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Ford Motors runs production and marketing operations across the globe. The company’s operational planning focuses on daily production activities that contribute to the achievement of its overall organizational strategy. The operations plans of Ford and its subsidiaries revolve around procurement, supply chain and logistics, personnel management, advertisement and marketing. The global scope of the company’s operations and diversity brings major challenges in the formulation and implementation of operational plans.
The economy goes through a business cycle -- that is, alternating periods of growth, decline, recession and expansion. Ford’s operational planning acknowledges the impact of the business cycle on consumers’ spending habits. Consumer spending increases during growth and expansion and diminishes during downturns and recessions. Ford scales its operational plans to suit the changing economic realities. For example, the 2008-2009 economic recession prompted Ford to lay off employees and shut down unprofitable plants. In May 2009, the company opted to manufacture fewer pickup trucks and sport utility vehicles in favor of small-engine cars as a result of rising gas prices.
Political and Legal Factors
Government policies have always influenced Ford’s operational plans. For example, as a recipient of federal bailout funds during the 2008-2009 economic crisis, Ford was required to review the compensation package of its top executives through austerity measures such as suspension of bonuses and limited travel by executives. On the legal front, the company seeks to achieve the quality thresholds established in the local and international markets. Ford prepares for eventualities such as recall of vehicles that do not meet the quality standards established by the National Highway Traffic Safety Administration. In fact, Ford’s operational planning provides for reverse logistics -- that is, return shipment of defective recalled vehicles back to the company’s production factories.
In 2006, Ford set out to achieve 30 percent reduction of greenhouse gas emissions by 2020, a target that has since influenced its operational planning processes. This has seen the company entrench sustainability programs in its global supply chain operations: Ford has a dedicated supply chain sustainability department that focuses on integration of sustainable business practices in routine operations. This department monitors the implementation of sustainability processes within the group and among suppliers. It also trains employees to equip them with the necessary skills and competencies for integrating sustainability practices in the company’s supply chain and quality engineering functions.
Existing and emerging motor vehicle production technologies influence Ford’s operational plans, because they affect procurement decisions, employee training and research and development. For example, Ford’s pursuit of futuristic automobile technologies involves intensive R&D and establishment of operational infrastructures that have the technical and functional capacities to handle cutting-edge technologies.
Ford’s production and marketing operations are sensitive to the social and cultural diversities that prevail across its global markets. Its operational planning ensures that vehicles are branded appropriately to avoid cross-cultural misinterpretations in international markets. Ford learned this the hard way when it marketed the Ford Pinto in Brazil, only to realize later that the brand name translated to an obscenity in Brazilian slang.
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Paul Cole-Ingait is a professional accountant and financial advisor. He has been working as a senior accountant for leading multinational firms in Europe and Asia since 2007. Cole-Ingait holds a Bachelor of Science Degree in accounting and finance and Master of Business Administration degree from the University of Birmingham.