Ford Motor Company: Options for a Successful Future
The future of Ford Motor Company and its ability to remain at the top of the automotive industry requires the company to focus on products, resources, planning, and implementation. Decisions must be made relative to product lines, sales. and re-directing the organization’s resources for future success. In order to do so, four options have been recognized and the company must determine which options are best suited to move the company in a positive direction. Discuss at least three criteria the company should use to decide which of the four listed options is best and the reasons why each criterion should be used.
Ford Motor Company has the option to close down older plants in an effort to realign production and sales. The criteria identified in order to determine if this option is in Ford’s best interest include: What will be the total cost to the company to buy out employees, close plants and the political ramifications of this decision? What are future trends? What is the differential between production and sales? The second option for Ford Motor Company to determine is whether to produce only smaller cars, eliminating or sharply reducing the SUV and truck lines.
In order to determine the validity of this option, the company would need to evaluate the following: Can fuel economy be realized in these particular vehicle lines without significant cost being passed on to the consumer? Will there be a continuing market for SUVs? How will reducing or eliminating truck lines affect overall sales? Option number three requires reducing the North American presence and focusing more on international markets where Ford has been very successful. The determining criteria for this option includes: What is the sustainability of the Ford brand in the international market?
How will reducing or removing North American presence affect the overall brand? Can reducing North American presence act as a catapult and raise demand for Ford vehicles in that geographical location? The fourth option to be considered by Ford is the possibility of selling its luxury line – the PAG group. The determining factors for choosing this option would include: Performing a profit and loss analysis of the group to determine the losses sustained by the company relative to continuing to invest in this product line. Could redirecting investment from this product be better spent lsewhere? In light of the possibility that market conditions can and do change, discuss at least three examples of how the company should build-in flexibility to back up its decision-making process. The possibility of market fluctuation is imminent. Therefore, Ford must be certain to build in flexibility to sustain change. Using an options based approach will allow flexibility by reserving resources such as time, people, money, or production capacity. (Williams, 2010). By maintaining flexibility, Ford will be better equipped to adjust to changes and fluctuations in the market.
Discuss how an effective action plan can be created and how progress can be tracked. Creating an effective action plan involves setting both short term (proximal) and long term (distal) goals. Achieving short term goals is motivational to the employees who will assist in the achievement of the long term goal. Short term goals are more easily attainable than long term goals. However, long term goals are essential. Another way to track the progress of an action plan is by providing frequent feedback regarding performance to workers and employees. This will allow Ford to make adjustments in order to achieve goals. Williams, 2010) List at least three steps that make-up a workable plan and explain why each is important. Setting goals is the first step in creating an action plan. Goals should be specific, attainable, realistic and timely (S. M. A. R. T. ). (Williams, 2010) Once goals have been set, a workable plan that develops commitments to the goals must be created. Enlisting the commitment of upper level management and employees is essential to achieving goals. An effective action plan indicates who, what and when for accomplishing goals. (Williams, 2010). The best options for Ford Motor Company would be to limit production of SUVs.
Today’s economy lends itself to more fuel efficient, eco-friendly vehicles. With gas prices soaring to new heights on a weekly basis, maintaining a large SUV is simply no longer cost effective for the average American family. The price point for this type of vehicle is also a downside to ownership. However, the truck lines produced by Ford should remain intact. Ford’s truck line has become known as a reliable brand and people take stock in the Ford brand when it comes to company fleet vehicles, construction vehicles and even the agricultural and farming industries rely on the Ford truck brand.
Without question, Ford should sell the PAG group. With losses i n the billions and rising, resources from this product line could be redirected into better selling ventures such as the smaller vehicle product line discussed earlier. Ford does not have to rely on the PAG group for growth and profits. This venture is simply a dog that needs to be put down. The option to reduce SUV production and sell the PAG group would be the options best suited to produce growth and stability in Ford Motor Company.
These options allow Ford to focus on the traditional product lines of smaller and more economical vehicles and durable truck lines. Producing more cars than it can sell at this point in time would be detrimental to their future success. More inventory does not equate to more sales. The PAG is a loss that continues to be a thorn in Ford’s side. Eliminating this group would free billions of dollars for re-investment into fuel consciousness research for smaller vehicles while upgrading the truck lines. Implementing these options will contribute to Ford’s longevity, profitability and growth.