Research Proposal on "Ford Motors Corp -- Business Proposal Change"

Research Proposal 10 pages (2714 words) Sources: 10

[EXCERPT] . . . .

Ford Motors Corp -- Business Proposal

Change affects all features of the every day life and probably most of these changes are due to globalization -- one of the buzzwords of the twenty-first century. Basically meaning a transfer of cultural, technological, political and economic values from one country to another, the forces of globalization have resulted in more choices for the consumers and the investors. Corporations benefited from it in the meaning that they were better able to territorially expand their operations, but they were then forced to encounter more serious competition in both national and international markets. An example of an organization which made full use of the globalizing forces is American automobile manufacturer Ford.

The company occupied for decades the leading position onto the American market in terms of sales. Their success was often due to the high quality of the vehicles manufactured and the fact that they best appealed to the needs of the population. However, in today's world, the audience' needs change quite rapidly and the corporation has to be flexible enough to adapt to the modifying requirements. Ford did not manage to adapt to the changing environment and as a result, they lost their leading position to Japanese manufacturer Toyota. Foremost, they were forced to downsize part of their staff and, due to decreased sales, they registered losses instead of profits. The situation is even more dramatic when it affects not only the organization, but wide groups of stakeholders.

Given the current situation, one could easily observe the impending need for a rethinking of the business approach implemented by Ford. The decisions however must be made in the context of the changing environment.

2. The Company

Ford Motor Company was founded in 1903 by Henry Ford and it is currently headquartered in Dearborn, Michigan. The primary aim of the organization is to manufacture and sell vehicles; recently however, they have also became focused on offering additional and complementary services, such as financing solution upon purchase, including credits and leasing. They also offer support and maintenance services. Ford was the first organization to produce and sell mass vehicles, allowing as such the purchase of a car for more individuals. "Ford Motor began a manufacturing revolution with its mass production assembly lines in the early 1900s. The company is now firmly entrenched in the status quo as one of the world's largest makers of cars and trucks" (Hoovers, 2008)

The corporation manufactures and distributes their vehicles onto six continents, owning 95 production plants and employing an estimated 246,000 individuals. They have developed numerous strategic partnerships and they are now affiliated with brands such as Mazda, Lincoln, Mercury and Volvo. "The company operates as a globally integrated worldwide team with four key priorities: aggressively restructuring to operate profitably at the current demand and changing mix, accelerating development of new products customers want and value, financing its plan and improving its balance sheet, and working together effectively as a global team" (Ford Motor Company 2007 Annual Report).

The Ford stock is being traded on the New York Stock Exchange at a current value of $4.55, following a constantly declining trend (Money Central, 2008). Ford's market capitalization is of $10 billion; their revenues are also following a descendant trend, with $172.455 billion for 2007. The company's net income is of a negative 2.723 billion (Media Ford, 2008).

3. The Problem

Despite their efforts and good intentions, Ford Motors has encountered major difficulties in achieving their established desiderates. They lost their leading position onto the American market by being dethroned by Japanese Manufacturer Toyota. Consequently, the market share owned has become reduced and so have the corporate profits. Operations of downsizing the staff members followed and the dissatisfaction of the shareholders increased.

The main reason for their failure revolves around an impossibility to adapt to the changing features of the environment. In the background on an unstable economy, a decreasing dollar against a stronger euro, high federal debts and the increasing price of crude oil, the American population demanded more fuel efficient cars that would materialize in lower consumptions and costs. Also, since the population tries to become responsible consumers, they place an increased emphasis on the protection of the environment. Ergo, they needed vehicles that eliminated less waste and produce fewer greenhouse gazes.

Ford could have researched the market and integrated the new requirements into their product offering, but they were generally recognized for their large size and luxurious vehicles. The re-adaptation had then meant not only a change in Ford's market image, but also additional costs. These costs would have derived from the replacement of the already purchased technologies, used in the manufacturing of the luxurious vehicles, the training of the personnel on how to operate the newer technologies and financial losses generated from renouncing the production of large size automobiles.

With the contradictory arguments in mind, the top management at Ford Motors Corp decided to continue the manufacturing of their vehicles, betting on America's need for large size, powerful and luxurious cars. The decision turned out to be the wrong one and resulted in corporate losses.

4. The Proposal

The fact the Ford Motors is losing customers and money is no longer a secret. The company is not head for bankruptcy however, and some changes in their business approach could easily help regain its leading status. To achieve this however, they have to become more flexible and adapt to the new requirements in the micro and macro environments. This basically means that they have to implement newer and better technologies to create fuel efficient cars. The new Ford automobiles have to consume less gas and eliminated fewer wastes. This approach would undoubtedly imply additional expenditures, but if the company does not implement it, they risk becoming a niche industry, addressing only some of the wealthiest Americans, who do not mind spending large amounts on money on car maintenance and who feel nostalgic about the powerful image promoted by a Ford vehicle.

The actual implementation of the proposed solution depends directly on several features presented by the micro and macro environments of Ford's. To best understand the proposal in terms of forces that limit or support its implementation, one should conduct several analyses on the company, the industry, the market and the international environment.

4.1 SWOT Analysis

Internal Strengths

strong brand and image, which results in customer loyalty and trust despite recent losses, they still possess sufficient financial resources financial involvement in numerous social causes, which helped create a favorable image vast product palette, including maintenance and financing services

Internal Weaknesses

decreasing sales previous investment in technologies for large size vehicles; their replacement would imply additional costs low employee morale due to downsizing and lack of job security

External Threats

major competition from Japanese manufacturers increased competition from manufacturers worldwide who become more and more threatening changing demands from consumers

External Opportunities

numerous technological developments which would allow the manufacturer to better adapt to the new requirements governments offer support to the organizations which focus on environmental responsibility environmentalist organizations also offer support in reducing waste eliminations

4.2 Corporate Culture and Globalization

The emergence of globalizing forces has generated various mutations in the corporate affairs, with major impacts upon the organizational culture. Among the most relevant implications is the increased emphasis placed on the human resource, which has become more than the staff operating the machines, but the company's most valuable asset. In this instance then, Ford has commenced to place their staff members at the core of the operational process, recognizing the major role they play in achieving corporate success. And this internal strategy was not only applied within the United States, but in all countries where Ford operates. The implementation of the global corporate culture was achieved through a written communication of the common culture, with an allowed difference that made it possible for international facilities to maintain their local features. The variations in the corporate cultures implemented abroad however had to be limited and subject to the same organizational mission and vision (Rioux, Bernthal and Wellis).

4.3 PEST Analysis

Political / legal environment governments across the globe have implemented laws aimed to restrict increased gas consumption environmental organizations are pressuring the government into promoting laws that limit the formation of greenhouse gases

OPEC has restricted the exports of gas, only implying further increases in the cost of gas

Economic environment the unstable economic climate in the United States is forcing consumers to turn towards fuel efficient engines the unstable economic climate in the U.S. is threatening to enter recession, negatively impacting the rest of the world and as such Ford's international consumers the competitors are starting to set basis for strategic partnerships that will help them in the eventuality of future crises

Socio-cultural environment customers place an increased emphasis on better protecting the environment consumers are more oriented towards fuel efficient engines, from economic considerations protecting the environment and consuming less is sometimes not a simple recognized necessity, but also a fashion trend

given the global… READ MORE

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