Ford Motor Company Operations

Management, 10 Decisions, Productivity

UPDATED ONUPDATED ON FEBRUARY 5, 2017 BY DANIEL KISSINGER

Ford Shelby GR-1

Concept car. Ford Motor Company properly applies the 10 strategic decisions of
operations management to achieve high productivity in all business areas. (Photo:
Public Domain)
In 2008, Ford Motor Company’s operations management (OM) was reformed along with
massive changes throughout the organization. Under the One Ford plan of then CEO
Alan Mulally, Ford’s operations management became more effective in addressing the
10 strategic decision areas. As one of the biggest firms in the global automotive
industry, Ford maintains operations management strategies that deal with a variety of
business conditions based on different market contexts. As such, in the 10 strategic
decisions of operations management, Ford must ensure flexibility along with
consistency throughout its global organization.

Ford applies the 10 strategic decisions of operations management with emphasis on

consistency and high productivity. Ford also maintains a considerable degree of
flexibility to address business variations in different areas around the world.

Ford Motor Company’s Operations Management, 10

Decision Areas
1. Design of Goods and Services. Ford’s goal in this strategic decision area of
operations management is to achieve global consistency. The One Ford
mission requires such consistency in goods and services. This condition contributes to
Ford’s financial efficiency and its ability to optimize customer satisfaction.
2. Quality Management. The main concern in this strategic decision area of operations
management is the satisfaction of quality expectations. Ford Motor Company does so
through standard quality assurance practices. The firm also conducts random batch
tests on its products to ensure quality. Quality evaluation also involves data Ford
acquires through market research to identify customers’ quality expectations.

3. Process and Capacity Design. This strategic decision area of operations

management supports production goals. Ford pioneered the assembly line method,
which maximizes production capacity. Also, Ford continues to improve its capacity by
developing new facilities for its production network and supply chain.

4. Location Strategy. Ford Motor Company’s aim in this strategic decision area of
operations management is to ensure strategic benefits of its facility locations. The
company’s strategy involves regional production facilities, such as the Ford factories in
Germany. On the other hand, dealership locations are based on market size.

5. Layout Design and Strategy. In this strategic decision area of operations

management, the objective is to maximize efficiency of workflows and resources. Ford
addresses this objective through automation of production processes, such as through
the use of robotics in production facilities.

6. Job Design and Human Resources. Ford has the goal of maximizing human
resource effectiveness and efficiency in this strategic decision area of operations
management. Ford has a number of programs to support HR capacity and employee
satisfaction. The company ensures continuous improvement and personnel
development in its strategies.

7. Supply Chain Management. This strategic decision area of operations management

focuses on streamlining and cost-effectiveness in the supply chain. Ford’s supply chain
is global and involves company-owned production facilities, as well as third parties. The
company-owned facilities, such as those in the Ford River Rouge Complex in Michigan,
are a result of Ford’s backward vertical integration strategy. This strategy empowers
Ford to control the supply of some of the materials used for manufacturing its vehicles.

8. Inventory Management. Ford’s inventory management supports just-in-time

manufacturing methods, which require continuous monitoring to adjust the inventory
and minimize its costs. However, in this strategic decision area of operations
management, Ford’s actual inventory management performance also points to market-
based inventory decisions. Different markets present different challenges, such that
Ford has varying inventory management practices in different markets.

9. Scheduling. In this strategic decision area of operations management, the short-term

and intermediate schedules of processes and resources are considered. Ford
 addresses these concerns through automated scheduling in its production facilities, and
semi-automated scheduling in its offices, such as corporate offices and regional offices.

10. Maintenance. The goal in this strategic decision area of operations management is
to maintain adequate business processes to satisfy demand. Ford addresses this goal
through a combination of strategies for HR, IT, manufacturing and other areas, as well
as maintenance teams for facilities and other assets.

Productivity at Ford Motor Company

Ford Motor Company’s operations management addresses productivity goals for the 10
strategic decision areas. Since the firm has various operations and products, a wide
array of productivity measures are used. Some of Ford’s productivity criteria are as
follows:

1. Number of service jobs completed per day (aftersales service productivity)

2. Number of vehicles rolled out per day (manufacturing productivity)
3. Number of applications processed per day (Ford Motor Credit Company productivity)

Ford Motor Company’s Stakeholders: A CSR

Analysis
UPDATED ONUPDATED ON FEBRUARY 5, 2017 BY ANDREW THOMPSON

A 2009-2011 Ford
Fiesta (WS) Zetec 5-door hatchback. Ford Motor Company’s diverse corporate social
responsibility programs effectively satisfy stakeholders’ interests. (Photo: Public
Domain)
Ford Motor Company’s corporate social responsibility (CSR) programs are designed to
respond to the demands and interests of the firm’s stakeholders. Ford impacts these
stakeholder groups through its business activities. At the same time, the stakeholders
are significant because they affect the company through their purchases and
 sociopolitical pressure. As one of the biggest U.S.-based automobile manufacturers,
Ford must address the needs of its stakeholders to maintain its industry position. Thus,
improving corporate social responsibility efforts can help sustain Ford’s long-term
development toward its aim of becoming the global market leader.

Ford Motor Company’s comprehensive corporate social responsibility (CSR) programs

address stakeholders’ interests and optimize the firm’s relations with target customers
around the world.

Ford Motor Company’s Stakeholder Groups & CSR

Initiatives
Ford’s stakeholders are comprehensively addressed through various corporate social
responsibility initiatives and programs. The following is Ford’s prioritization of its
stakeholders, with customers having the highest priority:

1. Customers (Ford’s top-priority stakeholders)

2. Employees
3. Investors
4. Communities (Ford’s least-priority stakeholders)

Customers. Ford’s top-priority stakeholders are its customers. The interests of this
stakeholder group are high quality products and services, especially after-sales
services. Customers are significant stakeholders because they directly determine the
company’s revenues. Ford’s corporate social responsibility efforts for this stakeholder
group are as follows:

1. Product innovation for quality, fuel economy, and safety

2. Ford Smart Mobility
3. Ford Driving Skills for Life program

Ford Motor Company continues to innovate its products for quality, fuel economy, and
safety to maximize satisfaction among customers as stakeholders. Majority of the firm’s
2015 vehicles received five-star ratings from the United States New Car Assessment
Program (NCAP). Also, the Ford Smart Mobility program aims to increase mobility and
provide autonomous/driverless vehicles. In addition, the Ford Driving Skills for Life free
driver education program helps novice drivers develop skills for safe and efficient
driving. Thus, Ford’s corporate social responsibility programs extend beyond just
offering vehicles, and improve the driving skills of customers as the top stakeholders.

Employees. Ford considers its employees as second-level priority stakeholders. This

stakeholder group is interested in career development, high wages, and equal treatment
and opportunities. Employees are significant stakeholders because they influence the
production and service capacity of the business. For instance, even a small decline in
 this stakeholder group leads to a proportionate decline in the company’s productivity
and performance. To address the interests of employees as stakeholders, Ford has the
following corporate social responsibility initiatives:

1. Sustainable Workforce
2. Product Online Training
3. Global Learning and Development
4. Global leadership development programs

Ford Motor Company has reformed its workplace safety policies through time to protect
this stakeholder group and ensure regulatory compliance. The firm’s Sustainable
Workforce initiative aims to optimize employees’ health, efficiency and productivity. For
instance, Ford’s new global safety standards have reduced workplace injuries by 90%
since 2000. The company also offers online product training to keep this stakeholder
group always up-to-date and capable of doing their jobs. In addition, the firm’s corporate
social responsibility efforts include the Global Learning and Development program,
which offers continuing education through classroom-based and online courses, as well
as mentoring and shadowing to maximize performance and satisfaction in the
stakeholder group. Moreover, Ford has global leadership and development programs
like (a) the Global Leadership Summit for executives and general managers, (b) the
Global Executive Leadership Program for directors and senior managers, (c) the
Experienced Leader Program for middle managers, and (d) the Salaried Supervisor
Institute/Program (SSI) for new or experienced leaders. These programs reflect Ford’s
corporate social responsibility and dedication to support the interests of employees as
one of the company’s most important stakeholder groups.

Investors. Ford Motor Company’s investors are interested in maximum profits and
business stability. These stakeholders are significant because they affect the firm’s
capital. To address the interests of this stakeholder group, Ford implemented the One
Ford plan in 2008 under former CEO Alan Mulally’s leadership to achieve consistency
and synergy in its global organization. The One Ford plan reduces costs and maximizes
the company’s profits worldwide. This effort is part of Ford’s corporate social
responsibility strategy to improve its performance, especially in the aftermath of the
recession of the late 2000s.

Communities. Ford has a number of major corporate social responsibility programs for
communities as stakeholders. The interests of this stakeholder group include support for
community development, as well as environmental conservation. Communities are
significant stakeholders because they can influence the perceptions of Ford’s
customers. These interests are addressed through the following corporate social
responsibility programs at the company:

1. Supplier sustainability training

2. Ford Motor Company Fund and Community Services
3. Ford Volunteer Corps
4. Ford Driving Skills for Life program

Ford Motor Company provides sustainability training to its suppliers to improve their
sustainability performance, which is linked to environmental impact. Also, the Ford
Motor Company Fund and Community Services is the company’s nonprofit organization
for a wide variety of philanthropic efforts for this stakeholder group. For example, the
firm’s corporate social responsibility efforts provide investments for community irrigation,
as well as education programs in rural areas. In relation, the Ford Volunteer Corps,
mainly composed of the company’s employees, supports community development.
Moreover, the Ford Driving Skills for Life program also ensures that driving does not
create issues with community safety. Thus, the company’s corporate social
responsibility activities for these stakeholders are diverse.

Ford Motor Company’s CSR Performance in

Addressing Stakeholders’ Interests
Ford has excellent corporate social responsibility performance. The company has major
programs and strategies to address the interests of its stakeholders. The improvement
in the company’s performance following the 2008 reform under the One Ford plan is of
note. However, for long-term sustainable operations, the company must emphasize
more of product development and cost minimization in its corporate social responsibility
efforts. For example, more affordable, more energy-efficient, hybrid or electric vehicles
can increase customer satisfaction and add to the company’s business performance.

Ford Motor Company PESTEL/PESTLE

Analysis
UPDATED ONUPDATED ON FEBRUARY 5, 2017 BY CHRISTINE ROWLAND

A Ford Edge plug-in

hydrogen hybrid. Ford Motor Company’s PESTEL/PESTLE analysis indicates major
 opportunities for global growth based on various external factors. (Photo: Public
Domain)
Ford Motor Company’s strategies reflect the challenges the firm faces, as identified in
this PESTEL/PESTLE analysis. A PESTEL/PESTLE analysis identifies the most
significant opportunities and threats, based on the external factors in the company’s
remote or macro-environment. Ford’s environment refers to the global automotive
industry. Each external factor presents an opportunity or threat that the business must
address through strategic action. As one of the top five players in the global automotive
market, Ford ensures that it addresses the issues in its PESTEL/PESTLE analysis.
These issues are a direct determinant of the organizational development trajectory of
Ford.

Ford Motor Company’s PESTEL/PESTLE analysis shows that the firm has significant
potential for improvement, based on opportunities in the remote or macro-environment
of the business.

Political Factors Affecting Ford Motor Company’s

Business
Ford’s business must address the political aspect as an external influence.
Governmental impact on firms’ remote or macro-environment is considered in this
component of the PESTEL/PESTLE analysis. The following are the political factors
significantly affecting Ford:

1. Governmental support for technological innovation (opportunity)

2. Increasing international trade agreements (opportunity)
3. Increasing governmental effort for infrastructure in developing countries (opportunity)

Governments are increasingly supporting technological innovation to enhance economic

conditions. This situation provides opportunity for Ford to use governmental incentives
for innovation, environmentally friendly products and sustainability. Ford also has the
opportunity to expand its operations based on trade agreements, which make it easier
for companies to enter foreign markets. In addition, high-growth developing countries
are improving their infrastructure, including transportation infrastructure. This
remote/macro-environment condition contributes to the increasing demand for vehicles
in these countries, thereby giving Ford Motor Company the opportunity to grow
internationally. This component of the PESTEL/PESTLE analysis shows that the
political external factors create significant opportunities for Ford’s growth and
expansion.

Economic Factors Important to Ford

Ford must always keep an eye on changing economic conditions. This component of
the PESTEL/PESTLE analysis identifies the influence of the economy on the firm’s
 remote or macro-environment. The following are the economic external factors
significant to Ford:

1. Growth of U.S. economy (opportunity)

2. High growth rate of developing markets (opportunity)
3. Strengthening U.S. dollar (threat)

Ford has the opportunity to grow based on the slow but notable growth of the U.S.
economy, which is the company’s biggest market. Ford also has the opportunity to grow
in high-potential developing countries, where the company still has limited presence.
However, the strengthening U.S. dollar is an external factor that reduces profit margins
and the attractiveness of Ford’s products, considering that many of the firm’s raw
materials and automotive parts are produced in the United States. Such remote/macro-
environment condition indicates that Ford must improve business efficiencies to
maximize the opportunities in foreign markets identified in this component of the
PESTEL/PESTLE analysis.

Social/Sociocultural Factors Influencing Ford’s

Environment
Ford Motor Company’s remote or macro-environment is subject to the influence of
social conditions. The impact of sociocultural trends is considered in this component of
the PESTEL/PESTLE analysis. The following are the social external factors most
important to Ford:

1. Increasing demand for hybrid and electric automobiles (opportunity)

2. Moderate attitude about customer service (opportunity)
3. Increasing wealth gap (opportunity & threat)

Ford can grow by providing products that address the increasing demand for hybrid and
electric automobiles. Ford also has the opportunity to improve its services, especially
aftersales services to attract more customers. However the increasing wealth gap is a
remote/macro-economic environment condition that threatens Ford’s Lincoln
automobiles, which are luxury products with high prices. Based on this component of
the PESTEL/PESTLE analysis, Ford’s intensive growth strategies need to emphasize
more on product innovation to satisfy changing customer preferences and address the
sociocultural external factors in its business.

Technological Factors in Ford’s Business

Technologies enable Ford to develop its potential and compete in the remote/macro-
environment. This component of the PESTEL/PESTLE analysis deals with the
technological changes and conditions that affect firms. The most significant
technological external factors in Ford’s business are as follows:
1. Rising use of mobile computing (opportunity)
2. Increasing use of online fulfillment services (opportunity)
3. Limited network of alternative fuel stations (threat)

The rising use of mobile computing is an external factor that creates opportunities for
Ford Motor Company to grow through mobile service support and mobile marketing.
Also, the firm can improve its performance through enhanced online fulfillment services.
For example, Ford parts can be delivered to customers through these fulfillment
services. On the other hand, the company’s potential growth in providing alternative-fuel
vehicles may suffer because of the limited alternative fuel stations. Thus, based on the
technological component of the PESTEL/PESTLE analysis, Ford needs to focus on
service improvement and technological enhancement to ensure competitiveness
despite challenges in its remote or macro-environment.

Ecological/Environmental Factors
Ecological concerns partly determine the conditions of Ford’s remote or macro-
environment. Issues regarding the natural environment are considered in this
component of the PESTEL/PESTLE analysis. The most significant ecological external
factors in Ford’s business are as follows:

1. Climate change (opportunity)

2. Low-carbon trend (opportunity)
3. Declining oil reserves (opportunity)

Climate change is an external factor that creates opportunities for Ford to grow through
products that help in environmental conservation. The same effort could take advantage
of the low-carbon trend. Also, Ford can offer new products that use alternative fuels or
electricity to address the impact of the declining oil reserves on the remote or macro-
environment of auto firms. Thus, based on the ecological component of the
PESTEL/PESTLE analysis, Ford must emphasize product innovation to improve its
business performance.

Legal Factors
Ford’s business must satisfy legal requirements. The effects of regulations on the
remote or macro-environment are identified in this component of the PESTEL/PESTLE
analysis. The following are the legal external factors notable in Ford’s business:

1. Environmental protection regulation (opportunity)

2. Increasing safety regulations (opportunity)
3. Increasing intellectual property laws worldwide (opportunity)
Ford can improve its business sustainability to address the effect of environmental
protection regulation. Also, Ford can improve product design to take the opportunity
based on safety regulations. Moreover, increasing intellectual property laws are
improving the remote/macro-environment of Ford by creating more protection for their
intellectual properties and rights. This component of the PESTEL/PESTLE analysis
shows that Ford can grow based on changes in the external regulatory landscape.

Ford Motor Company’s PESTEL/PESTLE Analysis –

Recommendations
Ford has major opportunities for growth and improvement, as shown in this
PESTEL/PESTLE analysis. Ford can enhance its product innovation to address various
opportunities linked to climate change, demand for hybrid and electric automobiles, and
related external factors. Ford’s international remote/macro-environment also offers
opportunities for growth through expansion, especially in high-growth developing
economies. Thus, Ford must implement strategies to globally expand based on these
opportunities.

Ford Motor Company’s Marketing Mix (4Ps) Analysis

UPDATED ONUPDATED ON FEBRUARY 5, 2017 BY EDWARD FERGUSON

A 2014 Ford Transit

(VO) 350E. Ford Motor Company’s marketing mix combines different strategies and tactics to
maximize the firm’s performance in the global auto industry. (Photo: Public Domain)

Ford Motor Company’s marketing mix (4Ps) supports the firm’s ability to connect with its
target customers. The marketing mix refers to approaches used to implement a
marketing plan. In Ford’s case, the target market is highly varied and spans the global
 economy. As such, the company’s marketing mix is also comprehensive. The firm is the
second largest U.S.-based automaker and the fifth in the world. With this position, a
comprehensive marketing mix is critical to maintaining its performance. This marketing
mix and related strategies also evolve through time to ensure Ford’s competitiveness in
reaching its target markets around the world.

Ford Motor Company’s marketing mix enables the firm to reach its target customers
worldwide. This marketing mix and associated strategic actions change over time to
match the firm’s markets and industry environment.

Ford Motor Company’s Products (Product Mix)

Ford’s offers a considerable variety of products. Organizational outputs are included in

this element of the marketing mix. Ford’s main product lines are as follows:

1. Automobiles
2. Trucks
3. Buses
4. Tractors
5. Automotive parts/components
6. Financial services
7. Vehicle leasing

Ford Motor Company is popularly known for its automobiles, such as sedans. However,
the firm also has trucks, buses, and tractors in its product mix. In addition, the firm’s
Motorcraft brand includes automotive parts for most of Ford’s vehicles, although some
of these parts are also suited for the vehicles of other firms like Toyota. The Ford Motor
Credit Company is Ford’s subsidiary that offers financing for its customers. The firm
also provides vehicle leasing mainly to corporate clients. Thus, the diversity of Ford’s
product mix is shown in this element of the marketing mix.

Place/Distribution in Ford’s Marketing Mix

Ford uses typical places or venues used for its strategy of product distribution. This
element of the marketing mix focuses on the venues or locations used to reach and sell
to customers. In Ford’s case, the following are the main places used for product
distribution:

1. Dealerships
2. Auto parts stores
3. Ford Parts website
4. Ford Motor Credit Company

Ford dealerships are the most prominent places for distributing most of its products. The
majority of sales revenues are achieved through these dealerships. The company’s
 automotive parts/components are available in third-party auto parts stores, as well as
the Ford Parts website. In addition, customers can access the firm’s financial services at
the Ford Motor Credit Company offices or through personnel at the dealerships. This
element of the marketing mix shows Ford’s strategy that utilizes different company-
owned facilities and third parties to generate sales.

Ford’s Promotion (Promotional Mix)

Ford Motor Company promotes it products through all of the conventional tactics. The
activities used to promote goods and services are considered in this element of the
marketing mix. Ford’s promotion activities are as follows, arranged according to
significance:

1. Advertising
2. Personal selling
3. Direct selling
4. Sales promotions
5. Public relations

Ford uses advertising as the main tactic to promote its products. The company’s
television advertisements and online advertisements are especially prominent. In
addition, agents/sales personnel use personal selling to persuade buyers at Ford
dealerships and other venues. In some cases, the company applies direct selling,
usually to corporate clients who lease vehicles from the firm. This marketing mix also
involves sales promotion, usually through special offers, discounts, and trade-ins.
Moreover, corporate social responsibility programs and sponsorship of sports events
and facilities enable the firm to promote its business and products to a wider population
of potential customers. Thus, this element of the marketing mix shows that Ford
effectively applies all of the marketing communications tactics to promote its goods and
services.

Ford’s Prices and Pricing Strategies

Ford’s prices vary, depending on the market. This element of the marketing mix involves
the strategies used to determine appropriate prices for products, based on market and
business conditions. Ford applies two main pricing strategies:

1. Market-oriented pricing strategy

2. Premium pricing strategy

In the market-oriented pricing strategy, Ford’s goal is to set prices that are appropriate
to market conditions, with consideration for competition, demand, consumer perception,
and other variables. Ford applies this pricing strategy for most of its products, such as
sedans and trucks. On the other hand, the company applies the premium pricing
strategy to set higher prices for some of its products. This pricing strategy is used for
most of the Lincoln automobiles, which are Ford’s luxury line of vehicles. This element
of the marketing mix emphasizes the importance of different pricing strategies to
support Ford’s efforts to secure different segments of the market.

Ford Motor Company: Five Forces Analysis (Porter’s Model)

UPDATED ONUPDATED ON FEBRUARY 5, 2017 BY EDWARD FERGUSON

A 2013 Ford Fusion.

The Five Forces analysis of Ford Motor Company reveals that competition is the most important
concern in the firm’s industry environment. (Photo: Public Domain)

Ford Motor Company maintains its position as one of the biggest automobile
manufacturers in the world by reforming its strategies to address the issues shown in
this Five Forces analysis. Michael Porter developed the Five Forces analysis model for
analyzing the external factors in firms’ industry environments. Ford needs to develop
policies and approaches that respond to the most significant forces based on the
external factors in the global automotive industry. This Five Forces analysis of Ford
Motor Company identifies the most important external factors and how they impact the
business, thereby providing input for managerial decision-making.

Ford Motor Company needs to prioritize the most significant of the Five Forces, which in
this analysis is shown to be competitive rivalry. The other forces are also significant but
with lower intensities of impact on Ford.

Overview: Ford Motor Company’s Five Forces Analysis

Ford Motor Company’s Five Forces analysis shows that competitive rivalry or
competition is the most significant external force in the automotive industry
environment. The following are the intensities of the five forces in influencing Ford’s
business:
1. Competitive rivalry or competition (strong force)
2. Bargaining power of buyers or customers (moderate force)
3. Bargaining power of suppliers (moderate force)
4. Threat of substitutes or substitution (moderate force)
5. Threat of new entrants or new entry (weak force)

The results of the Five Forces analysis of Ford Motor Company show that competition
or competitive rivalry is the most significant issue for the business. For long-term
viability in the automotive industry environment, Ford must prioritize strategic solutions
to develop competitive advantage. For example, innovative products can boost the
company’s sales performance. As such, Ford must prioritize R&D investment to
maximize innovation processes.

Competitive Rivalry or Competition with Ford (Strong Force)

Ford Motor Company faces tough competition. This aspect of the Five Forces analysis
refers to competing firms that influence the industry environment. The following are the
external factors that contribute to the strong force of competitive rivalry against Ford:

 High aggressiveness of firms (strong force)

 High exit barriers (strong force)
 Moderate number of firms (moderate force)

Ford needs to compete against top players (e.g. Toyota) that aggressively innovate and
market their products. Also, the automotive industry has high exit barriers, which means
that firms would rather keep competing with Ford than to close their business, because
of the high costs and investments. Such a condition exerts a strong force of competition
against Ford. In addition, Ford must compete against a moderate number of firms,
especially a few large ones like General Motors. Based on this aspect of the Five
Forces analysis, Ford must maximize its competitive advantage to address the external
factors linked to competition.

Bargaining Power of Ford’s Customers/Buyers (Moderate Force)

Ford’s customers significantly influence the business. This aspect of the Five Forces
analysis pertains to the effects of buyers on businesses and the industry environment.
The external factors that contribute to the moderate bargaining power of Ford’s
customers are as follows:

 Moderate switching costs (moderate force)

 Moderate size of individual purchases (moderate force)
 Moderate availability of substitutes (moderate force)

Ford Motor Company’s customers face moderate switching costs, which are the
consequences of moving from one firm to another. In this case, customers can easily
transfer to other firms, although infrequently because automobiles are big-ticket items.
 Also, each purchase of Ford’s products is moderate in terms of its price and contribution
to the company’s revenues. Thus, even a small change in customer’s demand can have
significant consequences on Ford. In addition, the moderate availability of substitutes
gives customers the option to move away from Ford. Thus, Ford Motor Company must
maximize customer satisfaction to address the external factors in this aspect of the Five
Forces analysis.

Bargaining Power of Ford’s Suppliers (Moderate Force)

Suppliers exert moderate influence on Ford Motor Company. The impact of suppliers
and their demands on firms are considered in this aspect of the Five Forces analysis. In
Ford’s case, the following external factors contribute to the moderate bargaining power
of suppliers:

 Moderate overall supply (moderate force)

 Moderate population of suppliers (moderate force)
 Low forward vertical integration (weak force)

The moderate overall supply and moderate population of suppliers give suppliers
significant but limited bargaining power on firms like Ford. Also, most of these suppliers
have low forward vertical integration, which means that they do not own or control the
distribution and sale of their products to Ford. The suppliers’ bargaining power is further
weakened because of Ford’s backward vertical integration through the Ford River
Rouge Complex. Through the Complex, Ford produces some of the materials it uses to
manufacture cars and related finished products. Thus, this aspect of the Five Forces
analysis shows that Ford must consider the significant but limited external factors linked
to suppliers’ effect on the business.

Threat of Substitutes or Substitution (Moderate Force)

Ford Motor Company experiences the effects of the substitutes to its products. This
aspect of the Five Forces analysis refers to the extent substitution threatens firms and
the industry environment. The following external factors contribute to the moderate
threat of substitution against Ford:

 Moderate availability of substitutes (moderate force)

 Moderate switching costs (moderate force)
 Low performance of substitutes (weak force)

There are considerable substitutes to Ford’s products, including public transportation

and bicycles. However, these substitutes are not always available or appropriate in
certain areas or situations. In addition, the switching costs are moderate because, even
through Ford’s customers can shift to using these substitutes, they cannot easily do so
when they are still paying for their car loans. Also, in many instances, these substitutes
have lower performance than Ford’s products in terms of convenience and safety.
 Based on this aspect of the Five Forces analysis, Ford needs to address suppliers as a
second-priority external threat.

Threat of New Entrants or New Entry (Weak Force)

Ford Motor Company feels the effects of new entrants on its industry environment. The
impact of new firms is considered in this aspect of the Five Forces analysis. The
external factors that contribute to the weak threat of new entrants against Ford are as
follows:

 High capital costs (weak force)

 High cost of doing business (weak force)
 High cost of brand development (weak force)

Companies like Ford commit to huge spending to set up and maintain their businesses
and facilities. These costs are a barrier to entry that weakens the threat of new entrants.
In addition, it is costly to develop a strong brand comparable to Ford’s, thereby making it
difficult for new entrants to effectively compete against industry giants. Based on this
aspect of the Five Forces analysis, external factors present only a weak threat against
Ford.

Ford Motor Company SWOT Analysis

UPDATED ONUPDATED ON FEBRUARY 5, 2017 BY CHRISTINE ROWLAND

A 2015 Ford EcoSport

(BK) Trend. Ford Motor Company’s SWOT analysis highlights the need for innovation and
expansion to grow the business. (Photo: Public Domain)

Ford Motor Company’s success in maintaining its position as the fifth largest automobile
manufacturer in the world is partly based on its ability to address the concerns raised in
 this SWOT analysis. A SWOT analysis identifies the strengths that a firm can use to
overcome its weaknesses, exploit opportunities, and address threats. Ford’s SWOT
analysis shows the main issues that the company must deal with to improve its
performance. The firm’s aim is to become the leader in the global automotive industry.
To achieve this goal, Ford’s strategic formulation process must include the issues in its
SWOT analysis.

This SWOT analysis of Ford Motor Company illustrates that the firm is capable of
addressing the internal and external factors in its business. Focus on innovation and
expansion can support the company’s continued growth and performance improvement.

Ford Motor Company’s Strengths (Internal Strategic Factors)

Ford’s strengths are associated with its brand, global operations, and research and
development. This part of the SWOT analysis presents the organizational
characteristics (internal strategic factors) that support business effectiveness. Ford
Motor Company’s main strengths are as follows:

1. Strong brand image

2. Global supply chain
3. Effective innovation processes

As one of the top players in the global automotive industry, Ford has a strong brand
image that contributes to product attractiveness and customer loyalty. Also, Ford has a
global supply chain that supports its operations around the world. Another strength is
the company’s innovation processes that are now more effective following the launch of
the One Ford plan in 2008. In this part of the SWOT analysis of Ford, evolving strengths
support the company’s growth.

Ford’s Weaknesses (Internal Strategic Factors)

Ford’s weaknesses are based on the company’s limitations compared to competitors.

This part of the SWOT analysis shows the organizational constraints or inadequacies,
which are internal strategic factors that reduce business potential. Ford’s major
weaknesses are as follows:

1. Limited global scope of production network

2. Higher costs compared to competitors
3. Slow innovation processes

One of Ford Motor Company’s weaknesses is the limitation of its network of production
facilities, especially when compared to Toyota’s expansive global network. Ford also
closed down some of its production facilities in Europe in recent years, further
worsening this weakness. In addition, compared to competitors like Toyota, Ford’s costs
and prices are relatively higher, and its innovation processes are relatively slower to
 respond to new or emerging trends even though the company has increased its
innovation effectiveness. Thus, this part of Ford’s SWOT analysis indicates that the
company is relatively weak compared to other top players, especially Toyota.

Opportunities for Ford (External Strategic Factors)

Ford’s opportunities are linked to growth and expansion. In this part of the SWOT
analysis, the focus is on market or industry characteristics (external strategic factors)
that support business growth. The following are Ford’s main opportunities:

1. Global expansion through market penetration

2. Growth through product development
3. Cost reduction through strategic supply chain management

Ford Motor Company has the opportunity to grow and expand through market
penetration (e.g. more dealerships and improved marketing) and product development
(e.g. innovation to introduce new products to satisfy environmental concerns). Ford also
has the opportunity to improve its financial standing by expanding its supply chain to
achieve better economies of scale and reduce production costs. In this part of the
SWOT analysis, Ford has opportunities for growth through operational expansion and
innovation.

Threats Facing Ford (External Strategic Factors)

The threats against Ford are based on competition and global oil prices. This part of the
SWOT analysis presents the external strategic factors that could limit or reduce
business performance. The following are the threats against Ford:

1. Aggressive competitive rivalry

2. New entry of high-tech firms
3. Fluctuating oil prices

Ford experiences the threat of competitors like General Motors and Toyota, which
engage in aggressive marketing and innovation. There is also the threat of technology
firms like Google and Apple in their efforts to make driverless cars that could compete
against Ford’s products. Moreover, oil price instability threatens the sales performance
of Ford products, the majority of which have internal combustion engines. Thus, this
part of the SWOT analysis shows that Ford must innovate to maintain competitive
advantage.

Ford Motor Company’s SWOT Analysis – Recommendations

The main issues highlighted in this SWOT analysis of Ford are limitations in speed of
innovation and scope of its production network, as well as competition with existing
firms and new entrants. Ford needs to improve its research and development
investments and increase its innovation speed to address aggressive competition and
the entry of high-tech firms in the industry. Also, Ford needs to expand its production
network to increase economies of scale, which can reduce costs and prices to make
Ford automobiles more attractive.

Ford Motor Company’s Organizational Culture Analysis

UPDATED ONUPDATED ON FEBRUARY 5, 2017 BY JESSICA LOMBARDO

A 2012 Ford Mondeo

Titanium pre-production model. Ford Motor Company’s organizational culture promotes
teamwork and excellence. (Photo: Public Domain)

Ford Motor Company’s organizational culture influences the firm’s drive toward higher
performance to achieve its vision of industry leadership. A company’s organizational
culture defines the values, customs and traditions that affect individual and group
behaviors. Ford uses its corporate culture to maintain a high-performance workforce. As
the fifth biggest player in the global automobile market, the company needs to maintain
high productivity and effective support for technological and process innovation. These
needs are met through an organizational culture that embodies Ford’s vision and
mission statements, with emphasis on excellence and teamwork.

Ford Motor Company succeeds partly because of tis organizational culture. The
features of this culture are linked to the firm’s mission and vision, and the nature of its
business.

Features of Ford Motor Company’s Organizational Culture

Ford’s organizational culture is defined in the company’s One Ford plan, which was
implemented under former CEO Mulally’s leadership in 2008. In the plan, the firm aims
to unify its global organization to achieve consistency and synergy. Based on this plan,
the following are the main characteristics of Ford’s organizational culture:
 F: Foster Functional and Technical Excellence
 O: Own Working Together
 R: Role Model Ford Values
 D: Deliver Results

Foster Functional and Technical Excellence. Ford Motor Company emphasizes

excellence in its organizational culture to support innovation. The firm recognizes the
importance of excellence to push its performance higher. Ford has training programs to
support this characteristic of its organizational culture. Employees are encouraged to
learn and improve, and contribute ideas for organizational development. This feature of
the organizational culture supports Ford’s generic strategy adjustment toward broad
differentiation.

Own Working Together. In the One Ford plan, teamwork is among the most important
priorities in the company’s organizational culture. This characteristic of the firm’s
organizational culture entails employee participation. The company also emphasizes
personal development through team involvement and support. Ford’s organizational
culture facilitates teamwork combined with individual knowledge and skills development.

Role Model Ford Values. Ford Motor Company’s employees represent the business
and its values. This feature of the firm’s organizational culture builds integrity and
positive behaviors among workers. For instance, Ford’s values include initiative,
courage, and corporate citizenship. The company’s organizational culture also focuses
on quality, safety and sustainability in all business activities.

Deliver Results. This characteristic of Ford’s organizational culture is all about

effectiveness in satisfying customers and achieving business goals. The company also
highlights responsibility and accountability. By delivering results, Ford maximizes
financial performance through its organizational culture. In addition, this feature of the
organizational culture motivates Ford’s employees to achieve higher levels of career
development to deliver more to customers and other stakeholders.

Ford Motor Company’s Organizational Culture Advantages &

Disadvantages

The main advantage of Ford’s organizational culture is its support for unity through
teamwork. Prior to the implementation of the One Ford plan, the company had different
cultures and product lines in different regions. Today, the firm’s organizational culture
brings improved business capabilities based on synergy through unity. However, a
disadvantage is that the firm does not specifically address flexibility. Theoretically,
flexibility in Ford’s organizational culture can promote resilience and efficient problem-
solving processes.

Ford Motor Company’s Organizational Structure Analysis

 UPDATED ONUPDATED ON SEPTEMBER 8, 2018 BY NATHANIEL SMITHSON

A 2011 Ford Edge.

The features of Ford Motor Company’s organizational structure support the firm’s global
operations. (Photo: Public Domain)

Ford Motor Company’s organizational structure is based on business needs in varying

market conditions around the world. A firm’s organizational structure defines the
configuration of organizational components and their system of interaction. In Ford’s
case, the organizational structure directly relates to the global automotive industry
condition. The international scope of Ford’s operations also determines the key
organizational structure components needed to withstand competition and market risks.
In this regard, Ford’s position as the second biggest U.S.-based automobile
manufacturer is an indication of its organizational structure’s effectiveness in supporting
the firm for continuing business growth and high performance.

Ford Motor Company’s organizational structure is divided according to regional markets.

Other characteristics of this corporate structure are based on the global scope and
nature of Ford’s business.

Features of Ford Motor Company’s Organizational Structure

Ford’s organizational structure is based on the need to control operations according to

regional market conditions. Markets belonging to the same region have similarities used
as basis for regional structuring. The following are the main features of Ford Motor
Company’s organizational structure:

1. Corporate hierarchy
2. Regional geographic divisions
3. Global functional groups
 Corporate Hierarchy. Ford has a traditional corporate hierarchy in its organizational
structure. For example, Executive Vice Presidents report to CEO Mark Fields. Middle
managers report to these executive VPs. This characteristic of Ford’s organizational
structure supports traditional business management approaches that aim for effective
top-down control.

Regional Geographic Divisions. Ford has large geographic divisions in its

organizational structure. Typically, global companies divide their operations into several
regions per continent or subcontinent. However, Ford’s organizational structure is
divided into only three regional geographic divisions that cover all its markets around
the world. A potential effect of this feature of the organizational structure is the relative
ease of integration of business strategies. Ford’s main regional geographic divisions are
(a) The Americas, (b) Europe, Middle East, and Africa, and (c) Asia Pacific. An
executive VP heads each division.

Global Functional Groups. Ford Motor Company’s organizational structure also has
functional groups, each of which represents a specific business function. A Vice
President heads each of these groups. The main functional groups in Ford’s
organizational structure are as follows:

 Global Manufacturing and Labor Affairs

 Global Marketing, Sales and Service
 Human Resources and Corporate Services
 Quality and New Model Launch
 Global Product Development
 Government and Community Relations
 Global Purchasing
 Communications
 Finance
 Legal
 Accounting

Ford Motor Company’s Organizational Structure Advantages &

Disadvantages

The corporate hierarchy in Ford’s organizational structure has the advantage of

ensuring global direction and control. Also, the global functional groups maintain such
hierarchy through functional support, such as HR management to maintain Ford’s
workforce. On the other hand, the large regional geographic divisions have the
advantage of easily implementing integrated policies and strategies throughout Ford’s
organizational structure. However, these large regional geographic divisions also
simplify the company’s approach to its markets. In this simplification, Ford’s
organizational structure has the disadvantage or risk of disregarding the significant
unique conditions or needs of national markets.
Ford Motor Company: Generic & Intensive Growth Strategies
UPDATED ONUPDATED ON FEBRUARY 5, 2017 BY PAULINE MEYER

A 2013 Ford Fusion

Titanium. Ford Motor Company’s generic strategy (Porter’s model) and intensive growth
strategies support the firm’s competitive advantage. (Photo: Public Domain)

Ford Motor Company’s market position as the fifth biggest automobile manufacturer in
the world is supported through the firm’s intensive growth strategies aligned to its
generic strategy for competitive advantage. Intensive strategies are used to support
organizational growth. In this case, Ford’s business growth is dependent on the varying
emphases on market penetration, product development, and market development. On
the other hand, a generic strategy defines the general approach used for business
competitiveness. Ford’s generic strategy changes over time, although its original
generic strategy of cost leadership remains a significant force. Ford’s generic strategy
and intensive growth strategies determine the company’s approaches to grow its
business.

Ford Motor Company’s generic strategy (based on Michael Porter’s model) shows the
general trajectory of developing the firm’s competitive advantage. The intensive growth
strategies define specific approaches used to support Ford’s growth.

Ford Motor Company’s Generic Strategy (Porter’s Model)

Ford’s generic strategy has changed over time. Initially, Ford’s generic strategy was
cost leadership. This generic strategy supports business competitive advantage on the
basis of cost reduction and low prices to attract customers. In the early 1900s, Ford’s
vision was to make its automobiles affordable for working-class Americans. To apply
this generic strategy, the firm developed the assembly line method to minimize costs
and maximize productivity. Ford succeeded in attracting customers based on this
generic strategy. A strategic objective for competitive advantage based on this generic
strategy is cost minimization through process streamlining.

However, Ford Motor Company’s generic strategy did not protect the business from
competition with General Motors. By 1927, GM overtook Ford to become the largest
American automobile manufacturer. GM used its generic strategy of broad
differentiation to offer a wider array of products. Americans were gaining higher wages
and started valuing style and design, and not just low prices. Today, given its
current One Ford plan, Ford Motor Company has been moving its generic strategy to
emphasize differentiation for competitive advantage. Ford still maintains its cost
leadership generic strategy. However, the firm is moving toward the broad differentiation
generic strategy to compete against firms like GM and Toyota. Thus, a strategic
objective based on Ford’s current generic strategy adjustment is product innovation to
gain stronger competitive advantage.

Ford Motor Company’s Intensive Strategies (Intensive Growth

Strategies)

Market Penetration. Ford’s primary intensive growth strategy is market penetration.

This intensive strategy entails selling more products to current customers to grow the
business. Ford applies this intensive growth strategy by increasing the number of its
dealerships and increasing sales volume. This intensive growth strategy is linked to the
strategic objectives of increasing customer retention and increasing sales to existing
customers. This intensive strategy is linked to Ford’s generic competitive strategy by
highlighting the benefits of low costs and increasing differentiation to gain a bigger
market share.

Product Development. Ford Motor Company uses product development as its

secondary intensive strategy for growth. This intensive growth strategy involves offering
new products to increase sales revenues. Ford applies this intensive strategy through
R&D investments for new products, such as the all-electric Ford Focus Electric. A
strategic objective based on this intensive growth strategy is to increase R&D
investments for product innovation to improve business growth and competitive
advantage. This intensive growth strategy supports Ford’s generic strategy adjustment
toward broad differentiation.

Market Development. Market development is only a minor or supporting intensive

strategy for Ford’s growth. This intensive growth strategy involves providing entirely new
products or entering new markets or market segments. Ford already has global
operations, which means that market development is not as significant as it has been
for the business in its early years. Also, Ford has not taken any significant strategic
action to enter entirely new industries or market segments in recent years.
Ford Motor Company’s Mission Statement & Vision Statement: An
Analysis
UPDATED ONUPDATED ON AUGUST 22, 2019 BY ANDREW THOMPSON

A Ford Focus ST-R at the 2011 Washington, D.C.

Auto Show. Ford Motor Company’s corporate mission statement and corporate vision statement
depict the company’s drive for leadership and improved performance in the global automotive
industry. (Photo: Public Domain)

Ford Motor Company’s mission statement and vision statement focus on product
effectiveness and business leadership in the automotive industry. The company’s
strategic position as a major player in the global automobile market is linked to the
fulfillment of the corporate mission and corporate vision. Ford’s corporate mission aims
to benefit target customers through mobility. The company’s products are designed to
address mobility needs and issues in the transportation sector. On the other hand,
Ford’s corporate vision focuses on achieving top performance in the industry,
considering competition and other variables. The company competes
against Toyota, General Motors, Tesla, Volkswagen, Hyundai/Kia, Nissan, Honda, and
other manufacturers. This market condition imposes strong competitive rivalry, as
shown in the Porter’s Five Forces Analysis of Ford Motor Company. The company’s
corporate vision and mission statements influence strategic management decisions for
enhancing business performance despite the challenges present in the automotive
industry.

Ford’s corporate mission statement and corporate vision statement guide the
enterprise’s organizational development. Policies and strategies for various business
areas interpret how these statements apply to automotive operational effectiveness. For
example, Ford’s operations management and productivity measures apply strategic
management interpretations of the vision statement and mission statement, specific to
decision areas of operations, such as product design and human resource
management.

Ford Motor Company’s Mission Statement

 Ford’s corporate mission is “to make people’s lives better by making mobility
accessible and affordable.” This mission statement focuses on moving people, which
is a basic function expected in automobiles and the transportation sector. Such
emphasis on mobility indicates the purpose of Ford’s business in society. As one of the
biggest players in the international market, the company aims to make people’s
transportation more effective. The following are the main components of Ford’s
corporate mission statement:

1. Make people’s lives better

2. Make mobility accessible
3. Make mobility affordable

The mission statement’s first component (make people’s lives better) is a factor in Ford
Motor Company’s value proposition to its target customers. For example, the company’s
goals are directed toward improving people’s lives. To make such improvement specific,
Ford’s corporate mission statement includes the other two components. The company’s
strategic plans address accessibility and affordability of mobility to make people’s lives
better. Thus, accessibility and affordability are variables in assessing Ford’s fulfillment
of its value proposition. With this corporate mission statement, the automotive business
sees its role as a contributor to the improvement of transportation to enhance quality of
life. Considering strategic management objectives, the affordability component of the
corporate mission statement depends on selling prices and production costs, which are
linked to Ford’s generic strategy for competitive advantage and intensive growth
strategies.

Ford Motor Company’s Vision Statement

Ford’s corporate vision is “to become the world’s most trusted company, designing
smart vehicles for a smart world.” This vision statement reflects the multinational
company’s strategic goal of becoming a leader in the automotive industry. Ford’s focus
on smart vehicles is pertinent to current market conditions and customers’ preferences.
The company aims to maximize its profitability and relevance to the market, where more
efficient technologies are preferred. The following are the main components of Ford’s
corporate vision statement:

1. Worldwide scale
2. Most trusted company
3. Designing smart vehicles for a smart world

The vision statement’s first component (worldwide scale) is a specification of Ford’s

target market, which is the global market for automobiles. On the other hand, through
the second component, the corporate vision pertains to corporate or brand image, which
influences the attractiveness and profitability of the company’s automobiles. For
example, customers’ confidence in and preference for Ford electric cars depend on how
these vehicles’ brand value is perceived. In relation, the corporate vision statement
indicates that the corporation is focused on smart vehicles. This focus implies a
strategic response to the industry’s electric car trend, as discussed in
the PESTEL/PESTLE analysis of Ford Motor Company. Thus, the corporate vision
statement ensures that the company is abreast of the latest technologies suited to
current market trends.

Summary & Recommendations – Ford’s Corporate Mission and

Corporate Vision

Corporate Mission Statement. Ford Motor Company’s corporate mission statement is

brief and a general description of the business. For example, the corporate mission
focuses on making accessible and affordable mobility, inclusive of automobiles. The
general term, “mobility,” is indicative of Ford’s future product development, which could
include mobility technologies other than automobiles. The company could develop
personal flying vehicles, and new mobility products for transporting small parcels.
Overall, the corporate mission statement is descriptive enough to guide strategic
management in terms of what Ford’s business does and should do, and aligns with the
corporate vision statement. A recommendation is to improve the corporate mission by
including information about the company’s target markets, customers, mobility
technologies, and business philosophy and values as an automotive enterprise. It is
notable that the corporate mission statement’s focus on improving people’s lives relates
to Ford Motor Company’s corporate social responsibility strategy and stakeholder
management, in terms of business contributions to societal improvement.

Corporate Vision Statement. Ford Motor Company’s vision statement is concise,

future-oriented, and inspirational, while describing the business as a developer of smart
vehicles. The vision statement’s specification of smart vehicles complements the
corporate mission statement by providing a more detailed picture of what the company
does. Also, Ford’s corporate vision is challenging and abstract enough to drive the
business organization toward high performance. To achieve this corporate vision’s aim
of becoming the world’s most trusted company, it is essential to strengthen the
enterprise through enhancement or creation of competitive advantages, such as the
ones shown in the SWOT analysis of Ford Motor Company. Also, achieving the
corporate vision statement requires strategic initiatives for making the automotive brand
attractive to target customers. Thus, a recommendation based on the vision statement
is to develop Ford’s marketing mix or 4Ps in a way that strengthens customers’ trust in
the company. Moreover, it is recommended that the company include more information
about the strategic direction of the automotive business, to make the corporate vision
statement more effective in guiding management and human resources toward the
desired business goals.