Section: 9Group Name: Feedback

Submitted To

Chowdhury Golam Hossan, PhDSenior LecturerDepartment of Business AdministrationEast West University

Submitted By

Md. Imrul Basher AupoID# 2009-2-10-188

Mir Razaul HaqueID# 2009-2-14-016

M.A Aziz RatanID# 2009-2-10-068

Salman BhuiyanID# 2009-2-10-028

Date of Submission: 1 December 2010

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Table of Content

Topic Page Number

Acknowledge iv

Executive Summary v

Chapter One- Introduction

1.1 Origin of the Report 2

1.2 Background of the Report 2

1.3 Objectives of the Report 2

1.4 Methodology 31.5 Limitation 3Chapter 2- Organization

2.1 History of Ford's Company 5-6

2.2 Brands and marques 6-7

2.3 Corporate governance 7-8

2.4 Types of vehicles 8-10

Chapter 3- Case StudyAdvantages and disadvantages of centralization and decentralization

12-13

Rationale Ford 2000 Program 13

Recentralization 14-16

Luxury car division 17-19Conclusion 20

References 21

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Letter of Transmit

1 December 2010

Chowdhury Golam Hossan, PhDSenior LecturerBusiness Administration DepartmentEast West University

Subject: Application for accepting assignment paper

Dear Sir,

We have the pleasure to submit here with the term paper titled “Ford's European Organization Changes Strategy” as requirement for the course code MGT 101.Based on discussions, we have incorporated the necessary materials to finalize the assignment paper.

We also acknowledge our gratitude to those persons who have helped us and passed their valuable comments on the draft of the assignment paper. If you need any assistance in interpreting this term paper, please contact us at any time.

Sincerely yours,

Md. Imrul Basher Aupo

Mir Razaul Haque

M.A Aziz Ratan

Salman Bhuiyan

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Acknowledgements

All praise to Almighty Allah. Firstly we would like to thank almighty Allah for helping

us all the way and after that we would like to thank our parents for their love, care and

support which is always our strength.

We also like to thank some more people who make our way easy for making this

assignment paper.

Grateful acknowledgements are due to our “MGT 101” Instructor Chowdhury Golam

Hossan , PhD for whom we were able to complete our assignment. His support, excellent

guidance and interests inspired us doing this assignment. He is very insightful and leaded

us to achieve our desired result.

Lastly, we would like to thank East West University for offering such a course that

assign us such assignment; those enlighten us with the knowledge which will be very

helpful for us in near future.

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EXECUTIVE SUMMARY: Ford Motor Company has become one of the largest Motor

industries in the world. The main ownership of this company comes from

North America. This company has many service sectors among them they

provide motor service globally. This company has some mission to run their

business. They group their jobs, specialized their jobs according to their

need. They change their employees from another sector to other. They have

some cars of different features. They span their management and distribute

authority among the managers. The authority comes from upper level to

lower level. It is a centralized company. They departmentalize the work

according their product and function.

The company would become more successful in organizing

their business if they able to over come some of their lacks.

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CHAPTER ONE

Introduction

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1. Introduction

1.1 Origin of the Report:

Each professional degree needs practical knowledge of the respective field of discipline

to be fruitful. To complete BBA program also has some assignment, relating to the

exchange of theoretical know1edge into the real practical situation. The assignment

report entitled “Ford's European Organization Changes Strategy”, originated from the

partial fulfillment of the Management program. The main purpose of the preparation of

the report is due to the partial fulfillment of the Management program phase of the BBA

program.

1.2 Background of the Report:

In the later 19th century, Management is a part of Business. However, due to the

globalization and more expansion of international trade, Management places the major

role for the economic development. The development of the modern economy would not

have been possible without using Management. A first fundamental characteristic of

Management is to managing people of any organization. It is a parallel relationship

between Manager and Managing.

As a BBA student doing Management course has some assignment. We are really happy

to do those things in Mgt 101 course.

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1.3 Objectives of the Report:

To present an overall view of Ford's company.

To present strategy of Ford's company.

To identify the limitations and shortcomings decentralization.

To suggest remedial measures

1.4 Methodology of the Report:

While we were conducting the study we have collected various types of secondary data.

Data has been collected through different sources like by using book and internet.

Sources:

Books

Circular of the Ford's company

Internet

Newspaper

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1.5 Limitations:

Data insufficiency, fear of disclosure

Shortage of written material

Lack of proper information flow

Unavailability of correct and valid information

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CHAPTER TWO

Organization

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2.1 History of Ford's Company:

Henry Ford

1896 Ford Quadricycle

Ford's company was founded by Henry ford in June 16 1903. It is automotive car

industry which served its car all over the world. The headquarters of Ford's situated in

Dearborn, Michigan, United States. The Ford Motor Company was launched in a

converted factory in 1903 with $28,000 in cash from twelve investors, most notably John

and Horace Dodge (who would later found their own car company). Henry's first attempt

under his name was the Henry Ford Company on November 3, 1901, which became the

Cadillac Motor Company on August 22, 1902. During its early years, the company

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produced just a few cars a day at its factory on Mack Avenue in Detroit, Michigan.

Groups of two or three men worked on each car from components made to order by other

companies. Henry Ford was 40 years old when he founded the Ford Motor Company,

which would go on to become one of the world's largest and most profitable companies,

as well as being one to survive the Great Depression. As one of the largest family-

Controlled companies in the world, the Ford Motor Company has been in continuous

family control for over 100 years.

2.2 Brands and marques

Today, Ford Motor Company manufactures automobiles under several names including

Lincoln and Mercury in the United States. Ford plans to discontinue the Mercury brand at

the end of 2010. In 1958, Ford introduced a new marque, the Edsel, but poor sales led to

its discontinuation in 1960. Later, in 1985, the Merkur brand was introduced to market

Fords from Europe in the United States; it met a similar fate in 1989.

Ford has major manufacturing operations in Canada, Mexico, the United Kingdom,

Germany, Turkey, Brazil, Argentina, Australia, the People's Republic of China, and

several other countries, including South Africa where, following divestment during

apartheid, it once again has a wholly owned subsidiary. Ford also has a cooperative

agreement with Russian automaker GAZ.

Ford acquired British sports car maker Aston Martin in 1989, but sold it on March 12,

2007, retaining a small minority stake, and bought Volvo Cars of Sweden in 1999, selling

it to Zhejiang Geely Holding Group in 2010. In November 2008 it reduced its 33.4%

controlling interest in Mazda of Japan, to a 13.4% non-controlling interest.It shares an

American joint venture plant in Flat Rock, Michigan called Auto Alliance with Mazda. It

has spun off its parts division under the name Visteon.

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Ford sold the United Kingdom-based Jaguar and Land Rover companies and brands to

Tata Motors of India in March 2008.

Ford's FoMoCo parts division sells aftermarket parts under the Motorcraft brand name.

Ford's non-manufacturing operations include organizations such as automotive finance

operation Ford Motor Credit Company. Ford also sponsors numerous events and sports

facilities around the US, most notably Ford Center in downtown Oklahoma City and Ford

Field in downtown Detroit.

Overall the Ford Motor Company controls the following operational car marques: Ford,

Lincoln and Mercury.

Marque Years used Markets

Ford 1903–present Global

Lincoln 1922–present North America, Middle East

Mercury 1939–2010 North America, Puerto Rico, U.S. Virgin Islands, Middle East

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2.3 Corporate governance

Ford World Headquarters in Dearborn, Michigan, known as the Glass House.

Members of the board as of early 2007 are: Chief Sir John Bond, Richard Manoogian,

Stephen Butler, Ellen Marram, Kimberly Casiano, Alan Mulally (President and CEO),

Edsel Ford II, Homer Neal, William Clay Ford Jr., Jorma Ollila, Irvine Hockaday Jr.,

John L. Thornton, and William Clay Ford (Director Emeritus).

The main corporate officers are: Lewis Booth (Executive Vice President, Chairman

(PAG) and Ford of Europe), Mark Fields (Executive Vice President, President of The

Americas), Donat Leclair (Executive Vice President and CFO), Mark A. Schulz

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(Executive Vice President, President of International Operations), and Michael E.

Bannister (Group Vice President; Chairman & CEO Ford Motor Credit). Paul

Mascarenas (Vice President of Engineering, The Americas Product Development)

2.4 Different Types of vehicles:

Flexible fuel vehicles are designed to operate smoothly using a wide range of available

ethanol fuel mixtures—from pure gasoline, to bioethanol-gasoline blends such as E85

(85% ethanol and 15% gasoline) or E100 (neat hydrous ethanol) in Brazil. Part of the

challenge of successful marketing alternative and flexible fuel vehicles in the U.S., is the

general lack of establishment of sufficient fueling stations, which would be essential for

these vehicles to be attractive to a wide range of consumers. Significant efforts to ramp

up production and distribution of E85 fuels are underway and expanding.

Ford F-150

Ford Crown Victoria

Ford Focus

Ford C-MAX

Ford Mondeo

Ford S-MAX

Ford Galaxy

Ford Taurus

Ford Ranger

Ford Explorer

Ford Expedition and EL/Max

Mercury Grand Marquis

Lincoln Town Car

Hybrid car

Racing car

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Rally car

Sales volume of Ford's:

Calendar Year American sales1999 4,163,3692000 4,202,8202001 3,971,3642002 3,623,7092003 3,483,7192004 3,331,6762005 3,153,8752006 2,901,0902007 2,507,3662008 1,988,3762009 1,620,888

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Chapter Three

Case Study

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Question No 1: What are the advantages and disadvantages of centralization and decentralization?

Ans: Centralization means the tendency to restrict delegation of decision making. Using centralization a company can operate its business by a single department.

On the other hand decentralization means the tendency to disperse decision making authority in an organized structure. In this case study Ford company first use decentralization and then use centralization by making recentralization.

From the case study it is recommended that there are some advantages and disadvantages of centralization and decentralization. The advantages of centralization are:

In geographic concentration using centralization a company operating in a single location.

Using department centralization the maintenances for a whole plant may be carried out by a single department.

Easy to make decision.

Limitations: The limitations are

The environment may change fast. One way decision making. Allow mistakes by subordinates. Establish and use broad control.

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The advantages of decentralization are: From the case it is recommended that there are several advantages of decentralization and they are

Encourages decisions making and assumption of authority and responsibility.

Gives managers more freedom and independence in decision making. Facilitates product diversification. Facilitates setting up of profit centers. Promotes establishment and use of broad controls that may increase

motivation. Makes comparison of performance of different organizational units

possible.

Limitations: The limitations are

Makes it more difficult to have a uniform policy. Increases complexity of coordination of decentralized organizational units. May be limited by inadequate control technique. Can be limited by the lack of qualified managers. May be limited by external forces. May not be favored by economics of scale of some operations.

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Question no 2: What was the rationale for the ford 2000 program?

Ans: It is recommended that what course of action that is satisfactory or good enough for all is called rationale. If one course of action is good for some and not enough for others that is not called rationale. In the case study of Ford's company what action is good for its all centers including North America and Europe is rationale.

In 1994 Ford Company emerged a new strategy named Ford 2000. This strategy has some rationale action. For that Ford merged its automotive operation unit in North America with that of Europe. As a result they got more advantages in producing more cars in US and Europe.

Making the company competitive and achieve cost reduction through the elimination of unnecessary car platforms and duplication of engine models. It is very much effect on Ford's company to achieve its goal.

From the basis of Ford 2000 strategy among five operation center only the European center was developing small and midsize automobiles. So it is good for all centers that production is divided for every center. So North America center worked together with European center to produce and develop cars.

3.Compete with latest costly car : Day by day most of the automobiles company

produced luxurious car like BMW, Lexus, Mercedes Benz e.g. So ford have to

compete with these latest luxurious cars if they want to be profitable in market. So,

Ford establishes a luxury car division consists of Lincoln, Volvo, Jaguar, Aston

martin.

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4.21 ST Century demand : 21st century has huge demand for luxury car. Because they

by day newest model coming. New generation as well as rich people wants luxurious

car for their use. So ford has established luxury car division to meet up the 21st

century demand and they produced Luxury car. However, Ford faced major

challenges in the early years of the new millennium. While it continued to lay the

groundwork for future growth by spinning off its Visitor unit, acquiring BMW's Land

Rover SUV business, and purchasing the remaining shares of Hertz that it did not

already own, it was dealt a significant blow when Bridgestone recalled over 6.5

million Firestone brand tires--tires used as original equipment on Ford's popular

Explorer model, the Mercury Mountaineer, the Ranger, and some of its F-150

pickups.

5.Failure of 2000 strategy : A new strategy emerged that was named Ford 2000. But

the ford 2000 strategy and organization did not work well as shown by the 1998

performance report. Ford was loosing market share to competitors. Consequently the

newly elected chief Jacques Nasser reviewed the centralized Ford 2000 strategy and

reintroduced the market focus orientation. Moreover, Nascar created the premier

automotive group for luxury cars, which were more profitable than the low and mid-

priced cars.

Provide technical support to private race teams around the world to develop one common

race car capable of adapting to the major touring car categories globally. The new Focus

is the result of a global product development program bringing together Ford’s best

engineers and technology from around the world. The new Focus will be sold in 122

markets worldwide and manufactured in Ford plants in Asia, Europe and North America.

Ford find huge profit and huge market share after establishing new luxury car division.

Ford vision is to become the world's leading consumer company for automotive products

and services. Ford is a global family with a proud heritage passionately committed to

providing personal mobility for people around the world.

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Question 3: Why did Ford change from decentralization to centralization to recentralization? 

Answer:

Decentralization: decentralization is the tendency to disperse decision-making authority

in an organized structure. It is a fundamental aspect of delegation, to the extent that

authority that is delegated is decentralized. Decentralization implies more than

delegation. It reflects a philosophy of organization and management. It requires a careful

selection of which decisions to push down the organization structure and which to hold

near the top, specific policy making to guide the decision making, proper selection and

training of people, and adequate controls. A policy of decentralization affects all areas of

management and can be looked upon as an essential element of a managerial system. In

fact without it, managers could not use their discretion to handle the ever-changing

situations they face.

 

Centralization: Centralization is the tendency to restrict delegation of decision making.

A high degree of authority is held by managers at or near the top of the organization

hierarchy.

Different kinds of Centralization

Centralization of performance

Departmental centralization

Centralization of management

 

Recentralization: Recentralization is the tendency to centralize authority that was once

decentralized. Recentralization is normally not a complete reversal of decentralization as

authority delegation is not a wholly withdrawn by the managers who made it. The

process is a centralization of authority over a certain type of activity or function,

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wherever in the organization it may be found. To avoid pitfalls, any program for

decentralization of authority must take into consideration the advantages and limitations .

 

Ford Motor Company has a long history of operating in Europe. Starting with exports to

the United Kingdom in 1903, the company established sales branches in France

and England in 1908 and 1909. Later assembly plants were set up there.

As the European countries grew closer together, Ford viewed its European operations as

serving a common market with aregional organization, named Ford Europe, and two

large manufacturing facilities in Germany and England. When the European companies

were not considered separate and independent anymore, Ford used a coordination

strategy, the aim was to achieve economies of scale and to reduce the cost of engineering.

Therefore Ford designed cars that were considered suitable for most European countries.

Models such as Fiesta, Capri, and Escort were the result of new organization structure.

 

In 1994, A new strategy emerged that was named Ford 2000. Ford merged its automotive

operation unit in North Americawith that of Europe in 1995. Again, an important reason

was to be more competitive and to achieve cost reduction through the elimination of

unnecessary car platforms and the duplication of engine models. This meant fewer basic

vehicle platform as well as engine and transmission. Moreover, the regional profit center

concept was replaced by product-line concentration. Specifically, the Ford Automotive

Operation consisted of five vehicle centers with world wide development for cars and

trucks.

 

Ford 2000 strategy and organization did not work well, as shown by the 1998

performance report. In Europe , Ford was loosing market share to competitors such

as General Motors and Volkswagen. Consequently, the newly elected chief Jacques

Nasser reviewed the centralized Ford 2000 strategy and reintroduced the market focus

orientation, which gives more autonomy to the regions, especially Europe where many of

competitors introduced brands that addressed the specific needs of customers. Moreover,

Nasser created the premier Automotive group of luxury cars, which were more profitable

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than the low- and mid-priced cars. This division consisted of luxury cars such as Linkon,

Volvo, and Aston Martin.

Questions-4 : Why did Ford establish a luxury car division ?

Answer : Ford Motor Company is an American multinational corporation and the

world's fourth largest automaker based on worldwide vehicle sales.As the fourth-largest

automobile company in the world, Ford Motor Company represents a $164 billion

multinational business empire. Known primarily as a manufacturer of automobiles, Ford

also operates Ford Credit, which generates more than $3 billion in income, and owns The

Hertz Corporation, the largest automobile rental company in the world. Day by day ford

faces so many problems so they feel the need of establish a luxury car division.

Reason why ford establish a luxury car division is given below-

1. Earn more profit : ford feel that they can’t earn enough profit if they produced low

cost car. Because day by day demand for luxury car has been increased. So they

established a luxury car division where ford produced luxury and high costly car.Ford

Motor Co. (F) reported third-quarter earnings of $1.7 billion--its sixth consecutive

quarterly profit--and announced further actions that will bring the company's automotive

cash to about equal to its debt by the end of the year.Ford reported a profit in all of its

business segments around the world except Europe, which had a pre-tax loss of $196

million compared with a profit of $131 million a year earlier. The decline stems from

lower industry volume and higher costs to support new vehicle introductions.

2. Challenge in market : The 21st century brought new challenge for Ford. While the

past european car makers werw protected by quotas on japanese cars. This meant that

japanese and korean car manufacturers will compete more fiercely in the european

market. They produced more luxerious cars. So ford face a huge competition in market.

So they think to establish a luxury car division to adjust to the changing situation.

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Conclusion: A sound motor company system is laying in serving the clients by

reaching door to door and having a well established technological infrastructure in it. In

an era of competition like today it’s really important to provide fast and quality service to

the customer. And without having updated technological support it’s like day dreaming.

Ford Motor Company in its own realm is playing a leading role in promoting stability and

flow in the Marketing system. People are attracted more and more for its easy

accessibility.

References:

Web reference:

www.google.com www.wikipedia.com

Book:

Management A Global and Entrepreneurial Perspective 12th edition

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