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Ford Motor Companys Strategic Leadership
Ford had been experiencing losses for a long time, and this made it look for a CEO outside the industry. In the 1990s, leadership training programs were developed to strengthen the build-up of human capital. These were Ford Business Associates, Capstone, Experienced Leader Challenge, and the New Business Leader. These would assist in coming up with radical leaders and teach the designs to develop a manufacturing revolution. Their top management was highly bureaucratic with many layers and this delayed the execution of activities. Under the leadership of Alan Mulally, many changes were made and many people in the top management were replaced. The Board of directors includes members from different personnel and corporate background. However, the Ford family is the most influential and makes most decisions.
From the management structure of the top executive, it is noticed that the structure is very complex. Fords structure consists of the CEO, executive, group and senior vice presidents then, the vice presidents of every department. This structure is very complex and in the case of any decision making, the process takes a very long time. It also becomes very expensive for the company since all these executives are compensated highly. This chain of management is rigid and implementation of any changes is very cumbersome. In order to create value for the company, the chain of management and activities should be made flexible by reducing the number of executive leaders. This will make the process of decision-making simpler and the implementation of any change will be fast. The costs will also be reduced since the additional costs incurred due to this chain of management will be cut. Some of the departments can be combined and be placed under the leadership of one person.
Growth in the auto market is low despite the largeness of the auto market. Competition in this sector is very high and most of them are trying consolidations that affect domestic and global markets. For Ford to be competitive, mergers and acquisitions are a good strategy so that they can increase their market share. Ford should increase its market segmentation. This is done by targeting the small customer segments which can be done by increasing the number of models they produce. The increased numbers will attract groups of smaller customers and thus, it will be placed in a better position in the market. Ford should adopt the strategy of using fuels with higher efficiency. Considering the increase in the prices of gas in US and the demand for gas, other alternatives like bio-diesel should be considered. Also, the alternatives used should be cost-effective. They should be in a position to differentiate themselves from their competitors and this could be achieved through the use of electric hybrid vehicles. Through the commercializing of hydrogen fuel, it could be a significant technological innovation (Hitt, 2008, p. 127).
Ford mostly uses fleet sales like the rental companies which are less profitable compared to the general public sales. Due to this factor, Ford faces competition from other auto manufacturers who sell to the general public. In 2007, its fleet sales decreased and the competition could minimize the profit margins of the company. The reduced profits have an effect on the payment of the car salespeople. With the car information available on the internet, customers are able to shop online and negotiate their prices thus, reducing the work of the salespeople. New entrants in the US market are a competitive threat to Ford. These are like Honda and Toyota who established themselves and managed to be part of the markets key players. Automakers from foreign countries have begun exporting to US and some are making good progress in establishing themselves like Hyundai and Kia. If they reach the economies of scale, they will be able to establish their products in the US and this is a huge threat to Ford since their market will be reduced. Since the operating costs in the auto industry are very high, Ford is attempting to reduce the fixed costs by closing down their manufacturing sites, and bring more facilities to be in line with their present market share (Hitt, 2008, p. 130).
With Mulally as the new CEO, Fords strategic leadership will assist in the meeting of the objectives of the company. The influence which the finance section had in determining the final result will be reduced since the competitiveness of the company was compromised in an attempt to save some money. If the company uses its resources smartly, it will be able to make considerable improvements. The reduction of the Ford family members in the management team is a good strategy since the new managers will improve productivity. This is because these managers are employed on a contract basis and they are bound by the terms of the contract to deliver good results. Mulally has been attempting to reduce the operation costs by increasing the contribution to the retirement schemes and thus, reducing the financial burden on the company. If strategic leadership is put in place, it will enable the organization to meet its needs effectively. If the leaders are experienced in the running of the activities of the company, they will be able to improve the productivity and profits of the company within a short period. Additionally, if they are willing to cooperate in achieving the objectives and the vision of the company, they will assist Mulally and the company in achieving the strategic objectives that have been put in place (David, 2009, p. 23).
By coming up with more innovations, Ford is making efforts to develop its competitive position. To cut the manufacturing costs about forty percent of the workforce was laid off in 2008. If strategic leadership is adopted, together with the initiatives of Mulally, Ford will be able to improve its position in the market and its strategic goals and objectives will be achieved with ease.
Reference List
David, F. (2009). Strategic management, concept and cases: 12th ed, Upper Saddle River, NJ: Prentice Hall.
Hitt, M. (2008). Strategic management: competitiveness and globalization, cases, 8th ed, Ireland, South Western.
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