2. Ford Motor Co. Business Case
Table of Contents
Executive Summary……………………………………………..3
Background Information……………………………………….3
Environmental Analysis…………………………………………3
Organizational Culture………………………………………….4
Product Innovation……………………………………………..5
Safety Innovations ……………………………………………5
Self-Driving Cars………………………………………………5
Other Areas of Innovation…………………………………...5
Green Innovation…………………………………………………6
Incremental Change Strategy………………………………....7
Conclusion…………………………………………………………7
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3. Ford Motor Co. Business Case
Executive Summary
Our case analysis of Ford Motor Inc serves to highlight the key factors in the organization's
recent success. The objectives outlined in our report form the basis for our ultimate
conclusion on the organization's constant innovation and market agility. Ford’s has taken its
evolution in corporate culture, constant product innovation, rapid adoption of green
operations, as well as its incremental change strategy, to lead the brand through the test of
time. Our report highlights Ford's environmental awareness, product innovation, green
initiatives and incremental change strategy. These collective corporate implements have led
Ford Motor to stand out above direct automotive competition.
Background Info
Ford Motor Company has been in the automotive business since its incorporation in 1903.
From his first quadricycle built in 1896 Henry progressed year after year until he developed
the “Model T”. This vehicle became a staple American vehicle that propelled the
organization to new heights. Despite the many changes in c-suite management positions and
influence of external factors, Ford Motor Company has continued to outperform its peers
through constant innovation and industry agility. One noticeable corporate advantage is
Ford’s organizational structure favors open communication. This culture fosters innovative
dialogue among decision making management members. These members are typically
already trained to be aware of market fluctuations and make reactionary or preemptive
decisions to combat these changing external factors in the market. Our report outlines how
this longstanding brand has managed to evolve and adapt itself to the demands of the current
market. Ford has been able to pivot in conceptual direction and functional operations steadily
year after year in order to stay profitable not only to their core market but to expanding and
emerging markets of the future.
Environmental Analysis
This industry is one of the few large industrial giants that is highly susceptible to
external factors. Ford Motors has been able to constantly weather and adapt to these changing
external circumstances to stay ahead of competition while others fall by the wayside or are
acquired by competitors. Economically Ford has withstood fluctuating levels of discretionary
income, availability of consumer credit, and federal rebate programs.
Politically Ford has adapted through multiple changes in automobile regulations as
the American society continues to detach itself from an addiction to oil. Socially the
American public continues to demand the most updated technology in environmentally
sustainable vehicles. Ford has repeatedly stepped up to these challenges and delivered an
array of products that exceed expectations. Ford’s constant awareness and forward thinking
can be seen through their internal culture change led by former CEO Alan Mulally and
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continued by current CEO Mark Fields. Senior leadership changes in South America, Europe
and Ford’s Smart Mobility division have helped keep ford ahead of their competitors.
Even as the EPA continues to tighten laws on vehicle testing and classification, Ford
has been agile in meeting these new requirements. Ford has produced vehicles packed with
technology and features at price points affordable to the American public. Open
communication within Ford is one of the many reasons this multinational brand continues to
expand and profit in a market known for turbulence from external factors.
Organizational Culture
In the business world today you need to be adaptable and try new ways of thinking
and change the traditional to the original to survive. Ford has been about for many years and
has thrived for decades. Companies cannot survive as long as Ford has without the ability and
the agility to change when necessary and attempt something new.
With the world changing and businesses having more values and emphasis on
listening and respect at all levels, the former CEO of Ford set into motion the One Ford Plan.
This implemented plan that is still being improved today at Ford consisted of ideas that
emphasized the importance of employees at all levels and set out to differentiate Ford from
the pack.
In the past Ford had focused on a cost leadership plan that had low prices attracting
customers. They had this plan for decades beginning in the early 1900’s, but they were
starting to fall behind the pack and be beaten out by the likes of General Motors and Toyota.
Ford realized they need to adapt and to change to become a competing company once again.
They have been moving towards a broad differentiation strategy, one that puts innovation and
advantage over simply cost effectiveness. This is shown in the One Ford Plan. This Plan has
four parts to it: F for Foster Functional and Technical Excellence, O for Own Together, R for
Role Model Ford Values, and D for Deliver Results.
Foster Functional and Technical Excellence is about the people that work at the
company and the potential that possess for the business. Ford supports many programs to
promote within rather than outside, and “Employees are encouraged to learn and improve,
and contribute ideas for organizational development” (Lombardo, Ford Motor Company’s
Organizational Culture Analysis). The new wave of companies that are trying more and more
to involve employees at all level includes Ford. They have developed training programs for
lower level employees to learn valuable skills and to allow them to be more impactful for the
company.
Own Together is all about teamwork. The new Ford believes that the best ideas can
come from anywhere and that the employees are who fuel success. Teams of varying levels
of management and varying regions of work in the company meet regularly to discuss ideas
and plans for the future. Ford wants employee participation that allows for personal and
technical growth that puts the people who work there in a better position for the future.
Role Model Ford Values is about exemplifying the Ford way. Ford’s values are listed
as initiative, courage, and corporate citizenship. Ford wants these values exemplified in every
employee and every department that they have. These core values make the culture strong
and fruitful.
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Deliver Results is about making a change for the better in the organization. Ford used
to be about low cost affordable products, with results and quality somewhat lower on the
totem pole. However, they have seen the market changing and have tried to change
accordingly. They must adapt to what customers want and how their competitors are
planning. Ford is pushing through this plan for its employees to achieve more quality and
excellence. Employees who deliver are rewarded and trained for greater roles and
responsibility, which motivates for greater production and results.
Product Innovation
Ford is constantly searching for ways to innovate their products, trying to improve the
numerous styles of cars they offer. In an industry that is crowded with competitors, Ford has
to create purposeful, focused change in order to stay ahead of the curve. There are a number
of different areas in which Ford has focused on their product innovation. Recently, “Ford has
described itself as a technology company rather than simply a car maker” (Lee, 2016). Their
diverse projects in innovation have opened up a number of doors beyond just car making.
Their approach to innovating is similar to that of Amazon or Google, because they are putting
their efforts in a number of different places. In 2016, Ford registered 1,442 patents, the most
among automakers (compared to 1,368 by Toyota and 1,131 by General Motors). This is an
increase of 25% for Ford from 2015 (Gardner and Woodyard, 2016).
Ford has put a focus in “building human progress,” and these new projects are all
“working on different issues and needs, but with a common purpose of solving real-world
problems around mobility by using innovation” (Stroh, 2015).Here are a few key areas where
Ford is innovating their products.
Safety Innovations
Ford has been steadily improving the safety of their cars over the years. In 2011, Ford
improved their number of IIHS top safety picks by model year to 75, up from 52 the previous
year (Kanani, 2014). Ford describes on their website that their “strategy has advanced past
injury response toward injury anticipation” (Ford.com, Sustainability Report 2014/2015).
They have shifted their data systems to try and focus on identifying and analyzing potential
risks so that they can get the cars to react to these risks before they actually occur.
Self-Driving Cars
Ford has made massive investments towards companies working on technology that
can be developed to create a self-driving car. Ford made a joint investment with Chinese firm
Baidu of $150 million into Velodyne, a company developing a system used for accurately
detecting objects around the car, and was part of an investment round of $6.6 million for
Civil Maps, a digital mapping company (Lee, 2016). Ford has pinned itself up against
technology titans such as Apple and Google, deciding to go against them rather than work
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with them to build their self-driving cars. This makes their goal of 2021 for a self-driving car
even loftier, especially with other competitors like Uber and Tesla in the mix.
Other Areas of Innovation
Outside of innovations directly for their own cars, there are numerous projects that
Ford is currently working on. In 2015, CEO Mark Fields released a list of 25 Mobility
Innovation Projects. One of these projects was “data-driven insurance,” a product in London
that offers usage-based insurance based on driver-behavior history (Stroh, 2015). Another
project was the “Parking Lot 2.0” in Los Angeles, which uses an app and technology to help
users keep track of their parking spots and know when their time on a spot is expiring. Fields
acknowledged that a number of these projects would likely not work, but said “Innovation is
about taking some risks. And not all of these projects will succeed, but that is OK. We need
to try multiple things to solve these issues” (Stroh, 2015).
Green Innovation
Green Innovation, also called Sustainable Innovation, has become an innovation type
that has exploded among car companies around the world as they become more
environmentally conscious of their surroundings. These innovations have helped advance
sustainability by creating ways to reduce the carbon footprint for car companies.
Ford has recently been one of the driving forces in green innovation among U.S car
companies, with many of their green practices being used on their own products. They are
one of the leading innovators in Fuel-Efficient 6-speed transmissions in their cars. Introduced
with select 2008 models, Ford has gradually incorporated this transmission setup into a
majority of the cars they offered, and two out of every three cars made now have a 6-speed
transmission. This setup allows for a 7% increase in fuel efficiency on the highway than a
typical 4-speed transmission usually found on a much older Ford vehicle. Not only is the
6-speed transmission more environmentally friendly, it has led to better overall performance
and a smoother ride for the passengers.
Many of Ford Vehicles are primarily made from recycled materials, as is the case
with the Escape and Focus models. The industry average for an automobile’s content that is
recycled is around 75%. Ford has exceeded industry standards, as the content of both the
Escape and Focus is about 80% recycled. Ford is looking to continue increase this number as
they continue to be innovative in the way their high-quality vehicles are made. It will also
allow Ford to drive down costs to build these vehicles, which in turn could possibly drive
down the prices of their vehicles or increase their overall revenue.
Not only is Ford for leading the way in green innovation in their cars, but a good
number of their factories and immediate surroundings are incorporating practices that are
good for the environment, and it is helping reduce their energy costs. A great example of this
is Ford’s Truck Factory in Dearborn, Michigan, the home of Ford’s World Headquarters,
which has the world’s largest living roof that spans more than ten acres. The living roof has
allowed ford to cut down on maintenance costs because it is virtually maintenance-free since
the plants used are considered to be drought-resistant and it has the capabilities to absorb
more than four million gallons of rainwater that can be reused. The living roof also provides a
natural layer of insulation for the final assembly building which also helps reduce energy
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costs. In the long run, it is a lot less expensive to put in a green roof on a building than to
build a conventional roof, and a green roof is also expected to last twice as long as a
conventional roof.
Incremental Change Strategy
Ford’s display of incremental change over its lifespan of one hundred plus years is
truly astounding. Ford Motors has continuously demonstrated its ability to remain agile and
competitive in an industry that is influenced by many external factors. These subtle and
constant changes to Ford’s overall portfolio keep this brand at the front of consumer minds.
Whether it’s changing materials from steel to lightweight aluminum like Ford recently did
with the F-150 or developing its own electric vehicle through the Ford Focus EV.
This organization has remained profitable by showcasing its constant ability to adapt
and implement quickly and effectively. The implementation of cutting edge technology
throughout out the product line using the Ford Sync platform set industry precedent for in car
mobile integration and led the way for a new wave of infotainment systems. This software
combined navigation, audio, voice control and established a platform for potential add on
apps.
Additionally this added value was installed in non-luxury vehicles which prompted
direct competitors to step to the plate in terms of vehicle features. Ford Sync is now over five
years old and constantly produces transformational updates to meet new consumer demands.
This display of agility and awareness has been integral in maintaining the overall brand
image of value and durability. Year after year Ford tweaks its product offerings to match both
consumer and commercial demand.
The innovative agility of Ford to pivot towards profitability can be seen externally
through product offerings as well as through internal incremental changes. Ford recently
shuffled its senior leadership in its smart mobility division along with Europe and South
America. These changes placed new highly executives in positions that would allow them to
excel and further the organization's vision for the future.
These constant incremental changes both internally and externally deeply contributed
to the organization's long term success and increasing market share. Organizational culture
changes led by the repositioning of Alan Mulally to Ford CEO can be directly linked to this
overwhelming success. Mulally instituted open communication between managers to stay on
top of market changes across the globe and consolidated the brands offerings both of which
led to higher productivity and measurable success.
Conclusion
Based on our individual analysis of the various aspects of the Ford Motor Company in
application to the concepts presented in Chapter 8. We have collectively concluded that Ford
Motor Company is one of the few U.S based automobile manufacturers that has been able to
remain agile in an aging industry with many new entrants and constant consolidation. The
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objectives outlined in our report showcase how this organizational agility is displayed
repeatedly throughout the Ford Motor Company.
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9. Ford Motor Co. Business Case
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