The Turnaround at Ford - Essay Sample

Introduction

Ford as one of the renowned automobile brands which had up to a market share of 26% in the 90s employed a large workforce on both salaried and hourly paid. However, the market performance of the company decreased to almost 15% by the year 2007. Ford performed some market analysis which would enhance smaller and efficient production and better market performance. The company is facing two strategic issues which include the diminishing of the market shares as well as the cost structure that has resulted in financial fatalities. Another vital problem that Ford is facing is the companywide buyouts and early retirement packages for all its US hourly employees so that the organization can make an effort to lower the costs incurred by the organization and in the end recruit lower-paid workers to replace the retired employees.

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Some of the factors that contributed to the large-scale labor surplus at Ford include the fact that Ford has had a very successful market record in the automobile industry since the 20th century. Therefore, the company demanded a high workforce because it was having the market share that its equivalent was more than a quarter of an entire automobile sector. Additionally, Ford experienced large scale surplus in the labor force because the market demand decreased from 26% to less than 15% which meant that Ford also had to reduce the production. Finally, the advancement in technology is also another aspect that might have led to the surplus in the labor force because the production process became automated and needed les human intervention.

In case a company can adequately manage a larger workforce then it is likely to achieve the best market result. However, the decrease in the market demand implies that the rate of production also has to reduce because having several employees then will be of no value. However, in the case of Ford, it is also essential to recognize some of the employees who have spent their life serving the organization because they industry contributed to the rise in the company market share and kept it intact during the company good times. Therefore, a decrease in demand which would mean that the company has to implement employee cutting will imply that the company has to choose an appropriate approach to cut the employees without disorienting the expectations and social values of the employees as well as their social belief towards the company. Generally, the method of the company to pursue employee buyouts and attrition is a good option for Ford to achieve its goals although the company should be aware of some of the competent employees who should remain in the company.

Even though the approaches of buyout and attrition will help the company to achieve its goals, the methods will create a high expense for the organization on a short term basis, and pension or health facility plan will create long term liability for the organization. These approaches are also likely to lead to the loss of some experienced and competent employees who may join another competitor organization which may cause Ford another loss of its market shares because those employees are aware of its strategies and technologies of production. Thus, even if employee buyout and attrition may appear to be a good chance to deal with the issue of surplus labor, there are also techniques that might enable Ford to achieve its goals. The other approaches include layoffs, early retirement and stopping new recruitment and even movement of employees.