Sustainable Management Futures of Ford Motor Company - Essay Example

?Sustainable Management Futures Table of Contents Sustainable Management Futures Table of Contents 2 Brief of Ford 3 PESTEL Analysis 4 Political 4 Economic 4 Social 5 Technological 5 Environmental 6 Legal 6 Sustainable Aspects of Ford 7 Climate Change 7 Human Rights 8 Vehicle Safety 8 Mobility 9 Identify Benchmarks and Good Practice 10 AUDIO Analysis 11 Recommendations 13 Conclusion 15 References 17 Brief Description of Ford Ford Motor Company was first established in the year 1911 on 8th March. Its first operation was in London and consequently the company had become one of the most popular car manufacturers in the whole UK and all over the world. The prime focus of Ford is on automotive manufacturing. It had developed several innovative vehicles with revolutionary latest technologies. The priority of Ford Motor Company is to develop safe, stylish and competent cars which can be afforded by most of the people [1] (Ford Motor Company, 2011). Ford Motor Company was founded by Henry Ford with the introduction of Tri Motor airplanes. In the year 1908, Henry Ford developed Model T which was a revolutionary invention. It was a strong vehicle with a top speed of 45 MPH. It had surface regulator four cylinder engines and the vehicle could run 25 miles on one gallon gasoline. In the year 1914, Ford Motor had manufactured 308,162 vehicles that exceeded all vehicle manufacturers at that time. With the passage of time, Ford Motor faced strong competition from other competitors and accordingly stopped the production of Model T in the year 1927. Ford Motor had entered new generation in vehicle market and within 20th century, Ford Motor Company had successfully developed itself as an innovative car manufacturer and gradually made its presence in the world [2] (Ford Motor Company, 2011). As of 2011, Ford Motor Company had almost 70 facilities all over the world served by approximately 166,000 employees. The company also offers various financial supports by means of Ford Credit Company [3] (Ford Motor Company, 2011). PESTEL Analysis Political Several political factors can manipulate the automotive industry by determining the rule of competition, changing the production costs and supply chain distribution. Political instability can change oil prices, foreign exchange rates and simultaneously influence the people to spend on vehicle. Globalisation had increased the trade flow between countries by liberating trade barriers which had helped Ford to expand their sales in foreign countries. Several governments of foreign countries had developed good technological collaboration and permitted foreign ownership which had helped Ford to increase their resources and develop latest model to manage with the current market condition (Ivory Research Ltd, 2011). Economic Economical factor can influence the automotive industry. The GDP growth rate can determine the purchasing power of any country which is the most crucial factor for operating any business. Ford Motor Company operates in major economies such as China, America, the UK, India, Australia and others where the GDP growth rate and vehicle market condition are good (Ivory Research Ltd, 2011). Social Social factors such as customer attitudes, demographic factor play a vital role in automotive industry. For example, in countries such as America, people prefer large comfortable car, while on the other hand, people of the UK usually prefer small vehicles. These factors can affect the attractiveness of vehicle market in a particular country. From the graph below it can be seen that the demand of large vehicle had increased by 202% between the year 2003 and first quarter of 2004. Source: (Ivory Research Ltd, 2011). Technological In this era, the preferences of technological improvement had increased rapidly. People prefer more advanced and technological features in their cars. The Ford Motor Company always utilises good technology in their vehicle and it provides high quality vehicle for efficient use. It also allows customers to view the product’s features online and customise the vehicle according to customers’ needs (Dhanekula, 2011). Environmental The environmental aspects can influence the vehicle industry because various environmental issues such as GHG emission, usage of energy and water had emerged in countries all over the world. Ford has developed potential steps to tackle the environmental aspects and produced technology which is more environments friendly. Legal The change in legal condition can cause unfavourable situation for vehicle industry. The business regulation had changed from time to time which forced Ford to manufacture good quality vehicle. Moreover, the pressure of labour unions had also affected the automotive industry. For example, in one of the manufacturing units at Dagenham, the strike commenced by trade unions had hampered the production of Ford (Dhanekula, 2011). Sustainable Aspects of Ford Ford had successfully managed the bad business condition and raised their market share. Ford had developed new technology which can use low fuel, generated ‘green’ jobs and reduced the emission of CO2 which had helped both financial system and environment. [4] (Ford Motor Company, 2010). Despite the bad economic condition of 2009, Ford had successfully gained the vehicle market share in most of the business entities internationally. In the period of economic recession, over 40% vehicle sales had dropped in the US market, but good business strategy had helped Ford to make profitable growth. Ford follows four principles in their sustainable strategy that are: to provide best feature, safety and security, fuel efficient engines and smart technology in their product which can provide the customers good driving and travelling experience and thus continue to purchase Ford vehicle [5] (Ford Motor Company, 2010). Climate Change Ford has reacted to the threats of climate change issues by reducing the emission of GHG from its vehicles. It has enhanced the fuel economy in the vehicles and decreased the GHG emission from the manufacturing operations. From the year 2004 onwards, the vehicles of Ford had improved in conserving fuel by 20% which was twice compared to the closest competitor of Ford. In the year 2009, the CO2 emission of Ford was 5% lesser compared to 2008. In Europe, Ford Motor had decreased CO2 emission in its cars by more than 27% than 1995 [6] (Ford Motor Company, 2010). The climate strategy of Ford is based on lessening the GHG emission in the atmosphere and energy usage in the operation of Ford, developing elasticity and competence to capture the market of lesser GHG emission product and establishing efficient, predictable and technological structure for lessening GHG emissions [7] (Ford Motor Company, 2010). Human Rights Ford provides safe workplace and treats every employee with respect. Human rights policy of Ford encourages increased productivity of employees and employee retention. Ford works with the suppliers at commercial level to improve their policy, confirmation system and capability to manipulate the supply chain. Ford maintains good relation with automakers and supply chain companies and it was one of the companies which were invited to join the UNGC Supply Chain Sustainability Advisory Group. In the year 2009, Ford had provided training to over 180,000 suppliers. The human rights endeavours of Ford were positioned in the first place in ‘CRO Magazine’ [8] (Ford Motor Company, 2010). Vehicle Safety Vehicle safety is a vital factor for sustainability of Ford. Ford manufactures vehicles with top level of protection for wide range of customers. Ford utilises production analysis, broad computer modelling, crash and sleigh testing so as to assess the performance of cars and individual machinery. These examinations help to verify that the car manufactured by Ford will satisfy the regulatory prerequisite and guidelines. Ford has implemented automatic internal system in the car which can rapidly recognise, assess and resolve problems related to vehicle safety. The vehicles of Ford include crash prevention technology, accident evasion features, synchronise with 911 supports, hot-air balloon safety belts and roll solidity control which can increase vehicle protection, avoid accident and decrease major injuries to people [9] (Ford Motor Company, 2010). Mobility Mobility is a significant enabler of economic development. As the world population increases, the need for mobility also rises. Ford Motor Company makes mobility reasonable by making vehicle cost-effective, environmentally secure and collectively within society. Ford always strives to blend creative technology with services which can provide new solution to stimulate the advantage of mobility without reducing the ecological and social impacts. Ford has recognised the mobility problem in mega-cities because of traffic overcrowding. Each year the average urban drivers bear loss of 27 hours because of traffic problem. The anticipated loss because of traffic jam is calculated as 67.6 billion USD in the US each year [10] (Ford Motor Company, 2010). The injuries, losses and health problems related to vehicle had also amplified. Furthermore, several people had moved to the mega-cities from rural areas for enjoying the financial opportunities which had caused social inequity. Ford has developed mobility strategies to satisfy the mobility needs in urban and rural areas that can resolve the problems in mega-city because of congestion of excess vehicles [11] (Ford Motor Company, 2010). Ford provides reasonable delivery and transportation of goods and citizens between rural area and mega-cities. It will reduce the necessity of migrating to mega cities thus maintaining sustainable mobility [12] (Ford Motor Company, 2010). Identify Benchmarks and Good Practice Ford Motor provides vehicle in many regions internationally. Ford had improved the efficiency in producing vehicle and successfully reduced the CO2 emission from their products. The company maintains good relationship with stakeholders such as customers, dealers, suppliers, investors, employees and communities. Ford has made momentous development on the major environmental issues. The vehicles produced by Ford are one of the best with regards to quality, class and fuel economy. The company continues to develop inclusive sustainable material approach to increase the efficacy of sustainable material in the vehicles. This strategy helped to improve environmental performance and reduce the operational cost. For proper utilisation of energy, Ford Motor was given the “Energy Star Sustained Excellence Award” in the year 2009. The company’s practices include reduction of CO2 emission from its manufacturing facilities, reduction of water usage, disposal of waste and set up packaging rules for transportation of parts, resources and materials. For its performance in various environmental factors such as energy & water usage, GHG emission, waste recycling; Ford was rewarded the “Green Choice” award by “Natural Health Magazine” [13] (Ford Motor Company, 2010). There are many competitors of Ford in vehicle industry for example BMW, Toyota, Honda and others. Among them BMW had good record as one of the most sustainable car manufacturers internationally. BMW had successfully minimised the emission of CO2 by 74700 tons in the year 2010. It also reduced the utilisation of energy by 380,000 MWH in the same year. In spite of higher production, BMW had reduced the consumption of water in various activities by 370,000 m3 by implementing new technology. With regard to waste management, BMW has reduced the volume of waste by 28% in the year 2010 compared to 2009 (BMW Group, 2010). AUDIO Analysis Challenges Aspects Upstream Downstream Issues Opportunities Climate Change GHG Emission Manufacturing vehicle and transportation of raw material Customer Use Vehicle Global CO2 emission Develop Comprehensive strategy to reduce GHG emissions Water Usage Water Use Use of water in manufacturing facilities Water usage per vehicle Water Scarcity Utilising MQL (Minimum Quantity Lubricant) system to reduce water use and development of Patented Water Estimation Tool Waste Management Volume of waste generated Manufacture product which include hazardous and non-hazardous waste Recycle process to use the scrap steel, rust material, iron and water again Eliminate the landfill of hazardous waste Initiate waste management and send waste to landfill for disposal Energy Consumption High energy consumption Usage of energy in manufacturing plant Energy used by customer in vehicle Operational Energy Use Development of energy efficient car Source: (Esty & Winston, 2009). The first challenge Ford faced was global climate change from the aspect of GHG emission. The GHG emission comes from upstream which is manufacturing vehicle and transportation of Ford and from downstream i.e. uses of vehicle by customer. About 11% of global CO2 emissions are caused by customer because of using car and truck [14] (Ford Motor Company, 2010). For this reason Ford had developed Fiesta which reduces 30% of CO2 emission [6] (Ford Motor Company, 2010). Another challenge faced by Ford was usage of water from the aspect of water usage in manufacturing facility. The upstream is represented by usage of water in the manufacturing facilities of Ford and the downstream water use by customer per vehicle. The major issue for water is the water scarcity because less than 3% of water is fresh water and the consumption of water per person had increased due to the population growth [15] (Ford Motor Company, 2010). Meanwhile from 2000-2009, Ford had reduced the utilisation of water in manufacturing facilities by 62%. For benefit of customer, Ford had decreased the use of water per vehicle to 5.2 cubic meters in the year 2009 [16] (Ford Motor Company, 2010). As for waste management challenge the aspect is volume of waste generated. In the year 2009, Ford had generated waste that was almost 70,000 metric tons. In the upstream, Ford had decreased 21% waste in the year 2009 compared to 2008. For good waste management, Ford had won the ‘2009 Asia Pacific and Africa Environmental Leadership Award’ [17] (Ford Motor Company, 2010). Recommendations Ford Motor had responded to several issues during its business operation and improved its environmental performance as well as economic performance. In future, Ford should decrease the GHG emission to maintain sound climate situation. CO2 is a major GHG gas which is the main reason for increasing the temperature of atmosphere. CO2 is produced by manufacturing of products in plant and use of vehicle. Ford must reduce CO2 emission in future from its various operations. Ford should provide relevant information about dreadful effect of GHG in climate change to the stakeholders and thus form their business strategy by keeping in mind the impact of climate change. As the price of oil is volatile and its reserves are decreasing, Ford should ensure that all vehicles produced by it is best in regards to saving fuel more along with the quality, performance and feature. Ford should implement best technology which can help to develop global platform to meet customer preferences all over the world. New technology can help to respond more efficiently to the changing business condition of vehicle market. Ford should manufacture better fuel economy, superior security, driving dynamics and customer oriented vehicle. In future, Ford must improve hybrid electric and plug in vehicle for efficient use of energy in vehicle. The hybrid electric vehicle can reduce the emission of CO2 and use of non-renewable fuel. Ford should instruct the stakeholders about the benefit for using hybrid car compared to non–hybrid cars in order to decrease the impact of climatic change. In addition, Ford should introduce renewable bio-fuel in the hybrid technology and electric vehicle which can boost the performance of hybrid vehicles. The electrification can help to reduce the CO2 emission from cars and tackle the decreasing stock of fuel. Ford must make the use of electric vehicle in bigger part of their supply chain. Many vehicle manufacturing companies are now trying to invent battery technology in their vehicle and in future the demand of battery vehicle will increase. The cost of producing electric vehicle is much higher than fuel vehicle because of high cost of battery. Ford should develop next generation battery technology which can be afforded by most of the customer. The company should secure the raw materials and suppliers because the resources that are required to produce battery technology are concentrated in few countries such as China, Bolivia and Chile. There is a risk of inadequate accessibility of those materials. For encouraging the development of battery technology, Ford should invest big money for developing the next generation battery technology. In the manufacturing facilities, Ford should implement energy efficient measures for producing vehicle. Ford should increase the utilisation of waste material by recycling it and apply light weight material in vehicle production. In fact, Ford can develop strategy to produce electricity from waste which can help to keep the environment clean as well as reduce the volume of waste. Ford must reduce the usage of water in producing vehicle and other operations. It should develop an inclusive water strategy to create an environmental and social impact of water use. Conclusion In 21st century, Ford had experienced several issues and most important issues are economic recession, usage of energy and other environmental aspects. Ford had responded every issue critically and proved as one of the top car manufacturers in the world. It has developed new technology and decreased the CO2 emission along with increased sales. Ford is concerned for both green environment and global economy and thus it develops car which has less impact on environment and is affordable by most customer. Ford focuses on developing solution to resolve global issues and help customer live better life. Ford strives to be a leader in fuel efficient technology. Ford is continuously working on inventing bio fuel and clean diesel engine. Ford aims to create electric vehicle in order to capture the electric vehicle market. Over the years, Ford has decreased the usage of energy by initiating various programs. Ford had made continuous progress with regards to product quality, durability and security of vehicle. Ford has continued good progress in various environmental issues. In the year 2009, Ford received ‘Green Ranking’ in ‘Newsweek Magazine’. In the year 2010, Ford was awarded as the ‘World’s Most Ethical Company’ because of good corporate social responsibility attempts and sound business practices. Ford always provide product according to customer choice in different regions which is basic crucial aspect for development of Ford. With their convenient strategic business policy, Ford is determined to rank among the leaders of global automobile industry. References BMW Group, 2010. Implementing Sustainable Management. Group Management Report. [Online] Available at: http://annual-report.bmwgroup.com/2010/gb/files/pdf/en/BMW_Group_AR2010-Sustainability.pdf [Accessed May 09, 2011]. Dhanekula, C., 2011. Macro Environment and PESTL Analysis of Ford Car Manufacturing ltd. Scribd. [Online] Available at: http://www.scribd.com/doc/32286545/Macro-Environment-and-PESTL-Analysis-of-Ford-Car-Manufacturing-Ltd [Accessed May 09, 2011]. Esty, D. C. & Winston, A. S., 2009. Green To Gold: How Smart Companies Use Environmental Strategy To Innovate, Create Value, And Build Competitive Advantage. John Wiley and Sons. [1] Ford Motor Company, 2011. Ford for today and for the future. 100 Years in Britain. [Online] Available at: http://www.ford.co.uk/100Years [Accessed May 09, 2011]. [2] Ford Motor Company, 2011. The Model T Put the World on Wheels. About Ford. [Online] Available at: http://corporate.ford.com/about-ford/heritage/vehicles/modelt/672-model-t [Accessed May 09, 2011]. [3] Ford Motor Company, 2011. Global Vehicles Sites. About Ford. [Online] Available at: http://corporate.ford.com/about-ford/global-vehicles-sites [Accessed May 09, 2011]. [4] Ford Motor Company, 2010. Blueprint for Sustainability. Microsites. 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[Online] Available at: http://www.ivoryresearch.com/sample3.php [Accessed May 09, 2011]. Read More