lOMoARcPSD|9460825
Essay, exam case "FORD"
Organizational Structure (Rijksuniversiteit Groningen)
Studocu is not sponsored or endorsed by any college or university
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
Ford – Driving to succeed
Exam Case
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
Content
- Introduction……………………………………………………………………...3
- Strategy
- Structure
- Internal environment
- External environment
- Results
- Strategic recommendations
- Structural recommendations
-
Conclusion
2
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
Introduction
Ford is an American automotive manufacturer, operating worldwide, in 29 countries. It was
founded 1903 by Henry Ford and is now headquartered in Michigan, where the main
guidelines for every plant are drafted. Ford invented the concept of the assembly line, which
formed the basis in order to become a multinational car manufacturer competing in global
markets.
This report deals with an analysis of the Ford Company including their strategies, structure,
internal- and external environment.
Recently, Ford adjusted their current strategy and structure in order to meet current
costumer preferences and global expectations. The strategy will be elaborated regarding the
theories of Miles and Snow, Michael Porter and Bartlett and Ghoshal.
Those strategies link to the existing structure as they have an great influence on it. Regarding
the complexity, formalisation, centralisation, spatial dispersion, horizontal- and vertical
differentiation the structure will be analysed and referred to the current strategy.
Eventually the internal- and external environment will be discussed. Especially the
organisational culture and communication will be debated, regarding to external influences
and factors, such boundary spanners, environmental uncertainty and diversity.
History
Ford Motor Company was founded in 1903 by Henry Ford. Its first factory was introduced in
Detroit, Michigan. In the beginning, the company produced only a few cars a day but by
expanding overseas in 1911, the production rate increased. In 1913, Ford introduced the first
moving assembly line, which made the production process eight times faster; therefore, cars
became more affordable for the middle-class. During World War I, Henry Ford became more
popular in Europe because Ford created vehicles for Allied military, like the Ford 3-Ton
M1918 tank, and the 1916 ambulance. During the great depression, there was a big drop in
motor sales. As a consequence, Ford reduced its operations and a lot of employees were
fired. During World War II, Ford produced 390,000 trucks and tanks, 270,000 jeeps, 27,000
engines. Furthermore, Ford made a big amount of war parts and machine tools. The
3
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
organization has made a lot of innovations, such as rear seatbelts, child-proof door locks and
optional front. In the late 20th century, Ford also acquired Aston Martins and Jaguar Cars.
Later on, in the beginning of the 21st century, Ford faced a lot of challenges due to higher
fuel prices, a bad economy and high healthcare costs. In 2005 they created a new plan, The
Way Forward, developed by Mark Fields in order to return Ford to profitability. This plan
contained giving up inefficient models, closing factories, strengthen production lines and
cutting jobs. However, Ford had the largest annual loss in 2006, with an amount of $12.7
billion. Nonetheless, in the second quarter of 2007 Ford made a profit of $750 million;
nevertheless, at the end of the year it reached a loss of $2.7 billion. In 2008, Ford had a
record loss of $14.6 billion, this was caused by the financial crisis and the insurance of debt
of Ford. In 2006 Alan Mullaly became president and CEO of Ford and developed a new
strategy to return Ford to profitability: “The One Ford Plan”. Applying the new strategy, Ford
reached annual profits and regain increased market shares. Since 2014 Mark Fields is the
CEO of Ford.
Ford’s strategy:
The following paragraph presents and analyzes Ford’s strategies and links the company’s
actions to the theories mentioned in the book “Organisation Theory” written by P. Robbins
and Neil Barnwell.
A few years ago, Ford published a new strategy, which consists of four key priorities which
build the „One Ford Plan“:
-
“Aggressively restructure to operate profitably at the current demand and changing
models
-
Accelerate development of new products our customers want and value
-
Finance our plan and improve our balance sheet, and
-
Work together effectively as one team, leveraging our global assets” 1
Each of these key points contains important parts of Ford’s strategy including, for instance,
manufacturing, product development, etc. By referring this content to different strategies
1 http://corporate.ford.com/doc/ar2013-2013_ford_annual_report_mr.pdf, p.13
4
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
mentioned in the course book “Organisation Theory”, one can apply these to describe and
summarize Ford’s actions.
Classifying organizations into strategic types - Miles and Snow
The analysis published by Miles and Snow distinguishes organizations among four different
types:
-
Defenders
-
Prospectors
-
Analyzers
-
Reactors
Although it is very difficult to clearly dedicate Ford’s strategy to one of these types, the
model, which fits best, is the prospector. This strategic type implies that an
organization emphasizes on product innovation and searches for new market
opportunities. Therefore, the company has to be very flexible and decentralized units
are required.
The second point mentioned in “One Ford Plan” (“Accelerate development of new products
our customers want and value”2) states that the organization develops new products
continuously. After changing their strategy due to a loss of market share and profitability a
few years ago, Ford focused on being more innovative and developing new car models as
well as technology. Until now, the company does not stop being creative: for instance, in
2014/2015 they will launch “an all-new Mustang” 3 as well as an “all-new F-150”. 3 These cars
will be equipped with advanced technology and special features, e.g. 360-degree camera
view, LED headlights and side view mirror spotlights, etc. Moreover, Ford’s strategy includes
an approach to sustainability, which makes the company stand out from its rivals. The
development of so-called “EcoBoost engines” is described as the “centerpiece of […] Ford’s
Blueprint for Sustainability.”4 Apart from these improvements, Ford also searches for new
market opportunities worldwide. In doing so, Ford does not only focus on mature markets,
but also on newly developed and emerging markets. By adding the Lincoln MKC to the
Lincoln line-up, one of Ford’s brands which is part of a small premium segment, the
2 http://corporate.ford.com/doc/ar2013-2013_ford_annual_report_mr.pdf, p. 13
3 http://corporate.ford.com/doc/ar2013-2013_ford_annual_report_mr.pdf, p. 14
4 http://corporate.ford.com/doc/ar2013-2013_ford_annual_report_mr.pdf, p. 15
5
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
organization want to acquire customers in China and expand in this market. All these actions
are indicators for Ford being a prospector.
Finding a competitive strategy – Michael Porter
According to Porter, “a company’s management must select a strategy which will give its
organization a competitive advantage”5. Related to the company’s strengths and
weaknesses, there are three different strategies:
-
Cost-leadership strategy
-
Differentiation strategy
-
Focus strategy
Ford’s strategy partly coincides with each of these types. For instance, economies of scale
and technological innovation are characteristics of the cost leadership strategy, whereas high
quality is part of the differentiation strategy. Hence, it is not possible to clearly apply one of
Porter’s strategies to Ford, although Porter argues that an organization has to fit in one of
these models, otherwise it will be difficult for the company to achieve long-term success.
First of all, one of Ford’s main goals is to offer a high product quality, which is an indicator for
adopting a differentiation strategy. Since 2005, the company improves its cars constantly and,
in the past year, aimed a reduction of warranty repairs of 66%. Nevertheless, one can say
that Ford mostly adopts the cost-leadership strategy due to different reasons: Ford’s products
are comparable to these offered by competitors whereas Ford is at an advantage in offering
them more cheaply. By using global vehicle platforms, the company achieves economies of
scale. Moreover, Ford seeks to produce as efficient as possible and serve customers all over
the world by operating and manufacturing in many different countries. An overview of the
worldwide operations one can find on Ford’s homepage:
http://corporate.ford.com/our-company/operations-worldwide/global-operations-list
Another point that supports the cost-leadership strategy is that Ford focuses on
technological innovation. As already mentioned above, the organization improves its
technology continuously and, simultaneously, improves the organization and customers’
conditions. In order to strengthen its global supply base, Ford reduces its number of
5 Organisation Theory 5th edition – Stephen P. Robbins, Neil Barnwell, p. 162
6
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
suppliers, and as a result, reaches a “preferential access to raw materials”.6 Taking all these
factors into account, Ford is an example of following a cost-leadership strategy.
Linking global strategy and structure – Bartlett and Goshal
Bartlett and Goshal developed a theory, which emphasizes on the “ interaction of cost
pressures found in the market with the pressures for local responsiveness”7. These two
factors are critical to dedicate Ford’s actions abroad to one of the following strategies:
-
International strategy
-
Multidomestic strategy
-
Global strategy
-
Transnational strategy
Considering the different theories, Ford mostly adopts a global strategy. Ford published an
annual report 2013 which highlights its “hub and satellite approach”: There is a product
development in the engineering center, the hub, which creates cars with “common design,
parts, suppliers, and manufacturing processes”8 to ensure global scale and efficiency.
Additionally, Ford introduced regional engineering centers, which help to distribute these
cars by modifying them while retaining the global design. These actions demonstrate that
Ford can sell its cars in most markets just with little adaption to customer’s preferences. In
general, the company faces a high cost pressure but in contrast, the pressure for local
responsiveness is comparably low; therefore, Ford locates its key activities in markets where
it brings the highest cost advantage.
Structure
Ford’s new developed One Ford Plan strategy as discussed above includes features that lead
to restructuring. Their main goals involved developing new products, ensuring customer
satisfaction, improving their finance plan and working more effectively in a team. Therefore
Ford rearranged their structure to enable better success.
6 Organisation Theory 5th edition – Stephen P. Robbins, Neil Barnwell, p. 162
7 Organisation Theory 5th edition – Stephen P. Robbins, Neil Barnwell, p. 164
8 http://corporate.ford.com/doc/ar2013-2013_ford_annual_report_mr.pdf, p. 13
7
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
Horizontal differentiation
First of all, developing new products has the consequence of scanning the environment to
develop results for demanded products. Afterwards, specialised teams need to transfer the
developed ideas into actual products or, if necessary, improve already existing outputs to fit
the demands. This step can evolve many different areas of specialisation and the variety of
operating departments is needed. This led to a spread of divisions in order to enable overall
specialised knowledge at each department and fast and effective work groups. To facilitate
this method, extensive use of rules is necessary. Ford successfully assembled a high number
of divisions all responsible for parts of the production.
Research revealed that a certain target group commands more luxury car designs. To enable
this, Ford concentrates more on their Lincoln division, which is responsible for Fords upscale
vehicles. The Ford Automotive Brand and the Lincoln Automotive Brand are the two main
brand carriers and offer many additional services for customers. Those divisions mainly
consist of additional service provided to customers, such as:
- Ford Motor Credit Company
- Ford Service
- Quick Lane Tire & Auto Center
- Ford Parts and Motorcraft
- Ford Accessories
- Ford Extended Service Plan (ESP)
- Lincoln Accessories
- Lincoln Extended Service Plan
- Lincoln Automotive Financial Services
This variety of division leads to a high horizontal differentiation of the Ford Motor Company.
Division of labour guarantees high specialisation and allow conspicuous service and quality.
Vertical differentiation
Improving their finance plan and their working skills among their employees are changes that
have an effect on the entire company. These decisions are made by the headquarter,
whereas day-to-day decisions are made by lower management levels. Ford exhibits high
centralisation to ensure fast reactions to changes and avoid disagreements amongst different
departments. The clear flow of control is streaming from the CEO to vice-president to
8
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
department directors to employees. This implicates that the organisations hierarchy of
authority is well defined, decision-making is kept as high as possible and the communication
mainly flows vertically. Subsidiary, the span of control is kept fairly low to prohibit mistakes.
Spatial dispersion
The second part of Ford’s new strategy consists of ensuring costumer’s satisfaction. Ford
operates in 29 countries in all five continents. They adapt to the global strategy, which
includes miner local responsiveness and generally concentrates on one common model. In
order to achieve this goal Ford has to discover local advantages and divide their production
processes on multiple countries to ensure high levels of efficiency. Considering this, the wide
spatial dispersion is a logical consequence of their strategy. The following link contains a
graph illustrating the spatial dispersion.
http://corporate.ford.com/our-company/operations-worldwide
Divisional structure
These characteristics explained above conclude in one specific organisational structure; the
divisional structure, which is defined as “a set of autonomous self-contained units
coordinated by a central headquarter”.9
Strengths
These characteristics enable the organisation to keep a clear overview about the
accountabilities and responsibilities each division has to fulfil. Specialised units can bring the
production to its perfection and repetition of work tasks can lead to lowering costs due to
automation. As regulations are individually determined per division, the headquarter can
concentrate on long-term strategies.
Another important positive aspect of this structure is the independence of all units. One
downfall will not affect the entire organisation and it is more likely to be overcome.
Accordingly, Ford reduces the risk of a total collapse of the entire organisation.
Weaknesses
Due to multiple independent divisions, all must contain individual accounting departments
and particular regulations must be adopted. As a consequence higher costs will arise and
9 Organisation Theory 5th edition – Stephen P. Robbins, Neil Barnwell, p. 125
9
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
therefore efficiency will decline; however, this violates one of Fords most important
strategies, low-cost and efficiency seeking.
Another difficulty arises with communication and coordination among units. This often
appears to be problematic and can be responsible for economic blockades. If the division for
the Ford Extended Service Plan needs to act jointly with the division for Lincoln´s Extended
Service Plan, miscommunication due to different regulations and guidelines can end in
breakdowns.
The structure of the Ford Motor Company adapts because of the strategy they follow in
order to enable maximum success in persuading them; however, some structural
characteristics disagree with important strategies.
Internal environment
Organizational culture
The culture of Ford is participative and it has an open communication system. Fords culture is
adaptive in nature. The managers of Ford care for their employees, customers and
stockholders. To the company, the employees are very important, including their opinions.
Beside that, it is important to work together as one team to gain influence on decisionmaking.
Ford focuses on the development of a skilled and motivated work force, while providing a
safe and respectful environment. By doing so the invest in their employees to create a
friendly and welcoming work environment, while also improving their technical and
communication skills. Those innovations help Ford’s management to work more effectively
and goal-oriented. They make use of these aids to understand the employees needs and
satisfy those if possible.
To measure the employees satisfaction within the company, Ford lets its employees
participate in an annual survey, the Global Pulse and Engagement (Pulse) survey. The results
are included in Fords business plans. One important goal for senior management is to
improve those Pulse scores.
10
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
It is also important that employees stay enthusiastic about the company, as this will reflect in
their performance and will attract new motivated an talented operators. Employees and
managers have to communicate in open and clear ways. Ford tries to achieve this
communication by setting up 'town hall' meetings, joint labor-management committees,
surveys and chats. These are examples of interactive forums. Ford also uses publications such
as newsletters and the Ford magazine to create a bond of the company and connect their
personnel. Further connection is accommodated through social media.
One Ford
The One Ford strategy is about having One Team, One Plan and One Goal for an active and
viable company. It provides logical goals and expectations for employees with a sharp focus
on their skills and behaviors.
One Ford concentrates on educating and training their employees to enable adequate
qualifications. Furthermore appropriate behaviors and attitudes need to be adapted to add
to the company’s success. Four general key goals have been defined in One Ford, which must
be observed by all staff members:
-
Creating a pleasant place to work
-
Developing a capable and effective work force
-
Aligning the organizational structure with their global business footprint
-
And providing “people-related” processes to support their work force.
Power control
The ultimate decision power of Ford resides in the hands of top management, although
employees are free to give opinions.
Knowledge management
Knowledge management is creating new products and ideas by capturing, developing,
sharing and effectively using organizational knowledge.
Ford uses the approach of the Best Practice Replication. This approach arose in the 1980's.
One employee from every plant of the Ford Company was chosen and grouped into one
team. Visiting all plants, they observed production improvements and created a list of
recommendations, which was captured and shared with all excising plants. The ideas and
11
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
extra visual aids were documented on Word and faxed or emailed to every plant. Transferring
this knowledge led to a better use of their facilities and improved their productivity. In 1995
the Best Practice Replication moved online, which made it easier to share and replicate best
practices. Nowadays, the extensive use of technologies is common and well known.
Organizational innovation
Currently it becomes more important to innovate productions and products. This is caused
by the change in consumer expectations, technological progresses and regulatory mandates.
According to “New Research” by the Boston Consulting Group, most U.S. Car buyers want a
car from an innovative company. Xavier Mosquet, a BCG senior partner and coauthor of the
study says: “Consumers want to buy cars from companies that bring new technologies to the
market, and connectivity, safety, and fuel efficiency are three of their top priorities. The
ability to innovate in these areas will be a major factor in individual automakers’ success in
the coming years.”
Ford is constantly innovating its products. Its newest announcement is the new Ford PreCollision Assist with Pedestrian Detection. With new technology of radar and camera, it can
decrease the severity or even exclude collisions with vehicles and pedestrians. This new
innovation is debuting on the 2015 Ford Mondeo in Europe.
Organizational learning
While concentrating on organizational learning, Ford is focused on blended learning. This
combines self-studying, experiences and relationships. Employees need to be able to learn
new things and adapt to changes. For a learning organization, Ford has created a team to
concentrate on learning and developing strategic priorities.
Internal strategies
Internal strategies adapt and change organizational practices to fit the environment. There
are different types of internal strategies. Examples of internal strategies Ford uses are
buffering, improving information processing and geographic dispersion.
Buffering is the protection of the operating core from environmental changes in supplying
and demands. In 2014, Fords suppliers dealt with 106 companies, 80 production and 26 non-
12
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
production suppliers from around the world. Because Ford has a lot of suppliers, it reduces
its dependence on one or a couple of suppliers.
In improving their information system, Ford is using big data analytics internally to develop
and help transform its business results. Ford has collected customer feedback and by means
of the internal data, Ford can predict how their cars can be improved by adding new features
in their designs. Therefore they are now able to upgrade their processes, quality controls and
costumer satisfaction.
The geographic dispersion of Ford is mostly in the Asian Pacific African region. This region
includes 11 markets for Ford. Fast developing countries are growing markets for cars. In this
region, Ford has increased (and is increasing) its dealer networks and manufacturing
capacity.
External environment
As every company, Ford has to deal with its external environment, which is, in this case, very
complex as well as versatile. At first, in order to describe Ford’s environment, it is important
to define the meaning of environment: although there is no short and clear definition of
environment, one can consider that an environment of a company is defined as everything
outside an organization`s boundaries. To measure Ford’s external environment, the theory of
Paul Lawrence and Jay Lorsch are examined. These researchers consider that there are two
types of environments, internal and external environments. According to Lawrence and
Lorsch, the external environment should be measured by the organization`s uncertainty.
While some organizations face relatively stable environments, with no new competitors and
a really stable market, others companies face a very dynamic environment, with rapidly
changing market situations and unpredictable price changes etc.
Markets
Ford Motor Company is a MNE, which stands for a multinational enterprise. Thus, Ford is an
organization that is operating worldwide and consequently, it is difficult to judge about Ford’s
entire market environment. However, one can say that Ford’s market environment is diverse.
For instance, a market like Russia and the Netherlands completely differ because of having
different competitors, customer preferences, market stability and containing a different
13
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
degree in budget capacities. Each of Ford’s division has to deal with other market
environments, where the uncertainty, complexity and the stability of the market contrast. In
a certain country, Ford might have to deal with big fluctuations in demand and an instable
government policy. Nevertheless, Ford’s home country, the USA, is a relative stable market
with a stable government policy and a relative stable demand.
Competitors
The automobile industry contains multiple (international) car manufacturers. However, Ford
is the number four of the biggest car manufacturers worldwide and operates in five different
continents. In each continent, and of course in each country, Ford faces different
competitors. At its home market, Ford’s biggest competitors are General Motors and Toyota.
In contrast, a market like China has a complete different competitor situation, where Ford
has a comparative small market-share and has to deal with many competitive Asian rivals.
Besides the difference in competitors, Ford also has to deal with new competitors who enter
the market.
Hence, Ford is operating internationally and moreover, the market situation in each country
differs. Factors like competitors, stability, uncertainty, demand and customer preferences etc.
contrast worldwide. Anyway, Ford’s global market situation could be defined.
Ford`s external environment
Due to the high competition in the automobile industry, firms have to be cost-efficient and
innovative in order to survive on the long-term. Thus, the products have to be inexpensive
and, simultaneously, made of a good quality. Besides that, customers expect a good afterservice and in the end a sufficient trade-in value. All these high requirements lead to a high
degree of competition.
Ford`s external market is very complex. Because of all the different countries it is operating
in, Ford faces a lot of different market situations and circumstances. As a consequence, it is
hard to define Ford`s market situation due to its diversity.
After having considered the market competition and the market complexity, the market
(un)certainty of Ford is important as well. Firstly, Ford has to cope with a lot of factors that
influence its consistence, which makes its market and existence uncertain. The Ford
Corporation faces a very dynamic environment; there are rapidly changing technologies, new
14
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
competitors, continually changing customer preferences, unpredictable price changes etc.
The combination of a high level of competition and complexity leads to a moderate to high
uncertainty.
Results
To summarize, Ford has a divisional structure. This structure has strengths and weaknesses;
therefore, we recommend slight changes in the structure. For the strategy of Ford we had to
use different theories of strategy. First of all, the prospector fits best with Ford's strategy.
Secondly, Ford mostly adopts the cost-leadership strategy, although it partly coincides with
the other strategies too. Eventually, Ford follows a global strategy. Recommendations for the
strategy will enable Ford to grow and develop in order to achieve long-term success. The
culture of Ford is participative and the employees are important and treated well. For the
knowledge management Ford uses the approach of Best Practice Replication. Ford is
operating in an external environment that is complex, dynamic, high uncertain and versatile
with a lot of different competitors.
A new strategy – Recommendations
Due to the company’s crises a few years ago, Ford developed a completely new strategy
considering the strengths and weaknesses of the organization. Hence, it is not very simple to
give recommendations on their strategy, especially because of the success Ford achieves by
applying its “One Ford Plan”. However, there are a few improvements related to the overall
strategy:
By observing Ford’s market shares, the percentages of the Asia Pacific Africa segment attract
attention. In 2013, Ford achieved an increased market share of 3.5% in comparison with
2012, when Ford had a market share of 2.8%. The company reached a record market share in
this segment regarding the development in the past few years, driven by the improved sales
in China: the market share rose to a total percentage of 4.1% (in 2012: 3.2%). Furthermore,
the wholesale volume in the second quarter 2014 grew impressively by 26% and led to an
improved market share of 0.3%. This expansion shows that China is a very important market
for Ford being successful on the long-term. While other segments, e. g. the US or EU, are
comparably volatile, China’s market grows; thus, Ford should focus more on expanding in this
country and emphasize on increasing its presence there. Although the organization states
15
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
that they want to continue establishing in China, Ford should prioritize this course of action
to fully exploit its market potential.
In order to minimize the risks due to the market’s volatility as well as the risks of a
bankruptcy of suppliers, Ford should reduce the number of its production suppliers. In 2013,
they have a total number of 1,200 suppliers while seeking to have a global base of 750. The
organization aims to have a “stronger and healthier supply base”; hence, Ford should
evaluate the suppliers’ reliability, ascertain who are critical for the company’s survival and
chose which one they should eliminate. This process should be accelerated to cut the risks
faster.
All in all, one can say that the strategy improvements of Ford were successful in the past;
there are only few recommendations to support their strategy further on.
Structural recommendations
Recommendations to overcome these obstacles require slight changes in the organizational
structure.
Once again these improvements are connected to the strategies Ford tries to materialise. As
mentioned before, Ford operates in 29 different countries spread all over world; however,
they neglect local preferences and have more than enough confidence in their already
developed products. Considering the major loss they made in 2006, which arose due to
lacking satisfaction of costumers, assimilations must be considered. To improve local
responsiveness, Ford should recognise, that adjusting their instantaneous structure to a
more decentralised one will improve their effectiveness in foreign markets. Ford already
possesses multiple divisions, which makes it easy for them to transfer more authority to each
of them. Correspondingly, the divisions would not rely on the decision making of the CEO
and could adapt to local preferences. This change is linked to the growth of the organisation.
When the decision makers realise that dividing their power on the different divisions will be
responsible for a more successful international career of their company, they might act
figuratively in favour of their own organisation. This structure would open many new
possibilities regarding developing new prototypes suitable for the correspondent country.
Even though this structure disaccords with the current strategy, Ford should consider
improving it. Small adjustments would be necessary in the strategy; however, this is only
productive and would upgrade Ford’s entire new concept.
16
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)
lOMoARcPSD|9460825
Tightly linked to the decentralisation, Ford needs to take a look at their communication
system. Many divisions work parallel; however, will not communicate with others. However
this can help as ideas of improvements can be shared. Another very positive side effect is
the perception of the employees. With the current structure, staff members might only
identify themselves with their division of the company; however, it is important that they
are integrated and sympathise with the entire company, as this are the basic requirements
for the long-term success.
Conclusion
This report clearly shows, that Ford put a lot of effort in adjusting their current strategies and
structure to fulfil global expectations and regain profitability. In general Ford Motor Company
is a well functioning organisation, which operates worldwide; however, slight
recommendations on their current strategies and structure, such as focusing on the Chinese
market and generally adapting to more local preferences, should be applied.
17
Downloaded by Huy?n Nguy?n (thanhhuyen.payitforward@gmail.com)