FORD Business management IA

Should Ford expand the factory to be able to produce 3 extra models of cars in order to increase profit and market share?

(Lyla)Reungrong Van Es

BUsiness and management (HL) WORD COUNT: 1,843

Lyla Van EsHL Business Management IA

Research proposalResearch question:Should Ford expand the factory to be able to produce 3 extra models of cars in order to increase profit and market share?

Rationale:Right now Ford is producing 3 models of cars: Eco sport, fiesta and focus. Ford has extra land around the factory in Rayong which can be used to build a factory to produce 3 extra car models, this means that Ford may able to increase their profits as in Thailand there is a high demand for cars, and in addition they may be able to supply the demand for the different car models in different countries. Furthermore, by producing new car models Ford may able to increase its market share, as right now companies such as Toyota are dominating the market.

Theoretical framework:*PEST/STEEPLE will be used (to analyse the external environment, to help Ford make a decision, the PEST/STEEPLE can help the force field analysis)*Force Field analysis (to analyse whether or not Ford should expand their plant, and weigh the driving forces against the restraining forces)

Areas of syllabus covered: growth and evolution (To discuss whether or not Ford should expand there factory) Organizational planning tools (to be able to produce a force field analysis) The external environment (to be able to produce a STEEPLE analysis)

Methodology: primary

problems solutions

interview plant/production manager

may not be able to answer some questions (confidentiality)

try to ask specific questions

interview employees such as on the factory floor

language barriersspeak in Thai

observations will only be seeing production

ask other peoples observations to make sure my observations are reliable

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secondary

news articles Information may be limited

existing market research

could be wrong See multiple market research and compare against each other.

Action Plan:

TASKS September October November

1 Go to ford

2 study growth

3 start IA

4 finalize research proposal

5 hand in IA

WORD COUNT: 311

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AcknowledgementsI would like to acknowledge the Ford Plant and all the staff for being welcoming and allowing me to have a further insight of factory in order to help me with my business IA. I would also like to thank Noppawan Uttha and Patrick O’Neil, that I was able to interview them and be able to get further information for my IA.. Furthermore, I would like to give my thanks to Ms. Faye Wheeler in helping me and giving me guidance in order to complete my IA.

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ContentsResearch proposal.......................................................................................................................................1

Acknowledgements.....................................................................................................................................3

Abstract.......................................................................................................................................................5

Introduction.................................................................................................................................................6

Methodology...............................................................................................................................................7

Analysis and evaluation...............................................................................................................................8

Force Field Analysis.................................................................................................................................8

Steeple Evaluation:..................................................................................................................................9

Conclusions and recommendations...........................................................................................................11

Bibliography...............................................................................................................................................12

Appendices................................................................................................................................................13

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Abstract

In this there will be an evaluation on whether or not Ford should build a new factory to be able to produce 3 new models of cars. In the evaluation and analysis section, there is a Force Field Analysis and the restraining forces and driving forces both measure up to 13; a restraining force would be that Ford’s current factory is already capable of producing 6 cars, and a driving force would be, if Ford build’s a new factory they would be able to put a section for cutting the metal themselves rather than having the supplier do it. Also, there is a STEEPLE analysis on the opportunities and threats that might affect Ford in building a new factory. In the conclusion and final recommendations, it is stated that Ford should build a new factory in order to produce 3 new models and be able to increase profit and market share.

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IntroductionThe Ford plant in Rayong is manufacturing 3 models of cars which are: Eco sport, Fiesta and Focus. There is extra land around the factory which can potentially be used to build another factory and produce 3 extra models of cars. By building another factory Ford may be able to increase its profit’s as the plant in Rayong is on of Ford’s biggest plants, this means that they may be able to increase profits as they will have more cars to sell; in addition the new models that may be produced could be sold in Thailand and neighboring countries as there are limited models that are cold currently. In addition, by producing more models in Thailand Ford may be able to increase market share as currently Ford is not dominating the automotive industry compared to Toyota

Research question: Should Ford expand the factory to be able to produce 3 extra models of cars in order to increase profit and market share?

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MethodologyPrimary research was gathered by going to the Ford plant in Rayong and interviewing the managers and employees within the plant. Information was gathered by listening to a presentation by the HR manager, going around the Ford plant and getting information by what was being said on the tour, observing the factory firsthand, interviewing some of the employees on the factory floor, and lastly by interviewing Ford’s marketing director and plant manager. The problems that occurred while gathering the primary information was that the factory floor could be loud at times, and some information that was told could not be heard; in addition, while interviewing the employees there was sometimes a language barrier and there was limited amount of time. Furthermore, while interviewing marketing director and plant manager there was a time constraint which meant not all questions could be answered. The solutions were with the employees, got someone else too ask the questions; and finally extra information was collected from other people taking notes in the plant just in case there was anything left out.

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Analysis and evaluationForce Field Analysis

If Thailand floods again, it could cause production to stop, which means that Ford would not be able to supply deliveries.

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Economic growth in Thailand is pretty low at the moment so Ford might not be able to get good supplier contacts. 1

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Ford’s current plant in rayong is capable of producing 6 models of cars, which means that it might be a waste of money building an extra factory. 2

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They import their metal from Japan, Korea and Germany 3,furthermore, their supplier also cuts their metal for the car parts. This means that if there is a problem with the supplier such as they have problem with delivery, this means that the whole production line of Ford will be disrupted.

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1 Appendix 42 Appendix 1 (interview with Ford)3 Appendix 1 (interview with Ford)

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Should Ford expand the factory to be able to produce 3 extra models of cars in

DRIVING FO

RESTRAINING

If Ford plans of coming up with a new model of car in the future, it means that Ford would be able to facilitate and produce the new lines of cars.

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Ford already has land around the current factory, which means that they would not have to buy new land to build the factory, this means that costs are reduced as they do not have to buy land which can be very expensive.4

Ford is able to hire more educated workers, this means that Ford’s efficiency will increase.

2Ford plans to cut the metal by themselves, which means they can use the new factory to cut the metal and also produce 3 extra car models. This means Ford will eliminate costs such as transportation and the cost of having the supplier cut the metal.4


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Should Ford expand the factory to be able to produce 3 extra models of cars in

DRIVING FO

RESTRAINING

RESTRAINING FORCES: 13

DRIVING FORCES: 13


Steeple Evaluation:SOCIAL:

Opportunities: Ford is able to hire more educated workers4, which means that efficiency increases as there are more capable workers, this means that there is higher output. IN addition by having more educated workers it means that running the new factory would be easier.

Threats: Resources that are used to produce cars have to be “Just in Time” therefore traffic could cause them to missed out on some of the times manufacturing the car since they have no spare resources.

TECHNOLOGICAL:

Opportunities: The internet in Thailand has 10gbit/s high speed fibre-optic lines. Eg. THAICOM, a communication satellite that allows people in Thailand to access information more conveniently and at a faster rate. Which means that the departments within the plant such as admin, will be able to communicate effectively, for example with suppliers.

Threats: Thai web users have a 20.8 per cent risk of being attacked or becoming infected with some sort of malware.5This means that if the new technology put in for the new factory is infected with a virus, it will cost Ford a lot of money to hire specialists to fix the virus.

ENVIRONMENAL:

Threats: In 2011, Thailand was hit with a major flood, which left Ford’s plant in rayong to close for a few weeks, this means that if a flood does happen again then Ford would have more vehicles that would not be produced and delivered; which means they might gain a bad brand image.

ETHICAL:

Opportunities: The minimum wage is 300 baht in Thailand6-In comparison to other countries it is very cheap, this means that the employees needed to be hired for the new factory would not cost as much compared to if another factory would be opened in a country such as Australia.

Threats: Labour may be smuggled refugees from Myanmar, Burma etc.7., even though this would be cheap for costs, this is illegal and may cause problems with the law, which means that it may cost Ford more in legal fees than it is to open a new factory or hire employees that have not been smuggled

POLITICAL:4 Appendix 25 http://www.bangkokpost.com/news/local/326028/thailand-ranked-third-in-cyber-threats

6 http://thailand.prd.go.th/view_news.php?id=6223&a=2

7 http://www.vice.com/read/noi-thailand-human-trafficking-rohingya

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http://www.vice.com/read/noi-thailand-human-trafficking-rohingya

http://thailand.prd.go.th/view_news.php?id=6223&a=2

http://www.bangkokpost.com/news/local/326028/thailand-ranked-third-in-cyber-threats


Opportunities:Gen. Prayuth Chan-ocha, has moved swiftly to try to restore business confidence and stimulate the economy, including the automobile sector that accounts for about 11% of the country's annual output, which means that Ford may have government help.

Threats: There is political unrest in Thailand, for example a few months ago there was a coup, which means that investors might not want to invest in Ford Thailand as the political instability might affect the plant.

LEGAL:

Opportunities: workers in Thailand get fewer holidays than every other country in the world.8, this mean that there will be more workers on the production line to make the cars, which means output can be at its highest.

Threats: Limited working hours, they employees must not exceed 8 hours per day and must not exceed 48 hours per each week, which means Ford might have trouble finding employees to work in the new factory.

Economical:

Threats: Economic growth in Thailand is pretty low at the moment so Ford might not be able to get good supplier contracts. 9 Which means that if Ford do not get good supplier contacts it might be harder to find the materials to make the new line of cars in the factory.

8 Appendix 39 Appendix 4

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Conclusions and recommendationsIn conclusion, with the information that was analyzed Ford should build a new factory with the land they already have around it; this is because by building a new factory they will be able to produce 3 new models of cars and be able to cut their own metal. By being able to cut their own metal Ford will eliminate transportation costs and costs to cut the metal from the supplier, which may in the long term help Ford reduce its production costs. Furthermore, if Ford were to build a new factory, it could help in the future, as if Ford ever come up with new lines of cars, the plant in Rayong will be able to produce those car; in addition, if Ford were to just increase their production line and produce 3 extra cars in the current factory, this would mean that the factory would have to be rearranged to accommodate the new cars, which means that time might be wasted in trying to sort out a new layout, which means that they may lose money. BY building a new factory and being able to produce more models of cars, this means that Ford will be able to sell more models of cars to neighboring countries which means they might be able to increase profit as there is extra models for people to choose form, in addition If there is more to choose from Ford might be able to compete with other brands such as Toyota and Nissan and increase market share. However though, if Ford do decide to build a new factory, in short term Ford would lose a lot of money as building a new factory and getting the machinery can be expensive; furthermore by building a new factory it might disrupt the current factory and production line.

FINAL RECCOMENDATIONS:

If Ford does not have enough capital to build a new factory, they should not get a loan from the bank, they should just wait to build the factory.

If there is no demand for the models, Ford should build a factory but only for cutting the metal. If there is demand for the models, Ford should build a new factory to be able to produce 3 extra

models of cars, and also be able to cut the metal themselves.

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Bibliography Lamina, L. & Muchena, M. & Pierce, R. A. (2014) Business Management. 2014 Edition. Great Britain: Oxford University Press.

Index Mundi. (2014) Thailand Demographics Profile 2014. [WEBSITE]. Available from: http://www.indexmundi.com/thailand/demographics_profile.html [accessed: 08 November 2014]

Steve Mac. (2011). Ariel footage of Thailand flooding. [Online Video]. 23 October. Available from: https://www.youtube.com/watch?v=rFESGOor3rc. [Accessed: 08 November 2014].

Bangkok Post. (2014). Thailand Ranked Third in Cyber Threats. [Website] Available from: http://www.bangkokpost.com/news/local/326028/thailand-ranked-third-in-cyber-threats [accessed: 08 November 2014]

The government public relations Department. (2012). 300 baht daily minimum wage. [Website] available from: http://thailand.prd.go.th/view_news.php?id=6223&a=2[accessed: 08 November 2014]

Johnny Miller. (2013). Corruption, Torture, and "Ethics" in Thailand's Human Trafficking Industry. [ONLINE]Available from: http://www.vice.com/read/noi-thailand-human-trafficking-rohingya[accessed: 08 November 2014]

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http://www.vice.com/read/noi-thailand-human-trafficking-rohingya

http://thailand.prd.go.th/view_news.php?id=6223&a=2

http://www.bangkokpost.com/news/local/326028/thailand-ranked-third-in-cyber-threats

https://www.youtube.com/watch?v=rFESGOor3rc

http://www.indexmundi.com/thailand/demographics_profile.html


AppendicesAppendix 1

QUESTION ANSWERWhere do you get the metal you use to produce the cars from?

We import our metal from Japan, Germany and Korea. Our supplier also cuts the metal for us as well, such as cutting the metal for the car door that is then stamped. However, we plan to start to cut the metal ourselves soon, as sometimes the supplier has problems and then it affects the production directly.

(question asked to employee on the factory floor) Do you enjoy working here?

Yes I do, I get to play football outside and use the leisure facilities on my break.

HOW WILL TECHNOLOGY IMPROVE? - continue innovation factory floor = such as computers - to help the workers so they don’t have to strain themselves physically as much so that they are healthier- They will always try to advance and innovate they technology they use to make sure the car production is efficient

- going to become an exporterWILL YOU BE PRODUCING THE 2015 MODELS?

- now producing 2014 models – soon they will produce the 2015 ones there are slight changes to make them better – scrap the 2014 models = however depends on the demand and orders at the dealerships

FACTORS THAT COULD CAUSE DISRUPTIONS:

· Import parts so there could be a delay – they are trying to localize· Natural disasters worried as well

· When suppliers are affected it affects them – such as TSUNAMI in japan – factory that produced black pigment for the cars color was wiped out, this caused most car manufacturers to have problems difficulty producing black cars

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DID YOU WORK WITH THE THAI GOVERNMENT?

Worked with Thai government – when the plant was set up they worked very closely

DO YOU PLAN TO INCREASE THE CARS THEY MANUFACTURE ANNUALLY

It depends on demand, and they don’t want to produce too much or too little.

APPENDIX 2

APPENDIX 3

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(Days off employees get in Thailand)

APPENDIX 4

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FORD Business management IA

Documents

Transcript of FORD Business management IA