Case Study: Ford Motor Company
CASE STUDY: FORD MOTOR COMPANY Leadership and Organizational Effectiveness of Ford Motor Company “This is everything - Case Study: Ford Motor Company introduction. It’s heritage. It’s children’s future. It’s everything tied up into one. Failure is not an option. ” – Jr. CEO, Ford Motor Company The global marketplace is faced with different challenges that affect its overall management and operations. Various pressures on the internal and external conditions such as the unstable world and local economies, the workforce, the customers, and even the management itself risk the success or failure of the organization.
In implementing effective management of a business, regardless of what kind of management strategy is used, the person who is foremost in all the transactions of the business must be able to deal with all the potential hazards. Ford Motor Company is well known as the #1 manufacturing experts in the western world. During Ford’s early years, the company was virtually indistinguishable from its founder. Fordism,” as it came to be known–a system of mass production which combined the principles of “scientific management” with new manufacturing techniques, such as the assembly line–created more than fantastic profits for his company: it literally revolutionized industry on a global scale within twenty years of its implementation ( 2002). This paper aims to discuss the leadership implemented in Ford Motor Company under the administration of , Jr. and specifically, it sought to answer the following questions: a. what are the problems he inherits as the CEO of Ford? . What are the adaptive challenges he recognises? c. How does he go about projecting the voice of leadership? In order to point out the answers to the aforementioned queries, there is a need to provide brief discussion of the concept of leadership and its styles that will help to the entire analysis of the case. The integration of the concepts and the facts from the primary source will present a comprehensive result of the case analysis. The application of these theories will be evident to the next parts of the report. Leadership and Leadership Styles
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Leadership is an important aspect of any organization. For decades, the issue on leadership has been undertaken in various studies and related discussion. In fact the study on leadership dates back in 1921 ( 1999, p. 8). Leadership comprises the aptitude and ability to inspire and influence the thinking, attitudes, and behavior of other people (, 1991; 1985; , 1989; 1985; 1988). Leadership is a process of social influence in which one person is able to enlist the aid and support of other individuals in the achievement of a common task (, 1997).
The major points of this definition are that leadership is a group activity, is based on social influence, and revolves around a common task. Although this specification seems relatively simple, the reality of leadership is very complex. Intrapersonal factors such as ideas and emotions, interact with interpersonal processes (i. e. , attraction, communication, influence) to have effects on a dynamic external environment. Among the many definition of leadership, the most relevant definitions were given by (2002) and (1992). 2002) defined leadership as the process of inspiring other people to comprehend and agree on what needs to be done and how to accomplish them effectively. In addition, leadership is also defined as the process of facilitating collective and individual efforts to fulfill shared objectives. Alternatively (1992) stated the creation of culture is the main essence of leadership and that both culture and leadership are two sides of a single coin. Relating leadership to management, believed that leaders tend to establish and change culture, while administrators and managers live within the culture.
While both related definitions differ from one another, both speak of the essential role leaders have to play in corporate culture. The charismatic power of leadership has already been analyzed and challenged ( 1990). Along the process, leadership has been considered as a vital element of powerful and strong organizational cultures ( 1992). Leadership has been a subject of numerous discussions that oftentimes, it is considered as an attribute of personality, a characteristic of particular positions or behavior attribute ( 1978, p. 574). Clearly, organization culture and leadership have a strong and stablished relation. Leadership is vital in applying organizational culture. The role of the leaders for example, is significant in developing organizational efficiency and creating corporate culture. According to (2002), leaders have the ability to view the future. They are equipped with compelling abilities to visualize where things will naturally end or lead to. Unlike other people, individuals with leadership abilities see things that are not noticeable or obvious to others. In addition, leaders have the ability to build and establish confidence to others.
Hence, in order to be a good leader, a person needs to have a personal sense of efficacy and confidence ( 2002). Each of these aspects brings complexity to the leadership process. Somewhere between the broad personality trait and the specific behavior sits the leadership style. Different styles of leadership that a leader may follow or may not. Styles reflect relatively stable patterns of response to social situations. Leadership style refers to the degree of direction that the leader provides to subordinates in attempting to influence their behavior toward the accomplishment of organizational objectives ( 1995).
The three styles of leadership are the authoritarian (autocratic) style (, 1939), permissive (delegative) style, authoritative (democratic) style (, 1982; 1993). Authoritarian style ( 2003) of leadership states that the leader has the authority over his subordinates. In this manner the authority have the right to do the decision making without asking the opinion of the followers. The leader is this type of leadership tends to tell the followers what must be done in order to achieve the goals or objectives of the organization.
On the other hand, the permissive (delegative) or the so-called laissez-faire style refers to the kind of leadership wherein the followers are permitted to be involved in the decision making process. The leader implements minimal control or manipulation on their followers. However, the leader is still accountable for the final decision to be made. Herein, the opinion and ideas of the followers are being valued by the leader and each follower encompasses different tasks set by the leader. The last style is the authoritative or democratic style of leadership.
In this type of leadership, the leader and the selected subordinates are involved in the process of the decision making. Herein, the subordinates have the right to voice out their ideas and thought which they think would be helpful for the leader in making the final decision. In this style of leadership the leader is in control or has the authority for the final decision. Ford Motor Company One of the leading transnational manufacturers of cars and trucks and even one of the principal providers of automobile financial services, popular modern symbol that affects the economy, ecology and society (2001) is Ford Motor Company.
Products are produced in facilities operated by Ford Motor Company and/or joint ventures and Ford itself is a publicly traded company listed on the New York Stock Exchange. There are approximately 328,000 employees and has made an estimated 6. 7 million vehicles globally in 2002. There are 25,000 dealers and more than 10,000 suppliers as business partners. For the past years, due to some consequences, the company encountered several challenges. However, with the efforts of gaining back what was lost, there is a significant development in the whole organization. , Jr. popular in his moniker, , the Chairman of Ford Motor Company, assured that the company would distinguish themselves excellently by their efforts to make the world a better place. This is in line with moving the company’s vision from concept to reality. A public commitment was made to strengthen connection in the society and play a dynamic part in bringing about the transition to a greater economic, social and environmental sustainability. But before the glorious position of the said company in the marketplace, there were several problems that he needed to face.
He underwent numerous challenges, dealt criticisms – both constructive and destructive in nature, and the dilemma of proving himself. What are the problems he inherits as the CEO of Ford? “I don’t believe this. ” – Jr. , on a board meeting ’s administration was toppled due to many negative forces within his management. After leaving the company, he left big troubles that – the new CEO must tackle immediately. Among these are the following: lowest stock recorded in a decade – $7. 15 a share hammered bonds that leads to junk bonds he shocking company’s debts – $162. 2 billion a shortfall in the pension plans totaling to $6. 5 billion intense price war in the market worldwide competition among the competing industries internal, suppliers, and human resources upheavals external pressures – the state, economy, and media low worldwide demands in the car industry environmental conditions customers – needs, satisfaction, and behavior What are the adaptive challenges he recognizes? “We’ve come back from adversity many times I the history. We’re going to do it again…
We started the job; now let’s finish it. ” – Jr. , on a board meeting , being a democratic leader, he recognized the challenges that may hinder and/or allow the immediate solutions to the existing problems of the company. In order to recover to such organizational challenges, he studied the roots of the problem and identified the actions to be done. Primarily, he took all the risks. Ford launched an ad campaign that he himself is the model. Then, he planned extensively. Ford recognized the difference of setting strategy and implementing it.
He helped the hammering out of the turnaround plan that forced the closure of five plants, elimination of over 35,000 jobs and workers, and cutting of $9 billion cost in the middle of the decade. The pressures of the situation are opportunities for him to see his strengths behind those challenges. Further, he sought the advices, help and reinforcement of his old-timers in which he trusted very much. Ford is not afraid on strong people. Hence, he firmly believes that when bright people and brilliant minds work together, a masterpiece will be created.
He reorganized his whole management panel. In relation to Ford’s line of products, he noted new innovations in the product development. Further, he met and consulted environmentalists and worked on the strategies in manufacturing cleaner and environment-friendly cars. Additionally, he built nonpolluting factories and turned the organization into a role model corporate citizen. He visualized the possible problems that the company will face in the future operations. By facing such challenges, he relates his predictions to every party concerned.
Ford was the first person to warn the board that they are headed to a great trouble. He took all the risks up to the extent of sacrificing his own personal commitments – such as evenings at home with his family and management of his beloved Detroit Lions. In fixing the gap of the human resources and upper management, he stepped down the corporate ladder for the sake of mingling to the ordinary employees of the company. Sometimes he dropped off on the assembly line to check up and frequently buys his lunch to the cafeteria where he will casually talk to the people there.
In his management, Ford is not the traditional command-and-control CEO, according to , group VP of Ford North America. He possesses outstanding qualities and practices. He perfected the act of good listening. He meets with the executives who are layers below his direct reports. He also elicits feedback and opinions from all people. Ford forces debate and discussion. After he overrules an executive, he often calls the person to personally thank him or her for the job well done. Ford’s dealing with other inefficient employees in the company is also unique as shown in the situation of , a greedy cost cutter.
All in all, Jr. found numerous opportunities in challenges and he adapts them so that he can apply his innate leadership abilities coupled with his practicality and intellectual expertise. How does he go about projecting the voice of leadership? “I think I am the guy to pull this off… I want the company to win. If we get into this down the road and it’s not working, I will be the last person to hang on by my fingerails and fight it. ” – , Jr. , on an interview with Fortune Ford was the opposite of the ousted CEO who is more into money and power.
Rather, he is more into preservation of the tradition and valuing people. As stated above, his personal qualities and his knowledge of who and what a real leader is proved his effectiveness. His voice of leadership is gifted that it can offer hope to risky situations, motivate every employee, elicit brilliance in performance, and contribute to the performance of the company. He is not a pushover. He takes risks and finds the best and applicable solution for that specified crisis. According to Ford director . , Ford can talk strategy and vision clearly. He has both the credibility because of his name and the ability because of his style to marshal all those forces and get them, moving forward. ” Ford is the one who can talk to dissatisfied dealers and suppliers in a quick manner possible. He is very humble. He gets straight away into matters of significant discussions. He is frank according to , a dealer in Philadelphia. Ford is trying to balance short-term and long-term objectives without sacrificing one from the other. Optimism is one of his greatest virtues.
Finally, he has a good sense of where he and the whole company need to go. To quote an director’s comment: “His vision is right. He is willing to make strong decisions and to bring strong people in around him. ” With these attributes and their practical applications, Ford projects a voice of leadership that is loved and appreciated by all people that surrounds him. Aside from being acknowledged, the aftermaths of such practices and decisions bring benefits to all areas and people concerned. It is as simple and plain as it is.
Granted that he belongs to the lineage of great Ford past heads, he definitely have good genes. Up to now, firmly believes that an improved sustainability performance is not just a requirement but a remarkable business opportunity for the purpose of putting the company at the top in driving the transition and to be in a position to benefit from it. His outstanding leadership and effective management played a very crucial role to the present market and economic dominances of Ford Motor Company – which he considered his everything, heritage, children’s future, and everything tied up into one.
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.