Case Study - Ford Motor Company
1 - Case Study - Ford Motor Company introduction. The case creates four options to choose from. Discuss at least three criteria the company should use to decide which of the four listed options is best and the reasons why each criterion should be used: i. Economically profitable; to maximize Ford’s profits, it’s clear that North American factories are not doing good and are the major sources of losses.
Ford has lost a substantial amount of market share to its competitors and is not doing well during/after crisis (“Ford Motor Company”, 2010) Ford doesn’t want to produce more cars than it sells; in fact, it might be good to produce a bit less than it could actually sell (Ford Motor Company, 2011, p. 1). ii. Cost of Staff; in Ford’s North American operations is expensive due to unionization.
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The United Auto Workers (UAW) represents most of the company’s production employees (“Ford Motor Company”, 2010), and the contract terms over the years have been designed to provide significant long-term support to those employees benefits such as retirement, job protection (Ford Motor Company, 2011, p. 1). These generous benefits now weigh down the company operations (Ford Motor Company, 2011, p. 1). iii. Access to Markets; my third criteria would also boost my point to shut down the North American facilities and focusing on the other regions of the world.
Since Ford is doing well in any other regions, they should concentrate on those markets and it would be easier to access those markets (“Ford Motor Company”, 2010). Europe, South America and China have been very receptive to Ford vehicles and the company is doing well in these markets (Ford Motor Company, 2011, p. 1). 2. In light of the possibility that market conditions can and do change, discuss at least three examples of how the company should build-in flexibility to back-up its decision-making process. i. Options-Based Planning is to keep options open by making mall, simultaneous investments in many alternative plans (Williams, 2010/2011, p. 81).
When one or a few of the plans emerge as likely winners, you invest even more in those plans while discounting or reducing investment in the others (Williams, 2010/2011, p. 81). Options- based planning is maintaining slack resources, that is, a cushion of resources, such as extra time, people, money, or production capacity, that can be used to address and adapt to unanticipated changes, problems, or opportunities (“Ford Motor Company”, 2010) Holding options open gives you choices.
Choices combined with slack resources, give you flexibility (“Ford Motor Company”, 2010). ii. Learning-Based Approach; traditional planning assumes that initial action plans are correct and will lead to success. By contrast, learning- based planning assumes that action plans need to be continually tested, changed, and improved as companies learn better ways of achieving goals (“Ford Motor Company”, 2010). iii. Avoid Fixed, Long-Term Commitments that are part of a static business model.
Any major shock on a market may require new business tactics, strategies or even models going forward. For example; one reason that the American auto industry reacted so poorly to the oil shock in the 1970s is that they had built their businesses assuming a very static business model. It literally took them years to undo this model and adjust to the new reality that they faced. They had to be able to react much more quickly to changing customer preferences, and operate in a market with many new competitors where there used to be only three (Cornwall, 2004). . Discuss how an effective action plan can be created and how progress can be monitored.
Planning works best when the goals and action plans at the bottom and middle of the organization support the goals and action plans at the top of the organization. In other words, planning works best when everybody pulls in the same direction (“Ford Motor Company”, 2010). One way of writing an effective plan and effective goals for yourself, your job, or your company is to use the S. M. A. R. T guidelines (Williams, 2010/2011, p. 9). S. M. A. R. T goals are Specific, Measurable, Attainable, Realistic, and Timely (Williams, 2010/2011, p. 79). There are two ways progress can be monitored. The first method in monitoring progress is to set proximal goals and distal goals (Williams, 2010/2011, p. 80). Proximal goals are short-term goals or sub-primary goals, whereas distal goals are long-term or primary goals (Williams, 2010/2011, p. 80). The second method of tracking progress is to gather and provide performance feedback (Williams, 2010/2011, p. 80).
In addition, management by objectives is a technique often used to develop and carry out tactical plans (Williams, 2010/2011, p. 83). Management by objectives, or MGO, is a four- step process in which managers and their employees (1) discuss possible goals; (2) collectively select goals that are challenging, attainable, and consistent with the company’s overall goals; (3) jointly develop tactical plans that lead to the accomplishment of tactical goals and objectives; and (4) meet regularly to review progress toward accomplishment of those goals (Williams, 2010/2011, p. 3) 4. List at least three steps that make-up a workable plan and explain why each is important. i. Defining the Problem; Ford Motor has been losing money for “Ford Motor has been losing money for years, particularly in its North American operations. Ford produces more vehicles than it can sell and does so under very difficult personnel conditions that are part of the industry’s history (Ford Motor Company, 2011, p. 1). This is important as the problem needs to be clearly defined in order to arrive at an effective plan.
ii. Identify Decision Criteria; these are the standards use to guide judgments and decisions (Williams, 2010/2011, p. 86). Typically, the more criteria a potential solution meets, the better the solution will be (Williams, 2010/2011, p. 86). Finding a solution that meets the most criteria identified when defining/identifying a problem is important to make sure the companies goals/needs are met in the most effective way. iii. Weight the Criteria; after identifying decision criteria, the next step is deciding which criteria are more or less important (Williams,2010/2011, p. 6). This requires the decision maker to provide an initial ranking of the criteria (Williams, 2010/2011, p. 86). This is an important step to define the priority of the issues the company needs to address. 5. Discuss the option or combinations you selected as the best course for Ford Motor Company and detail your reason for selection that option or combination of options. This is a combination of all three of the criteria identified in question one.
To move the company to produce only smaller cars, eliminating or sharply reducing the SUV and truck lines (“Ford Motor Company”, 2010). This has the advantage of getting back to Henry Ford’s vision for the company as well as dealing quickly with products that are simply not selling in today’s expensive gas environment (“Ford Motor Company”, 2010). Taking the step of dramatically reducing Ford’s North American presence and focusing their efforts on international markets where Ford has been very successful.
Europe, South America, and China have been very receptive to Ford vehicles and the company is doing well in these markets (“Ford Motor Company”, 2010). All three of these criteria will be of an economic benefit to the company in a short-term and long-term future.
Cornwall, J. (2004). Valuation and Exit Planning. Retrieved from http://www. drjeffcornwall. com/2004/07/ Ford Motor Company. (2010). Retrieved from http://kmresults. com/solutions/search? q=Ford+Motor+Company Harris, R. (1998).
Decision Making Techniques. Retrieved from http://www. virtualsalt. com/crebook6. htm The Analysis Of Strategic Rationale And Implications Of Ford UK Plant Closure. (2005). Retrieved January 22, 2011, from http://www. ivoryresearch. com/sample3. php Williams, C. (2011). Planning And Decision Making. In (Ed. ), Management (pp. 76-93). Mason, OH: Cengage Learning. (Original work published 2010) (“Ford Motor Company” (Winter 2011). Retrieved January 22, 2011 from Stayer University (Course 302) Courseroom.