Ford Motor Company Strategy & Tactics
Ford Motor Company Strategy & Tactics
This paper will focus on reviewing the strategic initiatives taken by the company relative to organizational and operational adaptation to changing markets. How recent economic trends are influencing the business. Strategies the company has used or could use for adapting to changing markets, such as an economic downturn or recession. Tactics the company has implemented or could implement to achieve their strategic goals. The role human resource management plays in helping the company achieve its business goals
How recent economic trends are influencing the business
The Global economic trends that influence Ford??™s business are declining in sales of products. The decline in sales is mostly due to the over- production of vehicles that the customer base did not want or need. The decline is also due to the economic down-turn in which many customers have smaller budgets to purchase vehicles. Many customers in the United States started to move away from their large Sports Utility Vehicles to smaller more fuel efficient vehicles.
Strategies the company has used or could use for adapting to changing markets
Ford has implemented the following strategies in order to adapt to changing markets:
Aggressively restructure to operate profitably at the current demand and changing model mix;
The Ford manufacturing in the United States has 10 assembly plants and 23 power-train
stamping and components plants (2009 Annual Report). Ford converted one of its
North American assembly plant, and started converting two additional assembly plants, from production of large utilities and trucks to small car production to support what Ford believes is a everlasting move in consumer preferences to smaller, more fuel-efficient vehicles(2009 Annual Report). By 2012 U.S. assembly plants have flexible body shops in order to facilitate fast response to changing consumer taste. Nearly half of Ford??™s transmission and engine plants will be flexible, capable of manufacturing various combinations of transmission and engine families (2009 Annual Report). Ford announced plans in North America to close three Ford plants and one Automotive Component Holding plant in the 2010 ??“ 2011. Ford consolidated the Wayne Assembly Plant into the Michigan Assembly Plant as part of their plan to enlarge North American production capability for smaller, more fuel-efficient vehicles. Ford is exploring
options for their remaining Automotive Component Holding plants (2009 Annual Report).
Ford would like to change these businesses to the supply base as soon as possible (2009 Annual
Ford??™s supplier can have assurance that Ford continues to labor to make stronger their supply base in the United States. The supply base represents 80% of Ford??™s North American purchases (2009 Annual Report). As part of this practice, Ford reduced the total number of production suppliers qualified for fresh product sourcing from 3,300 in 2004 to about 1,600 suppliers in 2009 and 1,500 suppliers in 2010(2009 Annual Report). Ford has identified specific plans that will take them to 850 suppliers in the near- to mid-term, with a further cut-back to about 750 suppliers targeted (2009 Annual Report). Ford believes that their efforts at consolidation will result in more business for their major suppliers. This is really important due to the decline in industry sales volume (2009 Annual Report). Ford??™s move to global vehicle platforms will boost its ability to use one common supplier for the total global volume of vehicle components (2009 Annual Report). A smaller number of suppliers will obtain a greater volume of the purchases.
Ford??™s dealers are a basis of might in North America and around the world. ???In rural areas and small towns where they represent the face of Ford (2009 Annual Report).??? Ford expects its current and potential U.S. market -share, Ford has too many dealers in metropolitan areas. The over- supply of dealers makes it hard to continue a strong and lucrative dealer-base (2009 Annual Report). Ford addresses the over -supply by collaborating with their dealers in attempts to downsize, merge and reorganize Ford, Lincoln, and Mercury set-up in the largest 130 metropolitan market areas in the United States to make available targeted average-year sales for Ford dealers of around 1,500 units and for Lincoln Mercury dealers of around 600 units. This should cause sustainable dealer profits. As part of these efforts, the number of dealers in our Ford, Lincoln and Mercury network (2009 Annual Report).
Ford also will speed up development of new products our customers want and value. Product Development is another area that Ford has addressed. Ford has developed a ???One Ford??? Global Product Development System (“GPDS”) allows Ford to appreciate efficiencies in capital and manufacturing costs (2009 Annual Report). ???In order to increase revenue, and, bring to market a broad range of frequently-freshened, highly-acclaimed global vehicles that customers want and value???(2009 Annual Report). Ford??™s Global Product Development System GPDS allows Ford to speed to market the quantity of new products intended to meet changing consumer preferences, including, smaller, more fuel-efficient vehicles.
Ford??™s electrified vehicle strategy has allowed Ford to have three electric vehicles. The three types of vehicles are Battery Electric Vehicle, Hybrid Electric Vehicle, and Plug-in Electric Vehicle (2009Ford.com). The electrified vehicle strategy allows Ford to provide affordable technology to many in the world (2009 Ford.com). Ford is taking advantage of its technology with the Lithium-ion batteries, and, leveraging the size of global vehicle platforms to lower the cost of new technology (2009 Ford.com).
Another strategy implemented by Ford is to Finance their plan and improve our balance sheet. Ford??™s plan is listed as follows:
During 2009, Ford completed many financing transactions intended to provide additional Automotive Liquidity and improve their balance sheet. These accomplishments as noted in the 2009 Annual Report are:
??? Negotiated with the UAW to amend the VEBA agreement to provide the option of paying up to approximately 50% of our VEBA obligations in Ford Common Stock, and to smooth payments over the 13-year payment term.
??? Reduced Automotive debt by $10.1 billion principal amount, utilizing $2.6 billion in Automotive and Ford Credit cash and 468 million shares of Ford Common Stock, through a number of separate but related transactions, including a cash tender offer to repurchase outstanding debt securities, a cash tender offer to repurchase certain secured term
loan debt, and an induced conversion offer with respect to our convertible debt securities maturing 2036.
??? Raised $1.6 billion of equity in an underwritten public offering of Ford Common Stock.
??? Raised $565 million with the completion of an equity distribution program begun in 2008, pursuant to which shares of Ford Common Stock were issued over time in market transactions.
??? Entered into a U.S. Department of Energy (“DOE”) loan agreement to provide us up to $5.9 billion in loans, at interest rates generally equivalent to a 10-year U.S. Treasury rate, under the DOEs Advanced Technology Vehicles Manufacturing Incentive Program (the “ATVM Program”).
??? Issued $2.875 billion of 4.25% Senior Convertible Notes due 2016.
??? Amended and extended the revolving credit facility under our secured Credit Agreement ??“ reducing the amount of the revolving credit facility from $10.7 billion to $8.1 billion, extending the maturity date of $7.2 billion of that amount from December 2011 to November 2013 and establishing a new term loan in the amount of $724 million maturing in
??? Registered an additional $1 billion equity distribution program in November 2009 and commenced sales there under in December 2009.(2009 Annual Report)
??? Completed the UAW VEBA transaction on December 31, 2009 by transferring assets, consisting of cash and marketable securities, notes and warrants valued at $14.8 billion, to the UAW VEBA Trust, thereby discharging our
* The role human resource management plays in helping the company achieve its
* business goals
As the writer learned in Management 521, Human Resource Management is ???the process of determining human resource needs and then recruiting, selecting, developing, motivating, evaluating, compensating, and scheduling employees to meet the companies organizational goals (Nickels, Nickels, Mchugh, & Mchugh, 2010).??? Ford is no different in its goals. Ford Motor Company prides itself in finding change agents to transform the Ford Motor Company.
Ford??™s commitment to its employees is outlined below.
* Foster teamwork and apply the knowledge, skills and values required to support the business.
* Anticipate tomorrow??™s challenges and opportunities.
* Push the limits with innovative business solutions. Challenge norms and search out emerging HR issues and trends.
* Lead the change effort.
* Take action, deliver results and resolve problems.
* Embrace diversity and use it to deliver a competitive advantage.
* Measure results to support accountability.
* Reward individuals based on their performance and their contribution to Ford Motor Company??™s business success.
As mentioned above Ford has a set of commitments it expects of itself and its employees. By keeping in mind the employees of ford are empowered to make changes to make a better Ford (2003 Ford.com). Ford??™s employees are it most precious resource because without great employees to implement Ford??™s policies, Ford would not be the global leader it is today.
In order to find out if management is generating enough profit on Ford??™s assets, calculate the operating profit margin. Profit margin is very helpful when comparing? companies in related industries. A high profit margin indicates a more lucrative company that? has better control over? its costs compared to? its competitors. Profit margin is? displayed in percentage form. The profit margin ratio is calculated by using Ford operating profit and dividing it by total assets. Fords profit margin is 18.7 percent, (Forbes 2011) The meaning of this profit margin is, that Ford has a net income of $0.18 for each dollar in sales.
One of the most important ratios the writer found is the Return on Equity (Peavler 2011). All companies are concerned with its profitability. ???A frequently used tool of financial ratio analysis is profitability ratios which are used to determine the companys bottom line??? (Peavler 2011). Profitability measures are valuable to company managers and owner. If a business has investors who put their own money into the company, the primary owner has to show profitability to those equity investors (Nickels, Nickels, Mchugh, & Mchugh, 2010).
Profitability ratios depict a companys efficiency and performance (Nickels, Nickels, Mchugh, & Mchugh, 2010). We can divide profitability ratios into two types: margins and returns (Nickels, Nickels, Mchugh, & Mchugh, 2010).
Ratios that display margins correspond to the companys ability to convert sales dollars into profits at different stages of measurement (Nickels, Nickels, Mchugh, & Mchugh, 2010). ???Ratios that display returns represent the companys ability to measure the overall efficiency of the company in generating returns for its shareholders,??? (Nickels, Nickels, Mchugh, & Mchugh, 2010). As stated above this writer believes that investing in Ford is a great oppourtunity and should go forward with the investment.
Ford.com.(2011). Building Where We Sell. Retrieved 5 22, 2011, from Ford.com: http://www.fordahead.com/home/global-strategy/building-where-we-sell/
Irby , L. (2011). About.com. Credit/Debt Management. Retrieved 5 15, 2011, from About.com: http://credit.about.com/od/reducingdebt/qt/lowerdebtratio.htm
Nickels, Nickels, W. G., Mchugh, J. M., & Mchugh, S. M. (2010). Understanding Business 9E . In Nickels, W. G. Nickels, J. M. Mchugh, & S. M. Mchugh, Understanding Business (p. 473). New York, New York, USA: McGraw Hill.
Ford.com(2011) Ford??™s Electrified Vehicle Strategy. Retrieved 5-22-2011 from Ford.com
Ford.com(2011) Human Resources Building A Better Ford Retrieved 5-22-2011 from Ford.com
Ford.com(2009)Annual Report Retrieved 5-20-2011 from Ford.com