Since the advent of the motor vehicle, Ford Motor Company has been a revolutionary company that has led the way in manufacturing and a fair price point, as with the Model T automobile. Henry Ford was a pioneer, building the Quadricycle in 1896, founding the Detroit Automobile Company in 1899, defeating Alexander Winton’s 70-horsepower Bullet with his 26-horsepower Sweepstakes, creating the Ford Motor Company in 1903, developing the integrated moving assembly line in 1913, and developing the first flathead V8 engine (Ford, 2017).
The Ford Company continued to be not only an innovator in the automotive and manufacturing industry, but was also a patriot and stalwart in the war effort, producing Jeeps and other military equipment that ‘awaken(ed) a sleeping giant’ (“Tora! Tora! Tora!”, 1970). Currently, the company has moved into the progressive era through social responsibility and environmental efforts including the turbocharged EcoBoost line of engines, increased fuel efficiency in their commercial vehicle fleet, and hybrid vehicle technologies.
Considering this incredible history of success, the company has not pushed past General Motors in total production and sales across in the US (United States), nor Toyota globally, and this does not even include foreign competitors in the market. While being socially and environmentally responsible is an admirable goal, both in marketing and for society at large, the company must advance through inventive and creative production methods and types of vehicles offered. Huge innovations and exploration in future transportation will be critical if the company wishes to advance and grow in the 21st Century. Highly technical and advanced research into driverless vehicles and secondary transportation methodologies will need to be explored to be at the forefront of the changing market, while at the same time traditional business and manufacturing practices that made Ford Motors Company survive over a century will be needed to keep the Ford identity intact and advancing throughout the 21st Century.
The Ford Motor Company’s current mission statement was changed in 2013 to be about the ‘One’, meaning one team, one plan, and one goal.
- One Team: people working together as a lean, global enterprise for automotive leadership, as measured by all shareholders and stakeholders in the company.
- One Plan: Aggressively restructure the company to be more efficient, while being more profitable through a changing model mix; increase development of new products; finance our plan and improve the balance sheet; work together effectively as one team
- One Goal: An exciting viable Ford delivering profitable growth for all
– (Ford Motor Company, 2017).
While the company met those goals through changing course to correct issues with revenue and market losses during the early 21st and late 20th Centuries, along with new values regarding the environment by the consumer base, Ford Motor Company must recognize the values of traditional business methods it has incorporated in congruence with newer technology business models that are agile and flexible to growth and market changes with a newer mission statement for the coming decade.
The new mission statement should reflect the environmental and social responsibility that it has already invested in with the concept of technology and innovations that Millennial and the Boomlet Generations will find deep-rooted values, in which to purchase or lend to brand influence. Therefore, the new mission statement should be about the future and technologies that help in the lives of these segment groups.
New Mission Statement
Mixing the strong nostalgic values of the past, while developing the transportation of the future, Ford Motor Company uses the latest technologies to be the most advanced, environmentally and socially responsible, and efficient automobile company on Earth.
Thompson (2015), “People working together as a lean, global enterprise for automotive leadership” (para.2). This vision statement reflected the change from being a US automotive company, into striving to be a global automotive company through: Global Leadership, Emphasis on Stakeholders, and Lean Business Practices. While these are macro-vision plans to be more profitable in a global market, the company needs to add a fourth factor to the vision statement as part of the change with the company’s goals. The fourth factor must include technologies and environmental responsibilities: Technological and Environmentally Focused.
The new vision statement, “A global company working together as a lean, socially and environmentally responsible automotive company, using innovative and technological advancements to revolutionize transportation needs.”
The fundamental values for the company is set to the three ‘P’s: People, Products, and Profits. While these are strong focal points that have added value and cash flow reserves over the past decade, the core values must be expanded to reflect the additional new views of the company going forward: Planet and Progress
- People: Our people are the source of our strength. They provide our corporate intelligence and determine our reputation and vitality. Involvement and teamwork are our core human values
- Products: Our products are the end result of our efforts, and they should be the best in serving our customers worldwide. As our products are viewed, so are we viewed.
- Profits: Profits are the ultimate measure of how efficiently we provide customers with the best products for their needs. Profits are required to survive and grow
(Ford Motor Company, 2017)
- Planet: Our environmental impact in our production, products, and people must focus on being partners in our responsibilities to the Earth in all aspects of the company.
- Progress: Progress and forward-thinking methodologies have been the founding and long-standing principles of the company. Advancements in technology and innovation are symbiotic with company’s core values: People, Products, Profits, and the Planet.
The current vehicle market must be examined at both the domestic level and at the global level to truly understand the segments and geographic targeting within the current market. Ford Motor Company is second in sales in the United States, and fifth in the world. During the past decade, the company has lost production output with consolidation and expansions into South America, which had massive economic declines during that period. Therefore, the most vital factors in the environmental evaluation are: UAW (domestically) and labor (globally), tariffs, oil commodity costs, source materials, political environments, and the global and regional economies.
Toyota and General Motors have strong production outputs that are nearly double the output of Ford Motor Company. While the reduction of manufacturing has been part of the process to making the company a lean producer, the company has lost production output to these competitors. Toyota had global vehicle sales of 10.2 million vehicles, up 1% from the previous year, while Ford sales were considerably lower, the company did have a 5% increase from the previous year (Reuters, 2016). The labor costs for Toyota are quite lower in comparison with the UAW (United Auto Workers) Union; however, there are some dynamics politically and domestically that have helped Toyota and Ford respectively. Toyota, in order to avoid US tariffs, has built factories within the US to remove the costs of shipping and taxes, while Ford Motor Company has built plants in Canada and Mexico to take advantage of lower wage labor without the tax burdens within the US. Ford has also used this advantage in Australia, where they have factories and contracts with the Australian government to lower the costs to the consumer by making Australia made Ford vehicles within the country.
The most volatile commodity going forward will be the consistency and production of oil commodities around the globe, not to mention gasoline refinery production issues based on various countries. Ford Motor Company has made strong advances with increased fuel efficiencies and hybrid vehicles; however, the future of automobiles will require alternative fuel options as oil commodities will become exhausted at some point. Further, the company’s environmental and social responsibility goals must be aligned with this going forward.
Working in a global environment means understanding the political and resource environments of each country and region. Political environments can change quickly, especially in a dynamic and highly advanced social media network. Governments have been overthrown in weeks; therefore as a company, Ford Motor Company must have strong connections to political officials and human resource connections with citizens, while at the same time having strong risk management and assessment measures in place to account for such global changes. Political environments can also have consequences in regards to raw materials for production pipelines, and therefore, contingency plans or storage facilities of material must be considered as part of this environmental and strategic planning.
The Ford Motor Company relies on a number of resources that are within their supply chain and resource pipeline. These resources are their labor force and executives, the supply resources, and manufacturing plants and automated systems, with current assets of 90 factories, 62 of which are manufacturing sites, two brands (Ford and Lincoln) and a credit company (Statista, 2015).
The labor force for the Ford Motor Company includes roughly 190,000 employees on 6 continents with a record high employee satisfaction response in a Pulse Survey (Ford Motor Company, 2015). Increased diversity and a global workforce with employee satisfaction and production are at an all time high for the company internally, which means that internal metrics are doing well for the labor force at the company. Continued strategy to automate systems, increase safe working conditions, creating environmental sustainability and increased responsibility with suppliers will increase production and satisfaction with the work force
Ford is the second largest automobile company in the United States with a 14.1% marketshare, as General Motor Corporation is number one. The largest market for Ford is the United States, followed by China and Europe, with expansions needed in Asia, while at the same time reducing production in Europe to meet new market demands. The most sold vehicles for the Ford brand is the F150 and the work van, with the Fusion expanding in the fuel efficiency market as the highest rated fuel economy of its size. Further strengths include a very healthy financial reporting over the past 5 years, with a free cash flow of $3.47 billion dollars (Statista, 2015). Strong financial reporting shows that Ford has been wise in spending, research, and cost efficiencies, which will allow the company to move into new markets, while developing new automobile designs and features.
Finally, the company has strong supply chain partners across the globe for manufacturing, strategic executives that are vital to a global company in so many countries, and a strong dealership network of roughly 7,500 across the globe. With these strengths, along with moves towards greater fuel efficiency for the commuter demographic and commercial vehicle superiority in the market, Ford Motor Company has strong internal aspects.
Pure production output is a serious concern for Ford Motor Company, whereas the other top five automobile companies produced twice as many vehicles than Ford. Further, the company has a poor reputation with standard vehicles in the United States compared to international companies in the same vehicle class. Ford’s Lincoln is making gains in the United States Market, but fall far behind in British and German luxury cars in the US and global markets (Pestle Analysis, 2015). While the company has a strong reputation in the commercial and middle-class market, the brand is losing market share and sales to other companies that have strongly marketed to the working class more effectively, while higher end vehicle purchases are going to competitors.
The resource pipeline carries a lot of risk with a number of parts being made overseas with little control over the supplier risks and hazards. Many companies strive to not have sweatshop manufacturing, nor have resources used from specific countries because of political climate or the environmental impact, the Ford Motor Company has struggled with certain suppliers cost versus social responsibility and quality. Ford also had an extremely low stock price of $15.26 per share, which gives the company a poor reputation among stakeholders and shareholders alike. Therefore, Ford Motor Company has a lower value with investors, which means that the company can have issues with raising capital outside of their staunch cash flow resources.
Important Internal Forces
Understanding the strengths and weaknesses of the company, certain key factors are important in moving forward and increasing profitability of the company for all parties involved with the company. Considering that the South American markets are experiencing deeper recessions than anticipated, the company must reduce production to these countries. Expansion into China, Mexico, and India are critical for the company to grow into the future. Therefore, internal plans for expansion and resources must be used to enter these markets. Mexico should be the example of the expansion, as Ford Motor Company already has a presence and manufacturing facility in Mexico. With the Mexican economy rebounding through favorable trade deals with the United States and Canada, the opportunities for sales and growth have already been established.
With a large cash flow reserve, the next wave of automobiles will be more technology heavy, while increasing fuel efficiency. Alternative fuel cars that are purely electric and hybrid versions have done poorly in the market, and fell behind other companies quickly. Probably the most important internal addition to the company was the investment in Research and Development. The company invested deeply in a new center in Palo Alto, CA to expand on the technology heavy landscape (Ford Motor Company, 2015). The company needs to keep pace with competitors by having innovative vehicles that have connectivity, mobility, and aggressively enter the autonomous vehicle race. With competitors doing similar innovations, the company must internally bring in forward thinking and technologically driven people to succeed.
The automobile industry is a monstrous market with vast supply chain commitments and risk. With over a hundred billion in supply chain capital, in over 60 countries, the supply chain has a number of cost risks, and plenty of room for advantages as well.
US Sales 2015 (Akadijan, 2015)
Seeing the distinction in the top five automotive companies shows that there are some considerable differences in each of the global companies. With Brazil and Russia having massive recessions and political quandaries, many of the companies did not have favorable annual reports in percentage growth between fiscal years. Globally, Ford is tied for second in marketshare, but singularly second in US auto sales, while Ford is third in total sales with the 5 biggest companies.
Organization Structure Assessment
Ford Motor Company has a particular business structure that is split into three specific sections: Corporate, Regional Divisions, and Global Functional Groups. The corporate structure is quite typical of most companies, with a Board of Directors (c-level), Executive Vice Presidents, and Middle Management. Regional Division are geographically located and split into three regions. The Regional Divisions are headed by Executive Vice Presidents, reporting directly to the COO. A Vice President heads each of the Global Functional Groups, and they are separated into particular specialties such as manufacturing, finance, legal, product development, and so forth.
Having this particular organizational structure, allows the company to take advantage of unique internal environments that can help the company succeed, with little issue for strategic advantages across the company landscape. While this type of structure can have overlaps, strong communication channels and diversified structure allows for more flexibility. This structure also tends to create highly favorable consumer relationships and business partnerships.
Corporate Level Strategy
Corporate level strategy is considered the ‘big picture’ view of an organization, and therefore, is quite comprehensive in scope and implementation. According to Ford Motor Company (2017), “We are focused on our three strategic priorities: accelerating the pace of progress of our One Ford plan; delivering product excellence with passion; and driving innovation in every part of our business” (Our Strategic Priorities). While this is a very generalized quote meant to be used for promotion for stakeholders and shareholders, the company has some key components for the company’s corporate level strategies: passion and innovation.
Corporate level strategy delves into the financial allocations for the company going forward for the vision of the corporate level strategy for the coming decade, and the diversification of products during that time (Beard, D. W., & Dess, G. G., 1981). The current corporate strategy is to allocate resources for environmental responsibilities such as: reducing water consumption, using renewable or recycling materials, decreasing overall environmental impact, increase R&D for driverless vehicles, increasing technology synergy, increasing production and reducing overall labor costs.
With over $16 billion in net cash flow, diversification of products from other automobile companies will be the critical growth value for the company in the coming decade. The company has had a value-neutral strategy in the past, and this has left the company with little interest in consumers or investors. The strategy has helped the company increase free cash flow, but it has also left the share price stagnant and the company not increasing its position in the market.
The corporate level strategy going forward should switch to a value-creating strategy where the company uses surplus net cash flow to invest heavily in the new markets of self driving cars, increased connectivity and WiFi offering, technology advancements and synchronicities, and future plans for new and emerging market changes. With the opening of the new research facility in Palo Alto, CA (many companies have expanded to the Bay Area), the need to be at the forefront of technology means investing in the traffic issues cars create in most populated cities. Being at the forefront of the traffic issues with other options such as trams, pods, and new technologies means positioning the company for the future.
Business Level Strategy
Business level strategies focus on the methodology that the company uses to maximize the corporate strategy into actual functionality within the business. Current business strategies have been focused on direct performance goals. Current performance has been focused on community and environmental impact.
Ford Motor Company constantly examines the business pipeline, and has a tag line of One Team, One Plan, And One Goal; however, this again is for promotions and marketing to investors and pipeline personnel. Further, the consolidation of platforms from 27 in 2007 to the current 8 platforms has resulted in a more streamline production platform/pipeline.
While streamlining is good for reducing costs and labor, which helps to coordinate unit activities on a global scale, the main issue is that other companies in the market are out producing Ford. More marketing and research needs to be gathered to factor in what consumers want outside of the Lincoln Luxury Line and the commercial stalwarts of the F-150 and cargo vans.
Foreign companies do not have to deal with the automotive unions of domestic companies as American companies do, and therefore, more automation and foreign factories need to be utilized to increase profit margins and company growth. Utilizing human resources, as well as automated factory production, means exploring other operations in Mexico and Canada, where the taxes and wages are extremely reduced in comparison to the union wages within the U.S. Finally, the business strategy recommendation is to focus on emerging technology, marketing and research, pushing of brand stalwarts, and further globalization sales in new markets, while examining newer markets to grow into the future.
Global Level Strategy
Ford Motor Company has had a focus on being environmentally conscious, which for marketing to consumers is not a huge factor when buying a vehicle to most on the whole. Toyota, GM and Tesla have taken those consumers in the market for reduced emissions and environmental concerns, whereas Ford has failed miserably in electric and hybrid vehicles. A new global initiative must be put forth toward driverless vehicles, while continuing to show progress on other vehicle classes. The company would be wiser to have fewer vehicles per class, while moving toward new technologies and more focus on consumer needs.
Another major issue with Millennials as consumers, especially in cities, is the lack of car use in general. The economy has been difficult for some, and with new ride sharing experiences with Lyft and Uber, along with increased traffic; more Millennials are using public transportation. Further, the old marketing adage of a vehicle defining a person has been slowly fading with time.
Finally, a global manufacturing command center can reduce the issues with having separate production command centers for all factories across the globe. More companies are using this strategy to align the manufacturing to be at the greatest efficiency globally, rather than regionally. Monitoring with a global command center can also rotate maintenance better, and shorten production times.
Considering the detailed research and information in the market compiled, the strategic plan must then be implemented and put forth for the company. With more specialized projects, the implementation can be much easier, as it is usually dealing with less people or departments compared to a company-wide strategy. In regards to a complete global strategic plan, a company must have milestones and benchmarks across the company landscape that is unified and focused. As with all large plans, the ability to parcel and segment the goals is important to not have vague or unclear strategic plans. For the Ford Motor Company, these main points for the next five year strategic plan will be to: Develop a Driverless Vehicle, Reduce Labor Costs and Global Command Center, Reduce and Focus Vehicle Category Offerings, and Expansion Into Asia and Australia.
Driverless Vehicle Development
The Executive Vice President of Global Product Development will be heading the five-year plan of creating a new driverless car (Ford Motor Company, 2017). The goal is to have a working prototype in the first year, while having a completed model for production by 2018 in the United States. The objectives will be to use the Tesla design concept of a sedan that has all the features of a normal car, with increased luxury features for this market. A new position will be created for this project: Vice President of Technology Integration. This new position will be under the EVP of Global Product Development, for a more focused strategic plan for this new vehicle. Obviously, the EVP of Finance, Global Sourcing, and Marketing will be involved at various portions of the strategic plan for this specified product.
Labor Reduction and Global Command Center
The most costly portion of the company is Research & Development and Labor costs. With more broad advancements and investments in newer vehicle types, Ford Company must also consider better and more efficient means to produce their vehicles. The company has invested in a number of initiatives for being more environmental friendly; however, production yield has not been aligned with other competitors.
With other portions of the company moving to new categories, and reducing other categories, the need for production costs to be in other countries, automated, and global command centers, the change must begin immediately. While the company can continue to be more environmentally sound, the company must continue to reduce production costs. The Executive Vice President of Manufacturing and Labor Affairs will head these changes, while a promotion to one of the factory managers will need to head the Global Command Center in Detroit, MI. The Global Command Center project will be allocated to an outside company that specializes in Global Manufacturing Command Center Integration.
Reduce and Focus Vehicle Category Offerings
Ford Motor Company has too many vehicle categories in their production offering that are not doing well in the global market. The commercial vehicle lines and the Lincoln offerings have done well in the US; and these production categories will prove to hold the line during some transitional changes into driverless and more technologically advanced vehicles.
The Executive Vice President of Global Product Development will be focusing on newer offerings, while the Executive Vice President of Manufacturing & Labor Affairs will be focusing on the reduction of products, while at the same time increasing total output of manufacturing by 5% over three years.
Expansion Into Asia and Australia
The Ford Motor Company has already established a strong dealership network in Australia, as the country has specific trading laws that limit specific brands within the country. Ford already has manufacturing facilities in Australia, which gives the company reduced tariffs and costs through the production factory. This expansion results in reduced dealership sales costs, and lower offerings in competition to other manufacturers who have to sell at higher sticker prices.
Expansion into Asia will require the Executive Vice President of Global Marketing and Sales to head the expansion project in congruence with Finance. Asian expansion might require the same needs as the Australian Market, and therefore require extensive research and capital investments into the area.
Key Metrics and Strategies
Ford Motor Company has a number of key factors that must be met to achieve the strategic plans for the future. Communication and broad strategic sharing across departments will be critical to successes, with corporate level executives allocating resources and capital, while also setting the metrics, milestones, and goals already given. The previous tables have a very focused budget and goal achievements required. Further, executive level members must be willing to change course as factors change, and be flexible when circumstances change.
There are two main risk factors that are extremely prominent in this strategic plan, Driverless Vehicles and Expansion Into Asia. With the Driverless Vehicles, the most resources will be allocated, especially in capital investments; however, with companies like Tesla, Google, and Uber moving into these markets, Tesla and Google are the only true viable manufacturers that could actually achieve this with long term goals. From a competitor aspect, Tesla has the manufacturing capabilities and resources to achieve this type of vehicle, whereas Google has the resources and navigational infrastructure to move on this market. Uber, has serious cash flow issues, resource problems, and no manufacturing capability in large scale. Further issues involve the laws and technologies with driverless cars, along with liability issues. The biggest risk for Driverless vehicles is in the technology and state or national laws. With this in mind, many of the laws can be moved around by doing most tests in foreign countries, while waiting for extensive lobbying for laws that favor Driverless Vehicles. Finally, risk assessments of these particular issues should push the company to move into foreign markets where laws are less strict.
With foreign expansion into Asia, most Asian Markets are not amicable to foreign companies competing with their domestic businesses; however, China has the largest growing middle class of Asian Markets. This growing middle class wants luxury items from outside the domestic markets, and expansion of the Lincoln brand would do well in these markets. The risk, however, is in the laws and business expansion reversal from being a heavy exporter to an importer. Strong ties and deals with ASEAN (Association of Southeast Asian Nations) and individual nations could have key advantages in moving into the Asian Market. Risk assessment, therefore, would be to work with officials in these organizations and countries to have sound deals agreed upon, while at the same time understanding risk of government and cultural changes. Various insurance companies or policies can offer value for anything that could happen in this region of the world, if those options are available depending on country and total value of assets used.
Recognizing the vast global automobile market and industry takes intense research, while at the same time critically examining the risks and changes in a highly competitive industry. Forecasting the changes and innovations in the market begin with a strong cash flow, progressive and aggressive personnel, flexible and fluid strategic plans, and strong risk forecasting and contingency plans. Considering the vast global investments and resources put forth in so many countries, a broad strategic plan must be segmented intuitively to the managers and stakeholders that will be in charge of execution, while at the same time, executive oversight and knowledge must intervene if any portion of the strategic plan falters. Ford Motor Company was considered the innovative and future of automobile production at the turn of the 20th Century, so at the turn of the 21st Century, the company must live up to the progressive and radical ideals of Henry Ford to advance into the next century.