Strategic Challenges Facing Ford Motors Company Globally

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Running Head: Strategic Challenges Facing Ford Motors Company Globally

Analysis of Changes in a Major Business Organization

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Introduction

Ford Motors Company faced hard times in the recent past because of the recent financial turbulence, which has had a big effect on many firms globally. To respond to these challenges, the company formulated a restructuring plan dubbed as “Ford’s Way Forward.” The plan intended to address some challenges that the company faces globally. This paper explores the strategic challenges facing the Ford Motors Company in the face of the current global economic and industry turbulence.

Reinventing the product line

Fords product line is one area that has been lagging behind and with the current crises it has proven to be a hindrance to sales. The company is focusing on creating new product lines by manufacturing and assembling vehicles with new features. Mark Fields, the company’s North American Operations President announced that the company intends to manufacture new hybrid gasoline-electric vehicles as well as fashion a number of environmentally friendly innovations (Ford Motor Company, 2008).

The company projects to produce 250,000 new hybrids vehicles by 2020, to give it an edge when it comes to hybrid vehicles (Ford Motor Company, 2008). The neglected niche of female drivers is also being considered as a viable target for sales growth. To be more innovative, the company also plans to make bolder motor designs than before. This strategy was followed up by launch of the Lincoln MKX by ford in 2007.

Employee Layoffs

The need to minimize cash burn and bring costs down as quickly as possible in order to stay afloat in this difficult economy prompted the company to embark on downsizing and retrenchment. In 2008 Ford company launched its restructuring report titled “Ford’s Way Forward”, in this report, the company outlined key measures that it intends to carry out in order to reduce the financial loses it has incurred in previous years. It is worth noting that in the financial year of 2006 the company reported a loss of $12.7 billion, the biggest loss since the company was founded 104 years ago (White, 2007). The report recommended job cuts to assist in its financial restructuring plans going forward. Those targeted were salaried workers especially administrative clerks working in assembly plants in an effort to reduce the amount paid on salaries by 15%.

Innovation and Product quality

Auto makers all over the world have faced a common problem, global overproduction of cars and the selling of the very cars to consumers. The market therefore presented cut throat competition and decreasing profits. Market share of Ford in the US has been heavily eaten into by Asian auto makers whose share had reached 31% as at 2005 (White, 2007). Ford has emphasized that success in the auto industry lies in customer satisfaction. As a result the company embarked on producing improved products which are fuel efficient, superior quality, comfort oriented and boast increased safety features.

Formulation and Implementation of Business Review Processes

Fords “One Team” approach strategy assisted the company to formulate and implement a well-organized process to continuously review and appraise the automotive business environment, examine the available opportunities and the potential risks, and identify any areas in the company that needs extra attention. All employees have been encouraged to constantly contribute their views under the approach. The company has stressed responsibility and accountability from its top managers with their decisions being solely based on hard facts and accurate data. (Ford Motor Company, 2008).

Conclusion

Ford must execute the ‘One Ford’ vision and continue to differentiate itself from its competitors even as the economic crisis unfolds because the current business environment can be best navigated if the company understands the main problem the company is facing and deal with the conflict arising from it’s restructuring.

Thus, it is critical for managers to successfully lead their employees through this hard and turbulent period (Gordon 1994). Gordon (1994) adds that, they need to predict the way employees will react to stress and conflict and have strategies for managing change in a smooth way.

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Reference:

Borden, J (2008): Ford cutting production of trucks and SUVs; layoffs could follow: Retrieved on 18/1/2012 from: HYPERLINK “http://blog.mlive.com/kzgazette/2008/05/ford_cutting_production_of_tru.html” http://blog.mlive.com/kzgazette/2008/05/ford_cutting_production_of_tru.html

Ford Motor Company (2008): Ford Motor Company Business Plan: Submitted to the Senate Banking Committee: Retrieved on 18/1/2012 from: HYPERLINK “http://banking.senate.gov/public/_files/Brfg12308AutoPRESENTATIONOFFORDMOTORCOMPANY122_SenateFinal_.pdf” http://banking.senate.gov/public/_files/Brfg12308AutoPRESENTATIONOFFORDMOTORCOMPANY122_SenateFinal_.pdf

Gordon D (1994): Corporate Restructuring: – Managing the Change Process from Within Boston: Harvard Business School Press.

White, J (2007): Record losses for US automaker Ford: Retrieved on 18/1/2012 from: HYPERLINK “http://www.wsws.org/articles/2007/jan2007/ford-j31.shtml” http://www.wsws.org/articles/2007/jan2007/ford-j31.shtml

Woodyard, C (2006): Ford will cut 25,000 to 30,000 jobs, close 14 plants: USA Today. Retrieved on 18/1/2012 from: HYPERLINK “http://www.usatoday.com/money/companies/earnings/2006-01-23-ford-q4_x.htm” http://www.usatoday.com/money/companies/earnings/2006-01-23-ford-q4_x.htm

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