Wednesday, July 6, 2011

Ch 13 Corporate Governance in the Twenty-First Century

Corporate Governance is the system by which organizations, particularly businees corporations, are directed and controlled by their owners. Ford has all types of regulations in regards to business practices, safety inspections, and general laws that need to be followed. Ford has a CCO named Nicholas Singh who makes sure that everything is the way it should be in reguards to the laws that Ford has to follow. Not just some of the laws, but all of the laws! Not only does he have to make sure the laws are followed, but he also has to come up with how to overcome the agency problem. Which means the separation of the ownership of the capital necessary to fund a business enterprise from the day to day operational management of the business.

One of the ways that companies make sure that the executives do what is right for the company as a whole instead of what is best for them is to make the executives own the company's shares. Many of the incentive compensations and bonus plans require a variety of things that executives get. Some of these things are restricted stock, stock options, bonuses, and the traditional salary. Typically the restricted stock is high, but the stock options take the cake. Most companies offer the executives a large chunk of stock options that are a major portion of their compensation. Bonuses are typically large as well but usually are still close to half of what they stock options are. Now these are in general terms. Ford has a pretty evenly spaced compensation package for thier executives. They are given many stock options however. Ford doesnt do anything too crazy. They stay within the legal limits and do what needs to be done to bring the best vehicles to all sorts of customers.

Chapters 11 and 12

Organizational Structure, Systems, and Processes along with Considering New Ventures

Ford Motor has a good multidivisional structure. As with most major companies they have divisions of R&D, Advertising, Manufacturing, International Relations, and Corporate Responsibility.

Ford uses mostly a Multidivisional Structure to keep their company growning.
The reward system that Ford uses is the high pay high commitment.
Ford also uses the three C's of strategy communication:

Contacts-Ford's contacts are all over the world since they are one of the largest companies in the entire world.

Cultural Understanding- Ford's ability to cross the cultural divisions that most companies run into. Because Ford has been all over the world for decades they have a solid understanding of the cultures that they deal with.

Credibility- Because Ford does what they say they are going to do, their credibility is top notch. They are considered a hardworking honorable company who builds reliable and sustainable products.

The new ventures of chapter 12 is interesting to look at because Ford Motor Company is one of the most successful and longest lasting venture in modern history. Every aspect that the book talks about is interesting because Ford has essentially been there and done that. Ford has had to contract and expand with the changing market over time. Almost all of the companies that started when Ford started are no longer in business. It is interesting to see how Ford has made changed over time.

Sunday, July 3, 2011

Chapter 10 Mergers and Acquisitions.

Ford is constantly merging and acquiring plants, companies, and ideas every day. They are a mover and a shaker when it comes to merging and acquiring. Some of the most recent changes in Ford Motor Company are listed here..... http://investing.businessweek.com/research/stocks/transactions/transactions.asp?ticker=F:US

These changes are made constantly so that Ford will continue to grow and develop as a major power in the car industry. Without strategic placement of people, parts, and knowledge Ford wouldn't be worth what it is today! Ford has stood the test of time when it comes to the demands of the ever changing marketplace of cars and other vehicles. After doing such research into Ford and how they handle things... I am a Ford guy all the way! You could even say they have acquired me.... ha ha... ok that's lame.... but seriously Ford is a great company with great things still to come.

Chapter 9

Understanding Alliances and Cooperative Strategies...

Ford Motor over the years has done a good job of knowing when to hold em and when to fold em. Their alliances and strategies with those alliances have helped shaped them into what they are today. For example, most of the parts on the vehicles such as the door latches are third party produced. They found that  it is in their best interest to allocate these responsibilities out to other parties so that they can focus on the whole of the product.. the car...

They have strategically placed their emphasis on what is most important and that is the end result of a safe reliable American made vehicle. Some of their strategies include obtaining various car manufacturers on many different continents around the world, buying rights to vehicles that others have produced, and maintaining good relationships with companies that help them produce the vehicles. One of the big things that recently happened was their decision to not take government handouts along with most of the other major car manufacturers. This has played a key role in people determining what car they will buy. I will buy a Ford over other manufacturers for that simple fact! I don't think that handouts are what this country needs.... that's not what we were built upon and for us to continue that is not what we as a nation need to suggest that people do.. it leads to laziness and entitlement.

Ok now that I am off of my soapbox... Ford has done a marvelous job of building and maintaining alliances and cooperative strategies.