Ford Motor Company

Comprehensive Strategy
Assessment
05/22/2015
To: Terri Bell, Vice President of Strategy
From: Kelly Monegan
CC: Dr. Vincent DeFazio
Executive Summary
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Comprehensive Strategy Assessment

This Comprehensive Strategy Assessment will synthesize the strategic

issues articulated in the Strategic Fit of the Firm Assessment and Strategic Fit
with the Industry Environment. Comparing and contrasting strategic issues
along with a ranking of potential impacts of issues upon the organization and
recommendations for issues pertaining to their hybrid strategy.
Fords Strategic Issues
Some concerns that surfaced during the Strategic Frame Assessment
have been identified as having significant organizational impacts, significant
impacts to Fords competitive advantage and encompassed ethical dilemmas
in Fords corporate strategy.
I think the most important strategic issue has to do with Fords UAW
Contract expiring September, 2015. The threat is the outcome of the
contract. The impact is considerably high because it impacts the
organization, affects their competitive advantage and ethics strategy. The
first issue affecting the UAW contract negotiations was identified in Fords
Strategic Fit and the Industry Environment Executive Summary as
employee compensation.
The outcome of the negotiated employee compensation can become a
strength or an issue depending on how it impacts Fords workforce, suppliers,
manufacturing facilities and competition. The outcome on how Ford treats
their executives/salary employees verses hourly employees is a double
edged sword and the impact could hinder their reputation, product quality
and the future health of the company. Below is the Tier 2 wages that was
agreed upon in the last contract.

Comprehensive Strategy Assessment

http://www.uaw.org/content/wage

The two-tier and lower-cost wage system, introduced in 2007, has

allowed FCA, Ford Motor Co. and GM to invest billions into U.S. plants and
hire thousands of new employees. But those entry-level workers also make
substantially less than Tier 1 employees who earn about $28 an hour. In
September, the newer workers will make at least $19.28 an hour, up from
about $15.50 they earned in 2011. (Burden, M., Wayland, M., 2014) Note:
Tier 2 wages are less that import wages.
About 17.5 percent of GM's hourly workforce is entry-level;
approximately 23 percent at Ford; and about 44 percent at Chrysler.
Fortunately, Fiat Chrysler Automobiles and General Motors are all in
negotiations at the same time. A negative outcome of the negotiations could
be beneficial to implants such as Toyota, Honda, Volkswagen, Kia and Nissan.
Unfortunately, Ford isnt best positioned because they have the
highest wages because they didnt have the Tier 2 hiring cap removed
because of bankruptcy. Therefore, they have a limit to the amount of Tier 2
employees at a little over 20%. Theyve had to roll over many Tier 2 to Tier 1
because of increased business and retirements.
UAW President, Dennis Williams stated, He and his leadership team
will face Detroit 3 bargaining counterparts not only concerned about the
competitiveness and labor costs of their domestic rivals but non-union U.S.
auto plants operated by German, Japanese and Korean carmakers. (CAR
estimates that GM and Ford have hourly labor costs that average about $58
vs. the high $40s for FCA and transplant automakers. (This information is

Comprehensive Strategy Assessment

critical for the Patterned Bargaining), (Barkholz, D., 2015) (insightful

analysis)
The second strategic issue is the ability to keep up with Technology
and implement the current Vehicle 2 Vehicle communication technology in
current production vehicles. My concern is their ability to improve
Hybrid/Fuel- Cell batteries and have cars averaging 55.8 MPG by 2025. The
critical issue here is time. They must meet the new government cafe
requirements and they arent even in the top 6 for fuel efficiency. Ford is
considering using all aluminum frames but I see this becoming an issue with
salted roads in the rust belt.
Based on 2014, CAFE requirements Ford will be on target by 2021 for
40 MPG on the Fiesta but they arent even close to meeting the 2025 goal at
this time. Tesla Motors and Toyota have vehicles that meet the CAF
requirements now. Tesla is all electric and meets the 2025 caf standards
now without a transmission and state of the art V2V technology already in
the production vehicle model S. Below is an example of where Ford stands
with competitors in 2014.

Comprehensive Strategy Assessment

Referenced from: http://blog.caranddriver.com/the-54-5-mpg-cafetarget-looms-large-heres-how-companies-currently-stack-up/

My third concern is the lack of communication between business
sectors, suppliers and R & D departments. Theres a need for a direct link
with IT, new vehicle technology, software, manufacturing etc and this
information could improve lead times, enhance systems and design to build
times would be shorter.
Ford wants to align their information strategy with their business
strategy under their One IT Plan. So far they have merged all of Fords
global IT centers into a single IT center. The Plan implemented Informational
Strategy changes in five areas:

Reorganizing IT Organization
Improving Collaboration
Enabling Mobility
Helping in Product Development
Increasing Use of Analytics to re-organize globally

Comprehensive Strategy Assessment

Recommendations
First would be to agree to a win/ win contract with the UAW and truly
have a One Ford where everyone is aligned and works towards the same
corporate strategy. Employees have taken concessions in pay, allowed a two
tier pay system, gave up benefits, less paid holidays, unfair corporate
seniority and have accepted harsher attendance policies. Ford has been
profitable year over year over the last four year contract. I think to avoid
strikes, shut downs and outsourcing, Ford needs to give back a little.
This will appease workers, keep production intact, shareholders will
lose short term but the long term affects will be beneficial to the company.
The new contract would align with Fords business strategy and competitive
advantage primarily concerning costs.
My other recommendation is to collaborate with IT and use the
Technology Acceptance Model (TAM), developed for explaining and
predicting computer usage behavior. It specifies the relationship between
system design features, perceived ease of use, perceived usefulness,
attitude towards using the technology and the actual usage behavior
(Prakash, A., 2013)

TAM will be used for Fords Enable Mobility

program that allows employees to access ePOD (email on personally

owned devices) to access email and Fords network so there isnt a break in
communications when employees are away from their facility but need to
stay connected to all company networks, R & D, manufacturing, suppliers,
logistics and IT. This will eliminate a lot of downtime (hence: cut costs).
This small systems change will affect Fords culture and structure. It
will allow faster collaboration within and among different business sectors
and use newer technology that many of the millennial employees are familiar
with. It will also improve economies of scale.
Another application would be to use the Enable Mobility to access
corporate social networks and use social media as a way to advertise.
Keeping new and existing customers informed about all of the exciting things
Ford is doing. This approach would be similar to what Tesla Motors is doing.
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Comprehensive Strategy Assessment

They use social media and the media so much to their advantage, they pay
zero for advertising.
My third recommendation is to collaborate with other suppliers and
manufacturers and continue using QOS, within their organizational structure
and management system, Ford has continued to find ways to reduce costs by
outsourcing activities and or collaborating with suppliers and other
manufacturers.
Finally, my last recommendation has to do with the Financial Services
sector. It operates through two segments: Ford Credit and Other Financial
Services.

Ford Credit segment provides vehicle related financing, leasing, and

insurance through the company's wholly owned subsidiary Ford

Motor Credit Co. LLC.

Other Financial Services segment includes a variety of businesses,
including holding companies and real estate. (money.cnn.com)

By collaborating and developing strategic partnerships Ford can

increase sales and retain
customers by offering the best rates and financing based on customer
needs.

Strategic Position, Direction, Decisions, and Activities of the

organization
Fords business strategy and corporate strategy recommendations
validate the strategic frame because their frames geographical strategy is
that it competes globally (examples: Labor, Benefits, Manufacturing and
Logistics) and the vertical scope is products that can be purchased by
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Comprehensive Strategy Assessment

dealerships, vehicle financing and their vertically integrated supply chain

system. Also, aligning with corporate strategy would be the product scope of
the Enable Mobility program and the IT and use the Technology Acceptance
Model (TAM). All clearly indicating that each business sector has an impact
on the entire organization, Such as:

Organizational Impact Issues strategic position and direction of

the firm.
Competitive Advantage Issues. affecting sustainability
Mitigating Ethical Dilemmas. UAW contract and Ford Credit Financing

I strongly recommend Ford leadership to decide to follow my strategic

recommendations and direct and organize thru the One Ford program a
plan for implementation as soon as possible. I also believe that government
regulations and special interest groups will have a major effect on Ford.
Theyll need to stay active politically to help maintain their strategies going
forward. For further clarification please refer back to my previous executive
summaries:

Strategic Frame Assessment, 04/19/2015

Strategic Fit of the Firm Assessment, 05/03/2015
Strategic Fit With the Industry Environment Assessment,
5/10/2015

Hello Kelly,
Yours is a professional, expertly written. Comprehensive Strategy Assessment of
Ford that exemplifies executive level communication. I believe it is one of the best I
have seen in this course, and may better than some I have seen from consultants.

Comprehensive Strategy Assessment

I especially like your detail, analysis and synthesis of strategic issues; it was well
supported, organized, and leveraged the previous reports.
Your strategic recommendations are comprehensive, feasible, and demonstrate
vision with precisionimpressive.
Do keep the information from this course handy, not only for capstone, but as a
template for how to conduct a strategic assessment for the operations side of
Lowes, or a future client.
If you get a chance, please complete the EOC survey, and if you liked the course
and instructor, please say something goodThanks.
Dr. Vincent DeFazio

References:
Barkholz, D., (2015, March 25) UAW to press for 'pattern' labor deals in
Detroit 3 talks, Williams says, Referenced from:
http://www.autonews.com/article/20150325/OEM01/150329903/uaw-topress-for-pattern-labor-deals-in-detroit-3-talks-williams-says
Eisenstein, P., (2011, May 6) With New Strategy, Ford Aims at the Top,
Referenced from: http://www.nbcnews.com/id/43391595/ns/businessthe_driver_seat/t/new-strategy-ford-aims-top/#.VU-tAflViko
Henderson, R., (2013, March 13) Lessons in Strategy from Ford Motor
Company. Referenced from: http://www.alliance1.org/magazine/issue22013/lessons-strategy-ford-motor-company
http://money.cnn.com/quote/profile/profile.html?symb=F
Grant, R. M., & Jordan, J. (2012). Foundations of strategy. West Sussex, UK:
Wiley & Sons.
http://corporate.ford.com/microsites/sustainability-report-2013-14/blueprintstrategy.html
Thompson, A., Peteraf, M., Gamble, J., Strictland, A. J., (2013) Crafting &
Executing Strategy: The Quest for Competitive Advantage: Concepts and
Cases Referenced from:
http://w3.salemstate.edu/~edesmarais/courses/470general/semesters/Archiv
ed%20semesters/Fall%202010/3.%20Evaluating%20a%20Company%27s
%20External%20Environment.pdf
http://blog.caranddriver.com/the-54-5-mpg-cafe-target-looms-large-hereshow-companies-currently-stack-up/

Comprehensive Strategy Assessment

Burden, M., Wayland, M., (2014) UAW workers want two-tier gone, seek
raises, Referenced from:
http://www.detroitnews.com/story/business/autos/2014/12/12/uaw-two-tierworkers-raises/20337177/
http://www.slideshare.net/raprakashh/implementation-business-strategyorganizational-strategy-and-information-strategy-in-ford-motor-company

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