, the company introduced a tax qualified retirement plan to enable it to achieve its objective of improving its employees’ income security and to cushion them from catastrophic loss (Ford Motor Company).
The retirement plans provided by Ford helps its employees to amass tax-advantaged wealth for their retirement (Ford Motor Company). The resulting increase in income stability upon retirement motivates the company’s employees to improve their productivity. The retirement plans have a significant influence on employees’ behavior.
They serve as incentives to young employees to continue working for the company for a long period in order to accumulate retirement income. Moreover, the company’s aging employees are motivated to retire in time because they have income security (Ford Motor Company). Aging employees often opt to retire in time if they have adequate income to spend after retiring (Wemer, Schuler and Jackson 130).
Timely retirement is important to the company because it enables it to reduce staff costs. To elucidate, the costs of retaining aging employees is often high because of their deteriorating health and low productivity. Thus, the retirement plans are integral to the company’s success by improving the employees’ income security and motivating them to retire at the right time.
Apart from motivating the employees, the retirement plans enable the company to attract and retain workers with the desired behaviors. As a manufacturing company in a highly competitive industry, Ford is interested in employees who are willing to work for it for a long time (Ford Motor Company). This helps the company to achieve its long-term objectives such as product development.
Thus, the retirement plans enable the company to attract and retain employees who are interested in income stability and protection from catastrophic loss. Empirical studies have shown that employees who consider their retirement plans to be important are likely to continue working for their employers (Wemer, Schuler and Jackson 203). This explains Ford’s commitment to provide highly rewarding retirement plans for its employees.
Conclusion: Ford Compensation
Compensation plays an integral role in attracting, retaining, and motivating employees in virtually all companies. Most employees take into account the importance of the compensation packages provided by their employers when making their career development decisions. Thus, Ford has focused on providing a competitive compensation package to retain and to motivate its employees. This involves paying salaries that are equal to or higher than those paid by the major car manufacturers in the United State.
Additionally, the company’s compensation system promotes fairness, and income security, thereby reducing employees’ dissatisfaction. As a result, the company is able to retain its valuable employees. Ford’s compensation package consists of different rewards, which include salaries, stock options, perquisites, and retirement plans. In order to motivate employees to improve their productivity, the company compensates its employees according to their performance.
Works Cited
Ford Motor Company. Notice of 2013 Annual Meeting of Shareholders and Proxy Statement. Ford Motor Company, 9 May 2013. Web.
Wemer, Steve, Randall Schuler and Susan Jackson. Human Resource Management. London: Cengage Learning, 2012. Print.
Since its establishment in 1903, the Ford Motor Company is one of the leading automakers globally. After founding the automobile manufacturing company, Henry Ford headquartered the corporation at Dearborn, Michigan (Cronin, 2014). The company offers its products under the Ford and Lincoln brand names for commercial and luxury vehicles respectively. In over a century of operations, the American automaker embraces innovation as a key strategy that seeks to fulfill the changing needs of customers internationally. Over the last decade, the profound leadership of the organization has been integral in overcoming challenges that were undermining the success of the Ford Motor Company.
In 2006, Ford was about to make a loss of $12.7 billion before the leadership of its new CEO, Alan Mulally, rescued the American automaker. Earlier, the company experienced poor leadership, owing to the family approach to running the multinational company. The leadership of the new CEO accounted for the revitalization of the company since it edged its competition with Toyota. Interestingly, the company realized profits exceeding $6 billion in 2010 amid the global financial crisis that affected economies between 2007 and 2008 (Hanawalt & Rouse, 2010). Further, the need to create enthusiasm among employee teams also consisted of one of the key strategies necessary for Ford to execute in its quest for global success in the automobiles sector. In this respect, this paper discusses the comeback of the Ford Motor Company in the crisis of 2006, including the 2008-2010 global recession.
Ford’s Vision and Mission Statements
Ford Motor Company’s vision and mission statements influence the management to put in place measures that foster their realization. Ford’s vision statement reads, “People working together as a lean, global enterprise to make their (people) lives better through automotive and mobility leadership” (Cronin, 2014, p. 12). The vision statement denotes the company’s emphasis on global leadership, stakeholders’ consideration, and a lean approach to business. The global perspective of the vision statement indicates that Ford works towards claiming the top slot in the global automotive sector. Currently, the multinational automobiles company has secured the second-largest domestic automobiles player after General Motors (GM) besides claiming the fifth spot globally. Ford regards its stakeholders as significant by improving its HR policies while at the same time reinforcing its corporate social responsibility mechanisms for its customers, investors, and employees. The assembly line approaches embraced by Ford facilitate the efficiency of its lean business operations (Hesselbein, 2011). The need to bolster the growth of the company’s sales is crucial for realizing the global leadership aspect of the company’s vision.
Ford’s former CEO, Alan Mulally, facilitated the establishment of the company’s mission that states, “One Team. One Plan. One Goal.” The “One Team” aspect infers to the lean working strategy adopted by the global automotive enterprise. Further, the “One Plan” component of the mission statement indicates the aggressiveness employed by Ford to maximize profits through the development of new and products that have value to customers who work together as a single team. Moreover, the “One Goal” element aims at promoting desirable growth among stakeholders (Cronin, 2014). The mission and vision statements at the company require the leadership team to unceasingly ensure that employees work towards the realization of shared targets. The code of ethics upheld by Fiord plays a central role in ensuring that employees conduct themselves in a way that is in line with the organizational culture, as well as the mission and vision of the automobile player.
Ford’s Code of Ethics
Ford maintains a profound code of ethics that influences the company to observe responsibility in its operations. The American automobile company underlines that it carries out its business processes in a fair and honest manner. Further, Ford expects all its stakeholders to perform its tasks ethically as a way of bolstering the company’s commitment to integrity. As such, the company’s employees, as one of the key stakeholders, have the responsibility of reporting parties that violate the company’s rules or ethical policies. Moreover, Ford’s Code of Conduct Handbook integrates the aspects of financial interests, equal employment opportunities, and rewards for employees (Hesselbein, 2011).
The Globalization Crisis Challenging the Ford Motor Company
The Ford Motor Company has faced an array of challenges over the years that have tested its sustainability in the highly competitive automobile sector. In 2006, management inefficiencies and a weak lineup of vehicles saw the company on the verge of collapse denoted by an impending loss of $12.7 billion (Cronin, 2014). The poor financial trend caused by poor management threatened the company’s ability to safeguard its second spot as an automotive business with the highest sales in the United States.
Further, a few years before 2006, Ford adopted an unhealthy culture characterized by conflicts between executives. The executives engaged in turf wars while in meetings, thereby failing to reach decisions concerning key issues that affect the performance of the company (Hanawalt & Rouse, 2010). The executives disregarded the essence of realizing decisions in meetings, thus undermining the spirit of teamwork in the management of the company. Therefore, the decision-making crisis contributed to Ford’s poor financial performance in 2006.
In 2008, the emergence of the global recession affected various industries negatively, including the automobile industry in the US. As such, the period between 2008 and 2010 saw various players in the industry, including the “Big Three” automakers, namely, Ford, GM, and Chrysler, undergo financial difficulties. The financial crisis strained the financial reserves of the automobile players to the extent of making them unable to cater for their operational costs. Consequently, in 2008, Ford recorded an all-time high annual loss of $14.6 billion (Hanawalt & Rouse, 2010). Further, its share value went down to $1.01 per share in 2008, denoting the adversities of the global financial meltdown.
The period between 2006 and 2010 almost saw Ford go bankrupt (Cronin, 2014). However, through crucial interventions, especially at the leadership level, the company engineered a turnaround that accounted for its current position in the sector. Importantly, the 2006 management crisis required sound leadership to streamline the decision-making processes that would foster the efficiency of Ford’s short and long-term strategies. Additionally, the 2008-2009 recession prompted Ford to make important financial moves that would rescue it from bankruptcy (Hanawalt & Rouse, 2010). Therefore, focusing on how Ford addresses the challenges is relevant.
Ford’s Leadership Response to the Challenges
The need to engage in a new approach to Ford’s challenges brought about by internal and global crises proved crucial for the success of the company’s leadership. The necessity for intervention also held an influence on fostering the sustainability of the company amid the harsh economic times experienced globally (Hanawalt & Rouse, 2010). The leadership led by the company’s administrative wing and CEO proves strategic in tackling the issues by making important management decisions.
In 2006, the Executive Chairman of the Board at Ford, Bill Ford, facilitated the recruitment of Alan Mulally to act as the company’s new CEO who initiated the change of leadership strategies to overcome the challenges experienced. Mulally brought new changes to Ford by focusing on the “best-self” approach to leadership (Cronin, 2014). The leadership approach concentrated on inspiring and motivating team members to show commitment to the shared course. The move by Bill Ford to recruit Mulally made the company’s vision clear to all people. The vision consisted of a comprehensive plan coupled with a relentless implementation strategy for Ford’s major projects. Furthermore, Mulally’s leadership underscored the essence of working together as a unit.
Further, Mulally introduced the “One-Team” approach that was based on the need to get rid of the turf wars and silos that created disunity in Ford. The strategy sought to establish a simplified leadership arrangement that influenced employees to work as “One Ford,” thus creating a mantra that drove their commitment. Further, the new CEO introduced compulsory weekly meetings for all the senior managers at Ford where the “One Ford” mantra characterized the conversations. Notably, Mulally and Bill preferred holding informal meetings to discuss issues of different levels of importance to the success of the company (Hesselbein, 2011). Moreover, the respondent sought to establish the best teams that revived the devotion of members to the vision and purpose of the organization.
Further, in 2006, Ford’s management team led by Mulally sealed an important deal with a credit institution that secured $23.6 billion before the closure of institutions that offered credit facilities (Cronin, 2014). Further, the company opted to mortgage its assets as a way of bolstering its financial health ahead of the looming global economic crisis. The move ensured that Ford avoided a federal bailout that could have led the company to bankruptcy. Its rivals, GM and Chrysler, underwent the federal bailout, unlike Ford’s case. The intervention also protected Ford’s shareholding companies from dilution since the federal bailout would scrap off their birthrights. The financial boost provided resources for the leadership to use in its strategic endeavors that sought to realize Ford’s comeback.
Further, between 2008 and 2010, the leadership at Ford identified the reduction of its workforce population as a key move towards cutting the costs incurred by the company (Salleh & Grunewald, 2013). In the process, the company cut its links with at least 40,000 employees to reduce its expenses on the workforce. The wider picture embraced by Ford’s management was to cut the operational costs by a considerable $4 billion in 2010 (Hesselbein, 2011).
Moreover, Mulally’s leadership initiated the manufacture of smaller cars with efficient fuel consumption rates. The redesigned Taurus sedan is one of several changes in the models of the Ford fleet of cars (Hesselbein, 2011). The new models introduced by 2010 facilitated the improvement of Ford’s brand image. Consequently, they facilitated the company’s comeback in competitive markets. The move also sought to meet the changing demand patterns in the automobile markets.
Could the Intervention Be Done More Effectively?
The interventions influenced by the able leadership of Alan Mulally depicted effectiveness that accounted for the comeback of the automaker in the early 2010s. The financial decisions established by Mulally realized desirable efficiency. Thus, they accounted for the profitability of the company after making record-breaking losses in 2008 (Hesselbein, 2011). Nonetheless, the management still needed to implement measures that could facilitate the realization of the global leadership aspect of Ford’s vision.
Ford required a comprehensive improvement of its vehicles to meet the production capabilities of its rivals, including Toyota, General Motors, and Volkswagen (Hanawalt & Rouse, 2010). Therefore, the need to improve the sales of the company to reach the levels of its rivals was not considerably included in the decisions made by the leadership team at the Ford Company. For this reason, Ford is only the fifth-largest automaker internationally.
Further, the management needs to consider improving the image of the American automaker in comparison with its Japanese and European rivals (Cronin, 2014). For instance, the Lincoln luxury brand performed miserably compared to other classy cars in the market. In this respect, the need to meet the market standards would have attracted consideration from the team managers to make positive deliberations. Thus, the management needs to act more strategically towards the fulfillment of the company’s objectives and goals.
Recommendations for Future Leaders in Their Strategic Plans
The essence of leadership is geared towards the creation of a positive influence on the entire management team as well as juniors towards meeting shared goals and objectives. Therefore, the need to realize the shared vision should always inspire the strategic plans developed by leaders. In this case, the following strategies would be of use to leaders in combating challenges that affect the company’s performance negatively.
Leaders need to embrace ambassadorship and liaison by focusing on the big-picture, approaching issues procedurally, and acting as a role model. Liaison and ambassadorship foster global leadership through connectivity and networking (Hesselbein, 2011). Focusing on the big picture fosters the commitment of the teams working together to meet the ends of the company.
Leadership in a transition management environment needs to facilitate the smooth running of such processes. The leadership provided by Bill Ford ensured that the former Boeing CEO, Mulally, ensured that the latter (Mulally) gelled with the rest of the management team effortlessly. Thus, accommodating new executives in their new positions is also a key factor in leadership.
The creation of a culture where the top management team members oppose the senior leaders without fear is also an approach that leaders can consider in their strategic efforts. The need to manage conflicts in an organization through reasonable arguments proved strategic for Mulally’s tenure at Ford. Before Mulally’s leadership, turf battles undermined the efficiency of decision-making processes (Hesselbein, 2011). Thus, leaders could also employ the strategy to combat key challenges in their organizations.
Suggestions for Combatting the Challenge
The challenge influencing Ford’s comeback would be a critical one for any given leader. I would suggest the importance of working as a team when experiencing internal conflicts. Internal conflicts undermine the effectiveness of decision-making processes, thus leading to poor performance (Hesselbein, 2011). Sound financial management is important in bolstering the sustainability of an organization. Making strategic financial decisions safeguards the financial future of the organization by creating key foundations (Hanawalt & Rouse, 2010). Cost-cutting approaches to operations also streamline cash flows within an organization.
Moreover, an improvement of the services and products offered by a company is also one of the key factors for consideration when a challenge arises (Hanawalt & Rouse, 2010). The reputation of the brand triggers financial benefits that are necessary for leveling the prevailing hurdles. Thus, the competitiveness of a company is usually the factor that determines its sustainability in difficult times.
Conclusion
Alan Mulally’s leadership between 2006 and 2014 at the Ford Motor Company proved integral for its comeback in the automobile industry. The strategic leadership approaches improved the company’s management approach, thus resulting in profitability after making significant losses in 2008. Leaders facing similar challenges may apply the strategies implemented by the former Ford CEO to steer their companies towards success.
References
Cronin, M. J. (2014). Ford finds its connection. New York, NY: Springer International Publishing.
Hanawalt, E. S., & Rouse, W. B. (2010). Car wars: Factors underlying the success or failure of new car programs. Systems Engineering, 13(4), 389-404.
Hesselbein, F. (2011). Leadership by example. Leader to Leader, 2(59), 4-7.
Salleh, M., & Grunewald, D. (2013). Organizational leadership: The strategic role of the chief executive. Journal of Leadership, Accountability and Ethics, 10(5), 9-20.
Supply chain management is a very essential aspect in any organization irrespective of its size and should therefore be considered in the undertakings of an organization. This is because it determines the success or failure of the particular organization through its influence on efficiency, effectiveness, productivity, economy and profitability.
Toyota and Ford are different companies that are in the same industry (i.e. motor industry) but they both apply different supply chain management practices depending on what they deem appropriate and effective all aimed at achieving success in the companies.
Supply chain management is a practice that entails what a company engages in and the manner in which the activities are carried out in an effort to achieve the best. It is faced with various challenges and strategic planning is therefore necessary.
Introduction
Different organizations and companies have different management styles and practices depending on their specific objectives and goals and how they intend to achieve them.
Supply chain management entails the coordination of aspects (like resources for instance information, materials etc) as they move through the distribution channel, (I.e. from the suppliers to the manufacturers to the wholesalers to the retailers and finally to the consumer).
Supply chain management is a practice that involves the coordination and integration of the above within and among different companies with an aim of achieving efficiency, effectiveness, economy and profitability in the organization’s activities and practices. Companies should strive to establish and maintain an effective supply chain management system that reduces inventory under all circumstances.
A general supply chain management chain is composed of the finances flow which entails payment schedules, terms of credit and arrangement of title ownership and consignment, the information flow (which covers aspects like transmission of orders and updating the delivery status) and the product flow (which entails the movement of products and services from the suppliers all the way to the consumers) (Iver and Vasher 2009).
This paper looks into the supply chain management practices that are applied by the Toyota and Ford companies and the various aspects associated with the practices.
Describe And Critically Analyse The Supply Chain Management Practices Employed By Both Of These Companies.
Toyota is a motor company founded in 1937 with it’s headquarter in Japan and one of the world’s biggest automobile manufacturer in terms of production and also sales. The firm also takes on in producing robots and offering pecuniary services in addition to dealing with the manufacturing of vehicles. It is also well known for its production of environmentally friendly and technologically advanced cars.
Ford on the other hand is a motor company and an American multinational founded in 1903. It is ranked as the second biggest automobile and the world’s fifth largest in relation to the statistics of the 2010 vehicle sale.
Supply Chain Management Practices in Toyota
There are many benefits associated with an effective supply chain management system in any given company. Toyota Motor Company has been known for its performance advantages and this can all be accrued to the supply chain management practices that are employed in the company as they contribute collectively to the overall success of the company.
One of the strengths of Toyota Company is that it designs and manages its supply chain in a holistic manner and as a unit rather as a series of connected items which is very common in most companies.
The supply chain management in this company has helped it in the achievement of balance and efficiency through emphasizing on aspects like visibility, which advocates for maintenance of transparency in all the practices involved with an aim of allowing for continuous learning and improvement in the processes; velocity, which entails maintaining a steady flow for all the processes of the supply chain from suppliers to the consumers, variability which involves the management of any inconsistencies that may occur in an appropriate manner so as to reduce the cost and at the same time improve the quality of the processes, the products and services and variety of the products and services offered in relation to demand in the market and the operational efficiency (Iver and Vasher 2009).
The supply chain management system in Toyota aims at keeping the supply chain cost to a minimum while at the same time ensuring that the customers are well served with maximum satisfaction in regard to the quality of services offered and timely delivery.
The objective of the supply chain is to ensure that the right products are produced in the correct quantity at the correct cost, stored at the right place with the required conditions, and delivered to the correct clients at the correct t time.
The suppliers in the Toyota Company are organized into two functional tiers where the first tier suppliers are involved with the product development and hence liaise with the people involved in the development of the product in the company while the second tier suppliers are concerned with making of individual parts.
For effectiveness in the running of the processes, there is an enhanced cooperation and communication strategy between the first tier and the second tier suppliers and at times there is cross sharing of the personnel in the different departments.
The Toyota production system (TPS) is a very useful tool in the company and its practices and principles that include an extended supply chain which necessitates careful practices to ensure its efficiency. The supply chain is very complex with a lot of processes being joined together to form a unit.
The processes include; production of different parts at the supplier’s level, the transportation of the parts to the assembly plant of the manufacturer, the parts are then assembled to form complete vehicles; the vehicles are then distributed to the dealers from where they are finally delivered to the customers. The supply chain in Toyota is composed of operational and planning processes as well as physical processes (Borowski 2010).
The above is the supply chain management at Toyota Tsusho. Web.
Supply Chain Management Practices in Ford
Ford Company utilizes a supply chain model which involves development of the product, obtaining parts from a variety of suppliers; the goods are then manufactured and then sent to the potential customers through various distribution channels.
The supplier chain network in Ford is rather complex and in most instances, suppliers are identified depending on individual cost consideration rather than total supply chain cost as is the case in the Toyota Company.
The supplier networks are managed by a purchasing department that is separate and independent from the product development while the distribution channel is composed of independent agents who interact with the potential customers and finally deliver their orders through the distribution channel.
Ford company enters into long term agreements with the identified strategic suppliers which serves as an important tool for enhancing transparency, communication and a partnership attitude which keep the parties involved on their toes as they aim at achieving the best.
It allows for accountability and responsibility among those involved in the supply chain. This allows for compliance and supplier development through reduction of the supply base and development of strong and transparent networks with a fewer number of suppliers for a long period of time.
The purchasing business strategy or model employed in the ford company is the aligned business framework (ABF) which has agreements which govern the business practices and activities in a way that future collaboration is enhanced for instance in terms of payment of various costs, data transparency and extended sourcing. This allows for increased volume of business with the specific suppliers that have been identified.
The accords of the associated trade structure also act as a guide to the supplier associates and uphold “bigger responsibility” and guarantee appropriate working conditions and effectual (environmental management) systems in all the progressions in the chain.
ABF has proved to be a very useful tool in the Ford’s supply chain management as it increases profitability, allows for creativity and innovation and also reduces the probability of operational and reputation problems through the utilization of a strong management system that ensures productivity and sustainability.
It also allows the company to manage the human rights and the environment in an in depth, collaborative and appropriate manner. It has also strengthened the company’s working relationships with the suppliers locally and even on a global basis and provided a means for the alignment of the working conditions and the environmental management in a way that conflicts do not arise.
This alignment in return enhances the supply base and allows for the achievement of the company’s objectives (Parker 2006).
The above picture depicts the wireless tracking in Ford’s supply chain. Web.
Are They Involved In Strategic Alliances With Major Trading Partners?
Toyota and Ford companies are involved with major trading partners as they consider it a positive act towards strengthening their efforts and increasing productivity and profitability through unity. Toyota Company has alliances with numerous partners for instance Tesla and Toyota seal electric car alliance where some practices and services are shared between the two companies.
Tesla delivers prototypes electric vehicles to Toyota after they entered into agreements to work together towards the development of vehicles with no emissions. The alliance is aimed at helping the two companies presently and even in the future (Business Green 2010).
Toyota Tsusho Corporation is also another alliance where there is a business alliance agreement with Thai sugar manufacturer. The alliance is aimed at maintaining a well balanced profit structure where the Toyota Company will be able to expand its business operations by engaging in non automotive practices for instance those that are food related (Nexis 2010).
Ford has also entered into partnership with other companies for instance the collaboration of the Ford performance racing partners with Trading post group which is a classified advertising business company for a period of two years to the end of the year 2012 with an aim of making the practices of both companies better through combined efforts (Bhatt 2010).
What Strategies Do They Apply To Procurement And Outsourcing?
Procurement entails the process of obtaining commodities and services. It involves preparation, processing of an order to the receipt and endorsement of the invoice for payment purposes. Outsourcing on the other hand entails contracting some of the company’s activities usually the non-core ones with an aim of saving on tome personnel, money and even facilities for the sake of the core activities that lead to competitive advantage.
There are a range of approaches that are employed in the procurement and outsourcing practice in both companies (i.e. Toyota and Ford). The procurement activities and practices in both companies are usually based on engaging in fair business practices as a way through which cordial relationships and mutual benefits can be achieved.
Toyota is occupied in a wide range of trade activities in diverse fields and is for that reason involved with the procurement of parts, equipments and even materials and amenities from the diverse businesses from the suppliers positioned in different parts of the globe. The company requires that the suppliers provide high quality products at a relatively low cost at the right time.
Along with the above, the company also works together with them to enhance environmental conservation and also meet other societal needs. The procurement policy ensures fair competition, amicable relationships that lead to mutual benefit and based on mutual trust, dealing with environmentally friendly products, localization of business as well as the strict following of the company’s rules and regulations.
Outsourcing at the Ford Company is only undertaken where the practices involved are deemed to make long term strategic benefits or where it is really necessary. It for instance outsources components, IT services as well as engineering services from India (Parker 2006).
What Challenges And Risks Do They Face Internationally? How Does Each Attempt To Overcome These Challenges?
Just as any other company, Toyota and Ford are faced with some challenges and risks both locally and globally in carrying out their practices and activities and each deals with them differently according to the specific challenge and the solutions they deem effective.
Some of the challenges encountered by the Toyota and Ford companies collectively include the risks associated with outsourcing for instance lower quality of product and services, less control due to involvement of different parties where chances of less responsibilities and accountability may arise and worst still longer lead times for instance the popular recent issue of Toyota’s product recall.
Employment practices, handling of the workers in terms of rights and the working conditions are issues of concern at Toyota. The company has taken measures to ensure that the workers’ needs are catered for so that the working conditions are conducive. The company has also established some industrial ties with trade unions at various operations worldwide.
It has also allowed the workers to form unions through which they can voice their grievances. One of the challenges of Ford is the credit market risks for instance market risk, residual risk, credit risk, and liquidity risk. These problems are handled uniquely in relation to their specific contribution to the company’s overall international risk (Ferrari 2009).
Compare How These Organisations Are Incorporating Sustainable (Green) Strategies in Their Supply Chains
The environment is a very important aspect in our daily lives and should therefore be considered in all activities that are undertaken by either individuals, groups or even companies. The manufacturing industry in which Toyota and Ford companies fall are responsible for a great percentage of emissions which cause pollution which is dangerous to individuals for instance the depletion of the ozone layer due to green house gas effect.
This threatens people’s lives in the present time and also for the generations to come and it is therefore necessary for the industries to indulge in environmental friendly operations throughout the supply chain to avoid damaging the environment in any way (Sovereign 2011).
Toyota and Ford companies have engaged in different strategies that are aimed at ensuring a sustainable environment for instance, Ford has a plan of surveying a representative number of suppliers to gauge the energy used and the green house gas emissions in an effort to reduce carbon emissions in the company and the automotive industry at large.
The data collected will be used as a basis for establishing a carbon management strategy for the supply base. The strategy is aimed at ensuring collaboration and sharing of processes and practices which can result into a considerable emissions reduction and in a way help in attaining the future regulatory requirements.
The carbon disclosure (project supply chain program) is also another scheme in which Ford Company is taking part and is working hand in hand with the (automotive) industry action group in coming up with guidelines which can be used to gauge the purveyor emissions.
Most of the Ford’s dealers are now insightful on the emission matter, for instance, Johnson Controls has an evaluation system (which allows the business to gauge its supply base sustainability). Ford aims at reducing green house gases by 30 percent by the year 2030.
It is also the believe of the Toyota company that it should bring a change in the world through nurturing a sustainable society by taking care of the environment by undertaking environmental friendly operations. This has been made possible through collaboration with philanthropy, the suppliers, the government and other bodies towards maintaining a mobile society that is environment friendly.
Toyota has been involved in various programs that aim at educating and mobilizing people to manage the environment well for their benefit for instance the Together Green program that funds projects aimed at conserving the environment, undertakes training for environmental leaders and also offer opportunities for people to volunteer and work towards conserving the environment.
It has also been involved with the government to harmonize fuel efficiency and regulate green house gas emissions.
Its collaboration with business partners for example the dealers and suppliers also help in conserving the environment through the provision of the green supplier guidelines which encourage the partners to work towards meeting the environmental expectations and more so get involved in the Toyota’s programs that have been designed to cater for the environment (Urlaub 2011).
Conclusion
It is evident that supply chain management is a very essential tool in any given organization as it helps in the maximization of added value while at the same time helping in the reduction of the total cost.
Just like information and communication technology, supply chain management has become a tool through which organizations can achieve a competitive advantage and be able to secure a place both locally and even in the global market.
It has however been deemed important in manufacturing companies like Toyota and Ford as it aids in the timely delivery of products at a competitive cost without compromising the quality.
Supply chain management is also a practice that has allowed many organizations to survive through restructuring their operations in a manner that they are able to focus on the core competencies of the organization and outsource other services to enhance its productivity while saving on time and cost through specialization.
An effective supply chain management in an organization also help a firm in strategic decision making in regard to the partners to be involved with resources utilization as well as the manpower in addition to market positioning.
Ferrari, B. 2009. Toyota’s Evolving Challenges- A Sure Global Survivor. Web.
Iver, A. Seshadri, S. and Vasher, R. 2009.Toyota Supply Chain Management: A Strategic Approach to the Principles of Toyota’s Renowned System. USA, McGraw-Hill Professional.
Nexis, L. 2010. Toyota Tsusho Corporation – Business Alliance Agreement with Thai Sugar Manufacturer. Web.
Parker, S. 2006. Ford Motor Company to Outsource to India. Web.
Sovereign, R. 2011. Importance of Supply Chain Management in Modern Businesses. Web.
Urlaub, J. 2011. Managing Risk with Sustainable Supply Chain Management. Web.
The Ford Motor Company was founded in 1903 by Henry Ford and it has grown into a multinational company with operations in different nations. One of its most significant markets outside America is the Chinese population. In America, the Ford Motor Company’s Headquarters is in Dearborn.
This essay seeks to discuss the external influences that impacts Ford’s operation in the global market in relations to Competition, Cultural, Legal/political, Economic, and Geographical factors.
External factors affecting a company’s operation in the global market
There are several factors that influence the operations of a business both locally and internationally. Such factors include cultural differences, competition, legal and political issues, economic environments, as well as geographical factors. All these factors emanate from outside the business which means the company has no control over them.
The Ford Motor Company has been successful in the business and its years of existence have enabled it to establish foreign operations. China is one of the biggest Ford’s markets in the East.
Cultural factors
Unlike Americans, the Chinese are slightly conservative. The Chinese use small vehicles with sophisticated technology. On the contrary, Ford specializes in SUV’s and their vehicles are simple in design and technology. This may prove to be a challenge in a culture that is used to complex technology in a car.
In addition to this, the Chinese are very loyal to their own products hence penetrating this market will affect the strategies used by Ford in their normal operations. Setting up a company in a foreign land requires a clear understanding of the cultural differences between the home and the foreign market.
Ford’s management will have to compromise some aspects of leadership in order to appeal for China’s cooperation in trade.
In china, for a foreign company to establish a business it must establish a relationship first. In other regions, a business starts its operations then it builds a relationship there after. In China, hierarchy is an important cultural aspect. Therefore, setting a business in the country Ford has to pay attention to hierarchy.
Another cultural aspect that is important and will change Fords operations is the culture of Guanxi (Pradhan, 2012). This means that actions are reciprocal in nature. When someone grants you a favor, you are indebted to grant a favor back as well.
Legal /political factors
Currently, Ford has not recorded any interference from the ongoing political changes in China. There have been major changes in the leadership structure and this was influenced by a recent scandal that exposed China’s political elite’s underground indecency.
However, the Ford Motor Company has not been affected by the political tension in and party wrangles in the country.
However, in China there are laws that govern the entrance of a foreign investor, one of these legislations include the mandatory requirement for an investor to obtain an approval license from the Commerce Committee (Lanteigne, 2012).
Another legal and political restriction that the Ford Motor Company has to endure is the joint ventures law. Joint ventures are not allowed to hold shareholders’ meetings as the ultimate decision-making authority (Daniels, Radebaugh, & Sullivan, 2015).
The government has also passed a law that requires all the foreign investors such as the Ford Motor Company to operate under the corporate governance rules as stipulated in the Company Laws.
Economic factors
Majority of the Chinese people are middle-class individuals and the economic environment in the country is friendly to foreign business. China is one of the greatest economies of the world and the financial market in the country is very stable.
Therefore, the Ford Motor Company is safe to invest in the country. Another economic factor that can influence Fords operation in the country is the population. China is the most populated country in the world. This creates a large market for Ford’s products in the country.
Therefore, the company has to come up with the right strategy to satisfy the vast market.
Competition
The main competitors in the Chinese market include General Motors and Volkswagen. The Chinese market is the world’s fastest growing automobile market and the major industry players are moving in speed to cease the opportunities presented by this market.
Comparing GM and Ford’s sales, the difference is quite evident. GM’s sales increased by 21% while Ford’s sales rose by 23% (Ramasamy, Yeung, & Laforet, 2012). However, this is a close range meaning that the competition is very high.
Geographical location
China is the most accessible platform to launch products in the bigger Asian region. The country is surrounded by international seaways making it easy for companies to export their products by sea.
From china, it is easier to supply products to other regions like India, Dubai, Africa and other economically viable regions (Ramasamy, Yeung, & Laforet, 2012). Therefore, Ford’s opportunities are unlimited.
Nonetheless, the geographical location of the target market is very humid which may force the company to change its production processes to address the climatic conditions in the country.
References
Daniels, J. D., Radebaugh, L.H., & Sullivan, D. P. (2015). International business: Environments and operations (15th ed.). Upper Saddle River, NJ: Pea.
Lanteigne, M. (2012). Chinese foreign policy: an introduction. New York, NY: Routledge.
Pradhan, J. P. (2012). Emerging multinationals: A comparison of Chinese and Indian outward foreign direct investment. Institutions and Economies, 3(1): 10.
Ramasamy, B., Yeung, M., & Laforet, S. (2012). China’s outward foreign direct investment: Location choice and firm ownership. Journal of World Business, 47(1): 17-25.
Ford Motors is a well-established automobile manufacturer across the globe. It has a long history of successful operations. In order to remain profitable amidst tough competition in the automobile industry, the company undertook a number of restructuring efforts as part of its business strategy (Bayou & de Korvin, 2008).
From 2006 to 2012, the company executed the ‘One Ford’ business strategy. The Human Resource (HR) department job positions at Ford Motors include personnel relations, workforce planning and recruiting, business operations and labor relations.
The main roles of the HR department entail recruiting/hiring, training, capacity building, promotions, demotions and firing of employees. I would prefer to work as a labor relations officer because I am diplomatic and can adequately bridge the gap between employees, employer and trade unions.
After Alan Mulally assumed the CEO’s position of the company in 2006, he initiated the growth stimulation plan under the banner of ‘One Ford’ strategy (Hiraide & Chakraborty, 2012). First, this business strategy outlined the importance of a competent and well-motivated workforce in the growth objectives of the automobile company.
There was urgent need to create a winning team that would boost the profitability of the company. Mutual participation in key decision-making processes was seen by the management of the company as a major motivating factor. Delivery of results was the mandate of individual employees even though tasks were assigned to teams.
Teamwork experience is the noblest approach through which the company markets its human capital. Second, the whole global enterprise of the Ford Motors adopted a single plan as part of the ‘One Ford’ strategy. The set performance objectives were also aligned with the global plan of the company.
The ‘one plan’ concept was meant to avoid any form of ambiguity in the course of operations. As much as some level of success was attained through the autonomous business units, the management thought that the system was quite inefficient in delivering desired results. The ‘one plan’ agenda would be sustainable for a long period.
Hence, a single, unified entity replaced the disparate units when the ‘one plan’ was embraced and adopted by the company. In order to implement the ‘One Ford’ business strategy, the company began by securing adequate finances.
A total of $23.5 billion was secured by the company towards the end of December 2006. This was indeed a major strategic financing that remarkably boosted the liquidity of the firm. Besides, another 4.95 billion dollars was secured by Ford as part of its convertible debt since it was necessary for the company to cushion itself against unforeseen risks.
The automotive business was also restructured alongside the ‘One Ford’ strategy. The latter was necessary because the company needed to be in line with the changing tastes and preferences of consumers, high fuel prices, and low demand for its products.
Restructuring also entailed minimizing operational costs by close to $5 billion. As it stands now, the company is still pursuing the broad objective of hastening the production and marketing of new products (Chuang & Liao, 2010).
Ford Motors can establish a number of HR management strategies in order to improve its competitive strategy. For instance, the department should attract and mobilize the unique abilities of employees (talent) in order to enhance the adopted business strategies.
Talent management can swiftly align HR roles with business strategy. Furthermore, building performance capability ensures that the set strategies are successful. It is the role of the HR department to undertake capacity building and training of employees on a regular basis.
Other alignment methods include building effective leadership, good governance, and providing coherence. The company can increase diversity at workplace by holding managers accountable, introducing mentoring schemes, developing and promoting organizational culture, flexible working for all employees, and promotion of minority networking groups (Ilmakunnas & Ilmakunnas, 2011).
References
Bayou, M. E., & de Korvin, A. (2008). Measuring the leanness of manufacturing systems-A case study of ford motor company and general motors. Journal of Engineering and Technology Management, 25(4), 287.
Chuang, C., & Liao, H. (2010). Strategic Human Resource Management in Service Context: Taking Care of Business by Taking Care of Employees and Customers. Personnel Psychology, 63(1), 153-196.
Hiraide, N., & Chakraborty, K. (2012). Surviving the global recession and the demand for auto industry in the U.S. – A case for ford motor company. International Journal of Economics and Finance, 4(5), 85-93.
Ilmakunnas, P., & Ilmakunnas, S. (2011). Diversity at the workplace: Whom does it benefit? De Economist, 159(2), 223-255.
