Strategic Management - Ford Motors - Case Study Example

Strategic Management - Ford Motors Table of Contents Introduction: Ford Motors 2 Impact of globalization and technological developments 2 Application of industrial organization model and resource based model 3 Influence of vision and mission statement on Ford Motor’s success 4 Impact of stakeholders on success of Ford Motors 5 Conclusion 5 References 7 Introduction: Ford Motors Ford Motors is a multinational company of American origin, which is listed on New York Stock Exchange. The company manufactures and sells utility and luxury vehicles in a number of countries. Ford Motors operates under a number of brands and is a Fortune 500 company with market capitalization of $68.92 billion. The purpose of this paper is to assess the impact of technological development and globalization on the company, the role of its vision and mission and to evaluate ways in which the stakeholders influence overall organisational success (Ford Motor Company, 2014a). The paper will further focus on understanding the role of industrial organization model and resource based model in improving returns of the company. Impact of globalization and technological developments Ford Motors is one of the renowned U.S. automobile companies that have earned excellence for providing small cars as well as luxurious sedans to the country over several years. When the world economies started integrating their markets through globalization, the company recognized vast opportunities ahead of it in the globalised market, especially in the European and Asian markets. Since then, the company has been capitalizing on its ability to produce automobiles varying in size and price (Ford Motor Company, 2014a). By 2008, the company had a strong market in Europe. Then again, due to global recession and increase in price of fuel, the global demand for vehicles declined and the company faced a loss of $5.9 billion in the fourth quarter. This state had continued until the third quarter of 2009, when the company was able to earn net income of $997 million. Through globalization, the company studied the global market and developed strategy of producing smart fuel efficient affordable cars. This strategy helped to increase the company’s market share in domestic and international markets (Ford Motor Company, 2014b; 2014c). According to John Viera in his interview by Forbes (2014), Ford Motors has always encouraged innovation and changes. The company has invested in innovative technologies so as to improve manufacturing practices and sustainability activities. The company has incorporated technological developments in vehicles produced so as to enhance consumers’ convenience and safety. The cars are enabled with driver assistance and post-accident emergency software and the company is also engaged in production of electric vehicles by considering energy sustainability. Ford Motors has initiated various learning programs where consumers are informed about technologies installed in the vehicles so that their safety is never compromised (Ford Motor Company, 2014d). Application of industrial organization model and resource based model The industrial organization model and resource based model are two important aspects of strategic management. The I/O model is applied on components of the external environment, while the resource-based model is useful in internal environment analysis for earning superior returns. The Industrial organization model will enable Ford Motors to utilize its knowledge and skills in order to capitalize upon the external opportunities in a high potential industry. By applying the I/O model, Ford Motors can analyze its external environment comprising the general environment (PESTLE components), industry environment and its competitors. The I/O model will help the company to determine the potential market with highest competitive advantage and prepare strategies to utilize the existing opportunities therein. The company will have to acquire assets and skills for implementing the strategy. Success of the strategy is critical as the superior returns are dependent on strategy implementation (Pepall, Richards & Norman, 2005). The resource-based model will help in recognizing the unique blend of resources that Ford Motors presently have and can utilize to have competitive advantage. These resources include manpower, knowledge, technologies and expertise in the form of company’s strength and weaknesses. The resource-based model suggests that the company needs to recognize and categorize its resources as strengths and weaknesses and allocate them in the production process. Post allocation of resources, the company must develop capabilities so as to utilize the integrated set of resources and gain competitive advantage. In the next stage, the company needs to identify opportunities and align its resources to extract monetary benefits from the same. Following that, Ford requires to implement its strategy for earning superior returns by way of producing standardized and differentiated products as per market requirements (Barney & Clark, 2007). Influence of vision and mission statement on Ford Motor’s success The vision and mission statement of Ford Motors has been presented in figure 1. The company believes in conducting business by incorporating the internal as well as external stakeholders as a team in its operations. The operations and work culture at Ford is aptly aligned with the vision and mission statement. The company is continuously pursuing innovation and technological development in order to maintain its position in the automotive industry. The company has undertaken adequate measures to improve profitability and boost market share growth in the global market. Besides that, the company has initiated sustainability reporting, which reflects its continuous effort towards reducing global footprint. Figure 1 (Source: Ford Motor Company, 2014a) The goal of the company to work as ‘one team’ is served through stakeholder engagement in its daily operations. The company undertakes various formal and informal initiatives to communicate with its stakeholders and integrate their opinions in business activities. Ford Motors is strictly against corrupt practices and has been appreciated for always maintaining transparency and sustainability in its corporate governance reporting (Ford Motor Company, 2014a). According to the “Blueprint for Sustainability” of Ford Motors, despite major changes in the management positions, the company has maintained integrity in its sustainability governance. As far as the business activities are concerned, the company ensures that its profit motives do not harm interest of the community. Ford Motors has instilled environment safe engineering processes and all the production facilities are certified to ISO 14001. The main priority of the company is to deliver quality product to consumers and through its efficient supply chain management, the company avoids any kind of compromise (Ford Motor Company, 2014d). Impact of stakeholders on success of Ford Motors Stakeholders are the internal and external interest parties of a company. The internal and external stakeholders of Ford Motors are the shareholders, employees, suppliers, dealers, consumers, local communities and the national and state government. The company respects value and opinion of its stakeholders and attempts to involve them in regular activities. According to the management, success of the company is a result of integration of stakeholders in business operations and building valued relationships through transparency and trust. The relation between the stakeholders’ role and success of the company is a two way process, where both the components affect each other. The consumers help in building reputation of a brand, while the company support the same by maintaining high quality of products produced. The shareholders invest in the company in exchange of ownership, while the company is responsible for maximising their value and interest. The government regulations, such as, tax rate, import export policies and other policies, impact upon the organisation’s business. On the contrary, supportive regulations contribute towards facilitating business expansions (Ford Motor Company, 2014a). Conclusion Strategic management constitutes major decisions pertaining to achievement of long and short term goals of an organisation. The study revealed that the company maintains an integrated value-chain relationship with the stakeholders and is continuously evolving and innovating its products and processes to better serve the consumers. Ford Motors is one of the leading automobile companies that are not only involved in earning profit, but also in creation of wealth for consumers and community development. Two important theories related to maximisation of returns have been discussed so that a brief structure can be created to increase the average return of the company. Following that, the role of stakeholders in success of Ford Motor’s business has been discussed to understand the importance of different internal and external stakeholders of the company. References Barney, J. B. & Clark, D. N. (2007). Resource-based theory: Creating and sustaining competitive advantage. Oxford: Oxford University Press. Forbes. (2014). Ford Motor Company’s sustainability chief talks innovation, progress and a vision for the future. Retrieved from http://www.forbes.com/sites/rahimkanani/2014/06/18/ford-motor-company-sustainability-chief-talks-innovation-progress-and-a-vision-for-the-future/. Ford Motor Company. (2014a). Our company. Retrieved from http://corporate.ford.com/our-company. Ford Motor Company. (2014b). Financial Reports and SEC Filings (2008 Q4). Retrieved from http://corporate.ford.com/our-company/investors/investor-quarterly-results/quarterly-results-detail/pr-ford-reports-4th-quarter-2008-net-29746?releaseId=1244754048554. Ford Motor Company. (2014c). Financial Reports and SEC Filings (2009 Q3). Retrieved from http://corporate.ford.com/our-company/investors/investor-quarterly-results/quarterly-results-detail/pr-ford-posts-third-quarter-2009-net-31244?releaseId=1244753891470. Ford Motor Company. (2014d). Sustainability 2012/13. Retrieved from http://corporate.ford.com/microsites/sustainability-report-2012-13/blueprint-governance-sustainability. Pepall, L., Richards, D. J. & Norman, G. (2005). Industrial organization: Contemporary theory and practice. Mason, USA: Thomson/South-Western. Read More