- Auto Industry
Restructuring of Ford Motor Company in Recent Years Seems to Have Been Successful Business Strategy
In 1903, Henry Ford introduced the Ford Model T. Ford quickly became very successful, much due to the second industrial revolution that took place in the late 19th and early 20th centuries. In recent years, Ford experienced loss of revenues and decided to eliminate jobs. According to Chew, “Excess capacity can arise in at least four ways, the most obvious of which occurs when market demand falls below the level required to yield returns that will support the currently installed production capacity. This demand-reduction scenario is most familiarly associated with recession episodes in the business cycle.” (Chew, 2005)
The Ford Motor Company employs thousands of workers at its various plants throughout the United States. When Ford realized it's continuing loss of revenues, the board members made the decision to eliminate jobs and to create new products that were expected to be more desirable to its consumers. The executives based the decisions on what they felt was best long-term for the company as a whole and for the remaining employees. The employees who are still employed by the company may have increased long-term job security as a result of the re-structuring. Moving forward by creating new models demonstrates maturity, professionalism and willingness to make sacrifices for the betterment of the company. These are characteristics of a learning organization.
While the decisions made by Ford may have helped ensure the survival of the company, it has adversely affected thousands of employees who no longer have a job as a result of these decisions. This is not very flattering to the reputation of the company.
Ford also made the decision to create new products that were expected to be more desirable to its consumers. This is exemplary of organizational innovation. Buyers are always looking for the latest technology and design. Many long-term consumers are affected because some of their favorite models may be lost in the company’s efforts to keep up with its competitors. This may have an adverse effect on consumer relations.
1903 Ford Model A
The company faced and may continue to face a great deal of legal risk in its termination of employees. Many of these employees had been with Ford for decades. The decision was best for the company long-term and for the remaining employees because they have increased job security as a result of the re-structuring.
Globalization of the market also contributed to Ford’s losses because, American businesses have become globalized, but competitors have too. Toyota is largely popular within the United States with the Camry and Corolla being two of the most popular models available.
While other auto companies received government bailouts, Ford implemented these changes and held their own. As a result their stocks have slowly increased. This would indicate the business strategies implemented were successful.
It remains critical that Ford develop good long-term relationships with consumers. In the automobile industry, consumers often purchase vehicles from a particular manufacturer because they have a preference to do so. This preference is often developed as a result of the relationship they had with the company over the years. Individual dealerships represent the company as a whole, so while employees at dealerships may not be direct Ford employees, their commitment to the vision of the company affects the relationship that consumers have with Ford. The willingness of the employees to adjust to the changing needs of the company also create a picture of cohesiveness to the consumer. The recent and upcoming changes the company is facing are not going to be easy, but they are necessary for the long-term survival of the company.