The Ford Motor Company is an American multinational automaker that has its main headquarters in Dearborn, Michigan. It was founded by Henry Ford in 1903. The company sells automobiles and commercial vehicles under the Ford brand and most luxury cars under the Lincoln brand.
Ford also owns Brazilian SUV manufacturer Troller, an 8% stake in Aston Martin of the United Kingdom and a 32% stake in Jiangling Motors of China. It also has joint-ventures in China, Taiwan, Thailand, Turkey, and Russia. The company is listed on the New York Stock Exchange and is controlled by the Ford family; they have minority ownership but the majority of the voting power.
The balanced scorecard is a performance management system that was developed by Drs. Robert Kaplan and David Norton in the early 1990s. It is a strategy performance management tool – a way to help organizations translate their strategic vision into operational reality. The balanced scorecard approach has been adopted by many Fortune 500 companies and other organizations worldwide as a way to improve business performance.
The Ford Motor Company uses the balanced scorecard approach to help it achieve its strategic vision and objectives. The company has four mainperspectives that it focuses on in its balanced scorecard: financial, customer, internal business process, and learning & growth. Each perspective has its own set of objectives and measures that are used to track progress and performance.
The financial perspective includes measures such as return on invested capital (ROIC), earnings per share (EPS), and cash flow. The customer perspective includes measures such as customer satisfaction, market share, and brand equity. The internal business process perspective includes measures such as quality, productivity, and cycle time. The learning & growth perspective includes measures such as employee satisfaction, employee engagement, and training & development.
The balanced scorecard approach has helped the Ford Motor Company to improve its performance in recent years. In 2016, the company reported a net income of $4.6 billion, up from $3.0 billion in 2015. EPS also increased from $1.44 to $2.22 during this same time period. Cash flow from operations increased from $5.8 billion in 2015 to $7.4 billion in 2016. The company’s ROIC improved from 7.7% in 2015 to 9.4% in 2016.
The Ford Motor Company’s balanced scorecard is a key tool that has helped the company to achieve its strategic vision and objectives. By focusing on the four main perspectives, the company has been able to improve its financial performance, customer satisfaction, internal business processes, and learning & growth.
In 2006, Ford made a move that many thought was desperate; they borrowed $23.6 billion. The loan became Ford’s lifeline when the global financial crisis of 2008 hit and the auto industry tanked with it. By 2009, Ford was the only American automaker that did not receive a government bailout, and by 2010 Ford’s US sales surpassed GM’s, a feat that hadn’t happened in over 50 years (“Ford Motor Company”, 2012).
While other automakers were busy asking for government bailouts, Ford was making a comeback. How did they do it? In part, by using the balanced scorecard as a strategic management tool.
The balanced scorecard is a performance measurement system that takes into account both financial and non-financial measures of success. It was developed in the early 1990s by Drs. Robert Kaplan and David Norton as a way to help organizations implement their strategy (“The Balanced Scorecard Institute”, n.d.).
Since its inception, the balanced scorecard has been adopted by organizations in a variety of industries around the world, including Ford Motor Company. Let’s take a look at how Ford uses the balanced scorecard to drive its strategy and achieve its objectives.
Ford’s balanced scorecard has four perspectives: financial, customer, internal business process, and learning and growth. Each perspective is represented by a set of measures that are used to track progress towards achieving the company’s strategic objectives.
The financial perspective includes measures such as profitability, return on investment, and cash flow. The customer perspective includes measures such as market share, customer satisfaction, and customer loyalty. The internal business process perspective includes measures such as quality, productivity, and innovation. Finally, the learning and growth perspective includes measures such as employee satisfaction and training (“Ford Motor Company”, 2012).
By tracking progress in all four areas, Ford is able to get a comprehensive view of how well the company is doing overall. This information is then used to make decisions about where to allocate resources and how to improve performance.
The balanced scorecard has been instrumental in helping Ford turn its business around. In 2009, when other automakers were struggling to stay afloat, Ford posted a profit of $2.7 billion (“Ford Motor Company”, 2012).
Since then, Ford has continued to use the balanced scorecard to guide its strategy and drive results. In 2011, the company achieved its best ever financial results, with a net income of $20.2 billion (“Ford Motor Company”, 2012).
So what’s the secret to Ford’s success? The balanced scorecard is a big part of it. By tracking progress in all four areas of the business, Ford has been able to make informed decisions about where to allocate resources and how to improve performance. As a result, the company has achieved impressive financial results and regained its position as one of the world’s leading automakers.
Ford has changed its strategy to “One Ford” during this period of financial crisis, which has completely restructured the company’s mission and goals. With the help of Balanced Scorecard approach, now business unit leaders of Ford can easily convert One Ford’s “vague vision and strategy statements” into measurable “objectives and measures”. The following description explains how use of the Balanced Scorecard by Ford has helped change the company’s strategy as well as performance.
In the early 1990’s, the Ford Motor Company was struggling. Competitors were eating into its market share, quality problems plagued its products, and it was losing money. To turn things around, Ford embarked on a major transformation program called “Ford 2000.” Part of this program was the adoption of the Balanced Scorecard (BSC) as a tool for strategic management.
The BSC is a framework that helps organizations map out their strategy and align all levels of the organization with that strategy. It does this by balancing four key perspectives: financial, customer, internal business process, and learning & growth.
Prior to adopting the BSC, Ford’s strategy had been centered around increasing market share. But with the BSC in place, the company shifted its focus to profitability. This required a fundamental change in how the company operated, as well as how it thought about itself.
The BSC also helped Ford to better understand its customers and what they wanted. In the past, the company had been largely driven by internal goals and objectives. But with the BSC in place, customer needs and wants became a key driver of strategy.
This shift in focus has led to some major changes at Ford. The most obvious is the introduction of new products like the Ford Focus and Escape.