The company has one main objective, which is to focus on automotive business. However, this objective is considerably general since managements can justify their actions to expand into other business as long as it relates to automotive. One obvious action is to provide financial services that contribute about 10. 5 percent of the company’s revenue, previously represent 13 percent of revenue in 2005 (Ford Motor Company, 2007a). 1. 1. 2. Strategies
Realizing the fierce competition in automotive industry, the company develops some anticipation actions to deal with the possible declining sales in North America market. In order to address market trends, the company decides to rely on four key principles/strategies as following: • Conduct restructuring in order to help Ford Motor Company to earn profits even in markets that sell lower volumes of vehicles • Improve product development and eliminating any complexity/difficulties in manufacturing
• Generating and maintaining enough liquidity to finance the two most priority • Encouraging teamwork and accountability throughout the company’s operation (Ford Motor Company, 2007a). 2. Strategic Managers 2. 1. Board of Directors Ford Company is considerably a fat organization, composing of 12 persons in Board of Directors and more than twenty executives. One similar characteristic that Ford’s board of directors has is their background in which at top level, most of directors have vast experience in financial and retail services.
This fact highlights that Ford has problems and managing their fund as justified in their strategies (see section 2. 2. 3) and it also explains why the company also serve financial service in addition to their core business in automotive manufacturing. John R. H. Bond (65 years old) previously served as non-executive chairman at HSBC; Stephen G. Butler (59) used to be Chief Executive Officer at KPMG, LLP; Irvine O. Hockaday, Jr. used to be Chief Executive Officer, Hallmark Cards, Inc. , and many others (Ford Motor Company, 2007a). 2. 2. Top Managements
In addition to board of directors, the company also has vast top managements, composing of Executive Officers Group and a number of Vice Presidents. According to 2006 Annual Report, we see that the company’s top managements’ structure are distributed into regional group in which each region (North America, Europe etc) has one Group Vice President to address each market needs. Fransisco N Codina, for instance, becomes the Group Vice President at North America. Meanwhile, John Flemming is the Group Vice President at Europe (Ford Motor Company, 2007a).
In addition to regional model, the company also has some top managements each is responsible for particular brand. John G. Parker, for example, is the Group Vice President for Mazda; Lewis K Booth is Executive Vice President for Ford’ luxury lines: Volvo, Jaguar, and Land Rover (Ford Motor Company, 2007a). 3. External Environment (EFAS table is in Excel format) 4. Internal Environment (IFAS table is in Excel format) 5. Analysis of Strategic Factors (SFAS table is in Excel format) 6. Strategic Alternatives & Recommended Strategy: Economics of Scale
According to several resources, Ford’s general strategy is to meet a single goal, economics of scale. Within the strategy, the company strives for producing vehicles in the most efficient cost structure and in the most timely manner and sell as many as they can. Pros • Ford’s production and pricing strategy are mostly directed to achieve faster and cheaper ways to build cars for market demands. It helps the company to build affordable vehicles for customers • The strategy helps the company finds the production time cycle from 36 to 24 months and reducing platforms from 24 to 16.
Therefore, the strategy increases time-efficiency (Smith, 1996). Cons • Customers are segmented. Therefore, developing affordable price is not heavily true since customers would think there is a sacrifice to build ‘cheap’ cars like security, accessories etc. 6. 1. Recommended Strategy Despite being known as efficient producer of cheaper cars in the historical days, there are considerable developments within Ford’s strategic directions today. For instance, the company is now also aiming to be the market leader in the luxury car segment.
The Luxury division is established in 1999 to coordinate their luxury brands like Jaguar, land Rover, Volvo and Lincoln. Managers of the company believed that by coordinating these brands, the company is in the right position to become a major force in the luxury segment (Banks, 2001). Although, the company has successfully made brand extension for their luxury cars segments, still there are several recommendations to the Ford Motor Company to help increase the company’s conditions. • Change of Leadership According to some automotive analysts, Ford requires a new style of leadership.
Besides providing means to escape the old image, a change of leadership will also send a good message toward stakeholders, especially within these hard times (the declining market share in some key markets) • Design a New Market Image The company is known as producer of high quality and luxury cars with premium prices. The current image is about stability and elegance. It is about a legacy that is maintained and hoped to provide customers with the same amount of satisfaction. This image is losing to futuristic and ‘younger’ designs of cars that offer both quality and distinction.
Ford needs to find it new and better programs to demonstrate the new product image. • Introduce Hybrid Cars: Maintaining Ford’s Brand Name Currently, there are many kind hybrid cars from various brands such as Toyota, Honda and many others. Some examples of famous hybrid cars include the Toyota Prius, Honda Civic Hybrid (HCH), and the Honda Insight. Where are Ford’s cars? Although hybrid cars would not saleable within the next one year, still Ford should develop its prototype to tell customers they cope with the trend.