Ford Motor Company's quality issues and financial impact of recalls

Ford Motor Company's Current Market Position

Company Overview

Quality Issues at Ford Motor Company

Human Resources Role

Strengths

Weaknesses

Opportunities

Threats

Financial Impact of Recalls on Ford Motor Company

The Ford Motor Company was founded by Henry Ford in 1903 who along with 11 other investors signed the article of incorporation for the organization. Since then, the Ford name has experienced tremendous growth and has been awarded with substantial significance in the automotive industry. It is one of the largest car producers in the world, which distributes automobiles across six continents. Its primary operations are located in Europe and the United States. The organization employs more than 164,000 personnel. This analysis provides an overview of the organization as well as the issues that challenge the organization. Then, it will direct attention to the way in which the problem has in effect on the future viability of the organization. Lastly, it will refer to the principle role of Human Resource in the organization and how it may provide critical advice and recommendations to the company.

Company Overview

The Ford Motor Company was founded by Henry Ford in 1903 who along with 11 other investors signed the article of incorporation for the organization. Since then, the Ford name has experienced tremendous growth and has been awarded with substantial significance in the automotive industry. According to Datamonitor (2011), it is one of the largest car producers in the world, which distributes automobiles across six continents. Its primary operations are located in Europe and the United States. The organization employs more than 164,000 personnel. The large number of employees represented by the human resources pool requires effective management to ensure that the human resources are supporting the company's organizational objectives.

Quality Issues at Ford Motor Company

According to Muller (2012), Ford recalled 3.3 million vehicles in 2012, approaching the number of vehicles recalled by both Toyota and Honda. This means that there are some issues with quality inside the company. Datamonitor (2011) affirms that significant product recalls provide an indicator of product quality decline which may impact the company negatively and the confidence of the customers in the products of this Company. This may ultimately lead to a decline in sales, massive profitability losses, and ultimately it may jeopardize the success of the company in the future.

Quality issues all point to the same root problem which seem to be that there are issues in the manufacturing process. This means that the production causes these quality inefficiencies to happen. It may be the result of inappropriate equipment and devices to produce the cars and it may be the inappropriate handling of equipment by the company's employees. Inappropriate equipment may be outdated equipment, inadequate equipment, or the manufacturing process. It may also be the result of inadequate handling on behalf of the employees.

If the root of these issues is not exterminated or if the issues are not solved, the future of the company stands on unstable grounds and along with other issues in different departments may lead to company failure, even though it is an industry leader. It is likely that the quality problems are also related to the human resources function at Ford Motor Company. If more effective training and oversight was provided for the manufacturing employees then it is likely that the company would not be facing the same issues.

Human Resources Role

According to Holbeche (2009), human resources are the visible face of an employer's obligations towards employees. However, this is not the only aspect that HR is concerned of because human resource professionals are responsible of selecting, recruiting, training, and getting the best out of the employees; it also makes sure there is an appropriate relationship between employees, managers, and staff.

The situation of Ford Motor may find solutions in the hands of the HR department. If the employees are responsible for inappropriately handling of equipment when producing materials, HR professionals need to make sure an appropriate and specialized training is provided for them so that manufacturing would take place with results that describe best quality practices. This will eventually reduce to a minimum or eliminate product recalls, which would lead to increased and more efficient productivity, more satisfied customers, and higher profitability. If the equipment is inappropriate for the production process, the company would have to determine ways to improve, change, or replace the equipment to solve the issues.

SWOT Analysis

The purpose of this paper is to conduct a SWOT analysis on the previously established Ford Company and to offer an analysis of these results in light of the problem under study. It will identify how these problems have an effect on the Ford Motor Company and on its competitive position inside the industry it operates.

SWOT analyses are very important for such large companies such as Ford. According to Danca (1999), such an analysis represents a model that offers direction and serves as a basis from creating and developing strategic marketing plans. The word SWOT is the abbreviated form of: Strengths, Weaknesses, Opportunities, and Threats. Through a SWOT analysis, a company will gather a proper insight of its external and internal environment. It will have a more preferable idea about the internal environment by addressing the strengths and the weaknesses within the company, and it will generate a better idea about the external environment by addressing the opportunities and threats.

Strengths

According to Datamonitor (2011), the most illustrative strengths the Ford Company has are: a firm brand image and market share, an extensive operational network, strong engineering and resource and development capabilities, as well as increasing operational performances. The strong brand image was created through the company's brands like Ford and Lincoln, which are two of the strongest car brands in the world. As per 2011, Ford was ranked the eighth strongest car brand in the world having a value of $7.4 billion which is 5% higher than the previous year. Through a strong motor car brand, the company is able to inspire confidence to potential consumers and it offers the organization competitive advantage and increased sales.

Weaknesses

Datamonitor (2011) considers that the most important weaknesses of the Ford Company are: legal proceedings, concerning product recalls, and under-funded pension liabilities. Probably one of the most important weaknesses of this company is represented by product recalls since million of its vehicles have been recalled in 2010 and 2011. This is problematic for the image of such large car manufacturing company.

This also gives the idea that something does not function well within the production process. To remedy the issue of recalled products, the company needs to invest more resources into "driving for quality" since it is a domain where the company has started to lack through the recall process of these products. The product recalls can lead to legal proceedings and lawsuits from consumers and other organizations, which can be companies or individuals. It would ultimately affect the company's image.

Opportunities

The Ford Company sees opportunities in: the growing Indian and Chinese automotive markets, the accelerating global truck manufacturing market, as well as in the positive outlook for the future of hybrid cars. India is a forever growing country and Ford should consider investing into opening production facilities n the country. The labor costs would be lower compared to U.S. And Europe markets and the organization would have a lot to gain from such a strategy. Another potential successful strategy is the hybrid electric vehicles industry since it has gained experience and growth in the past years.

Threats

Threats are considered being part of the external environmental analysis. Ford should worry about: the risks of foreign currencies, increasing price competition, as well as strict emission standards. Probably the most important of them is the increasing price competition. In trying to become more competitive, the Ford Company should do an analysis on their competitors; a SWOT analysis would be appropriate because it would help the company find the areas where its competitors are most vulnerable.

Recommendations

Ford Motor Company is not experiencing hard times for the first time in history, and since the company was always able to surpass difficult times, it will be able to surpass these moments as will if everything is properly considered and if the Human Resource Department through its professionals does its best. The key relies in this department. To remain competitive, Ford needs to at least maintain its current strategy or to try and create other strategies. Since the company has operations world-wide, the risks that the company can face are divided in various areas.

The company has generated a significant amount of success in recent years by maintaining a customer concentrated orientation. The company is constantly monitoring consumer needs and uses this as the basis for their product designs and the development of their product mix. However, the external analysis identified the fact that Ford will have to adapt to be more responsive to consumer needs in different cultures and geographic locations in smaller and more segmented geographical locations. For example, car buyers in developing countries such as India and China will likely have different preferences in vehicles and options than those in the U.S. market. As a consequence, Ford could do a better job in developing a more regional strategy that is better suited for consumers in a more local region.

Ford also should introduce some form of Total Quality Management (TQM) strategy that will allow the company to become industry leader in quality once again. Ford has been exposed to a lot of negative publicity regarding their quality control issues. The headlines often referred to relatively recent quality problems that the company was having. As a result, there have been a large number of defects has resulted in a signification number of vehicles having to be recalled and repaired at great expense to Ford. The company cannot afford to continue having such problems because of the direct and indirect expenses associate with the quality issues.

Many of these quality issues seem to be a consequence of Ford's growth rate and its inability to maintain qualified human resources to support this growth rate. The company's recent growth rate can be even more challenging since vehicles are exponentially increasing in complexity. The engineering of automobiles in today's competitive market makes it challenging for a global organization to control quality by using the same types of quality control process and manufacturing processes that the company previously used. Therefore, even though Ford has had sufficient quality standards, these standards can diminish quickly in such a large organization and the level of technology involved in the products and manufacturing processes compound this issue.

The first step Ford should take is to create a formal quality improvement committee. This team should be compromised of cross-functional experts who can provide the valuable insights necessary to improve its quality. The committee can review all of the existing quality controls that are in place and design new standards for manufacturing appropriately. Ford should also work diligently to improve the skill base in its human resource pool.

Many of the quality problems seem to be a result of inadequately trained managers. This can be confirmed by the quality committee's investigation. Human resources are essential to ensuring reliable quality which ultimately serves as the foundation for a successful company. Ford should work to train employees more effectively as well as provide ongoing education to the manufacturing base. This is a key component of the company's future growth strategy. Ford should invest in a number of training facilities which will provide specialized training to new and current employees.