Introduction
In recent years, companies have found relief with the use of Information Technology (IT) with its Information System (IS) especially when the Internet emerged. They have found ways on how to utilize IT to be able to address complexity with the vast information that are needed to managed effectively thus Information System emerged. Organizations have formulated different strategic IS that will address their needs depending on what kind of information a company has, and the strategies that will provide the company advantages in terms of engineering, research and development, internal communications, customer service and supplier communications. Over the past years, several technologies emerged aside from the internet such as artificial intelligence (AI), robotics, wireless communications and others.
With this study, the focus will be on the IS strategy of Ford Motor Co. During the past years, we have seen Ford to launch new strategies, some of these failed but some gave the company success. The paper examines the IS strategies being implemented by Ford, using appropriate and effective mode of enquiry. The paper also covers the company’s external environment that may affect Ford’s IS strategies and implementation. It investigates on the impact of the strategies using appropriate consequence analysis technique.
The paper forecasts on the significant changes in the field of IT and IS over the next five years that has relevance on Ford Motor including the factors which may influence the changes in the Information system and use of information technology within the Ford Motor Co.
2. Modes of Enquiry
In researching, studying, investigating or examining on a particular topic, organization, person or process, the researcher has to collect data and gather relevant information about the focus of the study. There should be an organized way of gathering data or what is called enquiry. Enquiry is done to be able to produce the knowledge needed. This knowledge is basically the result of extracting different information from different reliable sources.
Knowledge and information are important bases when formulating strategies especially in a system where many interrelated processes or disciplines are dependent on each other. For example, before a company puts up a production system, there are information that need to be addressed first which may what type of products to be manufactured using the system; how can it contribute to productivity; how does the system works and for whom will it work, the advantages and disadvantages of using the system, and how long will it take to put up the system and how much does it costs.
Same is true with Information System; before a company creates its own IS, it should first enquire about the relevant information such as why the company needs it; what problems can it address; how can it contribute to production; innovation, design and engineering; can it provide the company and edge over the competitors, what advantages it can provide as well its downsides; what technologies support the system and what technology does the system supports and many other enquiries needed to be able to determine the usefulness of such system.
All the enquiries provided above are interrelated components collectively used to produce knowledge to solve a problem or problems, address issues or simply to improve some aspects of a business. The system of these interrelated components is known as enquiry system (ES).
An enquiry system consists of three components: the inputs which are the information collected that serves as the building blocks or bases of the knowledge needed to be obtained; the operator which transforms that the inputs into outputs and are basically the things needed to be done in order to achieve the knowledge needed; and the output which is the valid knowledge, the result of the enquiry, the aim of the enquiry which can be used for the advantage of an organization. These components are guaranteed to be correct by the ‘guarantor’ which is the influencing factor of the enquiry system itself.
Enquiry is the acquisition of knowledge but people has different ways of how they acquire and perceive knowledge thus there are what are called the modes of enquiry: simple which includes the inductive-consensual and the analytic-deductive modes of enquiry; the complex which includes the dialectic and multiple realities; and the innovative which includes the unbounded systems thinking mode of enquiry.
Inductive-consensual literally means an agreement made out of different principles from observed instances. In other words, in this mode of enquiry, there are different observers involved to acquire certain knowledge and together they will agreed on a conclusion and the agreed upon conclusion will be the output or the produced valid knowledge. This enquiry is basically used in making standards or in benchmarking since the data are obtained through comparison of the observed data from the historical data, from the data from a different process or situation, or/and data derived from averaging the data.
For example, a company wants to determine the most probable projected sales next year. To obtain this knowledge, the company usually based the projected sales from the past 5 to 10-year sales, considering variations based on the average change and predictions of marketing experts, and project the sales the following year with an aim to outperform the sales of the competitor.
This mode of enquiry has been widely used and accepted but its limitations include inaccuracy since it depends on historical data and predictions of experts and may be unreliable when the external environment that can affect the projected sales is not taken into consideration.
Moreover, analytic-deductive is basically the use of logical reasoning to come up with a model on how to solve a problem or improve something. It commonly uses mathematical formula to make complex situations appear to be simple. An example of a complex situation is a manufacturing process which usually starts with design, followed by prototyping, then procurement of materials, assembly, quality control, inspection, and then the final output or the product itself. Without a model with its variables given, it would be very hard to proceed from one step to another.
A model is produced through logical assumptions; that is it should answers enquiries such as what if procurement is done first before the design, or what if one step such as the quality control was omitted out of the system, will the model still produce the same kind of product. The guarantor with this mode of enquiry, which guaranteed that the output will be correct, is the logical reasoning of the people involved.
The weakness of the analytic-deductive mode of enquiry is that it gives extreme emphasis on logical consistency that anything that arise as illogical will be dismissed in the analysis when in fact, the more logical way to solve a problem is to consider anything that arises within the problem because in a problem, there could be more than one possible solution.
Multiple realities mode of enquiry combines gathered data and model or theory as the inputs and assume that can be multiple way to define or solve problems. In a multiple reality enquiry system, the observed data (like the one gathered with the use of inductive-consensual enquiry) is placed against a model or theory (like the one formed using the analytic-deductive enquiry) thus, this mode can be considered as a combination of inductive-consensual enquiry and analytic-deductive enquiry.
The result, using the multiple reality enquiry, is a range of different solutions. The best possible solution will be decided upon, thus this mode of enquiry is risky that the chosen solution might not be the best one.
Dialectic mode of enquiry is also called conflict, which is basically an investigation of truth, or discussion intended to resolve conflict between two contradictory ideas. With this mode of enquiry, there are two contradictory ideas available and these ideas will be debated or compared against each other to determine which is better.
An example of this is to decide whether an organization needs to be reorganized or not; or deciding which between two product design should be approved. There should be two teams debating, one against the other, each team should have supporting ideas in order to defend their side.
The last mode of enquiry is the Unbounded Systems Thinking (UST). The term itself signifies that this mode of enquiry means that it considers everything that may affect the system, internally and externally. A good example of UST is when formulating strategy wherein a company conducts an internal analysis to determine the strengths and weaknesses of the company. It also conducts external analysis wherein PEST (Political, Economic, Social, Technological) factors are considered to determine the opportunities and threats to the company. With the data gathered from these analyses, the company can now formulate the possible strategies that can enhance its strengths, address the weaknesses, take advantage on the opportunities and prevent the threats.
Comparing the modes of enquiry, Inductive-consensual enquiry and Analytic-deductive have the same limitations in a way that both consider only one output which may be inaccurate or insufficient to solve problems or to provide enough needed knowledge. Multiple realties mode of enquiry on the other hand addresses the limitations of inductive-consensual and analytic-deductive because it provides multiple possible solutions. However, it imposes risks since it depends on the decision-maker on to which solution should be chosen.
The Unbounded Systems Thinking (UST) seems to be the best among the modes of enquiry since it considers all the elements that can possibly affect the output. Using UST will provide more valid building blocks of knowledge since there are many possible sources of knowledge. However, UST requires in-depth analysis elements affecting the system and as the term systems thinking implies, this mode of enquiry looks at the system as a whole, that is the interrelatedness of the elements comprising the system.
The following sections use the Unbounded Systems Thinking mode of enquiry to discuss the strategic Information System of the Ford Motor Co. This mode of enquiry is used because Ford Motor moves in a global market wherein the strategies that the company formulates are affected mostly by its external environment, especially the IS strategies which are driven primarily by technologies.
3. Company Profile
Ford Motor Company is an American-based leading manufacturer of automobiles; boasting automotive brands such as Ford Lincoln, Mercury, Mazda, Volvo, Jaguar, Land Rover, Aston Martin and automotive service brands like Motorcraft and Hertz. Each brand has a unique personality and holds a distinct place in the Ford Motor Company family. It was established on 1903 and has a great contribution to automotive manufacturing by developing the first moving assembly line that uses interchangeable parts, making it possible for the company to put the cars together at much lower cost and with greater reliability and repeatability, a technique that has been proven to be efficient and has helped the company increase production levels, surpassing their competitors and making vehicles more affordable.
4. Internal Analysis
The company operates primarily in the US, Mexico, South America, Canada and Asia Pacific. Ford is headquartered in Dearborn, Michigan and has 327,500 employees. In 2004, Ford has increased pre-tax profit, from .4 billion in 2003 to .8 billion; has cost reductions of almost 0 million and in total has improved automotive cost performance by more than billion over the last two years. It also improved its revenues in North America and its market shares have increased in Europe, South America and Asia. Half of its worldwide market is in North America and lesser in Asia (ABR, 2005).
In recent years, the automobile industry has been revolutionized due to the emergence of various types of information technology (IT). IT has given companies the ability to operate more efficiently and effectively. Special interest has been given by large companies to information technology, as either producers or the large consumers of IT (Allen & Morton, 1994). Ford is one of those companies that belong to the category as large consumer of IT. The utilization of technologies such as the internet, has given Ford a competitive advantage by decreasing the overall time needed to manufacture cars, better share ideas through real time programs, advertise more appropriately targeting demographics and the desires of customers, reinforced product innovation and new technologies, and ultimately to find other ways to gain an edge over the competition.
Ford has been very dependent on its Information System (IS), that IS is incorporated with every operations of the company, from design to manufacturing, from internal communication to customer services and external communications such as advertising. Ford has utilized technology using effective and strategic Information System.
5. Ford’s IS Strategies
Information technology, which is being utilized by most companies today, can be defined as the use of knowledge to make and implement commercial decisions, thus organizations need an established system called information system that will collect, store and manage these knowledge and data and enable them to make the best decision in different situations (Tansey, 2002). As a company involving engineering and manufacturing, all the computing and telecommunications technology, which are classified as IT have application in Ford’s business such as in vehicle and engine research, product engineering techniques, manufacturing automation, and business computing that reaches out to dealers and suppliers (Earl, 1988).
Ford was one of the companies who first took advantage of the internet technology as its primary IS strategy to improve and solve problems in operations of the business. For a car manufacturer like Ford, the most common use of IT is the employment of robot on production lines particularly in the areas such as paint spraying where great precision is required (Tansey, 2002). Ford was also able to link the input and output of production lines to suppliers and customers with its just-in-time manufacturing system with the employment of IT that has lowered the company’s production costs through reduced holdings and wastage stocks (Tansey, 2002).
Product innovation is a key factor in Ford’s success, with many products to keep up with the current technology, from its assembly line back in the 1900’s that has revolutionized vehicle production, to the most innovative solutions it is using today. Ford has been exceptional in the area of product innovation using technological innovation driven by IT in order to offer more diverse automobiles and to make manufacturing more efficient.
In 2000, Ford partnered with Qualcomm to launch the telematics service called the WingCast in order to rival General Motor’s Onstar (Gilroy, 2000). Wingcast was going to offer an in-vehicle communications and navigation system (Wrlostad, 2002). However, Wingcast was dissolved in 2002 primarily due to buyers were turned off by pricey markups (Eisenstein, 2003) and driven by the combination of the changing technology and changing customer desires (MobileInfo, 2002). Ford is still using telematics with its delivery fleet to monitor fuel costs making its fleet maintenance cost decreased (Eisenstein, 2003).
Ford set up a wide area network linking manufacturing plants, dealers and suppliers to be able to communicate through standardized electronic forms which is a system known as electronic document interchange (EDI) (Tansey, 2002). Despite of these, Ford was still slow in quality improvement that in 2002, its product quality improved by only 13 percent, while its rival companies, GM and DaimlerChrysler improved by 30 and 27 percent respectively (Eisenstein, 2003). To address this challenge, Ford launched the Project Execution which is a project involving a quality verification system, a wireless monitoring system that tracks, via barcoding, software and sensors, a vehicle as it makes its ways through assembly, making it sure that no assembly steps are left undone and that each vehicle passes a series of quality tests (Eisenstein, 2003).
Ford also created a business analytics system to gather and analyze data from various sources such as the company’s warranty processing offices, emergency call centers and dealers to be able to determine problems and identify such problems before the assembly process (Eisenstein, 2003).
Ford has also speed up the time it takes to produce cars using the C3P system which is a Product Information Management (PIM) knowledge database that integrates three areas: computer aided design (CAD), computer aided manufacturing and engineering for improved quality, productivity and communication (Leong, 1998). PIM is an intranet-supported technology where specific information from the three areas is accessible to Ford’s car divisions and suppliers during any stage of design, engineering and manufacturing (Leong, 1998).
With this strategy, Ford was able to reduce development time, and improved collaboration among employees to improve the quality of Ford cars. C3P allows Ford to do more tests electronically than wasting time and money on testing cars conventionally; a prototype car that is usually tested, costs around 0,000 (Teresko, 1998).
Part of Ford’s IS strategy is its internet marketing. It had the online ConsumerConnect unit before that was replaced by FordDirect today. FordDirect (“Ford: Using E-Commerce…” 2006) is the collaboration of dealership websites with the main company sites. Through the FordDirect website, a customer can explore the many available vehicles Ford is offering, eliminating the use of the dealer as an information source.
In the FordDirect website, clients are provided with all the information they need including the price, the inventory of local dealers and the features of the cars available as well as special offers and options. Clients can also customize their chosen Ford vehicle with its Build-your-vehicle feature: customers can choose the color, interior, wheels, and other feature of the car he chose and the website will quote the price of the customized car. This strategy is a good way of attracting customers making Ford increased its retail sales by 9% or sold 210,000 vehicles (FordDirect). FordDirect has been an informational website enabling its customers become informed of Ford’s products and making them become more interested with them.
6. Impact of External Environment
The external environment of Ford Motor plays an important role in the IS strategic decision-making of the company. External environment has impact on the IS strategies of every company since companies especially global companies such as Ford Motor, are parts of the system called macro-environment. Unlike the microenvironment (internal environment), macro-environment includes factors that are uncontrollable by the company such as the political trends, demographics, economics or business conditions, social and technological trends. Since Ford moves in a macro-environment, its strategic planning must involve the use of unbounded systems thinking enquiry to determine the interconnectedness and impact of the factors mentioned in the IS strategies of Ford Motor.
6.1 Socio-Political Factor
Ford and other automotive manufacturers are affected by government rules and regulations which were created to ensure that quality and safe automobiles are being manufactured. This means that the design and engineering of the cars Ford should make should meet the quality standards set by the government. Safety standards should also be considered when designing automobiles as well as environmental protection standards such as emission regulation and pollution control.
There are also other laws affecting Ford such as workplace safety, wages and work hours. The C3P may reduce development time but it may also cut the working hours of some employees and get underpaid for it. The manufacturing process should also consider the safety of the workplace. Some technologies might emit radiation that may harm workers. There are also energy conservation policies that set standards for mileage per gallon an automobile must get, and standards on what particular energy source a company must used.
Social factors that influence the strategic IS of Ford include the people’s demands for vehicles such as safety, environmental-friendly and social perceptions. People also want convenience in ordering cars as well as excellent customer service which might include customized services. Some customers also want to know as much information about the cars, the brand, the features and the benefits they can get so they demand for available information especially now that the use of the internet is very rampant.
6.2 Technological Factors
Technology affects the IS strategic decision making in various ways. First, due to the shorter life cycle of different technological products today such as computer, laptop, robots and automation products, companies are hesitant to engage in technological innovation. The use of telematics of Ford’s Wingcast is now being replaced by the Bluetooth Technology. Production is the Ford’s operation that is mostly influenced by technology. Technological advances made possible the C3P, and other technological innovation such as rollover protection or the Safety Canopy air curtain system, Roll Stability Control (RSC) and Air Bag Technology. Technological advances have also allowed Ford to offer customers Variable Cam Timing, a 3-valve technology that improves modular V-8 efficiency and performance. GPS antennas, navigation systems, satellite radio and the SecuriLock Passive Antilock system are just some of the many new technologies used by Ford.
The introduction of the new Hy-wire prototype, a car that unites fuel cell propulsion and drive-by-wire systems with a unique new kind of chassis, has made a name for Ford as the industry leader in product diversity. Additionally, IT such as the wireless real-time locating system that allows Ford to track inventory using low-power radio frequency tags and a communications network has enabled Ford to have critical information right at their fingertips.
Technology also allows Ford to enhance customer service with its FordDirect website. The Internet is also a way of acquiring customer information. Technology made possible videoconference of Ford’s leadership team worldwide.
6.3 Economic-Geographical Factors
Ford and the entire automobile industry are influenced by economic trends such as the cost of raw materials, and the fluctuation of the costs of steel and oil that affect the buying behavior of consumers. Economic trends vary from different locations: half of its worldwide market is in North America and lesser in Asia (ABR, 2005). This might be because there are more developing countries in Asia than in North America that Asians tend to buy cheaper cars like Toyota. Therefore, Ford’s IS strategy is to manufacture cheaper cars for the Asian market. Also, people in other place still prefer the traditional way of buying cars. This factor influenced the internet marketing strategy of Ford. This also means that the data collected in North America is for that place only and may not be applicable to Asians. People’s socio-economic status, preferences, tastes, marketing channels and buying behavior vary depending on the geographical locations and the economic trend on that certain location. This implies that Ford’s IS strategy planning and decision making should also vary depending on the location.
Geographical factors also affect other factors such as political, social and technological factors. Regulations in USA may be very different from the regulations in China and other Asian countries. Technology may also be underdeveloped in some countries so they may not appreciate some of the modern and latest technology. Demographics also varies from one place which are all influencing factors in Ford’s IS strategy planning.
Globalization affects Ford’s IS decision making to be able to stay competitive in the global market. Since it is a global player, it is affected by exchange rate and tariff. Therefore, before all these factors should be considered in IS strategic planning and decision making to ensure that the problems and issues in relation to IS strategies will be addresses before the strategy is implemented and to ensure its effectiveness. It can also be recommended that IS strategies are designed to adapt to changes in the macro-environment.
7. Consequence Analysis
In analyzing the consequence of the IS strategies of Ford Motor, we use the Confidentiality, Integrity, Availability or CIA which is a widely used benchmark for evaluation of information systems (IS) security, focusing on the three core goals of confidentiality, integrity and availability of information. Data confidentiality exists when only the authorized people are allowed to access electronic data while integrity refers to data that are not tampered with since its creation and the data really did originate from the original creator of such data (Chudwick and Mundy, 2004). Availability of data means that the electronic data are available to the authorized users whenever and wherever they need to access them (Chudwick and Mundy, 2004).
Applying CIA to the analysis of IS strategies of Ford Motor, it is noticeable that Ford may not achieve all the requirements of CIA. Analyzing Ford, data from the C3P are and should be accessible to the designers, engineers and some workers involved in the manufacturing as well as to the suppliers to ensure integration of the three areas. Once specific data can not be accessed in the PIM database, both the production operation and design will be affected and may be delayed. It is also required that data from PIM database will only be accessible to the designers, engineers and production managers because designs of car models as well production process are critical and important assets of Ford Motor.
Accessibility to the PIM database also affects the integrity of the design. That is, unauthorized access to the designs may result to alteration or copying of designs which is intended to be exclusive for the Ford Motor.
Moreover, data presented on its website should be protected against hackers and viruses to ensure that they only present reliable data to customers. Also, customers’ data such as email address, telephone numbers, address and others especially credit card number and account number acquired via online transactions are required to be protected to ensure that customers’ data remain confidential. Hackers may also deface the website and may corrupt data.
It is also noticeable that with the IS strategies of Ford, they utilize intranet within the company to be able to share information such as customer demands and problems that should be address in the design and production, thus some employees are authorized to access information, add, update or change the data as the need arise.
Therefore, security, ethical and legal issues should be address and integrated in the IS planning and decision making. The more complex the information system of a company, the more the problems associated with it and the more it should be protected. Furthermore, Ford’s IS should have back-up system especially the PIM database used in the C3P system. Back up system will ensure that production will not be interrupted in case the IS system was corrupted.
Another consequence of the strategies of Ford is its being prone to intruders, unauthorized access, viruses, and Spyware. Thus Ford’s IS needed protection such as Firewall software, access control system, anti virus software, encryption system, and anti-spyware.
8. Potential Negative Impact of the Consequences
The potential negative impact of the consequences of Ford’s IS strategy can be classified into two: technical and non technical. Technical impact concerns on the hardware and software assets of Ford while non-technical impact concerns on business process or human issues.
Technical Negative Impact
As mentioned above, the technical negative impact may include modified data resulting to unreliability and non-integrity of data as well as inaccessibility to other important data in the database. The availability of the hard disk and the computer system itself may also result from virus attacks. Viruses may also erase important software containing important data. Serious virus attacks may infect all the computer system connected in the intranet causing system failure within the entire company. When unreliable data were transfer from the database to the C3P system, the products that can be manufactured especially when the data were altered may have defects. All these impact the company’s financial and physical resources.
Non-Technical Negative Impact
Most human issues involved in the negative consequences may not be the result but the cause of such negative impact. Modified data and unauthorized access may be caused by unsatisfied employee or misinformed ones.
On the other hand, the most negative impact of the consequences will be distrust of the customers to the company due to the distorted company’s credibility, impacting the company’s profitability.
Therefore, company’s IS strategies should be aligned with the company’s mission and objectives as well as with its organization. So far, Ford has not yet encountered such negative impacts but the company did experience, over the past years, too much spending on IT and IS instead of making good automobiles in an attempt to provide the customers excellent services via online websites (Eisenstein, 2003) but Ford bounced back when it changed its CIO. This means that in IS strategy planning and decision making, a company should have the resources needed not only financial as well as the resources provided by humans such as leadership.
9. The Next Five Years
Ford Motor was and still very much center on utilizing information. According to its CIO Marv Adams, Information is central to Ford’s strategy (Eisenstein, 2003). However, Ford should learn how to capitalize on the technology and information. Over the next five years, automotive companies are likely to be more reliant with the use of internet due to the cost savings and fast communications that can get out of the internet. Chrysler is replacing its old dealer communications systems with a web-based communication system where all the ordering, warranty, nuts and bolts of communication, service manuals and training come in via the internet while GM ha its GMAC SmartAuction, a technology that notifies customers when to bring a car in for an inspection, before the lease expires; all the information about the cars are logged into the system and are electronically auctioned where only the GM dealers are allowed to participate (Eisenstein, 2003). This means that over the next years, Ford should still formulate effective IS strategies that may give tem advantages and provides profitability while maximizing the use of technologies available.
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