5UIBP Level 5 Innovation and Business Performance Of Ford Motors Questions Answers
Organization Summary (200 words)
Innovation and business performance of the organisations are the key indicators of their success, growth and stability in the competitive market. The selected organisation Ford Motors has marked its presence in the automobile industry with innovative models and vehicles since its inception with the founder as Henry Ford. The company is headquartered at Dearborn, Michigan in the United States. The company has its presence in the global market covering the significant countries like Australia, India, Malaysia, Africa and countries in Asia-Pacific region. The products offered by the company vary from automobiles, commercial vehicles, luxury variants, SUVs to pickup trucks. The significant people directing the company is recognised as William Clay Ford as the executive chairman and James Farley as the CEO and vice-president of the company.
The renowned automobile company has the target market for the comparatively young generation with both the middle class and upper-middle-class segments from all geographical locations. The mid-sized cars are suitable for four people in the family while the SUVs and MUVs can cater to the needs of the big size family. The competitors of Ford Motors can be identified as Nissan, Toyota, Hyundai-Kia and Tata Motors Global. Ford Motors represent $164 billion automobile company with strength of 190,000 employees worldwide.
|Question 1a||15 Marks|
The business organisations are monitored continuously based on their performances in the global market. The criteria that determine the success of the business organisations depending on their performances comprise of the profit accumulated in consecutive years, comprehending the strategies of the competitors and framing counter-strategies to promulgate the business and positive feedback from the customers which creates a brand reputation of the company in the global market. The performance measurement, therefore, can be defined as the constant accumulation of data and information from specific operations ongoing in the organisation which enhances its performance and functional area in the global market (Van & Shafagatova, 2016). The measurement of business performance can cover the areas like financial measures of the company, process measures of the company, people measures and customer measures of the company.
The role of the performance measurement is to assist the strategic planning of the organisation with the implementation of the Action Plans while identifying the progress indicators of performance. The framework relevant to determine the role of the performance measurement signifies the input, activity, output, and outcome of the organisation (Sanchez Marquez et al. 2018). Efficiency and effectiveness in the operations of the company and management of other resources assist in determining the performance of the business where efficiency suggests in doing the tasks in the right and optimised way while effectiveness offers in performing the functions in right way irrespective of the process or time is taken.
The selected organisation of Ford Motors can be accessed with the framework of performance measurement indicators. The input indicates the people, equipment, raw materials, technology and budget for manufacturing the products offered by Ford Motors (Kallio et al. 2017). The output here symbolises the final products provided to the customers in the forms of sports utility vehicles, multi-utility vehicles or luxury cars for high-end customers.
The outcome of the company is measured through customer satisfaction, segments of the customers served globally, and the environment sustainability practised by the organisation. The development of the company in terms of customers' satisfaction can be rated as 82 out of 100 as reported by 2018 ACSI Automobile report. The company, however, has incurred a loss of 99% with $47million net income in terms of the financial statement due to the botched introduction of Explorer SUV in the market (Arbour-Mich, 2019). The operation execution is blamed for being the shortfall of the company where the vehicle had faulty seats, loose wirings and other issues in the car.
The balanced scorecard is considered as essential metrics to determine the performance measures of the organisation that involves financial aspect, customers, internal process and the employees to understand the progress of the company in comparison to that of the rivals in the global market. Ford Motors maintains the action plan of one goal, one team and one plan for the company all over the world. A recent survey by USA Today, however, portrays that new segments introduced by the company do not have the same passion as they had for Ford Mustang. The survey indicates 54% of customers to be loyal to the company with 1,170,982 unit sold by the company, which was 4.5% less than 2018 sales (Myung et al. 2019). Ford Motors reformed the inventory management, supply chain and process and capacity design of the vehicles in 2020.
|Question 1b||15 Marks|
The business functions are interdependent on each other and have metrics to assess their performance in the organisations. A single business function will not able to sustain the organisation in the long-run since all the functions comprising of finance, marketing for products, management of human resources in the organisation and operation functions together bind the success of the organisations. The three business functions which can be chosen from the Ford Motors Company are recognised as the financial management, human resource management and operations management.
The outcomes of the business organisation can be identified through the process of benchmarking. The method of benchmarking assures a systematical comparison of products, services and similar function of the organisation that assist different departments in leading the best outcome for the products launched in the market (Erdil & Erbiyik, 2019). The role of benchmarking helps to attain the performance which an organisation struggles to achieve while mitigating complacencies among the providers of the organisation as well as driving towards realistic goals (Omoregie, 2019). There are three types of benchmarking comprising of the internal, external and international benchmarking process. Internal benchmarking is the process where the units or departments of the company are compared against each other. External benchmarking suggests a comparison with other companies in the same industry, while international benchmarking suggests a comparison of performance against the multinational companies and brands.
The financial management in Ford Motors can be measured with the profitability of the company from the year 2016 to 2019 to gain an insight into the progress of the company in earning revenue. The return of equity (ROE) is calculated for the company, which is the measure of profitability in relation to equity. Ford Motors accumulated 16& in 2016, 22% in 2017, and the least in 2019 with 0.25% (Annual Report, 2019). The company witnessed an increase in profitability due to increased sales and decreased expenditure on the production and operations of the company. The lowest profit margin is witnessed in the year 2019 since the world suffered from a prolonged period of the lockdown of operations due to COVID-19.
The human resource management is one of the essential business functions which helps in deriving the talented workforce for the company. The workers improve the quality of products offered by the company through their hard work and dedication to improve the productivity and performance of the company. The measure of retention of the employees in the company helps to determine the reputation of the company, effectual and favourable policies for the employees and providing job security for the employees in the company. As illustrated by Martinez (2017), Ford Motors awarded four executives of the company with retention stock bonuses in the year 2017, which amounted from $2million to $5 million.
The operations management is one of the most depending factors of the company that ensures enhanced productivity of the goods and services, increased capacity of products, reduced wastage and sustainable measures adopted by the company. Ford Motors, in the wake of the pandemic, has reduced its production for two weeks to ensure employee safety due to COVID-19 (Higgins-Dunn, 2020). This measure of safety has impacted its sales which have gone down by 16% in the worldwide production of the vehicles.
|Question 2||25 Marks|
The concept of innovation refers to the process of redesigning or introducing the goods in a new way, new packaging, original method of production and improving its existing concept. In the case of the automotive industry, the design of the vehicles, the fuel efficiency, ergonomic design of the cars and value for money for a specific segment of customers can be projected as innovation. The installation of high-tech structures and new platforms on which the vehicles are now built, ensuring safety and protection, speed and low emission range can be idealised as innovation (Bohnsack et al. 2020). Innovation can be stated as four types which include architectural innovation, radical innovation, incremental innovation and disruptive innovation.
Professor Joseph Alois Schumpeter proposed the theory of innovation and entrepreneurship which is divided on the assumption comprising of the launch of new products from the existing and popular products, by applying modern methods of manufacturing or sales of the products, opening an entirely new market for the products, acquiring latest sources of supply of the raw materials or parts for manufacturing of the products and by destructing a monopoly while creating new industry structure (Borras, 2016). The argument presented by Schumpeter emphasised that any entrepreneur who seeks to accumulate profit needs to innovate their products and services. As enlightened by Alvarez and Grazzi, (2018), innovation theory justifies the necessity of industrial mutilation, which revolutionises the economic structure, destroys the traditional one and create the latest one.
Innovation is the new trend in each sector in the business environment since this aspect gives dynamism for sustainability for a long-term in the competitive market. Innovation creates the path for facing the competition in the market and establishing a company with an enhanced brand image to procure better revenue from the market. Innovation as a concept in the Ford Motors stands for three elements which emphasise on the pricing of the vehicles it offers in the global market, the fuel efficiency and power of the vehicle and the size of the vehicle within the given price range. The recent compact SUVs and cross over cars are popular in the global market, satisfying the needs of the worldwide customer. The taste and preference of the customers also successfully meet up the production of the company. However, the innovation with electric vehicles has not met with success in innovation by the company (Debord, 2016). The company may not be entirely blamed for the failure of innovation on electronic models since the infrastructure on recharging the vehicles at around 20 kilometres is not available in most of the developed countries even in the year 2020.
The relevance of innovation in the automotive industry is to create a brand signature among the rivals while introducing several segments of vehicles like SUVs, hatchback, luxury sedan, MUVs, trucks and carrier vehicles targeted for different customer segmentation. The present trend in the innovation line of Ford Motors is Bronco, Bronco Sport, Mach-E, and Flex. The relevance through the introduction of these models signifies reducing the cost of manufacturing cars, incorporating the trend of digitalisation with feature-loaded vehicles, and reducing the carbon footprint through effective turbocharging engine models. Innovation is highly required in the automotive industry to introduce electric and autonomous vehicles in the coming years. The innovation of products and models help to gain new opportunities in new markets and build new segments of customers (Pereira, 2017). The brands continually developing their products in the market while investing a lump sum in Research & Development and Innovation have the command over-responding to the latest trends that emerge in competition.
Ford Motors have introduced artificial intelligence and machine learning in the process of production and operations of the company. The research lab of the company introduced computational intelligence long back which assists the cars to detect wrinkles in seats and quality assurance of the products. The Ford Edge model comes with artificial intelligence as a part of innovation move for the models which offers high-tech sensors, all-wheel-drive system, interacts with the drivers to detect acceleration or braking and improve fuel efficiency (Marr, 2019). Innovation in the models with the latest technology led to the incorporation of climate control methods inside the car. Ford Motorsports cars are also built on simulation technology like NVIDIA DGX1 to comprehend the vitals of the racing cars, insights on the strategies it could adopt and produce implausible results.
The innovation strategy adopted by Ford Motors can be identified as the disruptive innovation model. This disruptive model describes innovation as the process that has simple application, less expensive and easily accessible by the customers to afford the products offered by the company. The enabling technology and innovative business model marks the success of this innovation model. Ford Motors pioneered the vision of disruption model through Model T in its car segment 115 years back, which replaced the carts drawn by horses through the lower-priced cars. However, the disruption model of innovation can be a thing of past with IoT and AI replacing the technology in digital space. Ford Motors plans to introduce level four autonomous cars which will not require human attention (Edelson, 2018). The improved version of the technology will assist the automobile industries with such landmark achievements in the coming years.
|Question 3||25 Marks|
Innovative organisations can be described as the mix of adapting new culture, new ideas and unique process of projecting their existing products with uplifted versions, redesigned concepts or in new facelifts of the products. Innovative organisations emerge with embedded characteristics comprising of the constant urge to grow within the industry while embarking distinguishable features of innovation along with the brand names of the companies. The characteristics of innovative organisation indicate the competitive advantage that can be experienced by an organisation. The strategic focus is one of the prime features of innovative organisations where the companies stress on the business strategies to be developed for the programs to become achievable and accomplishment of goals.
The customers remain in their focus while innovation on any design, proto-types or fresh ideas of the products is developed to be launched in the market. The critical characteristics of collaborating with other companies are embedded with innovation since no one company alone is self-sustaining with technological advancement in the market. The supply chain and partnering with other technical aspects also comprise the essence of collaboration with other competitors or companies. Ford Motors, in this aspect, collaborated with Volkswagen to drive the innovation on autonomous and electric vehicles on the Argo AI platform by investing $7billion (Media News, 2019). The architecture on electric vehicle and Modular Electric Toolkit (MEB) of Volkswagen will be used by Ford Motors to commercially develop the cars targeted by the end of 2023.
The assessment on innovation can be measured through methods, and metrics used by Ford Motors while identifying it as an innovative company. The innovation started with the founder of the company Henry Ford when he started to build racing cars, and Model A from his company became the best sellers. The company invests in its people whose contributions are taken as those of innovators. The company boost of open innovation as its trend in the industry. Open innovation refers to the process of promoting information on technology countering the silo mentality and secrecy of data in innovation in the corporate research lab (Caldwell, 2019). Open innovation can alternatively be known as distributed innovation which benefits the company in reducing the cost of researching extensively for the technology, incorporating the feedback from customers at its developmental process, increasing the accuracy of research in the market and providing ample opportunities for both internal and external exploration of data through multiple channels of existing resources.
The innovation success in Ford Motors can be attributed with the incorporation of additive manufacturing technique recognised as the Technological Readiness Level (TRL) method of innovation, also known as 3D Printing for enhanced product quality and implementing the innovation in the car models. The traditional process of prototyping is used in the automobile industry where the parts of the vehicles are designed, generated and tested till a final design is made. This prototyping involves a massive cost of production whereas the innovative technology of 3D Printing will apply 10% more of the manufacturing cost which is less in comparison of the traditional prototyping of the designs (Smithwick, 2018). Ford Motors can be recognised as the early adopters of this new technology through which the company manufactures 500,000 parts to date.
Innovation metrics can be identified through the key performance indicators (KPI), which comprises of project management, financial performance, and staff performance from the NESTA innovation group. National Endowment for Science, Technology and Arts (NESTA) established in the year 1998 in the United Kingdom proposes the above measures of performance or key performance indicators for innovation projects in the industry. The KPIs presented by Henry Ford has evolved in SMART goal achievements which states the specific goals, measurable, attainable, relevant, and time-bound which could counter the waste created by the time involved, the energy involved and materials involved in innovation.
Ford Motors has been an innovation-oriented company which planned to invest $500 million in the R&D process through Rivian's tech startup where the vehicles will be built on flexible skateboard platform that will bring in the cars like R1T pickup trucks on electric versions. The commercialisation of the vehicles introduced through the innovative platform will start at the end of 2020 since most of the manufacturing units are closed due to the pandemic crisis (O'Kane, 2019). The centre of automotive innovation by Ford Motors will be housed in the Dearborn, Michigan which can employ 20,000 employees in a new facility building to thrive the talent in the upcoming years (Evans, 2019). The research and engineering campus is built on the core principles of interaction among the workforce, integrating the resources and co-location facility with a focus on managing various product lines.
Building innovation diversity in the company while promoting effective teamwork and leadership in innovation, Ford Motors has tactfully induced the components of good teamwork comprising of communication, coordination, mutual effort and support, cohesion and balancing the contributions of the members in the innovation of the models and vehicles of the company. The commercialisation of the innovative models of cars and other vehicles has received IP rights through 3,200 patents for cars (Brachmann, 2017). An example of Ford Motors mobility technologies can be considered here where Carr-E developed by a German engineer with the R&D support from the company built a personal transportation device which is used as a wheelchair and has the capacity to load itself as a compatible trunk after the passenger boards the car.
|Question 4||20 Marks|
The ethical paradigm in innovation frequently encounters several challenges like safety in the products to be launched, the confidentiality of the technology used, intellectual property rights on the innovation and acquiring stakeholder’s data for commercialisation. The associated risks in innovation which might affect ethical consideration are the commercial failures due to inability in meeting the needs of the customers, failure to meet the operational costs due to higher wages involved in the pandemic conditions and delayed in meeting the financial obligations for the projects. The open innovation facilities offered by the Ford Company, however, mitigate the fact of using the same platform for building future vehicles with shared information yet there remains the issues with infringement of intellectual property rights developed for specific vehicles or models produced by the company.
The recent carbon emission testing for the cars and other automobiles by the US Department of Justice is investigating the emission level of the Ford cars, which announced anomalies in the certification. The environmental hazards due to carbon emission, come under the sustainability issues which if beached by the company may lose its reputation among the global stakeholders (Barry, 2019). In the global perspective, Ford received the world's most ethical companies by Ethisphere Institute in the year 2017 by following the protocols of societal expectations and responding to the geo-political climate of the world (Sengupta, 2017). Ford Motors has been instrumental in addressing the ethical issues like safe working conditions in their company environment, implementing Human rights, encouraging to source conflict-free minerals and aimed at the cleaner environment through a different program like PACE (Partnership for A Cleaner Environment) program.
Ford Motors believes in cultural integrity in the workplace environment. The integrity also passes strong messages to the communities that the company invests in the people while putting them as first in their priority list. The company maintains the employees as the foundation of the company in every actionable step it takes towards meaningful, innovative progress towards the future (Bui & Eguaikhide, 2019). A diverse workforce brings in need of cultural harmony which supports the leadership pipeline of the company that fosters an environment which provides flexibility to voice the opinions by the employees and bring in new ideas for innovation in the company.
The sustainability strategies implied by Ford Motors focus on the people and protecting the planet. The corporate social responsibility report of the company in 2020 emphasises on achieving carbon neutrality by 2050, which will be an innovative step towards the future. Ford Motors aspires in Doing the Right Thing by reducing carbon emission and increasing fuel efficiency for trucks and SUVs in the market as per the high demands by global consumers. The company built several buildings in the Michigan Assembly plant where the power usage is 100% acquired from renewable energy with locally sourcing of wind energy from MIGreen Power program (Sustainability Report, 2019).
The corporate governance of Ford Motors specifies the combination of laws and rules operated, controlled and regulated in the company. Ford Motors have Charter of the Sustainability and Innovation Committee that discusses and advises the employees on the areas like consumption of energy, water usage, waste disposal, and climate change issues while performing an evaluation on the progress of meeting the criteria every year with the adherence to the charter (Innovation and CSR, 2015). The innovation aspects like emerging technologies in the company, enhancing the experience of the customers through better innovation models and achieving profitability for the company is also that the charter reviews in the company.
The analysis on the corporate social responsibility of Fords Motors ensures that the top priority is enjoyed by the stakeholders, employees, investors and communities. The responsibility of the company is directed towards innovation on the product quality, assurance on fuel economy, as well as safety of the passengers in the cars. Employees of the company enjoy a sustainable work environment while getting relevant training in the offices and through online with global leadership development programs initiated by the company. The One Ford plan seems feasible for profitability and stability in business for the investors in the company. Hence the company provides privilege to the entire community through sustainability performance and training for the employees (Thompson, 2020). The feedback of the customers on the level of performance is attended by the company with zeal and passion since their motive is to progress in the competitive world since its inception and create a unique experience for the global consumers by following all the ethical parameters and corporate social responsibility.