It is hard to imagine a company operating efficiently, with no external partners, still less employees around. Being an international giant that it is, Ford Motors has important stakeholders in external partners or suppliers, such as Bosh and TRW reported to provide the producer with critical components like brakes, seatbelts and airbags. There are elements vital to the safety of actual or would-be car owners, and the latter use this customer value as a benefit to compare it with the financial sacrifice the purchase implies. The reputation, employment conditions, and reasonable prices suppliers have to offer advantage the product manufactured by Ford constituting the price and quality elements of customer value. To maintain relationship with partner providing such value, Ford use the strategies of transparency and accountability, open houses for suppliers, and the reduction of the number of external partners for the improvement of the workload of the chief suppliers.
Considering the great utility of preserving external partnerships, the retention measures cannot present any significant disadvantages for the company. Of course, Ford faces miscommunication and has a way of forcing them to bring prices down following poor sales quarter; still, the company seeks to overcome the troubles by improving communication channels and enlists the help of rank-and-file employees, which testifies to the great role played by the workforce. Departments involved in the improvement of the functional systems within vehicles produced and performing corporate social responsibility functions have proved their utility too. Overall, Ford Motors can be said to be using efficient strategies of maintaining relations with suppliers who contribute to the enhancement of customer value, yet some shortcomings are in need of liquidating.
External Partners Co-Create Ford Customer Value
Butz and Goodstein (1997) used customer value to identify customer perceived value (cited in Asgapour, Hamid, and Sulaiman 2015, p.633). McDougall and Levesque (2000) described perceived value as the benefits customers obtained relative to overall costs, such as the price paid (cited in Asgapour, Hamid, and Sulaiman 2015, p.633). Duchessi (2004) cited price, service quality, and product quality as three principal elements of customer value (cited in Asgapour, Hamid, and Sulaiman 2015, p.634). If there are car elements against which to offset the need to spend a considerable amount of money, it is safety-related components like brakes, seatbelts, and airbags. Klier and Rubenstein (2008, p.6) described the brakes of the Ford F-150 as supplied by Bosch and airbags and seatbelts as produced by TRW.
Griffin and Moorhead (2013, p.164) noted that, at one of its brakes producing facilities, Bosch paid workers a median of 18 dollars in salary and provided them with a medical, disability, and life coverage, and retirement packages. Bosch has maintained an international reputation for outstanding employment practices and quality engineering (Bilham-Boult 2001, p.128). What follows therefrom is that a happy worker is a quality worker who is at great pain to produce the top quality product for fear of losing job with a wealth of benefits as an underachieving worker. Thus, by paying the workforce adequately or providing it with a benefit package, which keeps them satisfied, the supplier ensures the quality of brakes, a critical component of a Ford car, which will not leave potential buyers feeling doubts about whether to purchase the car since benefits will most certainly outweigh the financial sacrifice associated with the purchase.
Johnson (2009, p.131) opined that Bosh had gained the reputation of the best in the business. The same is true of TRW Dobbs (2002, pp.75-76) suggested that the company producing safety systems for cars among other things had developed a reputation for its high-end technologies along with their practical applications. Thus, the status of Ford and TRW as suppliers only adds to the positive perception of its products enhancing the quality component of the customer value. Indeed, a company with such status will never manufacture products in a slipshod manner, as reputation is easy to forfeit, which may be a question of producing a number of flawed brakes leading to lethality. Lastly, Monczka, Handfield, Giunipero, and Patterson (2015, p.790) noted that Bosh has developed the way to achieve parts standardization potentially reducing the cost of specific products up to 30%. If it be so, the company can reduce the price of its products, at which companies like Ford Motors may acquire them. A price for supplied components can lower that of the final car product improving customer value through price, one of its three major elements.
Strategies of Relationship Management
Reliance and trust were central to forging business relations (Mouzas, Henneberg, and Naude 2007, pp.1016). According to Smith (2001), and Marsh and Dibben (2005), in business-to-business relations filled with a great deal of risk, the initiation of accountabilities via transparent performance monitoring and standards conflicted with interpersonal trust. Trust is considered unimportant for long-term business relations between partners (cited in Mouzas, Henneberg, and Naude 2007, p.1017). However, Pryke and Smyth (2012, p.100) stated that trust was an essential foundation in economic relations. Trust stimulates the value of corporate and personal relations via the perceived reliability of corporate systems. Christopher et al. (2001), Gronroos (2000), Gummesson (2001), and Ford et al. (2003) maintained that relationships were instrumental in articulating business-to-business relations (cited in Pryke and Smyth 2012, p.100).
With this understanding in mind, Ford Motors has more sense than to avoid using transparency and accountability as its trust building relationship strategy with regard to external partners like suppliers. Wood, Logsdon, Lewellyn, and Davenport (2015) cited the statement of accountability issues by Ford, in which the company vowed to be open and truthful abiding by the highest of corporate integrity standards. To do so, Ford promised it would be responsive to all concerns of stakeholders as regards the impact of company products, operations, and services via regular reporting and public disclosure. The second part of the statement of accountability makes it mandatory for Ford to compete in an ethical fashion, to make precise and outspoken statements, to avoid the conflict of interests, and to tolerate no bribe acceptance or solicitation (Wood et al. 2015).
As for the direct interaction with external partners, Gupta (2005, p.171) noted that open house for suppliers held by purchasers for personnel and resources was one of the most efficient approaches to cultivating a better understanding between purchasers and suppliers. The community relations section of the public department of Ford developed the Suppliers’ Day plan. What the company does is stage 15 supplier open houses in every major assembly plant city. Overall, 1.500 representatives of company contractors took part in the Supplier Day programs. Ford gave its suppliers a tour of the local assembly plant. An informal luncheon at every plant either followed or preceded the tour.
Lastly, the company has embraced the strategy of reducing the number of suppliers. Lewis (2007, p.139) suggested that Ford’s executive engineer for plant facilities, Vincent Coletta, had come up with the idea of substituting a single contractor for the practice of garnering competitive bids for each of multiple part of the production facility. Formerly, there was no room for project-ide creativity when suppliers would see only a small part of the entire project. Such fragmentation damaged coordination resulting in issues Ford faced in Ohio. Jackson, Sawyers, and Jenkins (2007, p.488) noted that Ford Motor made its plans known in September 2005 that it would overhaul its 90 billion dollars’ worth of an annual global purchasing program by offering larger long-term agreements to a smaller number of suppliers reducing it by 2.5 times to 1000 partners. Doing so was expected to economize billions of dollars. Suppliers, in turn, stand to gain from enhanced factory utilization (Jackson et al. 2007, p.488). The strategy of cutting the number of external partners short by Ford is unique in many ways, as it allows suppliers to increase the extent to which they utilize the factory. If the amount of work rises, so does their income. If projects become lucrative due to their grander scale, it will increase the longevity of the relationship between Ford Motors and their suppliers who are likely to feel more valued when provided with meaningful contracts in terms of the work amount.
The Advantages and Disadvantages of the Strategies
The maintenance of the professional relationship with suppliers is difficult to imagine in a negative counterproductive context. In building external partners relationships with specific suppliers like Bosch, Ford Motors manages to increase the customer value of their production by adding to the positive perception of their brand. The use of Bosch as a supplier of car components like brakes only lends additional credibility to the car manufacturer production convincing consumers of product value by allowing them to offset expenses against benefits when making the purchase decision. External partnerships in case of Ford allow outsourcing a portion of its manufacture to countries like Germany thereby reducing its environmental footprint in the USA and creating a positive CSR image connecting to a larger customer base, which is central to market share augmentation and the enhancement of competitiveness on the market. Turnbull, Ford, and Cunningham (1996, p.46) suggested that some researchers did see a correlation between the ability of a company to develop and manage relations and its competitiveness.
The strategy of supplier reduction cannot be disadvantageous to the company although contractors are the first to benefit from the approach, as they secure larger projects yielding bigger gains. Increasing the longevity of business relations with such suppliers will benefit Ford if they add great value to the product. The strategy allows this benefit to prove useful longer since suppliers like Bosch will not grow distraught over the contractually determined amount of work to perform if they have considerable agreements signed with them. Furthermore, the strategy of open houses may be said to be disadvantageous, as their holding requires money, especially seeing that the company holds 15 events of this kind; however, the opportunity the strategy presents of building strong relations with external partners may be worth investing.
The impact-related promise of the Ford transparency provision strategy addresses the concerns of such stakeholder as the society often anxious about the environmental effects of production. However, this approach also contributes to the preservation of external partners like suppliers who may be pressurized out of professional relations with a company with a poor corporate social responsibility record by its own ecology-minded shareholders. Alternatively, suppliers may revise their CSR that will oblige them to deal with more environment-friendly corporations; thus, Ford would be best served by adopting the transparency strategy, which it does. Although the strategy of maintaining a clear accountability code should make Ford look poorly in case of a bribe scandal, should it be the case, which may not necessarily happen, it does much to improve the company image in the eyes of external partners. If the company guarantees it will try its utmost to avoid bribes, suppliers will be more willing to cooperate with Ford Motors convinced of bids being held on an unbiased and transparent basis following such public recognition of responsibility.
Challenges in External Partnership Management and the Ways Ford Overcomes Them. The Great Role of Employees
De Toni (2011, p.72) suggested that Ford itself identified issues like non-fluent communication from supplier to producer for notifying about the deficit of parts, maintenance or quality incidents and troubles. The company has adopted communication systems, such as ICT or information and communications technology making ceaseless and fluent relation between the producer and its suppliers possible, which enables the inter-enterprise integration and communication (De Toni 2011, p.70). Thus, much as the company seeks to address existing issues, they continue surfacing. It is like Ford to have troubles, as was the case in the first quarter of 2005 when it faced a loss. Backward pushed the company its financial difficulties requiring that supplies be the ones to cut costs (Hitt, Ireland, and Hoskisson 2006, p.52). Since at the root of the problem was poor performance, all the company needs to relieve suppliers of the price cutting need is to maintain a solid sales rate; otherwise, Ford will have hard times maintain proper relations with frustrated external partners. The company seems to have a great formula it needs to apply at all times. Huffmire and Holmes (2006, p.61) stated that Ford made workforce involvement its priority as early as 1981. This policy decision predated the one to treat efficiency and quality as paramount objectives. The company came to the realization that Ford Motors would better involve its employees in the process in order for quality to rise and costs to take a drop. The senior management knew better than to refuse to listen to the grass-root or blue-collar workers along with middle managers who had ideas to share (Huffmire and Holmes 2006, p.61). It may be that the company did not go through all the trouble of listening to their workforce. In any case, employees set an important precedent of the great role they may play at Ford.
Departments and Their Unique Role
Rajagopalan and Subramani (n.d., p.1) stated that knowledge management initiatives were implemented in new product development. Whiteley (2008, p.116) explained that product development had a department of the same name within the company, as seen in the case of Ford Australia, one of US-based company subsidiaries. As for knowledge management implemented in this department, according to Woods and Cortada (2013, p.163), it is a system gathering and sharing ideas that employees can make use of swiftly to perform their work better. An uninterrupted focus on the jobs actual individuals do or performance focus is key to the success of the company in question (Woods and Cortada 2013, p.163). Thus, the system practiced allows combining the utility of the workforce and the department for ensuring the success of the car giant. Since rank-and-file employees were found to contribute to better performance through ideas, Ford would be better suited investing more in the department so that it may process all suggestions allowing analysts to develop a comprehensive strategy of how best to handle issues related to communication between the producer and its suppliers.
According to Eppinger and Browning (2012, p.34), the Climate Control Division of the company was assembled in part the better to understand the network of element interaction within the climate control systems developed for trucks and cars manufactured by Ford. What engineering managers were originally doing was seeking new insights with respect to the way integration and system engineering activities were possible to improve and the way the elements functioned together as modules (Eppinger and Browning 2012, p.34). Thus, the role of the department was every important inasmuch engineers looked to introduce improvements into the critical elements of the final product, such as climate control systems, which would boost quality and customer value.
Ford practices an important approach that does much to establish and maintain a positive relationship with the community. Crossley (2013, p.128) suggested that officials working for the Ford Motor Company Fund provided assistance to a 5-year plan of transforming 12 high schools over the period spanning 1.5 years. The foundation communicates the commitment of the car producer to community stakeholders, education, and the improvement of struggling school systems, the social duty first adopted in the years when Henry Ford was at the helm (Crossley 2013, p.128). Assisting local schools with improvement is one of social corporate responsibility approaches that allows improving local community conditions, educating future workforce, facilitating the recruitment and retention of employees, and improving the good name of the company among consumers, to name but four benefits. Such CSR initiative is an element of cause marketing and strategic philanthropy (Waddock 2007, p.2008). With a good social image of a caring corporate citizen in place, Ford will have a shield of social admiration minimizing damage inflicted by criticism the company may evoke by finding itself at the epicenter of a scathing scandal. While CSR is the right strategy to embrace, its diversification will serve Ford Motors right especially when applied on the environmental front more intensively since car producers, as any heavy industrialists are associated with pollution in the first place.
Conclusion
Thus, the strategies of transparency and accountability, the reduction of the number of external partners for the improvement of the workload of the chief suppliers, and open houses for suppliers seem efficient at maintaining working relationships with external partners that are very important for the car producer. Such relevance stems from them increasing customer value though at least two of value elements, such as quality and price influencing the purchase decision of potential buyers. While the communication and price regulation issues emerge threatening the stability of the relationship between the company and its partners, employees have stepped up to offer their creative solutions. Department too appear to help the company maintain its pace improving its flaw or enhancing reputation whenever needed.
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