BUS 441- Strategic Management Assignment Help
Think of a company or a firm or an organization. Write any topics pertaining to strategic management. Explain and discuss how some concepts, theories, analytical tools or approaches, communication and teamwork skills would help a manager improve business performance or performance of the company.
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This report is based on the concept of strategy management, illustrating the importance of cost leadership. The discussion present herein is based on case analysis of company Ford Motors. Strategy management can be described as one of the continuous process which includes planning, assessment, monitoring, and analysis of all the necessary functionalities within the organization which aims to achieve the goals and objective in accordance to the market situation (Wheelen et al., 2017). Cost leadership, is one of the key criteria involved in the strategic management issues which was developed by Michael Porter (Bertozzi, Ali, & Gul, 2017). The ideology of cost leadership is based on the implementation that help the company in managing and affirming the cost associated with operation. As a result of which, it enables the organization to reduce the operational cost, introduce innovations, customary aligned features, and achieve competitive advantage.
Brief background of Ford Motors
The present report is based on case analysis of an American Multinational Automaker Company - Ford Motors. The Company was started by Henry Ford in June 16, 1903, because of his passion for engineering and mechanics. Presently, the CEO of the company is James Hackett and headquarter is in Dearborn, Michigan. In present date, more than 246,000 employees work for Ford, across all the operational units around the world. The vision of the company is to become the most significant global automobile company by making customers life better. Ford’s mission is based on ‘One team’, ‘One plan’, and ‘One goal’ to provide personal mobility service to global customer through anticipating their need. The company owns both Ford as well as Lincoln brands and made a sale of 6.6 million of vehicles in 2017. United States and China are considered as the first and second largest market respectively for Ford Motors (Barbuto, 2016).
The idea of “Cost Leadership” for strategic management
According to reports, the revenue of Ford steadily increases from $151.8 in 2016 to $156.78 billion in 2017 (Shein & Bell, 2017). The brand primarily focuses on minimizing costs and re-allocating capital and raw material to the market having highest potential. The ‘One Ford’ plan was introduced in 2008 under the leadership of Alan Mulally, which describes ‘One Team. One Plan. One Goal’. The ‘One team’ describes the combined effort of employee, supplier, dealer, investor, union, community and customer to achieve the company’s goal of becoming automotive leadership. ‘One plan’ aims to achieve profit at changing model mix and exiting demand by developing new products and services according to customer’s demand. Lastly, ‘one goal’ focus on becoming a viable company which can deliver economic growth for all (Shein & Bell, 2017).
Introduction of concepts
Following ideology is introduced of cost leadership in strategic management, which can help Ford Motors to achieve competitive advantage by reducing the operational cost as well as by aligning the market requirements.
• Third-party outsourcing for manufacturing raw materials and adjunct services, including steel, paint, and integrating electronic system into automotive.
• Collaborating with economics and standalone research unit for R&D purpose.
Purpose of cost leadership at Ford Motors
Cost leadership mainly aims to reduce the cost of operation by using experience, lean manufacturing, sales ignore me, and control of overhead expenses (Dutse & Aliyu, 2018). These features returns the benefit in terms of higher profitability with low-cost operation. In addition to this it also helps in gaining business sustainability by virtue of down streaming the price for production and increasing the sales volume by reducing the sales price.
Outsourcing manufacturing processes
Ford Motors have the opportunity to gain outsourcing manufacturing benefit by hiring people outside from the company, especially for the purpose of steel manufacturing from raw material, assemble parts, paint and accessories, integrating the electronic devices to the automotive. The prospect is beneficial for the company by availing the opportunity of reducing investment in properties and infrastructure (Duarte & Cruz Machado, 2017). However, Ford Motors have the strategies to offer training, education, and certificate for the outsourcing films to collaborate in the manufacturing process. As a result of which the company needs to invest tenfold less for the manufacturing operations at host location. Note that the benefit of investment in training and certification of employees in outsourcing firms, is inclined to the quality assurance procedure. Additionally, with quality control measures the opportunity for rejection of raw material and ensemble units are also reduced. For example Ford Motors made collaborative outsourcing partnership with India for integration of electronic devices, the manufacturing cost reduces from $280 million $400 million from 2015 to 2017 (Kale, 2017).
Similar opportunities can be gained with respect to reducing the overhead cost in conjunction to manufacturing setup. These overhead cost includes the utility, labor charge, machine maintenance, and operation supervision cost. According to the report of Guo, Li and Chen (2017), Ford Motors is entering into China market, where the objective is to gain competitive advantage by 2022. Hence, outsourcing the manufacturing procedure within China will be unique opportunity for Ford Motors to reduce the overhead expenses for manufacturing operations.
Subsequently, the overhead margin that is controlled with outsourcing procedure can be used in other core competency of the company. As for instance, the sales and marketing of automotive is one of the core competency of Ford Motors, which will be beneficial with subsequent capital investment. Further, the cost margin saved can be used for reducing the local selling price of automotive. In return, this will available opportunity for the company to increase the sales level, attracting the local customers, and again competitive advantage in a limited duration.
Collaborating for R&D purpose
According to Kale (2017), Ford motor have recently initiated the outsourcing activities for accounting purposes, development of electronics, and software in India. This is further evidenced with recent investment of $5 million for the information technology setup venture. As a matter of fact, his investment reduces a large capital investment $30-50 million in the host unit. Thus, the opportunity for collaboration in R&D sector is beneficial for the company, if the partnership is made with developing nations which include India, China, and Brazil.
Some of the recommended strategies for such collaboration effort includes (Malik & Lan, 2016):
• Collaborating with academy units, by finding them for research activities can bring innovative solutions for the disruptive technology introduction into automotive.
• Introducing entrepreneurship platform for young brain by sponsoring project competitions. Such opportunity will invite interdisciplinary professionals to contribute for innovative and unique ideas into research field.
• Partnership with software and electronic companies for improved service which automobile is another opportunity. This ski can be introduced to be small size companies, which can solve the research purpose and innovation requirement of the company.
Risk identification is another important requirement that must be integrated into any plan. While opportunities exist for four motors to invest into the area of outsourcing and research collaborations, there also exists loopholes that can leak the information to the competitors. In order to mitigate the risk situation, following recommendations are believed to be effective, which includes (Woods & Linsley, 2017; Wu & Olson, 2015):
• Offering training and certification to the outsourcing companies, involved in manufacturing process.
• Quality assurance of the raw materials used by the third party for manufacturing operations.
• Legal and social economic investigation for the property and infrastructure used by third-party sources.
• Making confidential agreement with research units, involved in partnership with the company.
• Understanding the local market, and including the collected information into the strategy build up, before investing in outsourcing and research activities.
• Seeking the opportunities for outsourcing and collaboration with developing nations. This will help the company in maintaining cost leadership as well as availing opportunities for reduced-price raw materials.
In summary, the president report introduces strategies related to cost leadership that can be integrated into strategy management framework. The main frame of analysis is presented here by using the case reference of Ford Motors. It is evidence from recent investment of the company that the opportunities for controlling the overhead expenses as well as reduction in investment for research activities is reduced by 5-10 fold in last 5 years. The benefits thus associated with outsourcing and partnership for manufacturing and research activities are helpful by reducing the overhead cost as well as by increasing the margin of profit. Correspondingly, the capital saved can be used for building the core competency of company such as sales and marketing division. Another advantage that is associated with these strategies include easy penetration into foreign market, attracting local customers, as well as achieving competitive advantage in limited duration.
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