Introduction
The Ford Motors Company is a global company having 100 plants located in 38 countries with 15,800 dealer network in 200 markets. The company’s net income is US $ 20.21 billion and total assets are valued at US $ 178.35 billion both as of 2011. This paper is a business case study of Ford Motor Company (Ford). Ford’s Model A car was the first to be produced on mass scale and sold in the U.S. in 1903. The other two to follow suit were General Motors and Chrysler Motor Company in the early 1900s. Ford was founded by Hendry Ford with a partnership of twelve other investors with a total investment of $ 28,000. Model A car which was first to be rolled out sold so well in the market that the by 1907 the company’s profit exceeded one million dollars. At the first, the company experimented with more than one model of car but it settled down with one Model T in 1909 incorporating modern technologies and refining its popular model thus saving on labor costs by having different models. Although Model T car was selling very well, Henry Ford wanted to increase company’s profit by means of different strategies. Thus, the car which took 14 hours to be assembled was found to incur excessive labour costs in assembling alone. By introduction of mass production methods through improvement of large scale production, the entrepreneur managed to reduce the assembly time to 1 hr and 33 minutes by almost 12 hours and 30 minutes. This dramatic improvement in assembly time reduced the total cost of each car and helped company outbid its rivals in the market with lesser prices. The price of the model T car which was $ 1000 in 1908 was brought down to $ 360 by 1916 by constant introduction of newer technologies and substantial savings in labour costs. Thus, Ford Motors along with the other two as the big three dominated the U.S. auto industry until mid 1980s with a market share of 85 % contributing to the national economy like no other industry. Since 1985, the U.S. auto industry started facing strong competition from Japanese car manufacturers with compact and sub-compact models of Toyota and Honda. The big three lost their market to these Japanese models in the wake of recession that hit the U.S. economy in 2008-2009 forcing them to apply for bankruptcy.
Human Relations operations in the company
Most of the organization’s HR movements were only as a result of legal obligations. But Ford Motor Company introduced HR practices during 1910-20 when employees’ welfare measures had been unknown to the world. The company’s innovative HR practices at that time included wage levels that were twice as much as the industry average, and workforce diversity practices that resulted in as many as 62 nationalities and 900 disabled people. Work environment was also changed to suit the specific requirement of these employees from diverse nationalities. In 1920-1940, the company introduced equal employment opportunity and treatment policy that resulted in employment of African-Americans and Asians to management positions in sizeable numbers. At this point of time, the company also employed large number of women in different departments of the company. The company’s charter also was also amended to include a non-discrimination clause pursuant to company’s collective bargaining agreement with the trade unions. In subsequent years, the company started promoting an inclusive culture that envisaged employees being given due respect and encouraged to create a high-performing work environment with a sense of commitment and collaboration. Ford’s employees’ performance review process involves continuous dialogue between managers and employees that helps achieve better business results and retention of top employees through interviews with employees by providing feedback on their performance, followed by counseling, discussing their job status and their compensation. Employee counseling includes coaching, career management, decision making skills and post-retirement counseling. Some of the employee motivation tools at Ford are financial rewards, treatment of employees with due respect, non-financial rewards, medical insurance, fair wage policy among others. Incentives include minimum wages statutorily prescribed, competency based pay for blue collar employees, salary plans for white collar professionals, financial and non-financial rewards such as employee recognition, certificates, cash rewards, training programs, work benefits, family or individual travel. The employees are also benefited by health insurance, paid leave, vacations, educational subsidies, executive perks and pension plans. The company offers free personal computers to employees in America which policy seeks to save time for the company and employees by moving services online. The company also provides employees with up-to-the-minute details of their pay and benefits through a specially formulated scheme at the HR department. The company offers online training without having to leave their desks which practice has also saved training costs by $ 2 m for the company.
Management
Ford is a classical example of the founder’s entrepreneurial qualities. Using the Schumpeter’s Five-Factor model, Ford applied one or more of the factors of “introduction new good, adoption of new inputs to produce a new good or the previously produced good, introduction of new technology, opening of a new market and creating a new economic organization” . Schumpeter has stated that an entrepreneur’s function is to bring in radical changes in the prevailing pattern of production practices through innovation and try untested technology to produce a new product or to produce an existing one in a new way. He insisted that innovation was a part of business activity. In the context of Ford Motor Company, introduction of new product took place in the period of the company when Henry Ford successfully experimented with various models of automobiles. Soon the company produced one of its most successful cars the Thunderbird in late 1950s. As for new method of production introduced, Ford was the first to introduce a new method of production and this tradition continues even now in Ford as a going concern. Ford also made several acquisitions during 2005 and also divested its interests in some companies like Mahindra and Mahindra and Vastera. It also joined hands with Daimler Chrysler. In regards to opening of new market which is one of the two functions of innovation, Ford reacquired Visteon’s 23 North American facilities with an intention to protect its supply of components. It also acquired a minority interest in Beanstalk group that licensed trademarks. The company also sold its subsidiary Hertz. As regards carrying out a new organization of an industry, Ford undertook after sales service and products through dealer network. In the wake of 2008-2009 economic crisis, Bill Ford Jr took four key strategic decisions. He employed an outsider without any experience in the automobile industry to head the company. He mortgaged all the company’s assets in order to have a large cash cushion when the interest rates were low for redesigning of the company. Ford renegotiated labour contracts with its unions thus reducing labor costs substantially. Fourth and final one was the decision to sell all its non-core brands such as Aston Martin, Jaguar, Land Rover, and Volvo with a view to devote resources for financial and product development, production and marketing for the sake of growth of the company’s Ford and Lincoln brands. The company also endeavors to survive without government support during the economic crisis.
Communication, Conflict and Credence
Ford has invested heavily in internal television broadcast which could cost the company dearly. The Ford’s broadcasts reach 282 sites in the U.S., Canada, and Mexico. The policy is that both good and bad news must be communicated to the employees through such broadcast. As said earlier, Ford gives free of cost personal computers to its American employees in order maintain contact with them even while they are outside. This saves substantial amount of time and money for both company and employees.
Ethical and Social Responsibility
Ford confirms its commitment to its ethical and social responsibility towards climate change and the environment. The company’s goal is reduce carbon emissions at its facilities by 30 per cent per vehicle by 2025 as compared to a 2010 baseline of 31 per cent from 2000 to 2010. Water use reduction goal includes implementation of innovative technologies for increased water reuse and cutting down use of water on per vehicle basis. Reduction of waste sent to landfill has been planned at 40 percent. Ford’s operations affect a variety of stakeholders. The company maintains strong and open relationships with the stakeholders such as employees, dealers, communities and customers. Dealers are a source of strength for the company. As of year-end 2012, Ford and Lincoln dealers employed 189,000 individuals with an annual wages of $ 7 million. The company has 11,619 dealers as of year-end 2012. The company has ensured diversity in dealerships also. In 2012, there were 167 minority owned dealerships representing
5. 1 % of the company’s 3,286 U.S. based dealerships. The company also provides community support which is independent but in consonance with the company’s goals and ONE Ford Plan. The company has been practicing this for more than one hundred years. The commitment is not simply donations but building partnerships and working with others to tackle challenges being faced by people. The company’s community activities are driven by its sustainability and business priorities such as water, human rights and driving safety. The company also improves community life by affording them basic services of food and shelter besides participating in emergency and disaster responses and also educational opportunities. Ford’s service in community health has been significant. The company has been helping endeavors to find a cure for juvenile diabetes for the past twenty years. It has also been helping in the fight against breast cancer. Over the last 19 years the company has dedicated more than $ 120 million in the form of donations and gifts. The company has sold $ 4.2 million worth of apparels since 2006 which have gone towards funds to fight against breast cancer. Ford volunteers collected $ 530,000 for the March of Dimes. Ford volunteers also raised $ 319,000 for the national Multiple Sclerosis Society. As regards customers, one of the stakeholders, their needs continue to evolve which the company monitors and develop products that fit certain market segments. In this respect, the company has been focusing on the growing demand for more fuel efficient and cleaner vehicles. The company has been engaging customers by maintaining relationship with its them through mail, email and toll free phone. The company perceives customer satisfaction in the process. The company also uses social media such as Facebook, Twitter, Google+, Instagram, You Tube, Linkedin, Zynga some of which are publicly traded companies, to connect with customer especially for announcement of new products as a pioneering practice of an automaker. Ford launched its all new Ford Escape through social media.
Diversity and Globalization
The company has already embraced a century ago the practice of ensuring diversity at workplace which most businesses have started practicing only now. Ford’s highly skilled and committed workforce reflects diversity across culture, ethnicity, race, age, religion, disability and sexual orientation. The company has been given hundreds of diversity awards in the recent years. The 2012 Pulse Survey reveals that 86 percent of the company’s workforce across the globe feels that the company is committed to diversity. This represents increase from 82 per cent surveyed in 2011. As regards workplace health and safety, the aim to achieve zero fatalities and no serious injuries. The leadership in safety is aimed at not only within the industry but also within all the industries around the globe. Health and safety governance includes overarching occupational health and safety standards in respect of safety, ergonomics, occupational hygiene, toxicology and clinical operations. The year 2012 was the second year after 1918 without an employee related fatality. There were 312 reported events in 2012 in which serious injuries were averted. The company has embraced globalization in all respects. The Asia-Pacific region has registered the largest growth in car sales and in the next ten years the company expects that this region would contribute to the company’s growth as much as 60-70 per cent. Under “One Ford” market plan to sell one brand all over the world, the company’s advertisement campaign has assumed global proportions.
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