Business Strategy For An Introduction - Ford Motors Case Study

Ford Motors strategy to compete within its business area

Discuss about the Business Strategy for An Introduction.

The main aim of any business is to earn profits by selling its products. This is only possible when the products satisfy the needs of the buyers. It is not sufficient for the company to know the needs of its target customers. The enterprise should also have the capability to acquire and manage efficiently the resources needed to produce such products. This is why the organization needs to have a proper operations strategy which enables it to produce quality products at reasonable costs to the company so that it can make a profit. Ford Motors is one such company which has become a leader in the automobile industry largely due to the efficient management of its operations.

Ford Motors is one of the leading automobile manufacturers of the world selling its products in United States of America, Europe and Asia (Ford Motor Company, 2016). The company faces tough challenge from its competitors like General Motors, Toyota, etc. Almost fifty percent of the company’s revenues come from United States Of America. The Company would therefore continue to focus on meeting the needs of its customers in this country by providing more innovative and wide variety of products. The company would manage its operations efficiently to meet the demand of its customers in time. Further the company would try to cut costs to increase its profitability by employing technology in managing its operations. Quality control would be a top priority for the company.

Operations management is concerned with managing the change of an organization’s inputs into finished goods using different processes and systems within the firm. Operations strategy is about determining the plan of action that the company would adopt to make products that are desired by its customers in an optimum way with minimum costs to the company and at the same time not compromising on the quality of the products (Slack, Chambers and Johnston, 2010). The objective of the firm is to maintain continuity in production to meet the quantity demanded by the customers. The first stage in the operations strategy process is the operations strategy formulation.

There are different areas in the operations strategy formulation like enterprise resource planning, identifying process activities, inventory management, quality controls, supply chain management, project management, plant capacity management, etc. A business organization while formulating its operations strategy has to take into consideration what kind of products it wants to make and for what kind of customers. Ford Motor Company makes cars, trucks and small utility vehicles for its customers in United States of America, Europe and Asia. In order to meet the demand of its customers all over the world the company has established factories in different countries. The company has set up modern, technologically advanced plants where quality automobiles which are more fuel efficient, safe and which make lesser carbon emissions are made (Ford Motor Company, 2016). Although the company had to put lot of money in the construction of these plants, these assets have helped the company make products which have significant market shares across the world.

Operations strategy formulation in Ford Motors

Ford Motor Company has been following the lean production system to optimize the flow of production and materials to get the firm’s products to their customers with speed. This system has also led to energy savings and lesser use of resources in the production process. The company follows the assembly line production method which has led to increased production capacity.

The company sources components from suppliers all over the world and has also resorted to backward integration by making automobile parts at its own facilities (Monizka et. al, 2016)  .This is the right policy as there are many parts in an automobile and it is convenient and economical to source them from suppliers rather than produce all of them. This way the company can concentrate more on other areas of production.

Ford Motors has been following standard procedures for maintaining quality of its products. The company performs random batch tests of its automobiles. The company has been constantly engaged in research and development to produce automobiles with more features and improved performance.

The operations strategy adopted by Ford Motors aims at improving the cost structure, raise the quality of the company’s products and hasten the process of the development of innovative and more attractive products for its customers (Kourdi, 2015).

One of the steps that Ford Motors has taken to reduce its costs is to reduce the number of its production platforms. The company adopted what is called the One Ford Plan. Under this plan the company has restructured its global operations. There was a time when the regional production centres of the company operated as individual business units. This was changed and uniform procedures and processes have been adopted at all global plants of the company. This policy is more efficient and has led to cost savings.

The company has taken initiatives to develop a skilled and global workforce which is capable of working in different parts of the world (Mathis, Jackson and Valentine, 2016). The company has been providing different facilities to its employees like health care programs so that employees are fit enough leading to increased productivity. The company has a diverse workforce which is provided a safe environment where they can work with dignity. The employees of the company are one of the most important resources of the company.

Ford Motors has over the years worked to train and develop suppliers with whom the company has developed healthy relationships. The company has tried to secure supplier commitment to control costs, improve quality and meet sustainability standards (Krajewski, Ritzman and Malhotra, 2013).

Operations strategy implementation in Ford Motors

The company has taken steps for the modernization of its production facilities over the years. There have been engineering feasibility studies and evaluations done by the company to constantly improve the production processes. The company has developed new engine transmission technologies, size and weight reductions, advanced powertrain optios, etc to meet the changing needs of the customers.

Ford Motors has increased its product planning and design capabilities by setting up eight engineering research and development centres that work cooperating with one another.

It is very important to monitor the progress of the implementation of the operations strategy in a company (Slack, Chambers and Johnston, 2010). It is not enough to make plans if the things are not happening on the ground as desired. An organization has to put in place systems that can be used to monitor whether the predetermined strategy is being followed and what are the effects of that on the working and output of the organization.

 In Ford Motors scanners are used to monitor the delivery of automobile parts to the company by its suppliers. Further the company has put in place a logistics management system. An order taking software is used by the company. Technology is used in the company to keep track of how the different operations are taking place (Campbell, Edgar and Stonehouse, 2011).

Ford Motors highly automated operations are controlled to a great extent by information technology. The assembly lines are managed using computers. This also helps in keeping record of operations and one can identify the location of an error if things go wrong. Further the company has also helped its dealer network adopt the use of information technology in its operations. This has led to speed, convenience and efficiency in operations.

Ford motors employs automated scheduling in production facilities. The company has introduced short term and intermediate scheduling of processes and resources at its plants. This has helped to avoid wastage and interruptions in the production process. The chances of human error have been reduced considerably.

The company has taken adequate steps for internal data collection and storage (Campbell, Stonehouse and Edgar, 2011). There are monthly, weekly and daily reports made relating to production performance. In case the company takes on a new project, the responsibility for the project is given to a team but the individuals in the team are also made accountable for completion of certain tasks and their performance is recorded and reported.

Operation strategy monitoring in Ford Motors

Ford Motors follows the policy of carrying out its operations in a sustainable way (Ford Motor Company, 2016). In Ford Motors data is collected relating to the commodities being purchased by the company, the supplier’s location, its training and audit history. Further representatives from Ford Motors are required to report any human right violation from the suppliers.

The kind of organizational structure that a company has also determines to a significant extent the kind of control the firm would have on its operations. Ford Motors has divided its business all over the world into three geographical divisions only. This has helped the company in integrating its business strategies with lesser difficulty. Further the company has different functional groups within its organization like global manufacturing and labour affairs, quality and new model launch, finance, legal, etc. The organizational structure at Ford Motors suits traditional business management approaches that involve top to bottom control.

Ford Motors has adopted Six Sigma a data driven approach which involves improving business processes by collecting data and analyzing it through the use of statistical tools. This approach aims at eliminating any defects in goods manufactured by the company. The use of this method has led to better control at Ford Motors.

The company has adopted total quality management. This methodology is concerned with improving business processes leading to elimination of waste and lack of quality at different levels. This has helped in better quality control at the organization.

Ford Motors organizes Global Pulse And Engagement Surveys to measure employee satisfaction. Accordingly the company takes steps for providing better facilities to its employees (Werner, Schuler and Jackson, 2012).

Ford Motors has been making significant efforts over the years to develop its research and development facilities. The company has built the infrastructure and also a team of researchers, engineers and designers in its facilities. Not many companies can match this capability of Ford Motors. The company should continue to build innovative products for its markets all over the world. The company should follow this policy of differentiation to gain competitive advantage (Campbell, Edgar and Stonehouse, 2011).

Secondly, Ford Motors should make deeper market penetration by selling more products to current customers. The company needs to make more efforts to attain efficiency in its operations through means like better processes and systems so that additional demand can be met in time and at greater convenience to the consumer.

Thirdly, Ford Motors should make more efforts to develop more capable leaders in its organization. The executives in the organization should be given more training opportunities and exposure in different markets (Mathis, Jackson and Valentine, 2016). The company should pick the best people from different parts of the world and groom them to lead teams in different departments including production. The company should promote an environment where the employees are encouraged to learn new skills.

Fourthly, the company should follow the strategy of adding to its list of suppliers so that the company does not remain dependent on the present number of suppliers. The aim of the company is to sell more products and this would mean increased demand for components and parts. The company should try to reduce its supplier risks by developing more suppliers by providing them training and other forms of support (Monizka, et al., 2016).

Fifthly, Ford Motors should continue to find new methods for improving the quality of its products. The company should make more efforts to develop a more effective quality management program. Ensuring a good quality of its products should remain a top priority for the company.

In any company production department plays a very important role because a major portion of the costs of the company are incurred in this department. Moreover the variety and quality of goods that are made by the production department also determine to a great extent the kind of revenues and profits the company is able to make. There was a time when the Ford Motors could capture the market for automobiles by producing cars at lower costs by employing the assembly line method of production and producing cars at mass scale. But as other companies also started using same production methods, lower costs were not enough and Ford Motors have been able to enjoy a significant market share because the production department of the company has been able to make innovative products and product differentiation has become a major weapon for the company to grow (Gong, 2013).

Ford Motors has been using latest technologies like 3D printing to produce prototypes of new parts with speed and lower costs. The company has been making more use of digital technology in its cars in the construction of dashboards, entertainment systems in the cars (Ford Motor Company, 2016). The developments in the research and development facilities of the company have impacted the kind of product offerings the company has come up with. The ideas generated in the production department have given a direction to the whole company. Now the company has a vision for the future which it could not have imagined a few years ago (Ford Motor Company, 2016). The kinds of products and technologies that have been developed by the production department have shaped this vision.

Ford Motors reduced the number of its production platforms to lower costs (Slack, Chambers and Johnston, 2010). But inspite of this reduction, the company has been able to produce many models of cars. This indicates the efficiency, and innovative practice in the production department. Further, the company has made improvements in its assembly line production facilties. New technology has been employed constantly. The company has been aiming for growth in the markets of its products. But this growth has not come at the price of unlimited costs. The efficiency of the production department has helped to keep the costs down even as more ambitious new product offerings were developed and made in the company.

The production department at Ford Motors has taken the lead in implementing innovative practices like establishing warehouses where the suppliers could deliver automobile parts, leading to reduction in costs. Further, by using special kinds of steel and aluminium in production, the strength of vehicles has gone up and weight has gone down. The production department has taken the lead in promoting a culture of innovation in the company and also inspiring the other departments.

Conclusion and recommendations

Ford Motors has been able to do well in the highly competitive automobile industry in different parts of the world. The credit for this success also goes significantly to the fact that the company has been able to offer automobiles to its customers, which are good on different fronts like quality, variety, affordability, comfort, storage capacity, etc. The company has been able to make such products as a result of its continuous efforts to improve processes and equipment in its departments (Gong, 2013). The company has been able to put into effect a well thought out operations strategy to meet enterprise objectives. Ford Motors also needs to look at the future if it wants to achieve continuous growth. The company has to beat the competition in United States Of America and increase its market share there. But the company also needs to take steps to expand its markets in the emerging economies of the world which have huge potential. The environment and needs of customers in these countries are different and the company has to meet the challenge to develop and sell its products in these countries to sustain its global growth. 

References

Campbell, D. , Edgar, D. and Stonehouse, G. (2011). Business Strategy: An Introduction. United Kingdom: Macmillan Publishers Limited.

Ford Motor Company (2016). Annual Report. Available at: https://corporate.ford.com/homepage.html (Accessed: 13 July 2016).

Ford Motor Company (2016). Innovation. Available at: https://corporate.ford.com/homepage.html (Accessed: 13 July 2016).

Ford Motor Company (2016). Sustainability Report. Available at: https://corporate.ford.com/homepage.html (Accessed: 13 July 2016).

Ford Motor Company (2016). Vehicles. Available at: https://corporate.ford.com/homepage.html (Accessed: 13 July 2016).

Gong, Y. (2013). Global Operations Strategy: Fundamentals And Practice. United Kingdom: Springer.

Kourdi, J. (2015). Business Strategy: A Guide To Effective Decision Making. 3^rd(edn.) United Kingdom: Profile Books Limited.

Krajewski, L. , Ritzman, L. and Malhotra, M. (2013). Operations Management: Processes And Supply Chains. United Kingdom: Pearson.

Mathis, R. , Jackson, J. and Valentine, S. (2016). Human Resource Management: Essential Perspectives. 7^th (edn.) United Kingdom: Cengage Learning.

Monizka, R., Handfield, R. , Giunipero, L. and Patterson, J. (2016). Purchasing And Supply Chain Management. 6^th (edn.) United Kingdom: Cengage Learning.

Slack, N., Chambers, S. and Johnston, R. (2010). Operations Management. 6^th (edn.) United Kingdom: Pearson.

Warner, S., Schuler, R. and Jackson, S. (2012). Human Resource Management. United Kingdom: South Western Cengage Learning.