BPR in FORD Motor Company - Semantic Scholar · 2019-06-13 ·...

Tandon, et.al., Apeejay-Journal of Management Sciences and Technology, 4 (1), October - 2016

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Business Process Re-Engineering In Automobile

Industry: A Case Study Of Ford Motor Company

Abstract: Business Process Re-engineering (BPR) is an essential change in the processes and structure of any

company. That change can be related to work force, business processes, IT infrastructure, etc. In this case study,

the focus towards BPR was restricted to the changing regime of FORD Motor Company since 1900s. A critical

evaluation of Ford was made with the help of Situation-Actor-Process and Learning-Action-Performance (SAP-

LAP Analysis), Strength, Weakness, Opportunities and Threat (SWOT Analysis), Political, Economic, Social,

Technological, Environmental, Social (PESTEL Analysis) and Data Envelopment Analysis (DEA).The results

revealed that Ford is a very dynamic company which changes as per the requirement of the market. Repeated

BPR activities helped the company in remaining the world leader till date.

Key words: Business Process Re-engineering, SAP-LAP, SWOT, PESTEL, DEA, Ford Motor

I. INTRODUCTION

Ford Motor Company was founded in 1903. It was ranked fourth in the fortune 500 companies for the

year 2000. It has eight automotive brands (Aston- Martin, Jaguar, Volvo, Lincoln, Mercury, Ford, and

Mazda) and four service divisions (Ford Credit, Hertz, Quality Care, and Quik-Fit). Ford has its presence

in more than 200 countries and territories, with a workforce of 400,000 approximately and 140

manufacturing plants [1]. The Ford Motor Company, at least until World War II, was also occupied

in ”human engineering”. Gradually, Ford was able to go from a creative idea to near to optimum

assessment of demand, to engineering, manufacturing, and logistics, to the relationship with the

customers. Ford used e-commerce internally to start with, which they called it internet inside. Then, they

used internet in traditional B2B applications and B2C applications, and also to facilitate the ongoing

relationship with customers. Ford also applied technology inside their vehicles, through Telematics

initiatives, which created the internet on wheels. In due course of time, Ford allied with the best

technology partners.

Business Process Re-engineering implementation can be characterized as the implementation of

purposeful and basic change in business processes to achieve sudden improvements in performance.

Companies are re-engineering their basic business processes to improve quality, service and efficient

Dr. Sanjeev TandonArmy Institute of Management& Technology, Gr. Noida, India

[email protected]

Dr. Surabhi GoyalArmy Institute of Management& Technology, Gr. Noida, [email protected]

Kavita SharmaArmy Institute of Management &Technology, Gr. Noida, India

M. S. AbhilashArmy Institute of Management &Technology, Gr. Noida, India


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performance of the company. After re-engineering of vital business processes, new ways of company

management are required.

This paper gives an understanding through a contextual investigation research into the relationship

between strategic planning and BPR of an automobile major Ford. Organizations have experienced major

change. The impetus for these changes comes as a reaction to competitive pressures and proactive action

to improve corporate responsiveness [2]. Change of overall process is very complicated as it includes the

manipulation of interactive relationships among organizational sub-components such as management,

people, structure, technology and rewards. Drawing from a huge number of literature on implementation

with innovation, socio-technical design and the management information systems, this case study is

focusing on the accompanying inquiries:

1. What are the issues with Ford which are identified with execution of business procedure re-

engineering?

2. What is the relative seriousness of these issues?

3. How do these issues of Ford identify with the achievement of BPR?

4. What is the impact of BPR on the overall performance of the Ford Motor?

This study discusses about the implementation of BPR concept at various stages of business life of Ford.

Following sections will discuss about the objective, review of literature, research methodology, data

analysis tools, implementation, recommendations and conclusion of the study.

II. REVIEW OF LITERATURE

Re-engineering or process innovation, the term preferred by some [3], lead to new ways of doing work in

which the typical division of responsibilities between different masses may be obscured or eliminated. In

contrast to the segmentation of duties among individual and departments within traditional business

organizations proponents of re-engineering stress efficiency gains from consolidating responsibility and

authority for complete business processes in the hands of individual company personnel[4][5]. Although

efficiency gains from re-engineering may outweigh some of the control advantages inherent in the

segmentation of duties relating to authorization of expenditures, custody of firm assets, and record

keeping, the importance of internal controls in re-engineered business processes should not be

overlooked [6]. In response to global competition, US companies embrace the concept of re-engineering,

their fundamental business processes to improve quality, service and efficiency. Aetna Life and Casualty

[4], Bell Atlantic Corporation [7], Cummins Engine Company [8], Eastman Kodak and, Ford, and

Tenneco Gas, among others, have realized impressive gains from reengineering. Small and mid-size


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companies have also benefited from reengineering; Richard L. Florida of Carnegie Mellon University

found that 60 percent of 2,000 companies he surveyed showed improved returns from restructuring work

[9]. Accounting and Finance departments [10][11], production and supply logistics[12], human resources

departments[13], and government agencies, such as, the US Department of Commerce Patent and

Trademark Office[14], and the Metropolitan Transportation Authority in Los Angeles have undergone

BPR. By identifying procedures and applications software programs of the re-engineered accounts

payable systems that was described in Michael Hammer’s seminal article in the Harvard Business Review

[4], internal controls assures that organizations realize the benefits of re-engineering is demonstrated.

III. OBJECTIVES OF THE STUDY

This study was conducted with special reference to the BPR in the automobile industry. In this study, the

focus was restricted to the changing regime of FORD Motor Co.

The research encircles the following objectives:

1. To critically evaluate the BPR activities of FORD Motor Company.

2. To analyze the impact of BPR on the efficient performance of the company in a time span of last

25 years.

On the basis of this statement, the hypothesis framed is as follows:

H0-There is no impact of BPR activities on the overall efficient performance of the company.

The data will be tested on this assumption and results will be extracted.

IV. RESEARCHMETHODOLOGY

The study revolves around the historical challenges, their respective solutions and impact on the

performance of Ford Motor Company in its history of more than 25 years. The study is descriptive in

nature.

i. Problem definition: To develop a deep understanding of essence of the process of BPR to maximize

attainment of business goals.

ii. Research Design : The research design employed to satisfy the objectives in this research is

descriptive research.

iii. Data Collection Methods:

Data involves the collection of the secondary information (with data) regarding evolution of Ford and the

accomplishing business objectives by assuring quality standards, reducing inventory costs and internal

control and checks.


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Secondary Data: The data was collected through various magazines, books, journals and websites (e-

journals), Ford Motor Annual reports, financial statement from stock exchanges, research papers and Ford

website. For analyzing the data, SAP-LAP analysis, SWOT analysis, PESTEL analysis and DEA analysis

are being used.

A. SAP-LAP ANALYSIS

For analyzing the collected data, SAP-LAP framework has been used. This framework is developed by

Prof Sushil Kumar, IIT, Delhi. According to him,“SAP-LAP paradigm is the inquiry in management

which is equally applicable in non formal service sector” [15]. This framework can be used for case

analysis, managerial investigation and problem solving. It comprises of three basic elements i.e. situation,

actor and process. The interplay of situation actor process (SAP) leads to learning action performance

(LAP) [16] (Refer Figure 1).

Figure 1: SAP-LAP Model

(Note: Retrieved from Dubey, D K Sen and A ATalankar, 2012.http://www.vsrdjournals.com/ME/Issue/2012_12_December/Web/1_Sandeep_Kumar_Dubey_1065_Research_Article_VSRDIJMAPE_December_2012.pdf)

As per figure 1, "Situation" defines the internal and external environment of an organization and its

performance. In a vibrant sense, it is the historical development of the company and some important

milestones. The "actor" can be any per member of the organization like managers, departments or class of

actors such as suppliers, competitors, government, consultants, management, employees, etc. The

interface of "actor" and "situation" defines the organizational culture and climate that is important for the

better working of the organization. The "process" is the overall change of the business that converts

inputs into outputs to recreate the situation. The processes could be of various types, such as, supply chain


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process, customer interface process, performance management process, technology transfer process,

innovation and investment process, distribution process and so on.[16].

The interface of "actor" and "process" defines the structure, systems and strategies that need to be

transformed for organizational change. The interface of "process" and "situation" defines the incident to

be taken care of and adaptation and response of the process to the changing environment.

The interaction and synthesis of SAP leads to Learning-Action-Performance (LAP). The researcher needs

to learn about the SAP and bring out key learning issues of interest. Based on the learning, the action is to

be taken on situation, actor or process or the relevant interfaces. On the basis of efficient and effective

actions, performance is generated. Here, the “situation” examines all the time lines like the past, present

and the expected future; the “actor” explores various views, roles and capabilities, freedom of choice; the

“process” explains how the inputs are converted into outputs, and other alternative ways of doing the

process; “learning” refers to the key issues related to the SAP; “action” refers to what can be done to

improve SAP; “performance” indicates the impact of system’s performance on SAP.

B. DEA ( DATA ENVELOPMENT ANALYSIS)

Over the past few decades, data envelopment analysis (DEA) is being used for evaluating the relative

efficiencies of decision making units (DMUs) within a homogenous set. DEA is an approach to estimate

the manufacture function of organizations and organizational units and enables the assessment of their

efficiency. The envelopment surface will differ depending on the scale assumptions that underpin the

model. Two scale are generally employed: constant returns to scale (CRS), and variable returns to scale

(VRS). CRS reflects the fact that output is proportionately changing with inputs are changed; VRS

reflects that production technology may exhibit increasing, constant and decreasing returns to scale.

This model includes 2 inputs and 3 outputs of Ford Motor Company. The inputs and outputs are discussed

below. The inputs are:

1. Number of employees from 1991-2015.

2. Selling and administrative expenses for the period 1991-2015.

The outputs are:

1. Automative revenues for the period 1991-2015.

2. Earning per Share (EPS) for the period 1991-2015.

3. Total expenses for the period ending 1991-2015.


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The data related with these variables were shown in Table 1.

C. Adopted Model

This model will adopt the Output orientated DEA considering both CRS (Constant Returns to Scale) and

VRS (Variable returns to Scale). This method is majorly used to get more flexible and reliable results.

The CRS assumption is used when all DMUS are operating at an optimal level. The use of the CRS

specification when all firms are not operating at the optimal scale results in measures of TE (Technical

Efficiency) which are mystified by scale efficiencies (SE). SE is calculated by estimating both the CRS

and VRS models and looking at the difference [17]. VRS model is basically the CRS with an additional

constraint added to the Linear programming (LP) problem [18]. The analysis was done on 25 years data

of Ford between 1991 and 2015. The highest efficiency degree that can be achieved is 100 per cent.

According to Farell, if a given firm uses quantities of inputs, defined by the point P, to produce a unit of

output, the TE of that firm could be represented by the distance QP. This is usually expressed in

percentage terms by the ratio QP/0P, which represents the percentage by which all inputs could be

reduced. The TE of a firm is most commonly measured by the ratio TE = 0Q/0P, which is equal to one

minus QP/0P. It values between zero and one, and hence provides an indicator of the degree of TE of the

firm. A value of one indicates the firm is fully efficient. Another type of efficiency is allocative

efficiency (AE). The AE of the firm operating at P s defined to be the ratio AE = 0R/0Q, RQ represents

the reduction in production costs that would occur if production occur at the allocatively (and technically)

efficient point Q’, instead of at the TE, point Q.

The total economic efficiency is defined to be the ratio, EE = 0R/0P, where RP can also be interpreted in

terms of cost reduction. The DEA mathematical model is as follows:

Max h = Σr u r y rj0/ Σi ν i x i j subject to

Σru ry rj/Σi ν i x i j < 1, j = 1,Λ, n (for all j)

In simpler words:

Efficiency = Σweighted outputs/Σweighted inputs

Here, inputs include various resources like workers, machines, operating expenses, budget, etc. The

outputs include actual number of products produced to a host of performance and activity measures like

quality levels, throughput rates and lead time [19].


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D. SWOT Analysis

SWOT analysis is a contraction for strength, weakness, opportunities and threats. It is a

structured planning method that evaluates Abovementioned four elements of a project or business venture

[20]. SWOT analysis can be done for companies well as for product, place, industry, or person. It

involves specifying the business objective or project and identifying all the factors that are favorable and

unfavorable to achieve that objective.

E. PESTEL Analysis

A PESTEL analysis is a tool used for external environment players. It can be used to analyze and monitor

the external environment of the company. The strategic management tool gauges the macro

environmental factors. The results make decision taking much easier.

The different macro-environmental factors can affect business strategies. The aim is to assess how exactly

the factors influence business performance. PESTEL judges 6 types of environmental influences. They

are political, economic, social, technological, environmental and legal. These are not independent factors

but are interdependent.

V. DATA ANALYSIS AND INTERPRETATION

With the help of data collected and various statistical tools mentioned above, a detailed data analysis of

internal and external environment was done. All inferences were tested on the basis of hypothesis framed

and results were combined and concluded. To recall, the first objective of the study was

“To critically evaluate the BPR activities of FORDMotor Company”

This objective was analysed with the help of results obtained from SAP-LAP analysis, SWOT analysis

and PESTEL analysis.

A. SAP-LAP Analysis

SAP-LAP framework of BPR in Ford Motor is discussed in annexure 1. The table discusses the working,

people, process, issues, actions and performance of the company. It will help in drawing conclusions

about the hypotheses framed in the beginning of the study.

On the basis of the model framed, some results are extracted (Refer table 1).

https://en.wikipedia.org/wiki/Plan

https://en.wikipedia.org/wiki/Project

https://en.wikipedia.org/wiki/Business

http://pestleanalysis.com/what-is-a-business-strategy/


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TABLE 1

INFERENCES DRAWN FROM THE FINDINGS OF SAP-LAP ANALYSIS

Basis Ford Motor Performance

Industry Profile Ford Motor is a fifth largest distinctive car manufacturing company in the world.

Product Focus Ford motor is a renowned manufacturer of cars, SUVs, Trucks, Vans andLincoln.

IPR Profile Ford legal profile includes 3591 trademarks, 5780 patent grants and 412 patentapplications

Relationship betweenSales and Growth of theCompany

They are not mutually correlated due to dependence of revenue more onsegmented automobiles than the newer technologies.

Financial Position The last fiscal year revenue counts to $12.37 billion.

Several Issues The ability to manage growth, intense competition among Indian and overseasmotor companies and much of too dependency on America's best-selling F-Series truck and SUV sales for profits. The performance of average worker withdifference to the management of international operations and reduced demandfor technology used in existing products are also the issues of Ford.

Prospective Solutions forthe Issues

Product-wise, Ford has achieved its goal of delivering 25 new products from2012 to the close of 2015. It also transformed its Valencia plant into one of themost advanced and productive automotive plants, where each worker gotspecialized in one task with one tool. Also, Ford launched a key restructuringeffort including the closing of five plants, the abolition of 35,000 jobs, over $9billion in cost cutting, and the shuttering of several car lines including theMercury Cougar and the Lincoln Continental.

Future Plans Ford initiated many steps to provide better services like a new environmentalinitiative called the Partnership for a Cleaner Environment (PACE) with limitedsuppliers. They planned and implemented best practices for energy, greenhousegas emissions and water use reduction. They introduced various motivationalsprees for employees and simultaneously continued safety measures for them.Ford raised awareness of supply chain sustainability through training of newpurchasing personnel and global supplier technical assistance staff.

B. Interpretation of SAP-LAP Analysis

This analysis was done to make a detailed discussion of the changing phases of Ford. On the basis of

above mentioned criteria (Refer table 1), few inferences have been drawn:

1. Since 1900s, Ford has grown tremendously reaching every country in some or other way.


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2. Although quite an old company, Ford believed in dynamism and that too at global level.

Thousands of IPRs and changing organizational structures are examples of it.

3. One of the major backbone of Ford is its products and brand loyalty. Customers trust Ford

technologies and products by the name. It is because of this reason the sale is not dependent on

the IPRs.

4. Although Ford had been through tough times like, plant shut down, retrenchments, shutting down

the production of major segments of cars, supply chain issues, but the top management of the

company had always kept a futuristic endeavor and they kept on experimenting new strategies.

5. They also have shown interest in CSR (Corporate Social Responsibility) by providing aids to the

employees and the society at large. They are also working for producing more eco-friendly

automobiles for future consumption.

This shows that Ford Motor is surely a long run successful player of automobile industry. Various

BPR inclusions whether related to Supply Chain or Information Technology or Human Resource

have been made but they never refrained themselves from changes.

On the basis of the findings and interpretation done, it can be said that the null hypothesis of the

study is rejected and there is a positive relationship between Ford Motor performance and BPR.

Ford has in fact used this strategic option more rigorously.

TABLE 2

SWOT ANALYSIS OF FORD

Strengths Experienced organizations Global reach (more than 200 countries &

territories) Human engineering Use of e commerce internally Proven expertise in manufacturing, research

and development and automobile marketing Strong position in the American auto market. Implemented best practices for

environmental issues

Weaknesses Dependence of revenue Dependency on other best selling cars sale &

profit incapability to match the production targets or

sales volume of the top five automakers:Toyota, Volkswagen, General Motors, Renault-Nissan and Hyundai Kia

Reduction in demand for technology Adversely affected by the global recession &

Euro crisis High cost structure Poor environmental record


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Opportunities Green technology formula Demonstration of sustainability model. Increase their number of research and

development centres. A proper employee retention strategy shall

be framed. Growing auto markets, particularly in

expanding economies such as China, Mexicoand India.

Increased levels of e-commerce, whichmight increase the demand for lightcommercial vehicles used for delivery.

Growth through product development Expanding automobile sector Improving business scenario due to

expansion of consumer base

Threats Lower fuel prices could reduce the demand for

costlier fuel vehicles such as hybrids andelectrics.

Aggressive competitive rivalry New entry of high-tech firms Fluctuating oil prices Increasing usage of public transport and

increased fuel costs Production problems in local plants due to

labor and similar issues

C. Interpretation of SWOT Analysis

The data collected for SWOT analysis was extracted from secondary sources like company website,

annual reports and various research papers published. On the basis of observations mentioned in SWOT

analysis (Refer table 2), it was seen that Ford Motor is a global company having its reach in almost all

countries. The company is enjoying brand loyalty as well as an arena of new potential customers. They

are also following the best practices for human engineering. On the contrary, the revenues of Ford are

highly dependent on the performance of its close competitors. They are also not much apt of handling

environmental issues which they need to work upon as soon as possible. As far as opportunities are

concerned, they are entering into green technology supported by increased R & D activities and

increasing global reach. Still company needs to prepare themselves for some unseen threats like fuel

price fluctuations, aggressive cut-throat competition and increased use of public transport.

D. PESTEL Analysis

On the basis of the information available through various websites, discussed below are the results of

PESTEL Analysis of Ford Motor. These factors are the represents the steps taken by Ford on the basis of

various factors to uplift and sustain in the external environment of the company.

http://pestleanalysis.com/pestle-analysis-india/


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Figure 2: PESTEL Analysis of Ford Motor Company

E. Interpretation of PESTEL Analysis

As per PESTEL analysis of Ford as discussed in figure 2, from external environment point of view,

company is performing well. Politically, they are getting support at many places. They are being given

permission for various trade agreements. Along with that government is also keeping their eyes on the

tax for pollution levels. Economically, Ford proved to be one of the major players in US economic


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growth. Also, it among the top most fortune 500 companies increasing its goodwill as well as investor

support. Socially, the company is taking aggressive steps in doing CSR activities and maintaining the

ecological level around the globe. Technically, Ford is now adapting newer researches and also gearede

up in having more R & D centres to pace up the sales of the company. Environmentally, although

emitting pollution is one of the issues of the company but then they are putting efforts by going for R &

D in more fuel efficient vehicles and their economic pricing. Last, on legal aspect, Ford is very vigilant

about the varied rules, regulations and laws of various countries in which they are dealing. They also

look after their IPRs very well. So, on overall basis, FORD is doing well in their external business

environment.

The second objective of the study was

“To analyze the impact of BPR on the efficient performance of the company in a time span of last

25 years”

On the basis of this objective, a hypothesis is framed saying

H0 - There is no impact of BPR on the overall performance of the company.

This hypothesis will be tested through DEA analysis. In this analysis, an output oriented DEA model is

taken and TE of both CRS and VRS are recorded and compared. The results are compared and

inefficiencies were taken out to extract out the reasons behind it.

F. DEA Analysis

The results of DEA analysis of Ford motor Company is mentioned in Table 3.

TABLE 3

DEA ANALYSIS OF FORD MOTOR COMPANY

Output orientated Malmquist DEADISTANCES SUMMARY

Year CRS VRS

1 1 1

2 1 1

3 1 1

4 0.675 0.737

5 0.888 0.889

6 1 1

7 1 1


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8 0.984 1

9 1 1

10 0.957 1

11 0.908 0.944

12 1 1

13 1 1

14 0.971 1

15 0.684 1

16 0.94 1

17 0.812 1

18 0.794 0.899

19 1 1

20 0.913 0.929

21 1 1

22 0.945 0.968

23 0.966 1

24 0.919 0.99

25 0.88 0.995

Mean 0.929 0.974

Maximum 1 1

Minimum 0.675 0.737

G. Interpretation of DEA Analysis

On the basis of the results extracted through DEA (refer table 3), it can be seen that in most of the years,

FORD had given efficient performance as per the inputs added and out derived. Still, as per CRS, there

were 13 times that Ford Motor was unable to match its benchmark and as per VRS, there were 5 years

where Ford did not performed well. The minimum being Year 4. On an average, the performance of

Ford is almost near to efficiency.

When cross checked with the literature review about the reason behind such inefficiencies, it was seen

that in 1994, it acquired Jaguar which failed miserably. By 2005, both Ford and GM's corporate bonds

had been downgraded to scrap status, [21] as a result of high U.S. health care costs, decreasing gasoline

prices, fading market share, and an over dependence on declining SUV sales. Profit margins 0061lso

decreased on large vehicles due to increased "incentives" (in the form of rebates or low interest financing)

https://en.wikipedia.org/wiki/General_motors

https://en.wikipedia.org/wiki/Sport_utility_vehicle


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to counteract declining demand. This results into upgradation in the overall working of the organization.

This was done in the name of Business Process Re-engineering.

V. CONCLUSION

This study revolves around the BPR changes experienced by Ford. Since 1903 till 2015, many changes

happened in Ford. Whether it is expansion or diversification or contraction, Ford did everything to stay in

competition. Like any other company, there were issues with Ford, but strong and well organized BPR

strategies helped them to emerge as winners of all time. Thus, driving the company to become one of the

top leaders of automobile industry globally. To end this, on the basis of literature reviews done, some

recommendations are as follows:

1. There is an increasing need to reduce pollution levels exerted on the environment by reducing

exhaust emission levels produced by motor vehicles. Ford should take major initiatives in this

regards as a part of their CSR.

2. Ford should increase their number of research and development centres across the world to

empower its IPR treasure.

3. A proper employee retention strategy shall be framed. Along with that, there is a scope of

improvement in employee turnover ratio.

To sum up, Ford Motor Company is a growth oriented company which excels into varied departments of

its own outshining competition. With the help of BPR initiatives, Ford has demonstrated sustainability

model consistently. But, in the era of competition, Ford has to innovate Green Technology formula to

emerge as a winner. Ford has miles to go yet.

REFERENCES

[1] Naseer and Greenhalgh (2000). Ford Motor Company’s CEO Jack Naseer on transformational change, e-business and

environmental responsibility. Interview by Leonard Greenhalgh. Academy of Management executive. 14(3), pp- 46-51.

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of Management Information System. 12(1), pp- 109-144.

[3] Davenport, T. H. (1993). Process innovation; reengineering work through information technology. Boston, Harvard

Business School Press.

[4] Hammer and Champy, “Reengineering the Corporation : A Manifesto of Business Revolution,” Harper Business

Publications (1991).

[5] Hammer, M. (1990). Reengineering Work: Don't Automate, Obliterate. Harvard Business Review. 68(4), pp. 104-112.


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[6] Committee of sponsoring Organizations of Treadway Commission (COSO) (1992). Internal controls- Integrated

Frameworks. American Institute of certified public Accountants. New Jersey. Ed. 2.

[7] Currid, Cheryl and company (1991). Computing strategies for re-engineering in your organization. Prima Publishing,

Rocklin, California.

[8] Klimas, Anthony J. (1997). Re-engineering in the real world.Management Acounting. 78(11), pp. 30-36.

[9] Gleckman, H. (1993). A Technology payoff, a sweeping reorganization of work itself is boosting productivity. Business

Week. 3323, pp. 57-68.

[10] Hildebrand, C. (1994). Financial affairs. CIO. 7(11), pp. 62-68.

[11] Schmidt, D. (1994). The Credit manager’s Re-engineering Primer. Business Credit.. 96(1), pp. 29-32.

[12] Kallock, Roger W. (1994). Moments of truth are a call for action. Transportation and Distribution. 35(2), pp. 57.

[13] Shahooth K, Battall A.H. (2006). Using Data envelopment analysis to measure cost efficiency with an application on

Islamic banks. Sci. J. Adm. Dev. 4, pp. 134-156.

[14] Sushil (2012). Flowing stream strategy: Leveraging strategic change with continuity. Springer.

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31(2), pp. 58-64.

[16] Smith B. (1994). Business Process re-engineering: More than a buzzword. HR focus. 71(1). Pp. 17-19.

[17] Ramaj T. (2015). Data Envelopment Analysis: An application to measure Technical Efficiency of Hotel units in

Elbasan, Albania. Journal of Multidisciplinary Engineering Science and Technology. 2 (8), pp. 2141-2146.

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[19] Banaeian, N. (2004). Application of Data Envelopment Analysis to Evaluate Efficiency of Commercial Greenhouse

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Impact on Sustainable Development. 203. Extracted from

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[21] Schneider, Greg. (2005). GM Ford Bond rating cut to Junk. The Washington Post (2005).


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ANNEXURE: 1

SAP-LAP ANALYSIS OF FORD MOTOR COMPANY

Situation Issues

1. How company entered into automobileindustry?

1. Henry Ford builds a quadric-cycle. In June 1903, heestablished Ford Motor Company. Five years later, Fordintroduced the model T and sold over 15 million units innext 2 decades.

2. How is the present performance of thecompany?

2. In 2014, Ford sold approximately 6,323,000 vehiclesthroughout the world.

3. What is expected from the company?3. The annual revenues are at $ 140.6 M. with operatingmargin of 6.8% in 2015.

4. A variety of new technologies have joined stereolithography.5. With the 3D printing machines running nearly 24*7, thefacility has become a kind of virtual sandbox forengineers.6. With about 199,000 employees and 67 plantsworldwide, the company’s core business includesdesigning, manufacturing, marketing, financing andservicing a full line of Ford cars, trucks, SUVs andelectrified vehicles, as well as Lincoln luxury vehicles.

Actor1. What are the world views? 1. Ford is fifth biggest automobile manufacturer in world.

2. What roles and capabilities are exhibit?2. Firm’s intensive growth strategies aligned to its genericstrategy for competitive advantage.

3. In what domains is freedom of choiceavailable?

3. Ford is aggressively pursuing opportunities throughFord Smart Mobility, the company’s plan to be a leader invarious domains like connectivity, mobility, autonomousvehicles, the customer experience, and data and analytics.

4. Vision of Ford?4. Ford is present in Motorsports like Formula One, Rally,Sports cars, Touring cars & sponsorship of events5. Capitalizing on the models exclusively designed for thetype of markets e.g. ford Ikon for India

6. People working together as a team.Process

1.What is being done?1. In the 2014 Euro NCAP assessments, earned a five-starsafety rating for the Ford Mondeo.

2. What are the variables and parameters2. On April 30, 2015, Ford entered into an Amended andRestated Relationship Agreement with Ford Credit.

3. What can be changed?

3. In 2015, Ford also entered into collective bargainingagreements with Argentina, Brazil, France, Germany,India, Mexico, New Zealand, Romania, Taiwan, Thailandand the United Kingdom.

4. What it is being done?

4. Engineering, research, and development expenses for2015, 2014, and 2013 were $6.7 billion, $6.7 billion, and$6.2 billion, respectively. .


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5. How is it being done?

5. Substantial pension and post-retirement health care andlife insurance liabilities impairing liquidity or financialcondition.

6. What, why and how else?

6. Ford was honored by the Ethisphere Institute – for thesixth year in a row – as one of the World’s Most EthicalCompanies.

SynthesisLearning

1. What are the key issues related to situation?1. The ability to manage growth, intense competitionamong varied motor companies.

2. What are the key issues related to actors?2. Ford is too dependent on America's best-selling F-Series truck and SUV sales for profits

3. What are the key issues related to process?

3.The average worker performed several tasks in theproduction of each component, and used a variety of toolsin the process.

4. The ability to manage the international operations andreduction in the demand for technology.

Action

1. What can be done to improve situation?

1. Product-wise, delivering 25 new products from the endof 2012 through the end of 2015, and it's recently focusedon performance vehicles such as the Focus RS, Focus ST,Fiesta ST, and the newly available 2015 Mustang helpedFord in achieving the goal.

2. What can be done to improve actors?2. Ford transformed its Valencia plant into one of the mostadvanced and productive automotive plants on the planet.

3. What can be done to improve process? 3. Each worker specialize in one task with one tool..

4. The company takes a $2.1 billion charge to cover thecost of replacing Firestone tires on its vehicles5. Ford launched a major restructuring effort that includedthe closure of five plants, the elimination of 35,000 jobs,over $9 billion in cost cutting measures, and the shutteringof several car lines including the Mercury Cougar and theLincoln Continental.

Performance

1. What will be its impact on situation?1. Began pilot of a new environmental initiative called thePartnership for a Cleaner Environment (PACE).

2. How will the actors be affected?

2. Raised awareness of supply chain sustainabilityinternally through training of new purchasing personneland global supplier technical assistance staff.

3. How will the performance of the process beaffected?

3. Earned the highest possible Overall Vehicle Score offive stars in the New Car Assessment Program (NCAP) ofthe U.S. National Highway Traffic Safety Administration(NHSTA) for 15 Ford Motor Company vehicles.4. Safety measures improved substantially5. Kicked off a series of mobility experiments as part ofFord Smart Mobility.1. Ford is using 3D printing to revolutionize the world of

prototyping.


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ANNEXURE: 2

DEA VARIABLES FOR THE STUDY

Inputs Outputs

Year

Number ofEmployees(in'000)

Selling,administrativeexpenses

Automativerevenues EPS

Totalexpenses

1991 332 3993 72051 0.93 758201992 325 4434 84407 -2.4 861821993 322 4968 91568 -7.81 901361994 338 11280 107137 2.27 1013111995 347 7860 110496 4.97 114201996 372 6625 118023 3.58 1155071997 364 7082 122935 3.73 1159891998 345 7616 119083 5.75 1123981999 375 11010 135022 18.17 1285942000 352 9838 140765 3.69 1354892001 359 9778 130736 -3.02 1382222002 350 9758 134273 -0.55 1620772003 328 10152 138442 0.27 1639702004 325 11455 147134 1.21 1680422005 300 24588 153413 0.88 1784082006 200 19148 141727 -6.73 1770382007 245 21169 152691 -1.4 1777512008 205 21065 127635 -6.5 1592962009 117 13029 103868 0.91 119,7152010 164 11909 119280 1.9 122,2962011 164 10884 128168 5.33 129,3212012 171 11494 126567 1.47 127,9612013 181 13176 139369 1.83 134,1082014 187 14117 135782 0.81 143,7452015 199 14999 140566 1.84 141,911

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