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05/03/2015
To: Terri Bell, Vice President of Strategy
From: Kelly Monegan
CC: Dr. Vincent DeFazio
Executive Summary
This strategic Fit Assessment will address modifications to the Strategic
Frame as a result of an in-depth analysis of Ford Motor Companys business
strategy. It will analyze the following key strategic elements and an
evaluation of concerns and opportunities about Fords strategic fit and their
key strategic elements.
Business Strategy
Ford uses Cost Leadership and Diversification (a hybrid) as their business
strategy. The source of Fords strategy comes from their organizational
capabilities. Ford is a global automobile manufacturer that has production, R
& D, stamping, assembly and distribution facilities in North and South
America, Asia Pacific, Europe, Africa and the Middle East. Fords
internal/external environment, resources and capabilities are all
interconnected and used in a program called One Ford as a way to give
them a global competitive advantage. One advantage from using One Ford
Ford analyzes and measures their value chain by using internal cost
analysis, internal differentiation analysis and vertical linkage analysis. I
suspect the preferred measure is the vertical linkage analysis (Ford calls it
materiality analysis which prioritizes the most significant issues in their
value chain) because its the costs among external suppliers and value
evaluated and delivered to customers using surveys and repeat purchasing
data.
Customers reported that they most valued vehicle safety and human
rights affecting communities, investors and consumers where Ford has
production, stamping and assembly facilities.(corporate.ford.com, 2014) The
materiality analysis is used as a guide to understand how they can satisfy
customers, cover costs and realize profit.
Fords business strategy validates the strategic frame because their
frames geographical strategy is that it competes globally and the vertical
scope is products that can be purchased by dealerships, vehicle financing
and their vertically integrated supply chain system. Its very obvious that
they all interconnect.
An example would be that in 2012 2013, financial issues had been at the
highest level of importance to Ford and external stakeholders per materiality
analyses. But due to Fords strong and consistent improvements in financial
performance and the implementation of programs such as One Ford, ABF
and new technology called EcoBoost the financial issues are no longer the
highest concerns. (corporate.ford.com, 2014)
The Strategic Fit with the Goals and Values of the Firm
Fords goals are defined in a four point business plan. They are as follows:
value
Finance our plan and improve our balance sheet
Work together effectively as one team (corporate.ford.com, 2014)
Fords goals, strategy and business plan all establish direction, create
unity and empower members of the organization to achieve its goals. The
One Ford program is mandatory for all employees to follow. The success
of the program can be seen and felt threw increased sales and profit
sharing. Last year the average hourly employee earned a bonus of
$6,900. For the year 2014, Ford reported global earnings of $3.2 billion.
(Priddle, A., 2015).
Fords values consist of high-quality, fuel-efficient products that make
customers lives better (corporate.ford.com, 2014). I like that Ford values
high quality first because if they build high quality products, it should
increase sales, and please shareholders and stockholders.
By evaluating Fords Sustainability Report, I can understand that
Corporate Social Responsibility (CSR), is very important to them because
it aligns with their business strategies of low cost and differentiation
competitive advantages. By having high quality vehicles and rewarding
employees for their successes, it balances stakeholder and stockholder
needs. Since CSR creates a competitive advantage for firms, which leads
to greater market share, CSR can differentiate a company from its
competitors by engendering consumers and employee goodwill
(McWilliams & Siegel, 2001).
Cost Leadership
Value Chain
Resources
JIT Systems
Inbound Logistics
Capabilities
Quality, Standardization, Distribution, "One Ford"
Operations Management, Scheduling, Order Entry and Stock
keeping
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The Strategic Fit with the Resources and Capabilities of the Firm
The chart below is from the perspective of the competitive strategy,
identifying resources and capabilities that are most aligned with the Cost
Leadership and Diversification Strategies.
Ford can use the value chain approach to identify sources of
profitability and internal costs. An example would be to determine the
portion of the total cost of the product attributable to each value creating
process. A way to examine using differentiation under the value chain
approach would be to identify processes attributed to Fords products verses
its competition. Emphasizing customer values. (http://www.imanet.org)
Ford leverages its resources and capabilities by utilizing programs such as
One Ford and ABF. By striving for product excellence, constant innovation
and engaging employees to convey diverse perspectives, Ford can Go
Further by working together as one team, leveraging skills across the globe,
valuing, including and respecting each other and, in doing so, achieving
profitable growth for all. (corporate.ford.com, 2014)
Ford can most likely sustain their competitive advantage by continuous
improvement, collaboration, their value chain and diversification. Giving
Six Sigma and One Ford appear to be what is driving the success of
Ford Motor Company. Some threats would be complacency and lack of effort.
From my working experience it seems that everyone is all on-board in the
beginning of new processes but without effectively engaging, managing and
or rewarding team members for their efforts I can see where this system may
become weak and the advantages that were once present faltering.
A strength is engaging the Union Leadership at Wayne University to
train them in the Six Sigma and have the Union to work jointly with
management to make Ford a high quality automotive manufacturer that
makes fuel efficient products and makes customers lives better.
Hello Kelly,
Your assessment of Ford analyzes and synthesizes the fit of the firm and strategic
elements, and argues issues and explains them. It addresses the current allocation
of resources and key capabilities to functions and the value chain, and addresses
current management systems in support of the capabilities that execute the
strategy.
Your writing is both scholarly and business professional. Both indicative of your
expertise communicating at the executive level.
Dr. DeFazio
#1 Strategy-Goal Fit - Distinguished
#2 Strategy-Resources & Capabilities Fit - Distinguished
#3 Structure & Systems Fit with Capabilities - Distinguished
#4 Ethical Issues - Distinguished
#5 Strategic Issues Firms Capabilities, Structures, & Systems Distinguished
#6 Communications Distinguished
Reference:
Priddle, A., (2015) Ford workers to get $6,900 in profit-sharing checks, Referenced
from:
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