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Ford Auto Business Change Management and Implementation

by Suleman
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Introduction

In recent years, new political and economic movements have emerged on the world stage. A substantial realignment of global market forces emerged during the 1990s. Global markets and manufacturing capacities opened up at that period, and the notion of national economies started to wane. Usually, strategic transition begins with the redefinition and reframing of the function and task of the organisation, accompanied by improvements in the three subsystems, and concludes with the creation of new alignments inside and between these three subsystems. Shift is an integral aspect of every enterprise affected by internal and external conditions. It is possible to modify organisations by creating a new arrangement for new employees in a new region, or by renewing the same framework for the same employees in the same place. Critics accept that when the change is carried out by picking the “renewal” alternative, it usually involves the positioning of a new top management or top managerial team. Ford, like many other businesses, produced different plants for the production of innovative technologies and new goods in company organisations. In general organisations, it is possible to build a bold new vision that genuinely rehabilitates by beginning with a new approach, deliberately selected guards to be rehabilitators, and a new, committed workforce.

Ford is one of the world’s largest automakers. When the first converted plant was opened, the company’s history dates back to 1903. Currently, with a 17.5 percent market share, Ford is the second largest automaker. Ford has traditionally tried to contend against General Motors (GM), the industry’s pioneer, by growing its position in international markets. Three big areas located in twenty-six countries (Europe, Latin America, and Asia Pacific), Ford’s Foreign Automotive Operations coordinates tasks. In the late 1970s, Ford produced half of its worldwide vehicle output outside the United States – relative to one-fourth of GM’s. The Ford Motor Co. (Lessons In Transition From Ford Motor Corporation n.d.) has also been a pioneer in the implementation or quick acceptance of technical advances in the sector.

Ford Auto Business Change Management Overview

Henry Ford, the company’s creator, and the president are known as the father of industrial manufacturing. Ford displayed the willingness to quickly embrace the Japanese manufacturing structure in the tough decade of the 1980s and to advance further than any other automaker in pursuing the convergence of its activities on a global basis. As it was the first to establish an assembly plant in Canada (1904), in Mexico (1925), and in several other nations, the organisation was also a leader in the internationalisation of manufacturing. The business has traditionally played a leading role in developing automotive capabilities in those countries, and its policies have been distinguished by its responsiveness to local government demands and its comparatively high export operation levels (Lessons In Shift From Ford Motor Company n.d.; Ford Home Page 2007).

The mechanism of transition within the enterprise is affected by the needs of the market and competitiveness. Auto makers like Ford must conform with institutional laws in order to thrive and increase income. Structural rules are drawn from manufacturing technology (hard and soft technologies) which are effective in efficiently generating vehicles. An car is a complicated commodity that consists of more than 10,000 components and involves numerous and complex production procedures. Mass manufacturing has been effective in generating cars effectively, explaining that the structural guidelines for the car sector have been laid down for almost seven decades. In order to grasp Ford’s strategies, it is a dynamic framework that needs to be learned. Where they occurred, gaps in policy or priorities between the US Big Three (Ford, GM and Daimler Chrysler) were largely attributed to the willingness of each company to comply with antitrust laws and its relative place of influence in the market. Ford had no space throughout the 1990s for tactics to be designed that were somewhat different from those determined by GM. Ford, for instance, reported lower vertical integration rates than GM and aimed to retain supremacy in looking for business niches (Ford Home Page 2007)

Today, even though its US operations still account for the bulk of Ford’s overall operations, its international operations continue to contribute to the good success and market leadership of the group. Historically, Ford has appeared to place higher proportions of its production outside the United States, relative to its rivals, while global development of its automobiles has not risen as a percentage of overall world production, even during the most extreme years of the recession of 1979-82. Its global activities were a source of strength that helped Ford to retain its role as the world’s second largest car manufacturer and to react to the competitive movements of GM (Ford Home Page 2007).

The new laws of manufacturing and competitiveness (the agile or lean production method) suggested an increase in the consistency of the goods and in the partnership of management with manufacturers and workers, a major difference from the methods existing in the mass production system. The long-term strategy of Ford, and particularly its focus on improving its ties with US labour, demanded drastic and thorough adjustments in the company’s operations that prevented it from depending on international suppliers to procure parts and vehicles to the degree that GM or Chrysler did. Surprisingly, this restriction often became the basis of the competitiveness of Ford in the market place; and Ford’s labour peace transformed into an increased business position and maximisation of income for the group. As its regional integration policies have been in effect since the 1980s, the success reflected a shift in degree rather than course (Ford Home Page 2007).

Factors of Transition and Situation

Diagnosis

Out-of-date innovations, insufficient corporate structure, outdated management styles and coaching also prompted the need for reform. Ford’s notable difference was the attempt to reshape the business as the financial effects of an earlier revamp were already arriving. Ford received GM or Toyota’s benefit twice (Heller 2004). Ford has agreed to centralise its programmes across the globe. Ford would not have one in place if the definition of a global integration plan is the regional dispersion of each activity in the output value chain. Although if it implies the dispersion of some operations in the output value-chain, the effects are mixed. Ford has distributed certain operations, such as R&D, design and manufacturing, by joint arrangements with other firms (notably Mazda, but also other Asina, European and also some US automakers). Strategic alliances marked a major shift from previous policies that retained sole control of their actions, in order to preserve know-how and other ownership benefits, and from US anti-trust laws that prevented large corporations from forming those partnerships (Ford Home Page 2007)

The issue of morale, teamwork and management styles was triggered by the introduction of its branches into the North American production structure of Ford. Some inter-regional cooperation was also accomplished by Ford, but this was restricted to a few operations, such as R&D, design and engineering, between the parent company and a subsidiary for the production of particular automobiles, and then between the various manufacturing plants for the manufacture of global cars. The high risk and expensive nature of automotive production can be explained by some factors which prevented Ford from making significant changes in its production operations. Historically, Ford, like other car producers, appeared to open only a small range of manufacturing operations in foreign nations, usually in those that had achieved a certain degree of industrialization and therefore offering comparatively broad automotive markets. There were no major sovereign threats (Ford Home Page 2007; Lessons In Transition From Ford Motor Corporation, n.d.). Their development investments in less developed countries, particularly in the 1960s, were defensive strategies aimed at either securing first-mover benefits or defending future growth markets from intensified global industry competition.

Low culture, poor communication and ineffective leadership style were the other factors of change. Quality work of the employees depends a lot on good communicational skills of the managers. “The trouble is that managements are apt to defend and exalt their prevailing single-theme wisdom, often heavily influenced by the prevailing wisdom of others, at the expense of any alternative view” (Heller 2004). Performance managers are charged with controlling the employees’ work (performance) and have to be effective communicators and thus to be able to establish working relations with the employees, supply the employees with information and feedback, involve employees in planning and development activities, and above all, recognize and praise the most productive workers. Lack of communication and interaction led to low morale and low performance of the staff. What is the important component of the communication is the feedback – the reaction of the audience to the information received. The sender has to be very attentive controlling this reaction to be able to conclude if the audience has understood the message correctly. Another area of concern is conflict management (Stickland, 1998). And communication skills are as well important here as if the conflict cannot be resolved it can be managed and diminished if not brought to naught. The change proves was aimed to improve communication and morale, establish positive culture, regular training and new effective leadership style of management. Maintaining self-control is crucial in attempt to manage the conflict. It is known that what is important in perceiving the stressful situation or the problem is the emotional state of the person that is experiencing this situation. Thus, the manager is to try and restore the employee’s peace of mind. On the other hand, the manager is supposed to control oneself even more than the employee (Stickland, 1998).

Recommendations for Change

Aspects of the internal organizational situation that allow transformation to occur are the following: the gathering of some surplus resources for managing change, these additional resources may be managerial time and energy, or financial resources; readiness and willingness of at least the dominant coalition to change, External qualitative variables include: improvements in the policies of competitors; the intensity of foreign competition; regulatory legislation; shifts in social expectations; technical innovations; and changes in the level of market activity.

Theories of Change and their Application

Pfeffer and Salancik (1978) argue that there are two basic ways in which organizations develop a change: “The organization can adapt and change to fit environmental requirements, or the organization can attempt to alter the environment so that it fits the organization’s capabilities” (p. 106 cited Stickland, 1998, p. 43). Ford can adapt its environments to new conditions by such tactics as merging with other organizations, diversifying, co-opting important others through an interlocking directorate, and engaging in political activities to influence matters such as regulation.

Kirton (1980 cited Stickland, 1998, p. 44) a Shift and Creativity Theory has been developed. He claims that people have distinctly different types of imagination, problem solving, and decision-making. Ford may act cognitively as an adapter beyond the boundaries of the suitable, conceptually understood framework within which a challenge is normally initially interpreted. The percentage of innovators would presumably influence when and how easily companies will shift their paradigm. HRM and modern labour relations, educational programmes and information management should be extended to creativity.

Hage (1980 cited Lothans, 2006) it distinguishes between production developments, which are the new goods and services created by a single company within a year in comparison to their scale, and process innovations, which are new processing systems, procedures, and procedures. He describes shift in input-output and technology as disruptive advancement. He reviews the recent studies on this issue and summarizes the findings in propositions such as “Centralized organizations can introduce highly radical innovations if the dominant coalition has positive attitudes towards change and indeed pursues a pro- change policy” (p. 93 cited Lothans 2006, p. 34) and “The more committed the dominant coalition is to the introduction of change and the greater the concentration of specialists, the more likely there is to be a radical innovation” (p. 194 cited Lothans 2006, p. 34). Creativity and imagination are major motivating factors for Ford in the course of transition. In organisational contexts, they are features of human behaviour. Intra-organizational systems, and their effect on the community and culture, are the key subject of these research. Like the previous view, this one assumes a voluntary standpoint, seeing progress as primarily contingent on the conduct of the leadership and representatives of the association. Transformational leadership can be an important part of the change process.  This leadership is capable of providing new vision, aligning members with this vision, and mobilizing energy and commitment to the realization of this vision (Robbins 2002).

Organizational progress is a learning phase that is informed by the organisational and environmental factors and action hypotheses held by the participants of the organisation. For situations should be generated that will dramatically impact what people frame as the question, plan as a remedy, and generate as an effort to solve the problem. Following Heller (2004)

Fusion Management is about blending; about combining short-term, medium-term and long-term; discipline and freedom; commercialism with humanity; globalism with local, national and regional marketing; giving the customers what they want while leading them to want it; strengthening the old while nourishing the new”.

Employees may also offer biases, opinions, and myths to the learning circumstance that are relatively independent of the organization’s requirements.

Implementation Plan

  • Stage 1. Development and Change

Organizations are constantly fluctuating, making internal adjustments, incremental changes, and improvements. They constantly seek better ways to adapt to changes in their environment. At this stage, problems faced by Ford are solved within the current situation. Improvements do not change the purpose of the organization. Interventions are aimed at facilitating changes and solutions to problems. it is important to inform employees and management about coming changes and their purpose (Chang, 1994).

  • Stage 2. Creating Awareness

Under circumstances of rapid and drastic environmental changes and changes in members’ needs, changes cannot provide satisfactory solutions to problems and adaptation to the new environment. Employees tend to ignore the need for drastic changes or to postpone them. The results are sometimes “muddling through,” vicious circles, and crises. To help Ford employees accept the need for a change, interventions to raise awareness are needed. One way is to increase employees’ awareness of symptoms, attempted solutions, problems, and behaviors “here and now” (Beeson and Davis, 2000). A second way is to increase their awareness of the existence and impact of the current paradigm. A third way is to increase their awareness of the existence of purpose and mission, and the impact of these on procedures and behaviors (Chang, 1994).

  • Stage 3. The New

Fluctuations reach a critical point, and the organization may be trapped in a vicious circle and deep crisis. Ford may reach a critical point beyond which it could face demise or new possibilities, a new state of being. At this stage new ideas emerge at the periphery. There is still strong resistance to change, and acceptance of the belief that what worked in the past will also work in the future. Becoming more aware may lead to the acceptance of the need to change. In the third stage the main task is to encourage the search for, and discovery or creation of, new possibilities, new ideas, and new choices based on a higher-level paradigm. Each of the four approaches provides a variety of technologies for the search and the discovery of new directions (Chang, 1994). Changes in communication, morale and organizational values can be introduced by the consultant at this stage; the “changing mission” strategy offers technologies such as visioning, strategic planning (Chase and Podlesnik 2006).

  • Stage 4. Creating an Open Space

When new ideas are diffused, they become subject to political campaign and conflicts. Conflicts can be a paralyzing force, and may deepen the crisis unless communication channels are open and democratic processes take place. For Ford management, the main task at this stage is to encourage the formal system and leadership to attend to these new ideas, to examine their utility for the organization, and to set the stage for democratic processes. The main suggestion here is that facilitating change involves issues such as power struggles, conflicts, interest groups, and political campaigns, processes most practitioners tend to ignore. Democratization implies setting the stage or creating an open space for new ideas to be heard, examined, and accepted or rejected (Chang, 1994; Bielski, 2005).

  • Stage 5. Facilitating Transition to the New State

The process of searching for, creating, discovering, and accepting new ideas has been termed “transformation.” Translating these ideas into actual programs and implementing the change has been termed “transition”. For transition to be facilitated, many complex actions are involved, such as establishing task forces, translating ideas into programs, analyzing the impact of the future state on the present state, developing training programs, training, budgeting, restructuring, and reorganizing (Haak and Pudelko, 2005). Like the transformation phase, the transition phase may be divided into developmental stages such as planning, implementing, institutionalizing, and tuning up, as suggested in the model presented previously (Clark, 1995).

  • Stage 6. Resistance to and Persistence of the Change

Changes involve strong resistance. The first is within the organization; the second is without. When the change is too radical and the system is vastly different from its domain, it threatens its environment and generates strong resistance. Ford should foresee resistance to change and resistance to new values and communication, training and morale. Thus, the studies point out that it is probably easier to transform organizations by creating a new system or a new unit for which new personnel are recruited and trained, than to renew existing systems (Jansen, 2000. Thus, it is easier to create a new, innovative, open, alternative approach than it is to renew one. Change efforts must be measured by the persistence of the change, not by institutionalization. Whenever an organizational error, deviation, or problem is detected and corrected, or solved without questioning or altering the underlying values or assumptions of the system, the learning is “single loop.” (Bate, 1994).

Conclusion

For Ford, transformation and changes propose great opportunities to innovate and meet new environment. Each change makes the next structure more complex or coherent, requiring a greater flow of energy for maintenance and exhibiting still less stability. Fluctuations increase through positive feedback loops until they exceed a critical point or threshold beyond which a new and more complex order will emerge. Changing the organizational structure and morale will necessarily entail changes in the organizational mission and purpose, culture, and functional processes. Change in Ford’s culture will entail changes in the organization’s functional processes, but not necessarily in its mission and goals. Management and how organisations interface with environments especially how managers make assumptions on their experiences in their interactions with their environments, should be provided particular consideration. The most essential reason for transition is certain decisions, not the world itself. Change gives Ford better control over its environment, prevents radical changes, and enables incremental adjustments.

References:
  • Bate, P. (1994) Strategies for Cultural Change. Oxford: Butterworth Heinemann.
  • Beeson, I., Davis, (2000). “Emergence and accomplishment in organizational change”, Journal of Organizational Change Management 13 (2), 178-189.
  • Bielski, L. (2005). What Makes a Good Leader? the Go-To “Guy” with Vision and Passion Will Top the Org Chart-And Lead Change Management. ABA Banking Journal 97 (12), 21.
  • Chase, Ph. N., Podlesnik, Ch. A. (2006). Sensitivity and Strength: Effects of Instructions on Resistance to Change. The Psychological Record, 56 (2), 303.
  • Chang, R. Y. (1994). Mastering Change Management: A Practical Guide for Turning Obstacles into Opportunities. Irvine, CA: R. Chang Associates Publication Division.
  • Clark, J. (1995). Managing Innovation and Change: People, Technology and Strategy. London and Thousand Oaks, CA: Sage Publications.
  • Ford Home Page. Retrieved 21 October 2007, from ford.com
  • Haak, R., Pudelko, M. (2005). Japanese Management: The Search for a New Balance between Continuity and Change.
  • Heller, R. Fusion Management. Retrieved 21 October 2007, from http://www.thinkingmanagers.com/management/fusion-management.php
  • Jansen, K.J. (2000). The Emerging Dynamics of Change: Resistance, Readiness, and Momentum. Human Resource Planning 23 (2), 53.
  • Lessons In Change From Ford Motor Company (n.d.). Retrieved 21 October 2007, from http://maisonbisson.com/blog/post/11927/lessons-in-change-from-ford-motor-company
  • Lothans, F. 2006, Organizational Behavior. McGraw Hill Higher Education
  • Robbins, S. Organizational Behavior. Pearson Higher, 2002.
  • Stickland, F. 1998, The Dynamics of Change. London: Routledge.

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