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How a century-old brand is transforming the auto industry

Before the pandemic, automakers were already facing massive disruption, including driverless cars, electric vehicles, and shared mobility. But COVID-19 dealt another blow: Automotive was one of the hardest hit sectors in 2020, especially in the U.S., where auto sales sank by 15% .

In the midst of these unprecedented challenges, however, 118-year-old Ford Motor Company leaned in and began to reinvent itself.

As the virus accelerated, dealerships were forced to close their lots and shift to servicing and selling cars online , while larger supply chain concerns caused shortages in critical parts like microchips, which slowed vehicle production.

In the midst of these unprecedented challenges, however, 118-year-old Ford Motor Company leaned in and began to reinvent itself. Under the leadership of two new executives — Jim Farley as CEO and Suzy Deering as global CMO — the company saw an opportunity for business transformation and started mapping out a strategy.

Questioning everything, from its organizational structure to its customer experience, Ford made difficult decisions to put technology at the center of its business and get ahead of auto consumers’ evolving needs.

While still in the early stages of its journey, Ford has developed something of a blueprint for auto brands of the future. Recently, I spoke to Farley and Deering about the company’s transformation strategy. They shared three key changes they’re focused on.

1. Reimagining what auto brands do

Business transformation has been a buzzword for decades, but for years, it wasn’t an urgent reality for Ford. Then along came the pandemic, and its significance accelerated.

We have to invest in electric architectures and build software know-how in the company. And we need to integrate that know-how in ways we’ve never had to before.

“Events of 2020 made it clear that modernization is required to be a sustainable company,” explains Farley. A critical factor to modernizing has been disrupting its organizational model to aid the shift toward vehicle electrification and other digitally connected products. Since consumers expect more safety and convenience from automakers, the future of the auto industry will increasingly exist outside the doors of the vehicle.

According to Farley, this has required Ford to “unglue” its organization to allow for a new way of being. “The biggest transformation for us is to a software services–dominated company and brand,” he explains. “We have to invest in electric architectures and build software know-how in the company. And we need to integrate that know-how in ways we’ve never had to before.”

Such a fundamental pivot, Deering acknowledges, impacts company culture. “We have to make sure that we bring people along with us, and at the same time, give them the space to fail. There is strength in knowing that change is not going to be easy, but we’re going to do it together, and we’re going to look forward.”

2. Driving the connected car experience forward

By committing to look forward, the automaker is building on Henry Ford’s original vision — that every American consumer can own a vehicle — by reimagining what vehicle ownership looks like. Through software and other technology, Ford is working to ensure that it’s a fully connected, always-on experience.

When we have the ability to update our products dynamically with software, the customer relationship is no longer episodic. It’s every day.

“For so long, cars have really been isolated from the rest of people’s lives. We can change that by making them digital products,” Farley explains. To facilitate this shift, Ford has tapped into strategic partners like Google and is integrating software into its vehicles. Beginning in 2023, for example, millions of Ford and Lincoln models will be powered by the Android operating system, with Google apps and services built in.

Beyond offering drivers more assistance and convenience, connected vehicles also give Ford the ability to deepen its customer relationships. “When we have the ability to update our products dynamically with software, the customer relationship is no longer episodic. It’s every day,” says Farley.

3. Transforming the customer relationship model

To deliver on its vision of an always-on customer experience, Ford is also evolving how it approaches relationship-building. While many automakers stick to a traditional acquisition model to attract consumers through ads and rebates, Ford is bringing customer relationships to the forefront by shifting to a loyalty-based model.

“Another big transition for us as a company — and an industry — is to stop being obsessed with conquest and start putting all of our resources into taking care of the customers who already love the brand and own the product,” Farley explains. “This is a model that is available because of the always-on nature of digital. Our products and services are now integrated.”

We want to know our customers well enough to meet their needs while they’re in the vehicle, while they’re outside the vehicle, and before they even think about buying a vehicle.

Gearing marketing efforts to meet people’s ongoing needs in a more personalized way is critical to Ford’s loyalty-based push, because, as Deering points out, “The customer expects us to know them.”

For Deering and her team, this means relying more than ever on first-party data and signals to create an ecosystem that nurtures deeper relationships. “We want to know our customers well enough to meet their needs while they’re in the vehicle, while they’re outside the vehicle, and before they even think about buying a vehicle from us,” she explains.

While Deering and Farley both readily admit that Ford’s business transformation is a yearslong journey, they’re committed to playing the long game and continuing to drive brand love and loyalty through the 21st century.

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The Turnaround at Ford Motor Company

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How Ford Is Thinking About the Future

• Mark W. Johnson

It’s developing a portfolio of new business models.

Dealing with the uncertainty of new, disruptive business models is one of the biggest challenges that faces any large, established company. To gain insight into how to think through these obstacles, the author offers five lessons from Ford’s approach to recent advances in the mobility industry: First, be ambitious with new projects, but don’t over-invest in any one idea. Second, be sure to think not just about the physical functionality of your product, but also about the social and emotional roles it fulfills. Third, constantly examine and update your business model. Fourth, be openminded about creating new rules and metrics for your organization. Finally, to reduce risk, consider building a portfolio of new business models. While there’s no predicting the future, these strategies can position you to take advantage of new opportunities as they emerge.

Everyone’s talking about a future in which vehicles are shared rather than owned, autonomous rather than driven, and where car companies make large shares of their profits on digital “mobility services.” But if you are the Ford Motor Company and face the prospect of investing billions in new technology while your century-old business model is overturned, you might first have a few questions. How are consumers going to react to all of this? What do they really want? How can you tell which opportunities are real and which are science fiction?

• Mark W. Johnson is co-founder and senior partner of the strategy consulting firm Innosight and author of  Lead from the Future   (HBR Press, 2020).

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Berkeley Haas Case Series

The Berkeley Haas Case Series is a collection of business case studies created by UC Berkeley faculty

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Disruption in Detroit: Ford, Silicon Valley, and Beyond

Learning objectives.

Pub Date: Dec 31, 2017

Discipline: General Management

Subjects: Innovation, Leadership, Technological change, Technology, General management, Business models, Organizational change, Disruptive innovation

Product #: B5905-PDF-ENG

Industry: Automobiles

Geography: United States, Michigan, California, Silicon Valley, China

Length: 16 page(s)

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Launching a Flawless Fiesta: Ford Motor Company

Ford Motor Company is one of the largest automakers in the United States, producing millions of automobiles each year at 70 plants worldwide. According to J. D. Power and Associates Initial Quality Survey, Ford has received more top rankings than any other automaker since 2007. It’s no surprise that high quality standards have kept Ford an industry leader since 1903. And Ford knows that quality begins at a vehicle’s launch. When a cosmetic problem with the vehicle’s carpet threatened the impending launch of the 2011 Ford Fiesta, the company’s Body Interior Six Sigma team saw a clear opportunity for quality improvement through proven optimization methods. In their quest to maintain high customer satisfaction and performance, the team used Minitab Statistical Software to help them eliminate the carpet defect and achieve a successful launch.

The Challenge

The launch date for the Fiesta was quickly approaching when Ford determined that the appearance of brush marks on vehicle carpets would be unacceptable to customers. Ford’s Body Interior Six Sigma team, led by Six Sigma Master Black Belt Scott Sterbenz, began by working with the supplier to analyze the process used to manufacture the automotive carpet. They found that the settings of a machine called a needler were the likely cause of the diminished product quality.

Ford Motor Company improved the quality of the carpets in the Ford Fiesta with the help of Minitab Statistical Software.

But the manufacturer worried that altering the needler’s settings also would affect the plushness of the carpet. The team needed to find process improvements that would eliminate brush marks while maintaining the plushness, and they also needed to consider other critical qualities, like the carpet’s durability and stain resistance. As they set out to complete the daunting task of improving carpet quality in the Fiesta, the quality improvement experts turned to the Design of Experiment (DOE) tools in Minitab Statistical Software.

How Minitab Helped

In statistics, DOE refers to the creation of a series of experimental runs, or tests, that provide insight into how multiple variables affect an outcome, or response. In a designed experiment, investigators change more than one factor at a time, and then use statistical analysis to determine what factors are important and identify the optimum levels for these factors. It’s an efficient and economical way to improve almost any process.

With time running out, Ford’s improvement team needed to design an experiment that assessed the effects of the six needler settings on the carpet’s brush markings and plushness levels. The experiment had to satisfy a difficult balance: it needed to be rigorous and reliable, but also needed to minimize the cost of materials and disruption to the supplier’s production schedule. Their challenge was to find an experimental design that would gather sufficient data to optimize the needler settings in as few runs as possible.

Experimenters used the Minitab Response Optimizer to determine the optimal configurations for eliminating brush marks and maintaining carpet plushness at the same time.

Minitab’s DOE tools can be used to create and analyze many different kinds of experiments, and can help investigators identify the best experimental design for their situation, based on the number of variables being studied and other conditions. Using Minitab’s DOE tools, the Ford team created a fractional factorial design with center points that would give them the information they needed in only 34 runs.

For each of the experimental runs, a team of evaluators compared the new product to the current carpet, and their ratings were averaged and analyzed. The experimenters also performed a Gage R&R study in Minitab to verify that any changes in the assessed quality of the carpet were a direct result of the factors changed in the experiment, and not due to a variation in the opinions of evaluators.

A Pareto chart created in Minitab clearly shows the three-way interactions that had a significant impact on carpet quality.

When data from the 34 runs were analyzed in Minitab, the results for each response revealed complex interactions between the different needler settings. The interactions explained why previous adjustments to individual needler settings had failed to find a way to eliminate brush markings.

The designed experiment not only provided the team with a list of significant variables and interactions, but also with equations to show how the inputs affected the responses. Even better, the results showed that optimization settings for eliminating brush marks did not have an adverse effect on the plushness.

In response to feedback from both the manufacturer and the Fiesta development team, Sterbenz used Minitab’s Response Optimizer tool to fine-tune the optimal settings identified in the initial DOE. Using the results identified in the DOE as a starting point, the Response Optimizer let Sterbenz and his team modify the settings to consider other practical concerns from the manufacturer and the development team.

After the new carpet from the confirmation runs received favorable ratings by the initial evaluators, samples were sent to Ford’s Research and Engineering Center for final assessment. The samples passed all tests for durability, stain resistance, and color and sheen, and the experiment was deemed a major success by all.

The entire project took 12 days, from the time the problem was defined to the point where the solution was in place and the process was under control. Besides a complete elimination of brush marking and an unexpected improvement in the softness of the carpet in the Fiesta, the experimenters achieved a better understanding of the entire manufacturing process.

Minitab helped Ford discover and implement a solution to find the optimum needler settings to eliminate brush marks and simultaneously maintain the plushness of the carpet. The 2011 Ford Fiesta enjoyed a highly successful launch just a few months later, and marked another milestone in Ford’s commitment to excellence and quality improvement.

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Ford Motor Company: Struggle in India

By: Sudhir Naib

In April 2021, the giant US automaker Ford Motor Company was facing a decision regarding its Indian operations, which were struggling. It had brought in a new global chief executive officer-its…

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• Publication Date: Jun 13, 2022
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In April 2021, the giant US automaker Ford Motor Company was facing a decision regarding its Indian operations, which were struggling. It had brought in a new global chief executive officer-its fourth in the past decade-who was tasked with making this choice. The company could remain invested in India, either operating on its own or in a joint venture. It could also decide to manufacture for export or choose to exit the Indian market entirely. Ford Motor Company had to decide on an international corporate-level strategy, all while considering the factors influencing the changing Indian market and the rise of new technology. What would be the best path forward for the automaker?

Sudhir Naib is affiliated with.

Learning Objectives

The case is intended to be used at the end of a graduate-level strategic management course. It can also be taught as a part of an international business course. It is particularly useful for highlighting the complexities of international expansion and growth, and for addressing the challenges that emerge when entering competitive industries. The case will be of value in executive management education. It explores Ford's international strategy and offers insights into the difficulties that companies face when making strategic decisions that involve international operations and establishing themselves in foreign markets, particularly in industries that are capital-intensive and highly competitive. After working through the case and assignment questions, students will be able to explain the reasons companies have for entering foreign markets; analyze why strategy-making becomes more complex when competing across national borders; identify the challenges that global automobile companies face in continuing and managing international business; and describe the main strategic approaches for competing internationally.

Jun 13, 2022

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Ford Motor Company Case Study

Looking for Ford industry analysis? Find it here! We’ve prepared Ford Motor Company case study that contains analysis of the company’s financial condition and provides recommendations to its management.

Introduction

• Industry Analysis
• Environmental Scan
• Financial Condition
• Recommendations

Works Cited

The current report provides an in-depth analysis of the motor vehicle industry based on the Ford Motor Company case study. It also analyzes Ford Motor Company using SWOT analytical tool. Moreover, strategies that could be adopted by Ford Motor Company for the next five years have been provided. The study is divided in several sections with the first section being the motor vehicle industry analysis.

The industry analysis explores the industry structure, major environmental changes, competitors, and Ford’s competitive position in the industry. The second section gives an environmental scan with major focus on the major opportunities and threats. The third section explores the company’s key strengths and weaknesses. The last section gives viable strategic recommendations which can be adopted for the next five years.

Ford Industry Analysis

The motor vehicle industry is very competitive and characterized by changes in vehicles design and technology (CLLES 7. Just like any other industry, the motor vehicle industrial structure and landscape have been changing and reshaping operationally, functionally, and geographically.

The increase in competition has been as a result of new emerging automotive and vehicle industries in South American, Eastern and Central European, and Asian countries (CLLES 7). The industry’s major structures are the motor vehicle and the motor vehicle parts sections.

These two sections provide employment to more than one million people in U.S. The motor vehicle industry is a loosely connected industry and diversified in terms of supply chain structure, employment levels and compensation. Lastly, the market is characterized with excess capacity which is a major structural problem.

The industry was highly affected by the 2007/2008 global financial crisis. Major players such as Chrysler and General Motor were majorly affected that it took the intervention of the government to bail them out.

However, based on the case study, Ford Motor Company was the only major company which was not affected by the financial crisis. The company has been described by as the only automaker company which has survived the major crises that have hit the motor industry without financial bailout by the government (The New York Times 2012).

The major competitors of Ford Motor Company are BMW, Chrysler, Toyota, General Motors, Honda, Nissan, Mercedes Benz, and Hyundai-Kia among others. In U.S, General Motors (GM), Toyota, and Honda are the main competitors of Ford (Canis and Yacobucci 6). Different automakers use different strategies to increase their competitive advantage.

Based on the case study, Toyota uses lean production to increase its effectiveness and efficiency in production. Toyota’s lean production encourages just-in-time scheduling, flexible production, teamwork, and quality production. In addition, the company avoids material wastage and inventories. Another company like Hyundai produces quality products to meet the demands outside Korea.

For instance, the company has recently established a production line in Alabama, U.S to near KIA to benefit from economies of scale (Canis and Yacobucci 6). In addition, the company offers the longest warranties which are geared towards the attraction of customers from the Japanese and US cars. In general, all the major competitors have brand product portfolio which are part of product diversification and cost differentiation.

General Motors which is the largest competitor of Ford Company has adopted a new strategy which has been borrowed from Toyota Company (Ferrell & Hartline 30). The new strategy is based on new auto designs which meet the expectations and demands of emerging market segments.

The company has acquired the Toyota’s design which involves synchronization of production, platforms, and parts from different parts of the world. This new globalization strategy encourages flexible manufacturing. Based on checks and benchmarking carried by Henry (91), the competitors in the automobile industry are grouped in four groups.

The first group is of high price and low range automobiles and it consists of Rolls Royce and Bentley. The second group comprises of Ferrari, Ashton Martin and Porsche while the third group contains BMW, Mercedes, and Lexus. The last group is composed of Ford, Renault, Honda, Volkswagen, GM, Nissan, Toyota, and Daimler Chrysler (Henry 91).

The Lexus, BMW and Mercedes group produces highly priced and quality products but of a lower product range. The Last group produces a broad range of products which have considerably low prices and quality compared to other groups. In this group, competitors compete in the market based on reliability, price, and the design of their products (Henry 92).

Ford is the second largest automaker after General Motor. The American automaker has found its niche in car and truck production. The company has a strong brand which has improved its competitive advantage. Product diversification has been the major competitive advantage thus increasing its competitive position in the industry.

To maintain its competitive position, Ford brands product portfolio comprises of Ford Ikon, Ford Fiesta, Ford, Fusion, Ford Endeavor, and Ford Figo. Its survival under numerous financial crises has increased the confidence and trust from different stakeholders especially consumers (The New York Times 2012). In North America, Ford remains as the largest market shareholder.

However, the company receives high competition in new emerging markets in Asia and Europe. Nonetheless, the American automaker has continued to defend its position in the industry and in 2008, it closed the gap that existed between itself and Toyota. The company was able to sell over 55,301 vehicles compared to Toyota in 2009 (Canis and Yacobucci 6).

Based on the current statistics, Ford has a market share of 15.5% after GM which has a market share of 19.8 percent (Canis and Yacobucci 6). The fall of GM and Chrysler was beneficial to Ford as many buyers between 2008 and 2009 preferred Ford cars thus increasing its financial and competitive position in the market.

As other companies market shares declined, that of Ford increased. To remain competitive, the company has provided new models which are affordable, competitive, and environmentally friendly.

Ford Company Analysis: Environmental Scan

Environmental scan has been carried through the use of SWOT analysis to give the major opportunities and threats that Ford Company has.

Company analysis

Ford Company Analysis: Financial Condition

The company is in a better financial position compared to other players such as Chrysler and GM. In 2008, the company survived the U.S and Europe financial crises (The New York Times 2012). In addition, as other companies’ market share reduced, Ford’s market share increased to 15.5% while that of GM’s dropped to 19.8 % (Canis and Yacobucci 6). In 2009, Ford increased its sales by 55,301 vehicles compared to Toyota.

In 2011, Ford increased its small cars sales in U.S by 25 percent (Ford Motor Company 2012). The annual operating profits of Ford increased in 2011 and as a result, the company announced an operating pre-tax profit of $8.8 billion (Ford Motor Company 2012).

In a third year in a row, the company has announced improved annual operating profits which show that the company is in a better financial position. According to Ford Motor Company 2011 annual sustainability report, the company has increased its annual automotive gross cash which is a sign of financial progress (Ford Motor Company 2012).

The revenues of Ford have grown from USD 119.3 billion in 2011 to USD 128.2 billion in 2012 (Bloomberg Businessweek 2012). In addition, the company has reduced its sales pegged on income tax expense to -0.90% from -0.505 thus leading to a bottom line growth of USD 20.2 billion from USD 6.6 billion (Bloomberg Businessweek 2012).

Because of its financial position, the automaker plans to invest $16 billion in the U.S production plants with the objective of designing, engineering and producing upgraded vehicle components. Therefore, Ford Motor Company financial position is strong despite the recession and economic downturns.

Ford Case Study: Recommendations

Based on the industry and company analysis, some suggestions have been provided which can be applied for the next 5 years as part of strategic plan management. First, Ford needs to expand its market operations in emerging economies in Africa, Middle East, and Asia so as to reduce overreliance of the U.S market. This would expand its market share and meet new demand in new market segments.

Second, the company needs to diversify its products to meet the demands and expectations of consumers in the 21 st century. Ford needs to carry out market and consumer demand research to determine the major emerging market trends and patterns. Product diversification can be achieved through the production of more fuel efficient and environmentally clean cars which are small in size.

This would meet the demand in the new segment of environmentally sustainable and green fuel motor vehicles. Ford can adopt the strategy adopted by Toyota of producing a variety of cars annually which fit different market segments. For example, it can design cars that meet the income capacity of consumers in developing nations.

Drawing from the case study analysis, Ford is the second largest American based automaker in the world. In addition, the company operates in a very competitive and saturated market. As a result, the company faces high level of competition from major players such as BMW, GM, Toyota, Honda, Chrysler, and Mercedes Benz among others.

When grouped, Ford lie at the lowest group which produces broadest range of cars which affordable prices. The company is a strong brand which is globally known. Its financial capacity and presence has increased its market share. The major weakness of the company is that it highly depends on the U.S market. Financial crisis in Europe and U.S have threatened its performance and market share.

Financially, Ford is stable and in a better position. The company has increased in sales and revenues as well as pre-tax operating profits in a consecutive period of three years. it has been recommended that the company ought to increase its presence in emerging markets and produce diversified products

Canis, Bills and Brent D. Yacobucci. “The U.S. Motor Vehicle Industry: Confronting a New Dynamic in the Global Economy.” Congressional Research Service 26 Mar. 2010: 1-66. Print.

CLLES. Benchmarking Analysis for the Motor Vehicle Industry. Center for Lean Logistics and Engineered Systems. University of North Carolina, 2009. Print.

Bloomberg Businessweek. “Ford Motor Co (F: New York).” Bloomberg Businessweek 6 Dec. 2012: 1. Print.

Ferrell, O C, and Michael D. Hartline. Marketing Strategy . Mason, OH: Thomson South-Western, 2008. Print.

Ford Motor Company. “ Financial Health – Sustainability 2011/12 .” PDF file. 7 Dec. 2012. < https://corporate.ford.com/homepage.html >.

Henry, Anthony. Understanding Strategic Management . Oxford: Oxford University Press, 2008. Print.

Schwed, Joel. Ford: History and Corporate Profile . 12 Dec. 2011. Web. < http://www.valueline.com/Stocks/Highlight.aspx?id=12047 >.

The New York Times. “Ford Motor Company.” The New York Times 30 Oct. 2012: 1. Print.

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Case study: How Ford promotes a culture of compliance and ethics across its operations

Operating in over 100 countries and employing 201,287 people in 71 facilities across the globe, Ford tries to gain the trust of key stakeholder groups by operating responsibly and transparently     Tweet This! , with compliance and ethics as a solid foundation for the company’s business practices and activities.

This case study is based on the 2016/17 Sustainability Report by Ford  that can be found at this link . Through all case studies we aim to demonstrate what CSR/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.

Making sure ethical business practices are implemented across the company’s operations worldwide is a key priority for Ford, in trying to be a good corporate citizen. In order to promote a culture of compliance and ethics across its operations Ford took action to:

• provide ethics advice
• offer ethics and compliance training
• encourage the reporting of violations
• fight bribery and corruption

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With this case study you will see:

• Which are the most important impacts (material issues) Ford has identified;
• How Ford proceeded with stakeholder engagement , and
• What actions were taken by Ford to promote a culture of compliance and ethics across its operations

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What are the material issues the company has identified?

In its 2016/17 Sustainability Report Ford identified a range of material issues, such as product carbon footprint and fuel economy, customer satisfaction, product quality and safety, supply chain management, assessment, capacity building and performance, government regulation and policy. Among these, promoting a culture of compliance and ethics across its operations stands out as a key material issue for Ford.

Stakeholder engagement in accordance with the GRI Standards

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The organization should identify its stakeholders, and explain how it has responded to their reasonable expectations.”

Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups Ford engages with:   

How stakeholder engagement was made to identify material issues

To prioritize material topics and identify key challenges and opportunities, Ford conducted interviews with both internal and external stakeholders, who were additionlly asked to rate issues according to importance.

What actions were taken by Ford to promote a culture of compliance and ethics across its operations?

In its 2016/17 Sustainability Report Ford reports that it took the following actions for promoting a culture of compliance and ethics across its operations:

• Providing ethics advice
• Ford’s Corporate Compliance Office has developed various tools to provide employees with key compliance information. These tools include The Right Way, a free mobile application available in seven languages. The Right Way covers topics such as human rights, harassment and discrimination, human trafficking, bribery and corruption.
• Offering ethics and compliance training
• Mandatory online training courses are provided by Ford to non-manufacturing employees and other key personally globally. These courses focus on a number of issues, including the protection of personal and company information, bribery and corruption, conflicts of interest, and the company’s ethical culture.
• Encouraging the reporting of violations

• Fighting bribery and corruption
• implements clear bribery and corruption policies, as well as procedures for reporting breaches of law or policy
• strengthened the anti-bribery and anti-corruption components of its Global Terms & Conditions (and of other contracts) for the company’s suppliers
• provides training to individuals who may come across bribery or corruption issues at work
• assesses all operations for bribery and corruption risks

Which GRI Standards have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 102-16 Values, principles, standards, and norms of behavior

2) Disclosure 102-17 Mechanisms for advice and concerns about ethics

3) Disclosure 205-2 Communication and training about anti-corruption policies and procedures

78% of the world’s 250 largest companies report in accordance with the GRI Standards

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1) This case study is based on published information by Ford, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original at the link:

http://corporate.ford.com/content/dam/corporate/en/company/2016-17-sustainability-report/Sustainability-Report-16-17.pdf

2) http://www.fbrh.co.uk/en/global-reporting-initiative-gri-g4-guidelines-download-page

3) https://g4.globalreporting.org/Pages/default.aspx

4) https://www.globalre porting.org/standards/gri-standards-download-center/

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Ford Operations Management: 10 Decision Areas, Productivity

Ford Motor Company’s operations management (OM) optimizes the organizational processes of the multinational automotive business. Under the One Ford plan of former CEO Alan Mulally, the company’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. The company also maintains a considerable degree of flexibility to address business and automotive market variations in different areas around the world. Through high productivity and efficiency, operations management helps address the tough competition illustrated in the Five Forces analysis of Ford . Competitive forces involve other automakers, such as Toyota , General Motors , Tesla , and Nissan.

Ford’s Operations Management, 10 Critical Decision Areas

1. Design of Goods and Services . The company’s goal in this strategic decision area of operations management is to achieve global consistency. Ford’s mission statement and vision statement require such consistency in goods and services. This condition contributes to the car manufacturer’s financial effectiveness and its ability to optimize customer satisfaction. Also, decisions in this area of operations management are based on Ford’s generic competitive strategy and intensive growth strategies , which give importance to product innovation. The company’s automobiles, accessories, and financing services are designed to be differentiated from competing products in the international automotive market.

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 that the company acquires through market research to identify customers’ quality expectations about automobiles and related services. Ford’s company culture (work culture) maintains a mindset of quality in human resources, in support of the quality standards and measures in this area of operations management.

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, the automaker continues to improve its capacity by developing new facilities for its production network and supply chain. The high efficiency and high productivity of business processes are among the main factors that reinforce the business strengths and competitive advantages noted in the SWOT analysis of Ford Motor Company . With support from decisions in this area of operations management, such strengths enable the company to withstand the aggressiveness of other large multinational automakers.

4. Location Strategy . Ford Motor Company’s aim in this strategic decision area of operations management is to ensure the strategic benefits of its facility locations. The company’s strategy involves regional production facilities, such as car factories in Germany. On the other hand, dealership locations are based on market size and proximity to target buyers. Ford’s marketing mix (4Ps) relates to this area of operations management, in terms of selecting locations for maximum market reach and vehicle sales.

5. Layout Design and Strategy . In this strategic decision area of operations management, the objective is to maximize the productivity and 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’s corporate social responsibility (CSR), ESG, and stakeholder management programs support HR capacity and employee satisfaction. The company ensures continuous improvement and personnel development in its strategies. The teams and divisions in Ford’s company structure (business structure) determine the factors influencing operations managers’ critical decisions for optimizing workforce productivity.

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 the company’s backward vertical integration strategy. This strategy empowers Ford to control the supply of some of the materials used for manufacturing its vehicles. However, the trends, opportunities, and threats noted in the PESTLE/PESTEL analysis of Ford affect such operational control and the operating condition and productivity of the supply chain.

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, and the automotive company applies different inventory management practices to suit relevant market variations.

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 is used. Some of Ford’s productivity metrics are as follows:

• Number of service jobs completed per day (after-sales service productivity)
• Number of vehicles rolled out per day (manufacturing productivity)
• Number of applications processed per day (Ford Motor Credit Company productivity)
• Chen, X., Deng, T., Shen, Z. J. M., & Yu, Y. (2023). Mind the gap between research and practice in operations management. IISE Transactions, 55 (1), 32-42.
• Ford Motor Company – Form 10-K .
• Ford Motor Company – Locations .
• Ford Motor Company – Responsible Material Sourcing .
• Reid, R. D., & Sanders, N. R. (2023). Operations Management: An Integrated Approach . John Wiley & Sons.
• U.S. Department of Commerce – International Trade Administration – Automotive Industry .
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• Educators, Researchers, and Students: You are permitted to quote or paraphrase parts of this article (not the entire article) for educational or research purposes, as long as the article is properly cited and referenced together with its URL/link.

Company: The Ford Motor Company Industry: Automotive Size: Over 200,000 employees

The customer: making lives better through automotive leadership.

Ford Motor Company introduced consumers to large-scale auto production over one hundred years ago. Now, in the midst of their most ambitious manufacturing expansion in 50 years, Ford continues to service the world with great products while they also invest in solving global challenges linked to economic development, energy security, and environmental sustainability.

The challenge: moving from distributed to consolidated decision-making

With eight global regions utilizing various processes and systems, Ford operated from a distributed decisioning model. To increase efficiency and transparency into Demand for their global IT Services, Ford decided to move toward a centrally consolidated model.

The solution: end-to-end demand management

Ford partnered with Rego Consulting to implement and/or support standard Idea, Project, Program, and Portfolio configurations for Demand Management. The deployment included the consolidation of multiple practices and systems into a single global process with one entry point.

Rego developed the solution to allow for incremental (ad-hoc) requests, the distribution of planned costs across multiple business units and regions, and significant reporting views.

The customizations allow Ford to aggregate and report on demand by business and work areas, and the new reporting views support bi-annual IT project review and approval (for projects over $1MM), annual planning, and five-year road mapping for each of Ford’s eight global regions.

To assist with change management, Rego also conducted significant training to support user adoption of the new tool and practice.

The benefits: a streamlined global process

Currently Ford is working to integrate the solutions listed above and migrate from a distributed decisioning model to a centrally consolidated model. With a portfolio the size of Ford’s, ranking all demand top to bottom, including in-flight projects, is a significant exercise.

Ford has engaged its management consulting partner to help with the strategy, and continues to partner with Rego for best practice consulting (experiential/practitioner and expert knowledge), tool consulting, and tool configuration, including an on-premise upgrade, innovative Agile Central integration, and alignment with strategy.

By working with Rego Consulting to establish a single global process for Demand Management, Ford is streamlining multiple practices and systems to increase efficiency, planning, and oversight.

As the leading Strategic Portfolio Management (SPM), Project Portfolio Management (PPM), Technology Business Management (TBM), Agile and expert services provider, Rego Consulting has helped hundreds of organizations achieve a higher return on their software investment, including 60% of Fortune 100 and 70% of Fortune 20 companies.

Questions? We can help. [email protected] 888.813.0444

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Ford Case Analysis

Ford Motor Company is an American multinational automaker headquartered in Dearborn, Michigan, a suburb of Detroit. It was founded by Henry Ford and incorporated on June 16, 1903. The company sells automobiles and commercial vehicles under the Ford brand and most luxury cars under the Lincoln brand. Ford also owns Brazilian SUV manufacturer Troller, an 8% stake in Aston Martin of the United Kingdom, and a 49% stake in Jiangling Motors of China. It also has joint-ventures in China (Changan Ford), Taiwan (Ford Lio Ho), Thailand (AutoAlliance Thailand), Turkey (Ford Otosan), and Russia (Ford Sollers). The company is listed on the New York Stock Exchange and is controlled by the Ford family; they have minority ownership but the majority of the voting power.

Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce using elaborately engineered manufacturing sequences typified by moving assembly lines; by 1914, these methods were known around the world as Fordism. Ford’s former UK subsidiaries Jaguar and Land Rover, acquired in 1989 and 2000 respectively, were sold to Tata Motors in March 2008. Ford owned the Swedish automaker Volvo from 1999 to 2010. In 2011, Ford discontinued the Mercury brand, under which it had marketed entry-level luxury cars in the United States, Canada, Mexico, and the Middle East since 1938.

Ford is the second-largest U.S.-based automaker (behind General Motors) and the fifth-largest in the world (behind Toyota, VW, Hyundai-Kia and General Motors) based on 2015 vehicle production. At the end of 2010, Ford was the fifth largest automaker in Europe. The company went public in 1956 but the Ford family, through special Class B shares, still retain 40 percent voting rights. During the financial crisis at the beginning of the 21st century, it was close to bankruptcy, but it has since returned to profitability. Ford was the eleventh-ranked overall American-based company in the 2018 Fortune 500 list, based on global revenues in 2017 of $156.7 billion. In 2008, Ford produced 5.532 million automobiles and employed about 213,000 employees at around 90 plants and facilities worldwide.

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Henry Ford: A Case Study of an Innovator

9 artifacts in this set

1896 Ford Quadricycle Runabout, First Car Built by Henry Ford

Learn more about how the Quadricycle fits into the story of Henry Ford as an innovator by reading From the Curators: Henry Ford and Innovation, available at http://www.thehenryford.org/education/erb/HenryFordAndInnovation.pdf

Henry Ford and Ed (Spider) Huff Driving the Ford Sweepstakes Racer at Grosse Pointe, Michigan, October 10, 1901

Photographic print

Learn more about how auto racing fits into the story of Henry Ford as an innovator by reading From the Curators: Henry Ford and Innovation, available at http://www.thehenryford.org/education/erb/HenryFordAndInnovation.pdf

1903 Ford Model A Runabout

Learn more about how the Model A fits into the story of Henry Ford as an innovator by reading From the Curators: Henry Ford and Innovation, available at http://www.thehenryford.org/education/erb/HenryFordAndInnovation.pdf

1914 Ford Model T Touring Car, Given to John Burroughs by Henry Ford

Learn more about how the Model T fits into the story of Henry Ford as an innovator by reading From the Curators: Henry Ford and Innovation, available at http://www.thehenryford.org/education/erb/HenryFordAndInnovation.pdf

Ford Motor Company Executives in Superintendent's Office at Highland Park Plant, 1914

Learn more about how the team of engineers and executive fits into the story of Henry Ford as an innovator by reading From the Curators: Henry Ford and Innovation, available at http://www.thehenryford.org/education/erb/HenryFordAndInnovation.pdf

Newspaper Article, "Gold Rush is Started by Ford's $5 Offer," January 7, 1914

Learn more about how the $5 Day fits into the story of Henry Ford as an innovator by reading From the Curators: Henry Ford and Innovation, available at http://www.thehenryford.org/education/erb/HenryFordAndInnovation.pdf

Advertisement for the 1924 Ford Model T, "Freedom for the Woman Who Owns a Ford"

Advertisement

Learn more about how advertising fits into the story of Henry Ford as an innovator by reading From the Curators: Henry Ford and Innovation, available at http://www.thehenryford.org/education/erb/HenryFordAndInnovation.pdf

Ford Rouge Plant Pictorial Flow Chart, "Complete Car Can Be Built in 28 Hours," 1940

Learn more about how the Rouge fits into the story of Henry Ford as an innovator by reading From the Curators: Henry Ford and Innovation, available at http://www.thehenryford.org/education/erb/HenryFordAndInnovation.pdf

Henry Ford with the First Ford V-8 Engine, March 26, 1932

Learn more about how the V-8 fits into the story of Henry Ford as an innovator by reading From the Curators: Henry Ford and Innovation, available at http://www.thehenryford.org/education/erb/HenryFordAndInnovation.pdf

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