Ford Upmarket Essay Example for Free

Ford Upmarket Essay History In 1989 Ford bought Jaguar for à ¯Ã‚ ¿Ã‚ ½2.5 billion as the vehicle to take Ford upmarket into the luxury car market. After three years of Ford been in charge sales had plunged and Ford was losing à ¯Ã‚ ¿Ã‚ ½1 million a day from Jaguar. Ford saved Jaguar by cutting jobs and replacing nearly all of the facilities and procedures. Now 80% of the workforce has been replaced by Kawasaki robots with are cheaper in the long term, able to work constantly and are accurate to a tenth of a millimetre. They started making cars with the aim for the cars to be the best quality and therefore more desirable. With better quality and brand sales increased and Jaguar started new models e.g. the S class and increased production and within the next few years hope to be top in the luxury car market. Ownership The owner Ford holds a larger market share which includes: Aston Martin, Jaguar, Land Rover, Lincoln, Mercury, Volvo Cars and a 25% share in Mazda. This could be good and bad for Jaguar. Ford might see Jaguar as expendable and might be willing to dissolve the company or to sell it to another of the big car companies as it has Aston Martin and Land Rover for its luxury target group or if the company is not profitable. So Jaguar needs a strong emphasis on profit. If the company was taken over there might be a divorce of ownership where control and objectives might not be achieved therefore weakening the companies position. This is where the board do not act in the interests of the shareholders and managers may try to improve their own careers or bank balances while not worrying about the companys interests. Jaguar is a self-contained business that makes all their own decisions from designing new models, their finance and producing cars through their own board of directors who are elected at Jaguars annual general meeting by their shareholders. These directors would have contact with Ford so they would know what Fords plans are for Jaguar and departments e.g. Finance would interact with Ford to update them with Jaguars current performance. Ford has incorporated Jaguar, which means they have a separate legal identity, which diminishes some of their responsibility. So if Jaguar where to go bankrupt Ford would only be responsible to pay back the money they have put into the company. Because the company has limited responsibility it is able to gain wider borrowing opportunities, this allows the business to grow easier. This also has its disadvantages this adds to the administrative costs due to the accounts need to be audited. They also have to hold annual meetings of shareholders and they must publish annual reports to the general public when requested. Because Jaguar is independent to ford it is able to make its own decisions while enjoying the additional skills e.g. parts, contacts, technology, and higher skilled staff. This was especially import in the early years when Ford bought in specialist managers reform the companies employee structure and cultures and to overturn the company into a profitable organisation. With the extra skills Ford bring this improves the quality of the cars and increases sales. With the increased skills and capital Jaguar has been able to expand and grow. Jaguar is a public limited company where shares in the company can be bought across the stock market. Because of this Jaguar has to produce an annual report and detailed reports to shareholders and potential investors therefore this means extra administrative costs. Been a public limited company makes it easier for Jaguar to raise extra funds, they can sell more shares or they can get lower interest on loans because they are seen by lenders as a lower risk investment. Suppliers also offer listed companies better credit facilities because they are considered less likely to default payments. Like BAS Ltd in Gwent, Wales that produce trim for some Jaguar models. A company like this likes to have a guaranteed regular income and a big company like Jaguar provides this. To attract Jaguar BAS Ltd are likely to offer more attractive credit facilities. Because anyone is able to buy shares in the company it is open to takeovers. If someone buys 30% of the shares they must put an offer in for the whole company. The trouble with being a public limited company for Jaguar is the stock market investors place a lot of emphasis on short-term performance rather than long-term objectives. So if Jaguar invests a lot of money in the development of a new model the short-term performance might drop but will increase dramatically in the long term. Jaguar is very beneficial to its ownership. When Ford took over Jaguar it helped it upgrade its designs and manufacturing facilities as well as new models. It also provided high-class managers to revive the company and provided suppliers, technology while still allowing Jaguar to run its company itself. Controlling design, finance, production issues though their own board. The limited liability allows Jaguar to take reasonable business risks e.g. investing in a new car model. Jaguar been a plc allows it to raise funds if needed but leaves itself to takeovers which could lead to the companys position been weakened. Been a pubic limited company places emphasis on the importance of short-term performance. Objectives Each Organisation has objectives, which must be achieved in order to fulfil the corporate aims. The purpose of these is to create a common vision, which everyone in the organisation should work towards achieving. Businesses exist to provide goods and services these have to satisfy the customers wants and needs. The objectives of a business are set to show the employees the way they need to operate. The seven main objectives for any business are: * Making a profit * Increasing market share * Surviving * Providing services to the community * Offering non-profit services (e.g. caring for the environment) * Developing staff skills * Producing a high quality products or services Making a profit is key for a business to survive and prosper it allows the business to keep its shareholders happy, it can attract better employees by offering higher wages and it can invest in better technology and therefore producing a better quality product. The failure to make a profit leads to a loss of confidence within the company. This causes a ripple effect, if a business makes a loss the employees are less secure and fear they will lose their jobs which can lead to less efficient production, the shareholders profits go down so they sell the shares which devalue the company, the suppliers are worried if they will get paid for they parts or services and they might stop providing parts for the company until they are paid and the government are worried because they will receive less tax if the company is making a loss. Though the opposite happens if the company is making a profit the employees fell safe and secure so are happy and willing to work hard the shareholders dividends increase so they are happy and making a profit will make the business seem a good investment so more people buy shares and therefore the value of the company increases. The suppliers feel secure and believe they will get paid on time for their goods and services and the government are happy because they will receive higher taxes from the company. Profit can be closely associated with increasing sales/ or market share normally companies with high sales levels or which have a large share of a particular market are best placed to make high profits. Most large international firms like to have a high market share as an objective because it enhances the image of the organisation and places the business in a strong position compared with rivals. This makes the business look like it has ambition and makes the workers feel safe if they know the company is expanding rather than reducing jobs. Most small businesses starting ups main objective is usually to survive. Survival is about continuing into the foreseeable future, the company may not be the most profitable straight away but if it still exists there is a good possibility it will in the future when the company gets better known and gets more customers. For example Microsoft didnt make a profit in their first year but they survived and within years there yearly profit was in the millions. Survival is not necessarily only for small companies sometimes large companies need to survive. Currently Royals Mails main objective is to reduce the current loses in order to survive. They where losing a million pounds a day but due to job cuts, more efficient work practices and the increase in the price of stamps they are slowly reducing the losses. Most organisations include objectives related to developing people at work in their list of objectives. Businesses now recognise many new ideas come from the workers and it is usually the workers themselves who deal directly with the customers so it is important to develop the skills of the workers so they interact better with the customers and ensuring the customer is entirely satisfied. Workers would need to be trained to use any new technology and money can be saved if current employees can be trained to use the technology rather than new workers been needed. Many companies aim to produce high quality products but not all always succeed. Providing quality means the customers are totally satisfied with the product and the companies want the customer to keep buying their product. The most expensive product is not always the best quality the key for businesses is to make the best quality product they can for their cheapest price. Quality is very important because the customer will choose which organisation to do business with on the basis of their ability to satisfy customer requirements and usually the customer choosing the best quality product. Jaguars business objectives are: * To produce a high quality product * To create a good reputation for the company * To have high satisfaction * To be profitable and to keep costs under control * To recognise environmental issues * To train employees and to keep all staff completely safe in their working environment Jaguars aim to produce a high quality product is key to their success, they try to build their reputation on this and this provides customer satisfaction so customers repeatedly buy Jaguars. Jaguar try to keep a high reputation based on providing a high quality product, for a competitive price and to provide excellent customer satisfaction through the product, dealers and customer services. Jaguar been profitable is vital for the company to be able to expand and to keep the shareholders happy. If they are making a profit they will attract more investors, which mean extra money the train staff and integrate new technology into the production process. Jaguar aim to keep costs under control so the customers pay the least amount they have to it also allows the company to maximise its profit. Jaguars aim to recognise environmental issues is a non-profit making objective but it enhance the working environment making the workers happy and it improves the companies reputation Because it is seen to be caring for the local area. Jaguars aim to train staff enables them to make decisions on behalf of the organisation. This makes them more independent workers and more efficient workers. Functional Areas A business has several resources at its disposal known collectively as factors of production. For each production process the producer will need a wider range of resources before production is possible. Factors of production can be divided into land, labour, capital and enterprise. At Jaguar the land is where the factory is located, it is also all the resources of nature. Labour is the effort by worker to carry out specified tasks. Within Jaguar there are many functional areas and labour would be used on the production line, marketing specialists, car designers etc. The capital can be either physical capital in the form of machines and at jaguar the robots and production line. Capital can also be the money usually borrowed from banks to purchase the physical capital. Enterprise is the factor that brings the other factors together to produce the goods. At Jaguar the enterprise is the shareholders of the business and the management team s initiative in bringing together the various ele ments to form a successful business. Jaguar is split into several functional areas in order to carry out its operations involving the use of factors of production to produce a high quality product. Each of Jaguars functional areas needs to work together through good communication to process resources into final outputs. For example the human resource department needs information from the production department so they know what staff training is required or if any new staff are needed. The main functional areas within Jaguar are: * Finance * Production * Research and Development * Human Resources * Marketing * Administration Each department has a director or manager who has set responsibilities, which need to be carried out for the department to meet its aim. Production Department The production manager at Jaguar is responsible for making sure the components get turned into a finished car. The manager needs to ensure work is carried out efficiently and to the highest standard possible through checks and supervision. At Jaguar the production process can be split into five sub-functions: The production and planning department, The purchasing department, The store department, The design and technical support department and the works department. The production and planning department sets targets for each cell on the production line, each cell will have pre-set values of what the standard of the product must be when it leaves if its not up to standard it will be rejected. A comparator checks the product as it leaves the cell and checks it against the pre-set value. The comparator has the power to change the inputs or the processes in the production line to ensure outputs are of the expected quality and quantity. At Jaguar the production process has been refined so there is little chance of the product not been up to standard and they have researched and use the best suppliers, all this leads to the product been of the highest standard. The purchasing department is responsible in ordering the components for the cars from the different suppliers so the production process is kept running smoothly. The store department at Jaguar is responsible for stocking all the components used in the production process and to ensure the parts are transported onto the production line when required. At Jaguar this is vital, parts need to be on the production line so the line is kept running and doesnt need to constantly stop. The design and technical support department is responsible for researching modifications to working practices, the department is responsible for estimating costs of these new processes. The works department at Jaguar is split into small cells, which are responsible for their part in the production process. The cells are responsible for the maintenance of the production line, the actual manufacturing of the car and the quality control and inspection of the product. Finance Department The Finance department can be split in four functions: Financial accounting function, Management accounting function, the cashiers department and the wages department. The financial accounting function is responsible for keeping day-to-day records and is responsible for producing the annual reports and figures for directors meetings. Accounts must be kept of all money paid to suppliers and the money paid to Jaguar from dealers from sales. The management accounting function provides managers with figures to help them make decisions about the company. For example figures showing the best place to produce the cars to maximise profit while still keeping quality high. The cashiers department at Jaguar would be responsible for all the cash transactions and other payments through bank accounts. The wages department will be responsible for supervising the payroll. Calculations involving deductions for national insurance, pensions etc would be required. Human Resources The purpose of human resources is to recruit, develop and utilise the companys personnel in the most efficient way to meet the companys aims and objectives. Basically they recruit or train staff to make sure all work is done thoroughly so aims and objectives can be made. Companies recruit staff to ensure they have a suitable number of employees with appropriate skills for all tasks to be completed. The three stages are: 1. Researching from other departments to determine the requirements of the company. 2. Getting candidates with the right skills and experience to apply. 3. Choosing the best candidate for the job. Companies will need to recruit staff when: * An existing employee leaves due to retirement or going to another company. * An employee is promoted, creating a vacancy. * An increase in workload occurs. * The company requires employees with additional skills to develop a new project or control new technology. The best companies will have the best workforce and the most efficient workforce, which are able to adapt to tasks set and any difficulties if they occur. To do this they need to attract the best staff when a vacancy arises. Most human resource departments would produce an outline of the qualities they would look for in the applicant and would help produces criteria to select the best candidate. The vacancy can be filled to ways from within the company or from the outside. There are two types of training, which are on the job training and off the job training. On the job training is the process of instructing employees at their place of work on how a particular job should be carried out. This usually watching an experienced operative carry out a task, or actually undertaking the activity and been guide t the appropriate technique. Off the job training is any form of training not immediately linked to a specific task. It may take place within the firm or away from it e.g. at local technical colleges. Remuneration is the whole package of rewards offered by an organisation to an employee. This will include additional benefits, such as a pension scheme, share options, company car etc as well as basic pay. Administration The administrative department is important because it services the work of the organisation. The department deals with enquires, communicating messages and producing documents for the workforce. At Jaguar the admin department is responsible for communicating the times of meetings to employees and they produce word-processed documents for notice boards communicating safety issues etc. Problems can happen when administrators clog the process with red tape this is where administrative work moves the organisation away from its central objectives. Within the admin department the role of information and communications technology is important. ICT is the techniques by which information is obtained, processed and disseminated. ICT is important because it provides guidance, support and co-ordination necessary for t the companies to meet its objectives. Marketing The marketing department need to identify want the company wants and then needs to get the company to produce what the customer wants. They do this by carrying out market research to find out what the customers wants, the price they are willing to pay and what the customer would like the product to be. At Jaguar they recognise people want quality cars for affordable prices and Jaguar try to do this. They allow the customer to choose the specification of the product so they get want they want and don t have to compromise. It is important for the marketing department within Jaguar to communicate effectively with the production planning department so the customers wants and needs can be tied in with the product. The other main job of the marketing department is sale this is to get the customer to want what the company produces and this is usually done through effective marketing. Jaguar does this through television advertisements, the formula one car, sponsoring events, brochures etc. Research and Development At Jaguar the research and development is used to developing new ranges and models through concept cars, which are expensive to produce, but it is cheaper to produce a prototype then see what the public think of rather than mass-producing a new model and then it didnt sell because the consumers didnt like it, it would a financial disaster. Because in the car market there are always new cars been bought out by Jaguars competitors new improved products are vital for the company to remain successful. The R D department is also used to create new operational processes. The R D department of Jaguar also gets money to do exploratory work which produces no benefits in the short time but the development of new technology or better parts can be beneficial in the future of Jaguar. How These Functional Ares Help Jaguar Meet Its Objectives Because Jaguar had a clear set out list of objectives these can be translated down to the different functional areas, this allows each functional area to be driven by the companys objectives. Jaguars clear objectives of: * Producing a high quality product * Training employees and keeping a safe working environment * To create complete satisfaction These clear objectives allow the functional areas to combine effectively and allow to company to pull together and work in a co-ordinated way. Without these clear objectives Functional areas might have different views in how the company should move forward, this leads to areas creating there own objectives and cultures and they companies overall aims dont get achieved. The use of ICT within Jaguar allows the functional areas to work effectively and they dont have to be in the same building. For example the marking department in one place can tell the production-planning department in a different place what the customer wants so this allows the customer to be completely satisfied with the product. The cells in the production process allow Jaguar to effectively meet its objective of producing a quality product because the quality of the product is been checked at every stage on the production process. Jaguars marketing department sustains Jaguars high reputation through effective and positive advertising, and through promoting things like Jaguars aim to help environmental issues. Organizational Cultures The culture of a company is the attitudes and approaches that typify the way staff carry out their tasks. The culture type of a company depends on the companies objectives and the culture of a company, because of this there are four main culture types: Power, Role, Task, Person. Power cultures are usually found in small businesses where control rests with a single person or small group of people. Emphasis is on individuals rather than group decision-making so decisions are made quickly and they are able to react to dangers or threats. Because this style is autocratic and staff can suffer from low moral. Task cultures are usually found where work is organised into teams with people moving between tasks. The objectives will be related to the task the teams are performing. Teams have input in determining how a particular job will be done. In person cultures the objectives are related to meeting the needs of the individuals who make up the organisation. Person cultures are found within co-operative organisations or charitable organisations but not profit making enterprises. Jaguar has a role culture, it is structured in a hierarchical way and the organisation is divided into a number of functions. In Jaguars culture power comes from the employees position in the organisation. The organisation gets its strength from its functions, peoples jobs, what people do at different levels is determined by job descriptions and defined communication procedures. Rules and procedures are the main source of influence and power comes from the persons position in the company. Because Jaguar have this culture there administrative function need to efficient and the company need clear objectives because red tape can effect them meeting their objectives. From Deal and Kennedys model of culture based on Risk and feedback Jaguar has a work ha rd play hard culture. Jaguars employees take few risks, all with quick feedback; the primary cultural value is to supply the customer with a quality product. Management Style Management style is the way a management role is carried out over a period of time. There are three main types of management style: Autocratic, Bureaucratic and Democratic. Autocratic managers are used to giving instructions. There is a strong emphasis on authoritarian management and communication within the company is usually one-way. The advantages with this is there are clear lines of authority and everyone within the company knows who is boss, important decisions can be made quickly and if the leader is skilled and charismatic it can produce high quality work within the business. The trouble with this style is employees can feel frustration and resentment towards the boss, the employees can become too dependent on the leader and the employees have no participation in decision making. Bureaucratic management styles rely on doing thing according to the rulebook and because of this there is little opportunity for initiative to be shown. The advantages with this style are: it can produce consistency, everyone knows where they stand and employees can feel comfortable because of the predictable. Employees can show resentment towards the management because of the lack of participation, the rulebook doesnt always have the answers and this style is useless if there are circumstances of great change. Managers at companies need to adopt the necessary management style to develop a flexible workforce. When workers are allowed to contribute to decisions they feel more valued and more of a part of the company. The managers are responsible for achieving the overall objectives and strategy of the business. Jaguar has a strong emphasis on democratic management. Production line workers are grouped into cells with a team leader. The team is given production targets to meet but then decides how it will go about meeting these targets. The team meets to discuss what is going well and what is going badly and suggest ideas for improvement. The team then has the responsibility for putting their own ideas into practice. Several factors affect the leadership of the management these are: The skills of the manager and the workforce, the time constraints of the task, the risk and the nature of the risk. Within Jaguar there is plenty of time to discuss matters and only a low chance of it going wrong, the style is therefore democratic. Jaguars approach to management makes the employees more motivated and they show greater commitment. Managers need to be flexible to allow for change in circumstances in the company. Importance and Channels of Communication at Jaguar Communication is important within a business because it allows management to plan, coordinate and control a business but this needs high quality two-way communication. For communication to be effective it needs to be communicated the best way and at the most effective time through the best channel. These factors will depend on the type of information which is needed to be passed on with Jaguar large amounts of data in accounts would be best communicated in a report but a reminder of a cell meeting might be better in a notice on a board or through face to face communication. There are many channels of communication used within Jaguar and different types of communication. The methods of communication at Jaguar are: * Downward communication * One-way communication * Two-way communication * Formal communication * Informal communication Downward communication is where information goes from the top down, from superior to subordinate. One-way communication is when information is passed on with no feedback at Jaguar this communication is used when notices are put up. Two-way communication is where information has feedback through discussion. This allows Jaguars employees to suggest improvements or changes to managers. Formal communication is where information is passed on using the companies communication channels e.g. departmental meetings, cell meetings at Jaguar. Informal communication uses the workers own channels e.g. work of mouth. The methods of communication at Jaguar are: * Corporate videos * Annual reports * Team briefings * Memos * Letters * Faxes * E-mails * Internet * Television * Brochures The methods of communication are not only to allow the workers to know what is going on in the company. It is also is important to communicate to existing and potential customers. They do this television adverts, brochures, the Jaguar website, and promotional tours and videos. Effective communication can improve motivation and lead to better decision making internally; it can also provide better links and feedback with external groups such suppliers and consumers. Because Jaguar has a strong democratic management style it is vitally important to have effective two-way communication because the views of the employees are vital for improvement and motivation. Jaguar is a large company with many layers in their employment structure, which can cause problems with communication. Poor communication can lead to poor motivation, co-ordination and control difficulties. The employees can also get confused of what is required from them and what input they have. How the production process adds value Adding value to a product simply means making it more desirable to the final customer so the customer is willing to buy more products at higher prices. To add value to a product the product needs to meet the customer requirements or inputs need to be combined to create a physical change in the product. Most businesses use one of the following methods of production * Project production * Job production * Batch production * Line production * Continuous flow production. Project production involves binging people with different skills and different resources to complete a one off project. Job production is where a company produces one or a small number of items. The company may work on several jobs at a time so it is important that they have new jobs to replace the ones that are nearly completely. Batch production is where a number of identical or similar items are produced in a set or batch. Batch production involves work being passed from one stage to another each been highly planned. The items need not be for any specific customer but are made at regular intervals in specific quantities. Continuous flow production involves producing for twenty-four hours a day, using automatic equipment in a standardised way. Continuous flow is entirely controlled by computers and humans do not touch the product. This means there are fewer labour costs and very few mistakes the production line is also quicker and more efficient. Jaguar use a line production process this is where the product goes along a production line going through the same sequence of operations. The trouble with this has been the car buyer wants there car to be different and distinctive in some way. Jaguar have recognised the customer requirements and now allow the customer to personalise there car, by allowing them to choose interior, colour and mechanical spec. Customers appreciate this and are willing to pay slightly higher for this. Nowadays the customers recognise good quality and are willing to pay extra for it. Quality Management is achieved by Jaguar by: * Quality Control- detecting and cutting out components that fall below set standards. * Quality assurance, which tries to stop faults form happening in the first place. Jaguars aim is to produce zero defects. * Total quality management is concerned with creating a quality culture. Jaguar try to get every employee to seek to delight customers. They aim to produce zero effects by ordering components from reliable suppliers who themselves have a total quality management culture. To improve quality Jaguar has introduced robots and automation into the production process. Automatics are when a machine can be set to do a particular job and robotics is an application of automatic control. The benefits of using robots are: * People can be replaced by robots in mundane jobs, where human intelligence is not required; at Jaguar this is the routine assembly work. * Robots can be used where working conditions are difficult or dangerous * Robots are used during the welding process and are accurate to a tenth to a millimetre and it takes them seconds compared to humans who make mistakes. The introduction of the robots requires large initial capital but they dont get paid wages or have days off. And are able to produce perfect work over and over again making Jaguars are of the highest possible standard. Jaguar uses CAD, CNC, CIM and CAM to improve quality and the product as a whole. CAM stands for computer aided manufacturing. It is the use of computers to support the manufacturing process. CAM controls the robots and the track, it controls the speed of the machine so they are working in the most efficient way and CAM is a driving force in line production because of its high levels of quality control. CAD stands for computer aided design and is the use of computers to assist in the production of designs and drawings for the use in the manufacturing. This allows Jaguar to test new production techniques on the computer to test them for faults and problems it is also used by the design team to view new designs rather than making models. It allows Jaguar to be more flexible and safes time. CNC is used to control machines for cutting and shaping metal. Jaguar uses this because it is more reliable than humans and improves quality and reduces waste. CIM stands for computer-integrated manufacture this is used to integrate various elements of the manufacturing process. Design is a key aspect of adding value; a well-designed product will stand out from rivals and win customer loyalty. Good design can offer functionality, style and visual impact. This is why Jaguars R D department and design and technical support department have large budgets and spend long periods of time perfecting the design so it stands out and adds value.