Ford Motor Company, Research Paper Example

As with every large car manufacturer company, executive leadership at Ford Motors Company crafts’ decisions toward competitive edge in the traditional and new auto markets. Influxes largely derived from the financial contractions accorded to market instability, and the technological speed by which globalization advance business decision has promoted changes within Ford’s executive management. External changes outside of the industry, but with great impact to the current and future capacity of automakers, is ostensibly generated through broader changes in regulatory policy, regimes of trade, and especially rules change according to things like environmental mitigation the innovation of products through cutting-edge research and design.

Ford’s consumer has also changed, and the growth of the auto industry to include most segments of the consumer market in durable goods presents a sector with multi-level challenges to consumer demand. The global market picture has presented Ford with both benefits and challenges as the company responds to rapidly shifting consumer demands. Expansion of product line is largely incumbent upon the competency of executive management to plan and execute comprehensive business development projects, and forge necessary relationships integral to the company’s distribution channels on a scale worldwide in scope.

Research and development responsiveness to technological impacts already underway at points in time within competitor projects certainly do much in terms of prompting investment towards certain engineered prototypes and not others. Attraction and retention of the right talent pool of highly skilled professionals and labor is sometime contradictory to the pressures of flexible relocation of certain aspects of the manufacturing process offline, or offshore to other nations. A most recent example, is the commencement of the ‘all-new’ Fiesta car at the transformed Cuautitilan plant in Mexico, where the company’s investment is proposed to bring, according to group vice president of Canada, Mexico and South America operations and Global Marketing, Jim Farley, “ONE Ford’ global vehicles to life in North America and allow[ing]  more customers to experience even more of our high-quality, fuel-efficient vehicles [ as ] Small cars are the fastest-growing product segment around the world, and Ford is answering the call with fun-to-drive new cars.”

As with most global conglomerates, particularly in the manufacturing industries, Ford Motor Company is also confronted with a host of sometime unpalatable decisions in response to conducting business and seducing customer away from market competition in national or regional markets where they are presented strategic challenges responsive to corrupt legal practices, lack of protection of worker’s rights in free trade zones, unstable loyalty between employees and companies that remain flexible according to bottom-line, intensive re-training of existing employees to meet technological demands, and ultimately, excessive use and depletion of natural resources.

A preliminary VCM (Value Chain Management) analysis of Ford Motor Company reveals much about what the company has done right to integrate processes and procedures within the companies multi-scale manufacturing system (Leigh 1995). The phenomenon of globalization presents critical challenges to managers attempting to conduct business in environments that are comprised of oft unreliable matrices of mutually dependent value chain interests that in turn affect the internal or task environments of the organization. Ford is faced with a variety of challenges. Analysis of toward interpretation of competitive challenges include things like: 1) cost effective timing of product channel release to meet increased market demands that might also be profitable for the company in terms of labor and material expense, and; 2) more importantly value lost through competitor copying of the company’s product prototypes. VCM is intended to offer a multi-dimensional recommendation toward securitization of market share through investment confidence, and enhancement of revenues through retention of customers whom are loyal to or in the market for, Ford’s value added products.

An old guard company with a deep history in line production manufacturing dating to the era when Taylorist mechanisms of production were fresh model(s) for managing manufacturing projects, Ford has been exceptionally perceptive to the shift from vertical to horizontal management of operations and logistics within contemporary organizational practices, and has perhaps exceed beyond the capabilities of its competitors by very essence of the company’s retention of strong  management application to an otherwise entrepreneurial world of car manufacturing. Throughout the years, in an effort to maintain control over the quality of Ford’s products and compensate the most skilled talent, the company was willing to incorporate additional costs into product price point – at least within reason. While not always the ‘cheapest’ car on the lot, Ford’s contention toward incorporation of costs has been based on the belief that long-term retention of satisfied customers was more important than reduction to quality; to do so would only comprise its position as a company dedicated to tradition and safety in manufacturing.

Amortized costs, then, had to be ‘found’ rather than just implemented, and international decentralization of Ford Motor’s manufacturing plants around the world attests that Ford is doing just that: sourcing local solutions to high cost elements within the production and distribution systems on a region by region basis. The outcome has been two-fold: 1) increased capacity to offer first-of-its-kind products at a reasonable price to regional markets, and; 2) according to a time schedule that met high demand for those new releases. Ford’s decentralized production and distribution channels now offer the global corporation more consistency in oversight than the traditional vertical model of integration, by way of more control over materials and other inputs, as well as logistics management on site. Attendant costs related to regional tariffs and taxes are also mitigated, lowing excessive shipment expenses.

Upon employing Porter’s five forces model of pure competition analysis to the company’s prospectus for profitability, an integrated picture of Ford’s potential strategic priorities appears according to risk adjusted rates of performance (Hitt et al. 1995). Ford’s five forces were analyzed with the following criteria:

1. Nature of Rivalry – related to task environment and operational procedure management by competitors, as well as their vision. In the case of product line companies, research and design is of critical importance in response to annual design changes on the automobile manufacturing market.
2. New Entrants – extent by which it is easy or difficult for the firm to enter into the industry or new niche in the market. It is at this stage that corporation’s like Ford are forced into providing value added incentives in an attempt to stop customers from ‘switching costs’ or hopping from one brand to another. Competitive edge responsive to this criterion might result in substantially lowered profits. A profit loss is typical at stage, and with careful planning and close attention to material and labor expenses those losses may be mitigated by increase in market share upon release of new strategy or product.
3. Substitutes – by which alternative products or services can be substituted for existing offerings from the competition. The fewer available substitutes the greater the profits. Ford is challenged to offer models of vehicle exceptional in relation to competitors from all segments of the market. Failure to shore up product line weaknesses. An example of this challenge is competitive product, such an economy car that exceeds gas mileage availability at an even lower price than Chrysler or Chevrolet.

5. Strategic partners – stakeholders, and this includes subsidiary entities, suppliers and labor. Regulatory partners also impact. This is the area that many large manufacturing companies that were formerly exclusively U.S. based have faced intense strategic competition and with varied result. An ‘American’ market driver in the auto sector, Ford Corporation is nevertheless always seeking ways in which to curb resource, material and employment costs. The increase in cost of new technologies and additional costs to maintain those resources has inserted higher overhead into the internal manufacturing picture. Globalization of ford auto components has prompted ‘offshore’ (i.e. outside continental U.S) transfer of labor to locations where labor is cheaper. Resultant are new challenges in training, and unexpected overhead issues in response to everything from language to logistics to unexpected trade costs and regulatory fees. While change management can do much in this area, other external forces indicative of third term legislative policies (i.e. carbon emissions reductions law) that have placed an enormous force upon the foci and allocation of Ford Company’s expenses, and by proxy attention to the varied human interests within and outside of the corporation.
6. End point (Buyer Power) – includes consumer leverage, and also impacts to those decisions including responsiveness to information or identity management of the company, and especially portfolio management toward fiscal performance key to investment results. Identity control is a critical factor, especially in the case of crisis situations as those that plagued Ford in the 1970s with lemon recall on its Pinto car. How buyers discern which autos to purchase, and further investment relationship with has much to do with pristine brand identity as it has to do with revenue.

In recent years, competitor behavior has been largely impacted by the economy, and has had comparatively less effect on Ford’s more robust fiscal and management position. According to Hoovers 2010 Report on Ford Motors “global economic downturn hit the auto industry particularly hard, especially in North America, one of its largest markets.” While Ford did not seek bailout loans by the U.S. Federal government, or go through bankruptcy as its two main competitors, Chrysler and General Motors did, “the company took a huge hit to its bottom line in 2008, after a couple of years of lackluster results.”  In keeping with the company’s promise to customers, Ford has been highly responsive to shifts in consumer demand, and has ultimately moved toward restructured production facilities in order to be in sync with the flexible impingements of capital cycles and labor, as well as regional changes in consumer preferences. Technological innovation has followed, with innovation in transmission and engine designs according to a range of market niche demands from emissions reductions to high endurance terrain driving.

Competitive Landscape

KEY: Best of Group. Companies listed are Top Competitors.

¹ Data unavailable. Ford Motor Company, 2010. Hoovers. Retrieved from: www.hoovers.com

Conclusion: Competitive Leadership

In the 1940s, Italian intellectual Antonio Gramsci outlined the effects of government interventions that prompted the first failure between the nascent mass consumer auto industry, and the instantiations of labor in the face of rapid transformations of capitalism. In his seminal work, he looks at leadership in the Ford Motor Company’s early beginnings, and poses an inquiry into the degree by which Henry Ford’s leadership influenced the success of his venture’s new model of capitalist production, or Taylorist line manufacturing. In his analysis he reflects upon how Ford’s innovative labor mechanism transformed the international market through a rationalized process of work that was so effective that it was rapidly appropriated by similar auto manufacturers like FIAT in Turin, Italy. What is of interest within this query is the translation of Ford’s beginnings in Dearborn, Michigan where he produced the 1908 Model T on a moving assembly line that revolutionized the industry, is how the current leadership might maximize similar leverage, but in the atomization of consumer preference rather than by pure labor alone. Gramsci leveraged the early critique partly in response to counter theories on alienation of labor which were perceived to retract individual creativity from actual labor, and thus incapacitating motivation on the line. As indicated in the aforementioned analysis, it is in this realm of ‘motivation’ and identity management, along with highly efficient, cost saving operations and logistics that management at Ford must forge a future position. Noting the impact that Ford’s automaker model had on meeting strategic objectives intended for pure capital growth, Gramsci articulated that it is indeed labor that should be put into dialogue in order to avoid extensive union syndicalism and subsequent corporatism (i.e. coop) by the State through regulatory dominion or otherwise. If history is circular, and the recent global economic crisis has certainly shown signs that such a phenomenon exists, at least parenthetically, Ford Motor Company may find that competition is no longer the provenance of its once dominant competitors, but a realm that can only be redefined through internal decision.

References

Hitt, Black & Porter (1995). Management. Upper Saddle River: Pearson Education, Prentice Hall.

Ford Corporation (2010). Retrieved from: www.ford.com

Ford Motor Company (2010). Hoovers. Retrieved from: www.hoovers.com

Value Chain Management (2010). Reference for Business, Encyclopedia of Business, 2^nd Ed. Retrieved from: http://www.referenceforbusiness.com/management/Tr-Z/Value-Chain-Management.html

Edgeman, R.L.(2006). Six Sigma from Products to Pollution to People: Migration from Engineering and Business to Natural Social Environments. Moscow: University of Idaho.

Leigh, P. et al. (1999). Knowledge Management Strategies that Create Value. Outlook, 1.