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Elaine Cartas' Career Assessment Portfolio

Case Analysis: Ford

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1. Discuss Bill Ford’s actions using the steps of the basic control process as a model. Did he follow this process? What did he do in each step? Did he leave out any important steps? What is left to do?

As mentioned in the text, following the basic control process correctly and thoroughly is needed for any company in order to reduce possible control blunders and improve the probabilities of success. After the incredible losses of profit, Bill Ford had a critical task in his hands: to drastically increase profits before plummeting into unemployment by using the basic control process. Bill Ford was able to follow all the basic control steps.
The first step, establishing standards, requires three components: who should set the standards, the difficulty of the standards, and the specificity of the standards. Thus, Bill Ford’s top priority was changing the company from the top down. Therefore, he restructured the senior managers at Ford by appointing the former CEO of Ford Europe to analyze international issues, appointed a new chief operating officer, and brought Ford’s retired chief financial officer. The experience this new management team possessed enabled them to help Bill Ford develop a comprehensive plan to slash costs. The standards to meet these goals were difficult, but attainable. These attainable goals include: laying off 35,000 workers, increasing quality levels, closing factories to increase efficiency, and standardizing vehicle parts. Although the comprehensive plan for change was specific to his executive board, Bill Ford did not specify these goals to his whole organization. Instead, Bill Ford broadly stated to company workers, “I’m asking you to work hard. Keep the big picture in mind. Think about what really matters. Do that and nothing else.” What Bill Ford needed to say was exactly how they were going to work hard, what to do if there’s an obstacle, and how to keep the product development program going if the stocks worsen. Thus, the new CEO proficiently chose an experienced executive board who provided difficult but achievable goals; however, he lacked the specificity of these standards.
The second step, measuring performance, examines the actions of people and equipment that the organization wants to monitor. In order for measuring performance to be successful, it must include three elements: consensus among the organization, the elimination of non-critical controls, and a comprehensive measurement. For the most part, Bill Ford effectively executed this step. For instance, the CEO personally visited a myriad of Ford offices to increase cooperative consensus to employ these principles. Additionally, the CEO eliminated many expensive and non-critical controls to increase profits such as laying off 35,000 workers, simplifying the manufacturing process, closing factories for efficiency, and reducing the number of different parts being purchased. However, what Bill Ford lacked was a comprehensive measurement. As a result, Ford company had difficulty adjusting to the new controls. For example, managers could not meet profit goals for the new Jaguar aluminum-chassis model, the new Mustang, and a fuel efficient SUV. Consequently, Bill Ford did not approve the development plan since it did not meet the company’s profit goals. Although Bill Ford competently increased consensus among the organization and eliminated non-critical controls, he did not provide a comprehensive measurement.
The third step, comparing performance against standards, compares expected performance with actual performance. Bill Ford successfully meet this step through historical and engineering specifications comparisons. For example, through the CEO’s comprehensive plan, he was able to slash costs by $4.5 million. Additionally, the change in producing fewer better quality vehicles has led to lower recall and an increase in customer satisfaction. Also, the new execution of engineering specifications standardized parts and arranged better deals with various global suppliers, which has squeezed $240 from the cost per vehicle. Due to these successful changes, the Ford Company has lowered costs by $6 billion so far.
The last step, evaluate results and take action, is the most difficult step. In order for it to be successful, managers must evaluate the magnitude of the deviation between expected and actual performance and see what course of action needs to be taken. There are two possible actions: a corrective action or a reinforcing action. Although Bill Ford has successfully corrected action taken by setting clear limits and asking specific questions to lead the organization in the right direction, he has maintained a positive performance through reinforcing actions. According to this step, in order to maintain positive performance, employees excelling in their performance should be recognized and rewarded. However, the CEO has not provided excelling employees with recognition and reward.
Although Bill Ford followed each step, he did not thoroughly meet the criteria for each step. For instance, the CEO needs to provide the organization with specific standards rather than vague standards to “work hard.” Additionally, a comprehensive measurement is needed for managers to meet profit goals for new car models. Also, reinforcing an action is needed to increase rewards and recognition, increasing production targets, and adding new product lines. By executing these steps, Bill Ford can successfully lead the Ford Motor Company to being the number one car manufacturer.

2. Can Ford’s turnaround plan be characterized as tactical or strategic controls, and why? How are the actions and decisions of lower-level managers likely to be influenced by the plan?

Ford’s turnaround plan can be characterized as a tactical control, which focuses on the day-to-day implementation of strategy. The tactical control is described as a strategy that focuses on the entire organization moving towards a strategic end through several components such as: financial controls, budgets, supervisory structure, and human resources. It is clearly apparent the Ford focuses on the entire organization through a strategic end. For example, Bill Ford’s top priority was changing the control from the top down at the Ford Motor company. In doing so, he created a new executive group who developed a comprehensive plan to be applied among the whole organization. For instance, Bill Ford used financial controls and budgetary controls as a diagnostic tool to determine what action is needed to improve situations. Therefore, the CEO was able to set clear limits and goals to steer the organization into the right direction by lowering costs by $6 billion. Additionally, the CEO used supervisory structure to implement strategies within the company. In doing so, the Ford management pushed speedy new-product development by relying on budgets and schedules to enforce controls. Also, the CEO used specific human resources policies and procedures by selecting specific procedures and training improved skills to meet the new controls of quality cars.
The actions and decisions of tactical lower-level managers can be influenced by the plan through the time frames, objectives, types of comparisons, and the focus of the plants. For example, tactical companies such as Ford Motor companies are in a timely constraint. This is displayed through Bill Ford’s quick development to generate profits to excite dealers and customers. Therefore he states, “What keeps me up at night is that we’re not moving fast enough.” The CEO accentuates on a needed accelerated product development. Additionally, tactical lower-level managers are expected to control specific, functional level. For instance, all employees were expected to produce fewer better quality cars, provide fuel efficient cars, and standardize parts. Also, tactical lower-level managers’ decisions can be made through comparisons within an organization. These comparisons are essential to display the equal work needed for all divisions within an organization. For instance, if production deadlines are not meet, then finances are at a lost. Thus, the integration of all divisions is needed. Lastly, the implementation of the actions and decisions are influenced by tactical lower-level managers. For example, in order for change to be successful managers needed to use plans and schedules, which is shown through the Ford management. Also, constant reinforcement is needed to maintain positive results. Therefore, the actions and decisions of lower-level managers are easily influenced by the plan.

3. How does the amount of control used by Ford’s credit managers affect control and performance in other areas of the parent company?

In order for an organization to have an effective amount of control, the organization must find balance between overcontrol and undercontrol. Yet, if the amount of control is not sufficiently balanced, it can lead to the downfall of the company. When examining how Ford’s credit managers affected control and performance, one can see that they implemented the balance of control successfully. For instance, the lay off of 35,000 workers, factory shut-downs to boost efficiency, and raising quality levels of cars has reflected upon improved customer satisfactions of their cars. The improvement of customer satisfaction has affected the work performance within the various divisions of the company. As a result, it has motivated many workers to work cooperatively to meet the demands and rules implemented by the Ford management. Additionally, the balanced amount of control has allowed the Ford Company to easily respond to changing conditions. Therefore, there is a favorable cost-benefit ratio in which the benefits of controls outweigh the financial costs of the implementation. This can be exhibited upon the lowered cost of $6 billion as well as increasing customer satisfaction. Hence, the effective balance of control the Ford management has employed has resulted to the company’s exceeding quality and sales.

4. Thinking in terms of focus control and amount of control, what caused the problems at Ford in the first place? Is Ford’s management proceeding appropriately in their attempts to improve the situation? Why or why not?

Focus of control refers to not only what is to be controlled, but where control should be located. In order for companies to have successful focus of control, they need to keep a balanced scorecard of four perspectives: financial, customer, internal business, and innovation and learning perspective. A huge factor to the Nasser management group’s downfall was their lack of focus. Nasser mainly focused the control upon the financial shareholders, more specifically the executive group. Thus, a huge problem of the company was the isolation at the top. Therefore, there was a lack of strict standards, which lead to looser guidelines for all employees to follow. Additionally, the Nasser management lacked any amount of control. They did not have any control at all. For instance, the company’s credit managers wanted to fuel vehicle sales by setting loose guidelines that allowed customers to qualify for low-interest and no-interest loans. As a result, the credit losses led to higher loses for the Ford company by 2001. The lack of focus and amount of control executed by the Nasser management team is what lead to Ford’s downscale problems in the first place.
In contrast, the new Ford management has been doing exceedingly well in lowering costs. For example, the focus of control is balanced through the financial, customer, internal business, and innovation and learning perspective. For example, shareholders have seen a huge increase in profits as Ford managers have effectively lowered costs by $6 billion. Also, customers report higher quality as the company is producing better quality cars with lower warranty claims. Additionally, the company is excelling in internal business operations and procedures as managers interact with subordinates through clear goals and specific questions to steer into the right direction. Furthermore, the quality of Ford cars is improving drastically, which is reflected by customer satisfaction. Moreover, the amount of control is balanced among the Ford managers and workers as workers input their recommendations to Ford managers. As a result, the continuous balance of control may lead the Ford Motor Company to being one of the top car manufacturers in the world.