Wednesday, March 23, 2011

Ford Motor Co.

Following the economic downturn of 2008 and 2009, the automotive industry was forced to grapple with demand for more fuel efficient cars at a cheaper price but with higher quality and reliability. Ford Motor Co. has been the most successful American automaker in meeting these demands since the recession. Their strategic plans reflects the idea of integrating financial and business plan goals discussed in "Using the Balanced Scorecard as a Strategic Management System".

Their strategic vision outlines these goals at http://corporate.ford.com/microsites/sustainability-report-2009-10/overview-commitments

Some of the goals include:
1. "ONE Ford" plan to restructure workforce by buying out or offering early retirement to 42,000 hourly workers in addition to restructuring employee health care coverage for future employees
2. Become a leader in smaller, more fuel efficient cars and also make this a highly profitable segment of the business
3. Achieve profitability in 2011 (positive profits expected in 2010 for first time since 2005)
4. Increase use of recycled and reusable materials in production
5. Reduce water use and landfill disposal

Ford Motor Co. found its mass production plan ill-equipped to face a post-recession economy. And has been forced to re-think its management of production by meeting more diverse customer needs while still remaining profitable. This has caused Ford to maximize economies of scale while also reducing workforce and capital.

To become the leader in fuel efficiency (in each class that it produces in) Ford has started such initiatives as EcoBoost, Hybrid models, fuel cells, biofuel, and clean diesel. Additionally, Ford has invested nearly $1 billion dollars in developing electric vehicles and their battery packs so that Ford can make electric vehicles and their technology a core competency for the 21st century.

Question: Have other automakers (foreign or domestic) been successful in employing similar strategic plans to increase profitability while also pursuing green initiatives?

1 comment:

  1. Ford did not respond to e-mails or calls when contacted to explain the rationale for this latest investment venture. Ford stock has traded at a range of 15.90-16.10 as per news, at a gain of more than 0.25%. Investors have been mostly lukewarm about this idea, which means that they also have a number of questions to be answered by the company, in which their planned investment falls at odds with the opposite direction taken by the Chinese economy.

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