Ford analysis of strategic intent

CASE 17

Ford: No Longer Just an Auto Company?

Pauline Assenza

Helaine Korn Naga Lakshmi Alan B. Eisner

Copyright Anatoli Styf/Shutterstock

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Ford Icebreaker

How many of you own, or have ever had responsibility for the upkeep of a car made by GM, Ford, or Chrysler?

What is your opinion of this vehicle?

How many of you would consider buying a Ford in the future?

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Ford Discussion Questions

1. What are key forces in the general and industry environments that affect Ford’s choice of strategy?

2. What internal resources and assets does Ford have that may give it a competitive advantage?

3. How should Ford compete?

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Ford Intro: Strategy Concept

Strategic management consists of the analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantages, and has these key attributes:

Directs the organization toward overall goals and objectives

Includes multiple stakeholders in decision making

Needs to incorporate short-term and long-term perspectives

Recognizes trade-offs between efficiency (cost) and effectiveness (performance)

Primary role of the organizational leader to articulate vision, mission and strategic objectives

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Strategy is all about the ideas, decisions, and actions that enable a firm to succeed. Strategic management has certain key attributes. Leaders face a large number of complex challenges. Leaders must be proactive, anticipate change and continually refine changes to their strategies. This requires a certain level of “ambidextrous behavior,” where leaders are alert to opportunities beyond the confines of their own jobs, and are also cooperative and seek out opportunities to combine their efforts with others. Leaders must make strategic management both a process and a way of thinking throughout the organization. The primary role of the organizational leader is to articulate vision, mission and strategic objectives.

Ford Intro: Hierarchy of Goals

Exhibit 1.6 A Hierarchy of Goals

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The primary role of the organizational leader is to articulate vision, mission, and strategic objectives.

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Ford Intro: Strategic Vision

Company vision

Massively inspiring

Overarching

Long-term

Driven by and evokes passion

Fundamental statement of the organization’s

Values

Aspiration

Goals

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Leaders must communicate their initial vision of the organization’s purpose: What was the original goal that evokes a powerful and compelling mental image of a shared future, one that would be massively inspiring, overarching, and long-term, representing a destination that is driven by and evokes passion?

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Ford Intro: Strategic Mission

Mission statements

Purpose of the company

Scope of operations

Basis of competition and competitive advantages

More specific than vision

Focused on the means by which the firm will compete

Reflects an organization’s enduring, overarching strategic priorities and competitive positioning

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The organizational mission also needs to be considered: A mission encompasses both the purpose of the company as well as the basis for competition and competitive advantages. In writing a mission statement, it is important to understand the definition of the business: 1) Who are its customers? 2) What customer need is the organization trying to fulfill? 3) How does the business create and deliver value to customers and satisfy their needs? Organizations must respond to multiple constituencies if they are to survive and prosper, and the mission provides a means of communicating to diverse organizational stakeholders. Although vision statements tend to be quite enduring and seldom change, a firm’s mission can and should change when competitive conditions dramatically change or the firm is faced with new threats or opportunities.

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Ford Intro: Strategic Objectives

Strategic objectives

Operationalize the mission statement

Provide guidance on how the organization can fulfill or move toward the mission and vision.

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Anticipating that things might change, an organization’s leadership must then establish strategic objectives to operationalize the mission statement. That is, objectives help to operationalize the mission statement with specific yardsticks, and provide guidance on how the organization can fulfill or move toward the “higher goals” in the goal hierarchy—the mission and vision.

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Ford Stakeholder Dependencies

Dependencies among all stakeholders:

Parts suppliers, unionized workers, car dealerships dependent on car companies

Local communities dependent on tax income

Local businesses dependent on consumer spending

State & government entities afraid of a burden on social systems if any of this failed

2009 bailout by U.S. Congress

Shareholders needed to be kept happy as Fields continued to experiment and innovate.

A clear, focused message was necessary.

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Although not in the case, the discussion over the fate of the auto industry in early 2009 clearly demonstrated the dependencies among all stakeholders. Parts suppliers, unionized autoworkers and car dealerships were all dependent on the car companies’ ability to produce cars that would sell; local communities were dependent on the tax income from dealerships and parts suppliers; local businesses were dependent on the continued ability of employees to spend money; state and government entities were afraid of the burden on social systems if any of this failed. Stockholders and the overall U.S. financial system were dependent on a somewhat predictable future. This is why the government felt it had to act to bail out General Motors and Chrysler in March 2009 by loaning them enough money to stay afloat. All the U.S. automobile-related industries had an obligation to act in good faith and accept the government’s terms. Although not needing this loan, Ford’s CEO Mulally had to develop a sound strategy and give clear guidance. For an overview of this event, see http://useconomy.about.com/od/criticalssues/a/auto_bailout.htm Going forward, with the threat of competition not only from General Motors, Fiat/Chrysler and the Japanese, Korean and German automakers, but also from Tesla, and even Apple, CEO Fields had to be careful to keep not only customers, suppliers and employees focused on the automotive products, but also keep shareholders happy as he continued to experiment and innovate with his idea to solve transportation and mobility problems in cities across the globe. Could Fields craft a clear, focused message, expressing a cohesive narrative or game plan that made sense to all?

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Ford Intro: Strategic Management

Strategic Management involves

Analysis

Strategic goals (vision, mission, strategic objectives)

Internal and external environment

Decisions - Formulation

What industries should we compete in?

How should we compete in those industries?

Actions - Implementation

Allocate necessary resources

Design the organization to bring intended strategies to reality

How can Ford create a sustainable competitive advantage in the marketplace that is not only unique and valuable but also difficult for competitors to copy or substitute?

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During strategic analysis, the leader does “advance work” to anticipate unforeseen environmental developments, identify unanticipated resource constraints, assess changes in his or her preferences for how to manage. During strategy formulation, the organization addresses the issue of how to compete in a given business to attain competitive advantage. Strategies are formulated at the business, corporate, and international levels. Entrepreneurial initiatives may also play a role. In strategy implementation, depending on the type of organization structure, the leader might include key individuals in a discussion around selecting which strategies might be best to implement at which level within the organization. The leader must ensure proper strategic controls and organizational design, and establish effective means to coordinate and integrate activities within the firm as well as with suppliers, customers and possible alliance partners. Leaders should also be committed to excellence and ethical behavior while promoting learning and continuous improvement. Here’s where innovation is important. The basic question strategic management tries to answer is: How can we create competitive advantages in the marketplace that are not only unique and valuable but also difficult for competitors to copy or substitute?

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