Business Plan for the Ford Motor Company
The Ford Motor Company was started by Henry ford back in 1903 and it has been under the leadership of the Ford Family for the last ten decades growing to attain a work force of over 210,000 in almost a hundred plants scattered all over the world. It was founded in America in Detroit Henry Ford managed to get twelve investors who raised a sum of $28,000 in cash, which he used to get a converted factory as the company’s premises. The factory was located on Mack Avenue in Detroit, Michigan. It was in the great depression that the company’s strength was determined when it sailed through the tough times. From its humble beginning, the company struggled to become the second largest automaker in America and top five in the world by 2010 with a net profit of $6.6 billion. It also has a stake in Mazda. Being in the top ten of American based companies in the fortune 500 with revenues running into $ 118.3 billion in 2009 with a 5.5 million automobiles being produced the previous year (Bourne and Wilkes, 2003).
- This case outlines four strategic options Ford is pursuing to increase its profitability. Describe each of the four options. For each option list 2 criteria you would use to evaluate the option
One team: With the whole workforce being responsible for the overall growth of the company the one plan aspect comes in (Collins, 2001).
One plan: Ford had to adopt a workforce that was unified in pursuing the aspect of one plan, which is to restructure to make the company competitive enough to be able to post sizeable profit margins. Secondly research and development of new products with the customers demand and likes incorporated in them. A single plan on how to fund the restructuring and enhance the company’s financial status (Van et al 1980).
One Goal: The focus of the one team and one plan is to deliver a common goal, which is to come up with a new exciting and financially stable automaker with a profitable growth trend.
One Ford: Divestures from other new brands was the immediate action by selling Aston martin, jaguar and land rover operations. A significant focus is to be given to the ford blue oval brand, which is associated with efficiency, safety and durability in the automobile industry. The capital market provided funding for the one plan to the tune of $23.5 billion as well funds gotten from a cost cutting in operations around the North American entity, which saved about $ 5 billion. Additional cost cutting measures were put in place to save more funds for other projects. The consideration of the sale of automobile protection corporation is also another option that ford considered.
- 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.
Constantly meeting the changing customer needs is challenging and only an efficient decision-making process can ensure this. Through the ford design institutes technical education programs the company engineers are equipped with skills that enhance decision making. This is in line with the integration of the company’s participatory process. Research and forecasts are essential to ensure flexibility of the decision-making process. An adaptable organizational structure that ensures flow of information from top to bottom and vice versa is also a consideration.
- Discuss how an effective action plan can be created and how progress can be monitored.
It is clear that for a complete transformation to take place then the company’s way of doing things has to be changed. This has to be done through doing an overhaul on the company’s business model. By a combination of the one team and one goal strategic options. These options will be able to solve the company’s problems since it ensures dynamic policymaking processes, which can adapt to any changes and adjustments in the market. The process of developing an effective action plan involves first determining the specific objectives, setting of measurable milestones, creating timelines while breaking large tasks into smaller ones and finally scheduling of accomplishment in every involved division of the action plan. The evaluation of an action plan provides information on the success of implementation. Checking the effectiveness of the solutions offered by having reviews that show hand in hand the current situation and the expectation of the action plan. Reports should be prepared and checked at every step of the action plan with a comprehensive one showing the achievement of milestones. Employee assessments should be done to check the alignment with the objectives of the action plan (Bourne and Wilkes, 2003).
- List at least three steps that make-up a workable plan and explain why each is important.
For a plan to be successfully implemented then the following steps are followed. The first step is to make it right, then making it real and finally making it a routine. By making the plan right for the organization it ensures a motivated workforce. Bringing the one goal of making ford exciting and profitable to life by describing of the exact expectation ensures focus to the goal. The sense of direction and surety is developed when an activity or a plan becomes a routine.
- Discuss the option or combination of options you selected as the best course of action for Ford Motor Company and detail your reasons for selecting that option or combination of options.
In the last two decades there have been many changes in the markets. Back in early 90s the American economy was thriving and there were high sales growth in the automobile industry. This was also because of the low-fuel prices. This however changed over time, with high-fuel prices being a key factor and a slowing down economy led to reduced profit margins and slowed the rate of growth. In the past ford has operated as four different companies in terms of regions they include: South American, North America, Europe and Asia pacific entities. With each of the entity having research and development, manufacturing and distribution systems being independent. This kind of duplication was inefficient to the company since waste of resources and diseconomies of scale was against such a model (Collins, 2001).
The expansion of the corporation and inclusion of many new brands such as Jaguar, Land Rover, Aston Martin and others was also detrimental to the company’s main brand ford. The American market especially shifted from the SUVs and large trucks to smaller and fuel-efficient automobiles. The strategic plan is based on four options one ford, one team, one goal and one plan. The one ford model was to establish a global enterprise that was not based on regions but was all-inclusive. Ford implemented the one-team concept by having a lean leadership in charge of the global operations. Continues and regular review of the company’s threats, opportunities, strength, weaknesses and identify areas that need to be improved (Van, 1980).
Through the years the company has been borrowing funds in its bid to aggressively expand. However, its books were not looking so well in 2006 when it posted its largest ever loss of $ 12.7 billion which later reduced to $ 2.7 billion the following year. Faced with these challenges a restructuring was a necessity for survival with the company choosing to sell its jaguar and land rover operations. A transformation to ensure production of safer, greener and high quality automobile while ensuring competitiveness in the market as well as profitability are the company’s key issues (Collins, 2001).
Bourne, Mike, Franco and John Wilkes. (2003). Corporate performance management. Measuring Business Excellence. Boston: Addison Wesley Longman Publishing.
Collins, Jim. (2001). Good To Great: Why Some Companies Make The Leap And Others Don’t . New York. NY: Harper Business.
Van De Ven, Andrew H., And Diane L. Ferry. (1980).Measuring And Assessing Organizations. New York. NY : John Wiley & Sons.