ICFAI UNIVERSITY DEHRADUN

NAME : T.BARGHAVI

DATE: 16/07/2010

UID NO : 0901202793

COURSE CODE: : S L GM 611

SUBJECT: BUSINESS STRATEGY –I

TOPIC OF THE ASSIGNMENT :

APPLYING THE CONCEPTS OF BUSINESS STRATEGY IN FORD MOTOR COMPANY

SUBMITTED TO :Prof. SURJYA BRAT GOHAIN

SIGNATUE OF STUDENT SIGNATURE OF FACULTY

APPLYING THE CONCEPTS OF BUSINESS STRATEGY -FORD MOTOR COMPANY

COMPANY PROFILE :

The Ford Motor Company (NYSE: F) is an American multinational corporation based in

Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and

incorporated on June 16, 1903.

Ford introduced methods for large-scale manufacturing of cars and large-scale management of an

industrial workforce using elaborately engineered manufacturing sequences typified by moving

assembly lines. Henry Ford's methods came to be known around the world as Fordism by 1914

Ford is currently the second largest automaker in the U.S. and the fourth-largest in the world

based on number of vehicles sold annually, directly behind Volkswagen. In 2007, Ford fell from

second to third in US annual vehicle sales for the first time in 56 years, behind only General

Motors and Toyota. However, Ford occasionally outsells Toyota in shorter periods (most

recently, during the summer months of 2009).

In addition to the Ford, Lincoln, and Mercury brands, Ford also owns Volvo Cars in Sweden, and

a small stake in Mazda in Japan and Aston Martin in the UK. Ford's former UK subsidiaries

Jaguar and Land Rover were sold to Tata Motors of India in March 2008. Ford has agreed to sell

Volvo to Geely Automobile in a deal expected to be completed in the third quarter of 2010. On

June 2, 2010, Ford announced that it would discontinue the Mercury brand in the fourth quarter

of 2010.

CHARACTERISTICS OF STRATEGIC DECISIONS

Strategy is concerned with the long –term direction of organization .The CEO of Ford Mr.Allan

Mually has brought the “One ford” Startegy in the organization so that everyone in the

organization will have a long-term direction of Ford Motors .The” One ford” strategy comprises

the following 1

One Team

This consisted of people working together as lean global enterprise for automotive leadership as

measured by Customer, Employee, Dealer, Investor, Supplier, Union Council & Community

Satisfaction.

This plan focussed on four keys areas:

One Plan

Aggressively restructure to operate profitably at the current demand and change the model mix.

• Accelerate development of new products our customers want and value.

• Finance our plan and improve our balance sheet.

• Work together effectively as one team.

1 http://www.ecademy.com/node.php?id=143697

One Goal

An exciting viable Ford delivering profitable growth for all.

It is also concerned with the scope of an organization s activities .

One of the crucial decision is widening their product portfolio to meet the increased competition

hence they concentrated on small car segments .So their focus was higher localization for about

85% so that they reach small cities and towns globally .2

This strategy is also about achieving some advantage for the organization over competition .

The strategy is also affected by key persons who have power in and around organization

.Here CEO Mr.Allan Mually . Leadership - Ford brought in an outstanding leader Alan Mulally

from aircraft makers Boeing. Mulally brought the ability to create a vision, lead change and

transformation and above all, enthusiasm. Mulally brought to the organisation a focussed

strategy called "One Ford" which was mentioned earlier . Mulally is an outstanding team leader,

communicator and enthusiast, most of all, he is a team builder3. He continues to deliver the re-

birth of an American icon of industry whilst keeping everyone motivated and non-complacent.

Ford demonstrates to us all, the importance of leadership and vision, most important of all, is

business strategy in the success of any business.

Strategic decisions also insist on sustaining relationships and networks outside the

organization .Example: Ford officials said they want to take the supplier relationships "to a

different and new level" to ensure consistent production and possibly reduce its costs. Both

Visteon Corp. and Delphi Corp., the two largest auto-parts suppliers, contemplated bankruptcy.

Immediately Ford announced, both Delphi and Visteon in an initial group of long-term supply

partners.

Srategic decision involve change in organization which is difficult cause of

resistance to acceptance and culture . Ford's Model T exploded the size of the automobile

2 http://profit.ndtv.com/2010/02/17000121/Ford-outlines-strategy-for-gro.html

3 http://www.ecademy.com/node.php?id=143697

industry, creating a huge blue ocean. So great was the blue ocean Ford created that the Model T

replaced the horse-drawn carriage as the primary means of transport in the United States

1908.The change from horse - drawn carriage to the car initially was resisted by the citizens .

LEVELS OF STRATEGY

CORPORATE –LEVEL STRATEGY

Ford Motor Company is the only automotive manufacturer executing a truly global powertrain

strategy. Under Ford Motor Company’s global powertrain strategy, next-generation engine plants

worldwide will use a medium-sized production model of about 325,000 units annually,

enhancing efficiency and allowing Ford to adapt quickly to changing market needs. This is a

global strategy adding value to different business units of the organization 4.

BUSINESS –LEVEL STRATEGY

Ford have understood clearly that to compete in Indian market they should concentrate

on tierII and tier III cities if they want to sell their small car reaching out to smaller towns and

cities. Even the car was aggressively priced between Rs 3.5-4.5 lakh.In Indian market

Maintaining the low price tag is the greatest challenge for them .This is their business level

strategy to compete in Indian market.

STRATEGIC CHOICES

Here the powertrain strategy which provides efficiency in assembly line is aligned with the

targeting on small cars for mass markets .It involves understanding the bases at both business

level and corporate level.

4 media.ford.com/article_display.cfm?article_id=13633

INTENDED AND EMERGENT STRATEGIES 5

EMERGENT STRATEGY

Earlier in 1906 their strategy was to produce a car for all and which would be afforded by all (T

Model).It was also priced low.Later due to stiff competition from General Motors and others

who offered cars at high range in price also in expanded product portfolio . Ford also sticked to

range of cars and today it has both high priced as well as low priced cars .Thus this could be a

emergent strategy which Ford is following till date .

INTENDED STRATEGY

Ford needed an enterprisewide storage management solution that would make the automotive

company more responsive to end users’ needs for up-todate,easily accessible information and

keep it operating around the clock.To achieve the above outcomes IBM storage solution

designed by IBM Systems Group and implemented by IBM Global Services - Integrated

Technology Solutions provided what they desired .This is a intended strategy

REALISED STRATEGY

Within 11 months, IBM had helped Ford move approximately 90 terabytes of data at its two data

centers in Detroit from its current platform to 26 IBM Enterprise Storage Server. Ford has

responded with an enterprisewide initiative designed to focus employees on providing quality

products, strengthening the business and building a better world. Critical to this product-led drive

—expressed through the internal corporate motto “Go simple! Go common! Go fast!”—is a

visionary enterprise information technology (IT) strategy designed to enable Ford to reach new

levels of operational speed, effi ciency andfl exibility This is an example of realized strategy in

Ford .

5 Johnson Gerry (2009) Exploring corporate stratergy ,Pg no :565 Scholes Kevan Whittington Richard

DIVERSIFICATION

Fords strategy to diversify into financial services and electronics in may 1998 that took them into

new markets and products .6

SYNERGY

It refers to the benefits that might be gained where activities or processes complement each other

.Sync is a electronic technology that allows users to integrate their Bluetooth-enabled phones

and most digital music players, including Apple iPods, Microsoft Zunes, and other MP3 players,

and most USB storage devices into their Ford vehicles for hands-free, voice-activated use.

RELATED DIVERSIFICATION

Related diversification is strategic development beyond current products and markets but within

the capabilities or value network of the organization .The related diversification is is diversifying

into electronics .

UNRELATED DIVERSIFICATION

Having their hands in Financial Services is a unrelated diversification with subject to Fords

diversification .

6 http://www.nytimes.com/1988/05/13/business/company-news-ford-sets-strategy-to-diversify.html