Ford Motor Company\'s Current Market Position Company

Ford Motor Company's Current Market Position

Company Overview

Quality Issues at Ford Motor Company

Human Resources Role

Strengths

Weaknesses

Opportunities

Threats

Financial Impact of Recalls on Ford Motor Company

The Ford Motor Company was founded by Henry Ford in 1903 who along with 11 other investors signed the article of incorporation for the organization. Since then, the Ford name has experienced tremendous growth and has been awarded with substantial significance in the automotive industry. It is one of the largest car producers in the world, which distributes automobiles across six continents. Its primary operations are located in Europe and the United States. The organization employs more than 164,000 personnel. This analysis provides an overview of the organization as well as the issues that challenge the organization. Then, it will direct attention to the way in which the problem has in effect on the future viability of the organization. Lastly, it will refer to the principle role of Human Resource in the organization and how it may provide critical advice and recommendations to the company.

Company Overview

The Ford Motor Company was founded by Henry Ford in 1903 who along with 11 other investors signed the article of incorporation for the organization. Since then, the Ford name has experienced tremendous growth and has been awarded with substantial significance in the automotive industry. According to Datamonitor (2011), it is one of the largest car producers in the world, which distributes automobiles across six continents. Its primary operations are located in Europe and the United States. The organization employs more than 164,000 personnel. The large number of employees represented by the human resources pool requires effective management to ensure that the human resources are supporting the company's organizational objectives.

Quality Issues at Ford Motor Company

According to Muller (2012), Ford recalled 3.3 million vehicles in 2012, approaching the number of vehicles recalled by both Toyota and Honda. This means that there are some issues with quality inside the company. Datamonitor (2011) affirms that significant product recalls provide an indicator of product quality decline which may impact the company negatively and the confidence of the customers in the products of this Company. This may ultimately lead to a decline in sales, massive profitability losses, and ultimately it may jeopardize the success of the company in the future.

Quality issues all point to the same root problem which seem to be that there are issues in the manufacturing process. This means that the production causes these quality inefficiencies to happen. It may be the result of inappropriate equipment and devices to produce the cars and it may be the inappropriate handling of equipment by the company's employees. Inappropriate equipment may be outdated equipment, inadequate equipment, or the manufacturing process. It may also be the result of inadequate handling on behalf of the employees.

If the root of these issues is not exterminated or if the issues are not solved, the future of the company stands on unstable grounds and along with other issues in different departments may lead to company failure, even though it is an industry leader. It is likely that the quality problems are also related to the human resources function at Ford Motor Company. If more effective training and oversight was provided for the manufacturing employees then it is likely that the company would not be facing the same issues.

Human Resources Role

According to Holbeche (2009), human resources are the visible face of an employer's obligations towards employees. However, this is not the only aspect that HR is concerned of because human resource professionals are responsible of selecting, recruiting, training, and getting the best out of the employees; it also makes sure there is an appropriate relationship between employees, managers, and staff.

The situation of Ford Motor may find solutions in the hands of the HR department. If the employees are responsible for inappropriately handling of equipment when producing materials, HR professionals need to make sure an appropriate and specialized training is provided for them so that manufacturing would take place with results that describe best quality practices. This will eventually reduce to a minimum or eliminate product recalls, which would lead to increased and more efficient productivity, more satisfied customers, and higher profitability. If the equipment is inappropriate for the production process, the company would have to determine ways to improve, change, or replace the equipment to solve the issues.

SWOT Analysis

The purpose of this paper is to conduct a SWOT analysis on the previously established Ford Company and to offer an analysis of these results in light of the problem under study. It will identify how these problems have an effect on the Ford Motor Company and on its competitive position inside the industry it operates.

SWOT analyses are very important for such large companies such as Ford. According to Danca (1999), such an analysis represents a model that offers direction and serves as a basis from creating and developing strategic marketing plans. The word SWOT is the abbreviated form of: Strengths, Weaknesses, Opportunities, and Threats. Through a SWOT analysis, a company will gather a proper insight of its external and internal environment. It will have a more preferable idea about the internal environment by addressing the strengths and the weaknesses within the company, and it will generate a better idea about the external environment by addressing the opportunities and threats.

Strengths

According to Datamonitor (2011), the most illustrative strengths the Ford Company has are: a firm brand image and market share, an extensive operational network, strong engineering and resource and development capabilities, as well as increasing operational performances. The strong brand image was created through the company's brands like Ford and Lincoln, which are two of the strongest car brands in the world. As per 2011, Ford was ranked the eighth strongest car brand in the world having a value of $7.4 billion which is 5% higher than the previous year. Through a strong motor car brand, the company is able to inspire confidence to potential consumers and it offers the organization competitive advantage and increased sales.

Weaknesses

Datamonitor (2011) considers that the most important weaknesses of the Ford Company are: legal proceedings, concerning product recalls, and under-funded pension liabilities. Probably one of the most important weaknesses of this company is represented by product recalls since million of its vehicles have been recalled in 2010 and 2011. This is problematic for the image of such large car manufacturing company.

This also gives the idea that something does not function well within the production process. To remedy the issue of recalled products, the company needs to invest more resources into "driving for quality" since it is a domain where the company has started to lack through the recall process of these products. The product recalls can lead to legal proceedings and lawsuits from consumers and other organizations, which can be companies or individuals. It would ultimately affect the company's image.

Opportunities

The Ford Company sees opportunities in: the growing Indian and Chinese automotive markets, the accelerating global truck manufacturing market, as well as in the positive outlook for the future of hybrid cars. India is a forever growing country and Ford should consider investing into opening production facilities n the country. The labor costs would be lower compared to U.S. And Europe markets and the organization would have a lot to gain from such a strategy. Another potential successful strategy is the hybrid electric vehicles industry since it has gained experience and growth in the past years.

Threats

Threats are considered being part of the external environmental analysis. Ford should worry about: the risks of foreign currencies, increasing price competition, as well as strict emission standards. Probably the most important of them is the increasing price competition. In trying to become more competitive, the Ford Company should do an analysis on their competitors; a SWOT analysis would be appropriate because it would help the company find the areas where its competitors are most vulnerable.

Financial Impact of Recalls on Ford Motor Company

Ford Motor Company has been through some seriously tough times in the past several years within the context of this financial recession. After being one of the big three that received a tax payer bailout, the organization has been showing strong signs of recovery. Yet, despite clear growth since the government bailouts, the Ford Motor Company is once again facing a major problem. Research and development play a huge role in the launching of new automobile products in the highly competitive contemporary global car market.

The company was recently hit by a snag in design and product performance. In the mid-2000's, the Ford Motor Company had to announce a huge recall, with more than 8,000 Ford Escapes. These vehicles were having an issue with the brake pedal (CNN Wire Staff, 2012). According to research, "Ford says the mis-positioning of the carpet padding on the center console trim panel may be pushed outward, reducing clearance to the pedals" (CNN Wire Staff, 2012).

This is essentially a flaw in the design of the model of the vehicle. This flaw had a huge potential danger to the driver and/or other passengers. Essentially, "that reduced clearance may mean the driver's foot could not properly move from the side of the brake pedal when going from the accelerator to the break, increasing the stopping distances and the risk of a crash" (CNN Wire Staff, 2012).

There are enormous financial implications to this problem. The Ford Company now has to "remove the carpet padding and replace the left-side console trim panel free of charge" (CNN Wire Staff, 2012). This will be a big financial venture and loss of profits of the company. The nature of the problem is a huge element to the recall. The fact that the design impacts a driver's braking ability means the costs of the recall skyrocket because of the importance of the repair (Rupp, 2003). This is essentially an unexpected cost, which can the impact the underlying profit margin of the company.

Based on costs per car, it is a relatively inexpensive fix most of the time but will still cost the company money and customer loyalty. However, when you add up all of those small costs, it can potentially have a huge financial impact on the overall budget of the automotive manufacturing company. These types of fixes make repair costs immense, depending on the nature of the repair. In Ford's case those 8,000 or so vehicles will have a definite impact on the underlying profit margin of the budget, based on this being unaccounted for the nature of the repair costs. In many occasions, it is the shareholders who also suffer. When recall costs impact the bottom line of an organization, it can have a subsequent decline on overall shareholder profits (Rupp, 2003).

This can also damage profit margins, which reduce the dividends of the organization's shareholders. More so, there are additional research and development costs associated with going back to the lab and increasing development and the amount of testing done to future models of the Escape. First and foremost, the company will have to spend more money on adjustments and design to the vehicle. This is a costly process and can impact the overall budget set by the company based on additional design and testing funding for models that were previously thought to be complete in that stage of the process. The Ford organization will need to bump up its testing process in order to ensure that the design issue has been resolved, which can or will be a costly endeavor.

If the design issue is not resolved within future models, there could be additional costs that the company will have to endure. More losses to shareholders could impact the investments made into Ford Motor Company. Additionally, there could be untold or unseen costs associated with a plunge in brand reputation. No consumer wants to buy a car that could be subject to a design flaw. If the flaw is not worked out, the Ford Company may lose potential and/or future customers, therefore increasing the overall financial impact of the recall issues it is now facing.

Recommendations

Ford Motor Company is not experiencing hard times for the first time in history, and since the company was always able to surpass difficult times, it will be able to surpass these moments as will if everything is properly considered and if the Human Resource Department through its professionals does its best. The key relies in this department. To remain competitive, Ford needs to at least maintain its current strategy or to try and create other strategies. Since the company has operations world-wide, the risks that the company can face are divided in various areas.