Ford Motor Company: Difficulties and Opportunities

The purpose of the following record is to identify the most important problems facing the Ford Motor unit Organization and recommend a course of action that most sufficiently resolves the challenges of today's market. It starts by outlining three of the major troubles facing the Ford Motor unit Company
  1. Ford's current business plan is much less financially and environmentally sustainable as it could be.
  2. Global economic market segments are performing much worse than Ford had expected in previous planning.
  3. Ford's market share in developing international markets is leaner than desired.

The report recommends that Ford should focus on creating a far more fiscally and environmentally sustainable business design by developing energy conserving and environmentally sustainable automobile models in every vehicle class. These models should be developed without significant increases in consumer cost or lessens in overall performance. That is to be achieved by revamping Ford's research and development program. Some potentially promising regions of research include hybrid electric vehicles, gas vehicles, and electric vehicles.

Ford has the opportunity to make the most progress by focusing on cross types vehicle research and development. That is to be done by redirecting other R&D expenses and efforts, scaling back production to free up additional funds, initiating a fresh public relations advertising campaign to see consumers about the new ecological Ford plan, and creating partnerships with leading technology and anatomist firms.

The article then reveals an ethical display screen outlining the moral considerations this program of action entails. As the creation of a more sustainable business model builds upon Ford's honest commitments, the increased loss of jobs caused by proposed development and retail facility closures issues with these key points. And while a course of action that results in greater job losses to Ford employees is significantly less than ideal, it arises from market conditions. Lack of action may result in even greater job losses on a long-term scale. In this way, the recommended plan of action resonates with the ethical commitments outlined in Ford's Mission Statement.

A feasibility report discusses Ford's capacity to accomplish these goals. By 2007, the Ford Engine Company maintained the second highest R&D budget in the world, with a cross vehicle program already well underway. In the entire year 2000, Ford presented the first U. S. made hybrid-vehicle, an achievement that packages Ford apart from its U. S. opponents. This article concludes that Ford has adequate resources and abilities to reach these new goals.

A cost-benefit evaluation then weighs potential losses against gains which could arise from this plan. The proposed plan of action is high-risk is cost-intensive, nevertheless the potential benefits associated with increased income outweigh the expenditures Ford stands to reduce while chasing this goal and the equally high-risk option of failing woefully to act upon this pressing problem and opportunity.

Finally, the survey outlines a preliminary budget, timeline, and a step-by-step course of action. Overall, the proposed plan is intended to cost Ford little in conditions of net costs, and really should be completed in its totally by the entire year 2015.

Position

The Ford Electric motor Company is one of the greatest automotive manufactures on the planet (OICA). Founded in 1903 by Henry Ford, Ford Motor unit Company is currently one of America's 'Big Three' car manufacturers, along with Chrysler and Standard Motors (Datamonitor 13). By 2009, Ford's net worth in investments was $222. 977 billion (Ford 67). Ford's market capitalization in 2006 was reported at just over $13 billion (Kiley), and the business's total equity as of 2009 stands at negative $17. 311 billion (Ford 67). Personal debt notwithstanding, Ford is distinguishable from Chrysler and GM as the only real Big Three company never to seek personal bankruptcy or administration bailout because the onset of the existing financial recession. Ford has incorporated Lincoln Mercury, Volvo, Aston Martin and one-third of Mazda into its brand roster.

Ford's Mission Declaration is titled the One Ford Mission. It really is divided into three parts - One Team, One Plan, One Goal - and is roofed in this report's Appendix on web page 17. Ford strives to be one of the leading motor vehicle manufacturers on the planet, and to support this position for decades to come. Furthermore, Ford strives to provide its consumers with an affordable, ethical, and quality product.

There are a number of key stakeholders that count on the Ford brand, including financial buyers, consumers, and large companies and government organizations that depend on Ford to keep reliable fleets of vehicles (Datamonitor 14).

Challenges to Ford

While the Ford Electric motor Company's affect on the automotive industry is undeniable, a multitude of challenges are stopping Ford from capitalizing on the opportunities offered by today's shifting economic and sociable landscapes. Three of these troubles will be defined in the following section. They are listed to be able of top priority.

Ford's current vehicle models are not as energy conserving, green, and ecological as they may be. William Clay Ford Jr. echoes the sentiments of Ford Motor unit Company's Mission Affirmation in a recent interview: "For us, sustainability is not just about the surroundings - unless you have a ecological business model, none of the rest matters" (Bonini and Kaas). Ford prides itself as a firm built both on development as well as ethical responsibility. Yet Ford trails significantly behind Toyota in conditions of cross types technology and GM in conditions of larger-class cross vehicles (Carr-Ruffino and Acheson 21). With no hybrid or substitute energy types of its own in a number of vehicle classes, Ford has much floor to repay in becoming a innovator in environmental sustainability.

Global economic marketplaces are performing way worse than Ford got expected in previous planning. This poor planning has resulted in a $34. 3 billion credit debt that strains Ford's already limited budget (Ford 28). Compounding these problems, consumer self-confidence is, in turn, exasperatingly low (Datamonitor 9) with most consumers unwilling to make large acquisitions until market segments improve. While authorities incentives such as the so-called 'cash-for-clunkers' legislation and tax-credits for hybrid vehicle owners have helped American auto manufacturers weather unusually low sales information, these fixes are non permanent (U. S. Office of Energy).

Ford's market share in developing international markets is leaner than desired. While Ford uploaded a 1. 1% gain in home market shares this season (16. 1% up from 15. 0% at the close of 2008), the business remains fourth altogether global sales behind Toyota, GM, and Volkswagen (OICA) and offers only 2. 0% of all automotive sales in the company's South Asia Africa sector, which include the rapidly rising market segments of China and India (Ford 19).

While Ford finally must address all of these challenges to stay competitive and fulfill its Mission Statement, the remainder of the report will focus on how Ford can create more energy conserving, environmentally friendly, and sustainable cars. By doing this, Ford stands to develop consumer acquisitions and brand loyalty by addressing swiftly changing needs of consumers and other stakeholders.

Consumer Needs

Research is exhibiting that more and more consumers do not need to own autos that aren't fuel-efficient. That is due to financial as well as moral considerations (Prickett 29). Rising gas prices are increasing the value of fuel-efficiency for consumers (Bonini and Kaas) and government authorities are willing to offer bonuses to consumers in exchange for their acquisitions of more fuel-efficient vehicles. As the U. S. economy is based basically on fossil fuel usage - so that increasing scarcity is beginning to characterize fossil petrol options worldwide - there may be sociable interest vested in increasing overall reliance on ecological energy sources. To remain competitive, Ford must not only acknowledge this future, but adopt it.

Domestic and global auto-manufacturers stand to get a competitive advantage if Ford does not act upon this changing consumer need quickly. More and more cross types models emerge each year, with GM at the forefront in larger cross vehicle models (Carr-Ruffino and Acheson). China's federal government and home auto-manufacturers have managed to get clear that they plan to make China another center of hybrid and light vehicle engineering (Gallagher). The clock is ticking and Ford's windowpane of opportunity is shutting.

Sustainability at Ford

Ford must work to produce sustainable models in all vehicle classes. These models must compare to typical counterparts in terms of ticket price. Moreover, Ford must be sure that public infrastructure can effectively support these inventions so that individuals are not burdened with new operating difficulties, costs, or maintenance issues.

Potentially promising regions of development include cross vehicles, gas vehicles, and electric vehicles (Bonini and Kaas). Hybrid vehicles present the least complicated fix in terms of infrastructure and consumer familiarity in comparison to other alternative fuel types. Even though all options must be explored, Ford's first step is to focus on developing and widening its cross types program. Ford's hybrid program has already been well underway, and would require less allocation of resources to construct upon in comparison to the areas of research and development.

Revamping Ford's hybrid program will demand significant financial commitments. In marketplaces that already leave little deep breathing room for addition expenditure, this report recommends that Ford funnel all research and development cash into innovating Ford's hybrid program. Ford must also develop cooperative R&D facilities with leading energy firms, government research groups, and NGOs to save on costs and combine resources and knowledge. In addition, Ford should continue scaling back again production to meet the lower demands of recession marketplaces (Canis and Platzer) and redirect most of these personal savings into an broadened R&D program.

By making these changes in tandem with an enormous PR campaign, Ford stands to gain considerable market stocks both domestically and in foreign countries (Byron). And while this suggestion is high-risk, the history of the Ford Motor unit Company demonstrates that Ford functions best when arranging itself aside from competitors and taking chances. The Ford Motor unit Company was build on big thinking and technological innovation (Wren and Greenwood 73), which is through these procedures that Ford will overcome the most pressing challenges of today's market.

Benefits to Sustainability

Ethical display screen. The notion of a more environmentally friendly Ford Motor unit Company is not only ethically compatible with Ford's Mission Affirmation, it reaffirms and develops upon it. At the same time, there are repercussions to this course of action which contain further ethical concerns. Due to the proposed closing of several production and retail facilities, a number of Ford employees stand to reduce their careers. This move is extremely unwelcome in a nation with an unemployment rate already averaging 9. 7% (Bureau of Labor Reports). Ford stands to have problems with bad publicity and to potentially contradict the ethical commitments discussed in its mission statement.

This plan of action, however, is necessitated by downturn markets and does not represent the best intentions of the Ford Engine Company. The strategy of fabricating a more lasting Ford is intended to protect the work security of most Ford employees on the long-term basis (i. e. the creation of a more sustainable business design). It's the conclusion of the report, therefore, that this course of action complies with and upholds the ethical commitments specified in Ford's mission statement.

Feasibility research. In conditions of clean research, hybrid technology is rather well realized and has already been utilized by the Ford Motor unit Company. Concentration must be placed on improving cross types efficiency, performance, and dependability, as well as preserving affordable costs to consumers. Furthermore, Ford's R&D facilities are top-notch and already attempting to develop Ford's hybrid program. By 2007, Ford acquired the second-largest research and development budget on the planet at approximately $8 billion each year (Vijayenthiran). Also, Ford was the first auto-manufacturer to give a U. S. -made hybrid vehicle (in the year 2000) (Carr-Ruffino and Acheson). Based on these details, it is totally possible that Ford can produce additional landmark models in the near future provided that satisfactory resources and proper strategies are applied towards revamping its current cross types R&D program.

Cost-Benefit Research. There are a variety of original costs that Ford must account for to be able to properly do this program of action. Costs must be covered immediately and can count on the success of several primary budget-saving steps. That said, the total price of expanding hybrid models for those vehicle classes will be accounted for through inside budget recoveries; reductions in development costs are meant to reduce the dependence on increased world wide web spending.

The potential advantages of these investments much outweigh initial costs, but are long-term and may not bring significant results until the entirety of the plan is completed. Even though this proposal is economically risky, the existing problems facing the Ford Motor unit Company - its potential lack of ability to react to the challenges and opportunities of an changing current market - are dire enough that the competitiveness of the business itself is at risk. In this sense, these costs should not only be considered investments, but preventative measures.

Costs: public relations marketing campaign: $300 million each year - includes costs anticipated to advertising in print, television set, radio, and internet mass media, partnerships with non-profit organizations, general market trends, and product offers; revamped R&D facilities: $700 million each year - includes costs scheduled to equipment, much larger research/design staff, new/upgraded facilities, fair-use of patents and other legal expenditures, materials, and partnerships with technology companies, government research groupings, and NGOs. Total costs: approximately $1 billion yearly for the next five years.

Monetary benefits: A report from 2009 estimates that by 2015 the global hybrid vehicle market will have risen by 31. 3% and become respected at around $67. 7 billion (Global Marketplaces Direct). In 2009 2009 the U. S. market comprised 47. 5% of most cross types vehicles sold worldwide (or a expected $32. 16 billion annually in 2015, if the U. S. market talk about remains the same). Of these 2009 sales, Toyota has currently sequestered the best market show of 72% percent (R. L Polk & Co. ). If Ford succeeds in acquiring the highest U. S. market talk about in prospected cross sales by 2015 - if this market show is roughly the same as Toyota's first-ranked show in 2009 2009 - Ford could earn up to $23. 15 billion in cross types vehicle sales in 2015 in the U. S. exclusively (72% of $32. 16 billion). While this estimate is extremely tough and represents an extremely high performance in conditions of Ford's future hybrid sales, it illustrates the monetary benefits that could result from focusing on hybrid development over the next several years.

Other benefits: Financial and environmental sustainability should be considered incredible benefits in their own right. It really is through both that Ford ensures future competitiveness and remains true to its Objective Statement.

Recommendations for Ford

This report suggests the next steps to have success in its goal of creating a more ecological Ford Electric motor Company. First, Ford must begin a PR campaign centered on educating consumers about the existing status of the automotive industry and to raise recognition about the future Ford is assisting to build. The marketing campaign should target both on consumers who, generally, already look favorably on crossbreed vehicles, as well as those who may be skeptical about hybrid performance, cost, and feasibility on a larger level. Ford must utilize this campaign to unveil to consumers its five-year plan to create a more sustainable Ford. This should begin immediately and be fully operational following a transition amount of only four full quarters. Ford should continue this campaign before Ford brand is synonymous with sustainability. A complete of around $300 million per time (from an estimated $1 billion gleaned annually from center closures) will be allocated towards development and maintenance of this new PR campaign. Market research teams will measure the success of this campaign twice per one fourth. The PR campaign will certainly be a success once the Ford brand is accepted most importantly global competitors as the leader in sustainability and cross types vehicle development.

Second, Ford must start to significantly scale back production. This will be completed within the next four quarters. While the PR plan should get started immediately, it might take several months for Ford to evaluate which creation and retail facilities are most extraneous. Certified employees can be transferred to different positions at R&D facilities and public relations departments (Ford will begin recruiting internally). This step will be looked at successful once Ford has reduced its development costs by an objective of around $1 billion each year. Managers will monitor the progress of facility closures with goals established at minimizing operating costs by about $250 million on a yearly basis per quarter for another four quarters.

Third, Ford must immediately lead newly acquired cash towards revamping its R&D program and concentrating this program after the development of hybrid technologies. This should be completed next four quarters and can utilize yet another $700 million each year (gleaned from the believed $1 billion in reduced twelve-monthly operating expenditures). Achievement groups will determine the progress of Ford's cross types R&D program two times per quarter, making certain an increase of at least $175 million in addition annual R&D funds are available at the end of each quarter.

Fourth, Ford must start to develop human relationships and partnerships with leading energy businesses. By creating cooperative R&D facilities - where research responsibilities, budgets and inventions are distributed - Ford stands to make significant strides at lower costs and accelerated rates. By sequestering their co-operation in early stages, Ford stands to gain a competitive advantage against rivals. Ford must gain cooperative associations with nearly all leading energy and executive organizations - such as Basic Electric and Lockheed Martin - as well as non-government organizations and national research categories like the EPA's National Vehicle and Gasoline Emissions Lab (NVFEL) in Ann Arbor, Michigan (U. S. Environmental Safeguard Agency). Costs and evaluations will be designed into broadened R&D departments.

Fifth, Ford must unveil several new types of hybrid vehicles in all vehicle course types. This should be achieved completely by 2015, accompanied by the eventual discontinuation or change of existing conventional-engine-models in years to follow. Hybrid models should cost only current normal counterparts, and perform comparatively. Vehicle design budgets will be contained into widened R&D departments.

The problems facing the Ford Engine Company are great, but will be get over through invention and an increased devotion towards environmental and financial sustainability. Ford has consistently acted as a groundbreaking force throughout record, and it is only through similarly radical revolutions and improvements that Ford can help usher a new period in the global automotive industry.

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