Organizational History
What is interesting about the Ford Motor Company is that its organizational structure consists not only of its internal management and product creation divisions (i.e. marketing, engineering, etc.) but also encompasses aspects related to the different brands under its control, the various dealerships that sell its products as well as the partnerships it has with corporations in other countries. Initially, Ford was an ideal example of the Old Tail structure of organizational management wherein there was the CEO at the top of the command chain with executive vice presidents in charge of different divisions in the company (Eisenberg 1976).
However, as the company evolved and developed an assortment of brands to appeal to a diverse market, this changed its organizational structure from the Old Tail structure to one that is similar to the dual authority matrix. This change was further compounded by the expansion of the company into different international markets resulting in the creation of international divisions as well as joint agreements with foreign corporations involving the sale and development of country-specific Ford vehicles (American Icon: Alan Mulally and the Fight to Save Ford Motor Company 2012). As a result, this created a global matrix organizational structure within the company to deal with its expansion into the global marketplace.
Organizational Structure
To better illustrate this point, it is necessary to examine how Ford differs in comparison to other organizations that control multiple brands. For example, the company Kellogg’s has multiple brands such as Captain Crunch, Frosted Flakes, and Fruit Loops. While each item that is being sold is different in its way, the management of the product remains under a single-tier structure. What makes Ford different is that each car brand it has acquired or created, such as the Land Rover, Jaguar, Volvo, Mercury, etc. has its independent management tier structure. This means that each tier has responsibilities not only with the sales and promotion of its division but also has to respond to the decisions and instructions of the “command tier” so to speak which consists of the president of the company and the various vice presidents (i.e. finance, manufacturing, engineering, etc.) (Ford Motor Company SWOT Analysis 2013).
This particular management structure is further compounded by the various relationships the company has with individual dealerships which also creates another management tier involved in the sale and distribution of cars through dealerships on a regional basis based on the expansion of brands into target markets (Hughes-Cromwick, 2011).
Fit with External Environment
A company such as Ford cannot just simply develop and market its products without taking into consideration how best to allocate specific resources in determining where a car needs to go, which areas should the company allocate services, how will product purchases be processed and how its customer service division should deal with inquiries and client requests (Muller 2012). It is based on this that its organizational structure helps to mitigate such a problem and allows people to concentrate on their assigned tasks resulting in higher levels of internal efficiency. Through the use of up-to-date information systems to integrate the factors mentioned into an efficient and effective operational strategy, this enables Ford to better respond to external market forces through its brands (Research and Markets 2010).
For example, if there are greater levels of consumer interest towards affordable car brands or even SUVs (as seen during the mid to late 1990s), Ford would allocate more resources towards affordable car/SUV development while reducing the operational capacity of its luxury car division. Such a process can be done through its vertically oriented centralized management system wherein operations involving the company as a whole are decided to leave individual division leaders to focus on their respective tasks without having to put in the effort of foreseeing how changes in the market would impact each car brand division (Bonini & Kaas 2010).
This process enables the company to change based on market demand while at the same time facilitates better internal operations through the departmentalization of specific tasks. What you have to understand is that the larger a company gets the more hectic and haphazard its operations to tend to become. This is especially true in instances when its operations are located in different countries. Thus, to make sure that its operations are problem-free, the current organizational structure of the company advocates strict adherence to a vertical style of dual authority matrix/ global matrix management which is utilized to ensure proper controls are in place in all levels of operation. As such, it can be stated that Ford’s internal organizational structure is well suited for its external market environment.
Management Structure
Based on the previous section which delved into the organizational structure and development of the Ford Motor Company, it can be seen that its organizational structure is incredibly complex and, as such, this is one of the reasons why the management structure of Ford can be described as mechanistic. It can be described as having a fairly high level of centralization and rigid departmentalization of each division of the company (Datamonitor: Ford Motor Company 2010).
This is because each brand requires its tier of employees to handle the development, sale, and promotion of each type of car to different kinds of consumers. Ranging from luxury brands to vehicles that are suited for the working class of society, each Ford motors brand needs to be able to appeal to different consumer markets through different vehicle design developments and methods of promotion (Carmona 2013).
Fit within Internal Environment
It is due to this that a strict hierarchy of authority and control exists within the organization to properly facilitate and manage the diverse level of operational divisions within the company. One manifestation of this strictness can be seen in the method of communication and management within the company which is vertically oriented resulting in better internal management controls over operations.
Reference List
‘American Icon: Alan Mulally and the Fight to Save Ford Motor Company’ 2012, Publishers Weekly, vol. 259, no. 44, p. 53.
Bonini, S, & Kaas, H 2010, ‘Building a sustainable Ford Motor Company: An interview with Bill Ford’, Mckinsey Quarterly, vol. 1, no.1, pp. 90-96.
Carmona, JL 2013, ‘In an exclusive interview, Henry Ford’s great-grandson talks about how he rescued the family business and the company’s role in the future of the automotive industry. (cover story)’, Caribbean Business, vol. 41, no. 9, pp. 14-17.
‘Datamonitor: Ford Motor Company’ 2010, Ford Motor Company SWOT Analysis, pp. 1-11.
Eisenberg, D 1976, ‘Ford Motor Company Analysis of Diversified Products Operations ($ million)’, Black Book – Automobile Industry (1976), p. 17.
‘Ford Motor Company SWOT Analysis’ 2013, Ford Motor Company SWOT Analysis, pp. 1-11.
Hughes-Cromwick, E 2011, ‘Ford Motor Company’s Global Electrification Strategy’, Business Economics, vol. 46, no. 3, pp. 167-170.
Muller, J 2012, ‘Why Ford Should Worry’, Forbes, vol. 189, no. 2, pp. 34-36.
Research and Markets 2010, ‘Research and Markets: Engine Valve & Piston Manufacturers (Global) – Analysis of The Top 130 Companies Including Ford Motor, Mahindra & Mahindra And Parker Hannifin’, Business Wire (English), 6.