Ford Motor Company: Business Strategies, Performance, and Analysis

This report provides a comprehensive analysis of the Ford Motor Company, examining its value chain, planning processes, controlling mechanisms, and decision-making scenarios. It begins with an introduction to Ford, its history, and its market position, followed by an identification and description of Ford's value chain, highlighting activities that create value. The report then delves into Ford's planning process, detailing its business strategies such as market penetration, product development, and market development, and how the company positions itself against competitors. It includes an analysis of sales and manufacturing budgets. The report also analyzes the controlling processes within Ford, including monitoring sales and manufacturing plans and the application of a balanced scorecard for performance management. Finally, it presents two decision-making situations within Ford and offers concluding findings and recommendations, supported by references.

COST ACCOUNTING
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Table of contents
a) Introduction of Ford Motor Company.........................................................................................3
b) Identifying and describing the value chain of Ford.....................................................................3
c) Explaining the planning process in Ford Motor Company for the issues identified below........4
d) Analyzing the controlling process in Ford for the issues identified below.................................6
e) Providing two situations in which decision making is presented in Ford...................................9
f) Summarizing the findings and recommendations......................................................................10
References......................................................................................................................................11
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a) Introduction of Ford Motor Company
Ford Motor Company is an American based multinational automaker company, founded on June
16, 1903 by Henry Ford. The company sell economic class automobiles under the brand name
Ford and sell its luxury cars under the brand name Lincoln. Ford also took over Australian
performance car and Brazilian SUV manufacturer, also manufactured tractors along with
automotive components. The company is listed in New York Stock Exchange and is controlled
by the Ford family. It has 8% and 49% stake in Aston Martin, UK and Jiangling, China
respectively. The main aim of the company is to manufacture automobiles in large-scale. Thus, it
makes Ford the second largest car manufacturing company in United States and fifth-largest in
the world. The mission statement of Ford describes the strategies of the company that is used to
capture the worldwide market and retain its market position, also to counter the rivalries. With
respect to this context, Ford’s vision statement mentions that the Ford has strong belief to reach
higher performance level throughout the globe. Looking forward, the management of the
company expect another great year for our organization also, our investors in 2017. We expect
our entire year results to be solid, however lower than 2016, driven principally by expanded
interests in developing open doors. We anticipate that productivity will enhance in 2018.
b) Identifying and describing the value chain of Ford
The concept of value chain separates wasteful activities from the activities that are useful. A
company always focus on those activities that create values which benefits the company in many
ways. For example, brand reputation, lower cost incurred in the process of manufacturing, the
company will be able to charge higher prices etc. So by adopting the concept of value chain Ford
Motor Company has evolved itself as one of the major automobile companies in the world. To
strengthen their individual identities the company will be integrating its marketing, sales and
service organizations into unified sales and marketing functions in combining two divisions of
Ford and Lincoln Mercury brands. As per Steve Lyons the vice president of Ford Group, while
being efficient with resources, the company will be trying to reach customers in more focused
and smarter ways. This will form a new type of organization resulting in the development of
single-minded concentration to reach customers with better quality products. The company
provides warranties for the delivered products usually for 60000 miles or 5 years along with the
roadside assistance. When there is a increase in the price of petrol the demand for cars decreases
resulting less sales. Considering this Ford offered new cars in the market that are eco friendly,
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also the company produced all electric cars which consumes less fuel. And this again increased
the overall sale revenue. These activities of the value chain which the Ford Motor Company will
try to integrate will result in selling of its products at higher costs than the costs incurred in
combining the activities and thus the predetermined profit margin will be achieved.
c) Explaining the planning process in Ford Motor Company for the issues
identified below
Identifying the business strategies adopted by the company
Every company that achieve success has its own business strategies. Ford being one of the
biggest automobile manufacturing companies in the world has adopted intensive growth
strategies. The business growth of Ford is dependent on,
1. Market Penetration: The first growth strategy of ford is market penetration. This means
selling of more products to the customers for the growth of business. Considering this
strategy Ford increases the number of its dealership which will result in the increased
sales volume. Thus by highlighting the advantages of low cost Ford will attract more
customers and will sale more of its products which will result the company to gain a
bigger market share.
2. Product Development: This is the second business strategy that Ford uses to develop
and offer new products in the market for increasing the sales revenue. Ford applies this
strategy to produce new products such as the Ford Focus Electric. The objective of this
strategy is to increase the R&D investments for the innovation of products to improve the
growth of business and competitive advantage.
3. Market Development: This is not a major strategy, it's only a supporting strategy for
Fords growth. This strategy means providing new products in the market also this
strategy involves entering into new markets. But Ford is already operating globally which
means this strategy is less used by the Ford as compared to early years.
Thus the combination of all these strategies adopted by Ford helps in the production and delivery
of quality, reliable and innovative products in the market at low cost.
Finding how the company positions itself among its rivals or competitors
Henry Ford in 1903 founded the Ford Motor Company. The company started the production of
planes and vehicles during the World War II, since 1904 the company is operating
internationally by opening a branch in Canada to retain the position in the market. Ford
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maintained to be the dominant manufacturer of cars for the 21st century’s first half within the
market that the company had created. Capturing a major share of market obviously means
gaining huge profits compared to other companies that are serving in that market. But high
market share means great responsibilities that are, more demand for products from customers,
providing better services for all products. But Ford providing better training to its staffs and
members to cope up with responsibilities. This highlighted the Ford Motor Company as the
biggest and reliable automaker company in the market.
In the market, several automobile manufacturers are serving in the sense to be the best. So, to
position itself as one of the biggest company Ford is continuously working hard to produce
innovative products, when they produced Mustang car many years back was one of the biggest
hit and has remained still today. To give a tough competition to Toyota Fortuner, Ford produced
its muscular SUV “Ford Endeavour” and is the best SUV in its segment. Ford’s Mustang was the
most superior example of the company’s proficiency in manufacturing sports and powerful
performance cars. This car was preferred by numerous key people including celebrities. Apart
from sports car section, the Ford Company also focused on luxury brand section by introducing
its Fiesta Model. The most significant feature of Ford fiesta was that this car provided many
luxury features that were comparable to other luxury brands at a very economic price (Salihoglu
and Salihoglu, 2016, p.227). In addition to just the luxury facilities, the Ford manufactured cars
were able to deliver a very significant security performance at lower prices compared to other
leading automobile brands.
Reviewing the significant information required for sales and manufacturing budgeting
Ford motor company and subsidiaries sales were down by 60.4% to 5566 units during the
financial year 2016 throughout Asia Pacific. Recently the company has also faced downward
trend in the sales of its luxury cars especially in North America and Middle East. In fact, due to
these, the company has reduced its manufacturing units in Central Asia and especially in South
Asia. Keeping an eye on the performance of the competitors, the company has decided to prepare
new manufacturing and sales budget to counter its competitors and keep its sales on desired sales
line.
Estimated sales budget
FORD MOTOR COMPANY
Quarterly Sales budget (for the year ending 30 December 2017)
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1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
Sales units 1000 units 1500 units 1500 units 1500 units 5500 units
Price per unit $ 15500 $ 16200 $ 19500 $ 21000
Total sales $ 15.5 million $ 24.3 million $29.25 million $ 31.5 million $ 100.55 million
Table 1: Sales budget
(Source: Created by author)
Estimated Manufacturing budget
FORD MOTOR COMPANY
Quarterly production budget (for the year ending 30 December 2017)
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
Sales units 1000 units 1500 units 1500 units 1500 units 5500 units
Closing units
(planned)
600 units 1000 units 1300 units 1300 units 4200 units
Opening units
(planned)
(550) units (750) units (950) units (1000) units (3250) units
Total units
(planned)
1050 units 1750 units 1850 units 1800 units 6450 units
Table 2: Production budget
(Source: Created by author)
d) Analyzing the controlling process in Ford for the issues identified below
Monitoring selling and manufacturing plan
In order to ensure the proper manufacturing and sale of company products, it is very important to
monitor the process very efficiently. According to Richardson (2016, p.659), the efficient
designing of new and unique features in the Ford Models were accompanied by adequate quality
check and equipment testing. The main characteristics that were checked in the cars were the
safety features and comfort. The experts ensured that the driver must not feel and inconvenience
while driving the car and could easily control the driving options. Introduction of digital
techniques of display and installation all the latest available features in a car were done by
automobile experts.
The manufacturing process was controlled in a very efficient manner by the maintenance and
management staff of Ford Motors. In the early stages of manufacturing, the Ford Company used
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to manufacture their cars by welding their individual parts manually. The checking and
verification of designs were done by experts after making of every component. As opined by
Pinkerton (2016, p.29), manual process in Automobile Manufacturing results into numerous
errors. However, with the enhancement in technology and introduction of computer based
applications in factory manufacturing, the firm soon adapted the new techniques of carrying out
the operations at the Assembly Line. Moreover, the monitoring processes of operations were
done by advanced machines that also included the Coordinate Measuring Machine or CMM.
Apart from the manufacturing monitoring, the sales monitoring was done by maintaining the
excel sheets in an efficient manner and updating it regularly.
Figure 1: Assembly line of Ford in the earliest phase of manufacturing
(Source: Pinkerton, 2016, p.31)
Finding the way, the company can utilize balanced scorecard in its performance management
system
With numerous associations at present fixing their belts and requesting elite, how might you
ensure that your framework is streamlined for comes about? An answer lies in utilizing the
adjusted scorecard.
Numerous associations battle with execution administration on the grounds that their framework
comprises of minimal more than a shape administrator uses to lead yearly representative
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assessments. This doesn't work since execution administration ought to be a continuous
discussion amongst bosses and representatives that backings the achievement of vital goals.
Instead of just considering the procedure once every year, directors ought to be utilizing it year-
long to set clear targets, assess comes about and convey constant criticism to representatives
about their execution.
Figure 1: Balanced Score Card
(Source: Hausman, 2016, p.460)
Critical success factors are reviewed to evaluate the Ford Motor goals and ensure it gets
accomplished. Some standards are financial and others are quantitative and others qualitative in
nature. Further performance goals with at least three standards are judged, which are discussed
below
Profitability and growth
Productivity is the essential piece of accomplishment of Ford Motors. A gainful business pays
enthusiasm to loan specialists, assessment to expert and profit to investors and rewards to
representatives in time. It helps in fulfilling every one of the partners of Ford Motors. A gainful
organization makes greater open door for development and developing organization will create
additionally benefit to fulfill the partners. In this way, this cycle proceeds onward and causes
Ford Motors to wind up noticeably a genuine pioneer in car advertise.
Quality assurance and technology innovation
Ford Motors won't develop without quality ensured to their clients and acquaint new innovation
with be able in the dynamic idea of car showcase. Ford Motors is following product
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differentiation technique, so there is no space to bargain on quality. To end up noticeably a
market pioneer, it is essential to present innovation before their rivals and it is additionally
critical for accomplishing operational objectives.
Customer satisfaction
Consumer loyalty level is critical to Ford Motors, because fulfilled clients are destined to be
faithful and rehashed orders with Ford Motors. It will prompt higher and stable income to the
organization.
e) Providing two situations in which decision making is presented in Ford
There have been many instances when some of the most supreme examples have been shown by
the Ford management related to their decision-making capability. As per Kim et al. (2016,
p.113), one of the most significant and crucial decision was to take the initiative of building
heavy duty vehicles. After the proposal for manufacturing of heavy duty vehicles was sent to the
board of directors, a long and crucial series of discussions were carried out among the board
members regarding all the pros and cons. As stated by Hausman (2016, p.458), the introduction
of heavy duty trucks and vehicles by Ford in the American Automobile market was one of the
biggest blow to the already existing heavy-duty vehicle manufacturing giant named “General
Motors”. The decision was taken after a careful analysis of the trucks that already existed in the
market. The features of those trucks were carefully observed and drawbacks were noted which
was followed by finding the right alternatives to the problems (Kong et al. 2016, p.23). After all
the analysis and carrying out of Research and Development process, the L-Series trucks were
introduced in the American Automobile sector. According to many heavy-duty vehicle experts,
the Ford L-Series trucks were much more fuel efficient and easy to maintain compared to other
trucks. In addition, the trucks could carry more loads over a long distance at higher speeds. As
per Nunes (2016, p.19), many transporters preferred Ford manufactured Trucks over other trucks
as they reduced the time tremendously.
Some other instances of decision making of Ford Automobiles include the decisions to include
special features like rear parking camera, LED lights, Automatic parking sensors and many other
innovative characteristics. The company management had carried out surveys related to the
expectations of its customers. They found that the necessity of quick maneuverability and
powerful pick up while driving at hilly areas were the most prioritized needs and demands.
Hence, the Ford Company management decided to enhance the engine of their car and made it
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more powerful without compromising with the fuel efficiency of their vehicles. In addition, the
company established a dedicated department to look for different advancements that were
happening in the technological domain. As mentioned by Shi et al. (2017, p.173), the different
technologies linked to automobile characteristics were studied by the research and development
wing of Ford motors and necessary observations were made that helped the operational teams to
introduce new features in their upcoming models and vehicles.
f) Summarizing the findings and recommendations
In the above study, the cost accounting of all the different parameters of Ford business have been
described covering all the various phases of development that have occurred in the Ford
Automobiles. In the initial part of this study report, the basic introduction related to Ford
Company has been provided where the earliest phases of vehicle manufacturing by Ford has
been mentioned. This has been followed by identification of value chain that is being followed
by ford since its inception. This has also included the changes made in its value chain with the
passage of time and variations in demands. It has then talked about the planning process that
have been followed by Ford Motors to tackle some of the major problems and barriers of the
company like products and market development as well as market penetration. The study has
also included the monitoring of sales and manufacturing processes in the market and assembly
line respectively. Finally, two situations where the company management had to take some
crucial decisions related to enhancement in operations have been stated.
In order to ensure the customer satisfaction and their loyalty towards the Ford Brand, the
company has to keep developing its products and services. It has been observed that the servicing
cost for Ford diesel vehicles have been higher than that of other vehicles. Hence, the research
and development team has to find some very effective and innovative methods to reduce the cost.
Moreover, the reduction in time taken for airbags inflation can provide the company a significant
edge over its competitors in safe vehicles manufacturing.
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References
Hausman, J.K. (2016). What Was Bad for General Motors Was Bad for America: The
Automobile Industry and the 1937/38 Recession. The Journal of Economic History, 76(2),
pp.427-477.
Kim, M., Wang, S.T., Ostrowski, D., Rychtyckyj, N. and Macneille, P. (2016). Technology
Outlook: Federated Ontologies and Industrial Applications. International Journal of Semantic
Computing, 10(1), pp.101-120.
Kong, C., Lee, H. and Park, H. (2016). Design and manufacturing of automobile hood using
natural composite structure. Composites Part B: Engineering, 91(2), pp.18-26.
Nunes, L.B., 2016. Schumpeter's entrepreneurs in the 20th century: The Tucker automobile.
Technological Forecasting and Social Change, 102(1), pp.14-20.
Pinkerton, A.J. (2016). Lasers in additive manufacturing. Optics & Laser Technology, 78(2),
pp.25-32.
Richardson, M. (2016). Pre-hacked: Open Design and the democratisation of product
development. new media & society, 18(4), pp.653-666.
Salihoglu, G. and Salihoglu, N.K. (2016). A review on paint sludge from automotive industries:
Generation, characteristics and management. Journal of environmental management, 169(1),
pp.223-235.
Shi, Y., Reich, D., Epelman, M., Klampfl, E. and Cohn, A. (2017). An analytical approach to
prototype vehicle test scheduling. Omega, 67(3), pp.168-176.
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