Ford Motor Corporation: Walking a Tight Rope

Key Points

  • The Business Value Proposition – Affecting and Affected by the Stakeholders: The employees of Ford form an important segment of the Corporation’s stakeholder base. The Corporation must have a value proposition, not just for investors, but also for all its stakeholders, which includes the employees.
  • Achieving Strategic, Sustainable Competitive Advantage in the Global Marketplace: Industrial action by the employees threatens to erode the Corporation’s competitive advantage by presenting an image of a company that cannot handle its internal issues. This bad publicity may cost the company its clients.
  • Responding To Dynamic Business Challenges – Strategically & Operationally: Having plans to the outcome of the voting that will decide whether the deal signed between the Union and the Corporation shows that both parties embrace a strategic outlook towards unpredictable outcomes. Each of the parties feels that the deal is the best way forward, yet each of them also is ready to take remedial action if the deal does not pass the vote.


Ford Motor Corporation is walking a tight rope. If an agreement between the Corporation’s management and the United Auto Worker members does not gain popular support, then there are some serious ramifications. The workers are an important segment of the Corporation’s stakeholders. They can cripple production and create very bad publicity for the Corporation. Permanent employees are in support of the labor agreement mainly because it offers them bonuses and stock options over the next four years. Other employees are not as enthusiastic because they do not feel included in the agreement. However, some are grateful that they will retain their jobs. The Union officials feel that they may get bad publicity if the majority of employees do not ratify the agreement because other stakeholders may view the Union as selfish and insensitive in the current economic climate.

The risk of a strike threatens the competitive advantage of the Corporation. Strikes make a company appear inept at handling its internal issues. It raises questions about the quality of services the company offers and the conditions the workers operate in to provide the services. In this case, a strike is the last thing Ford Motor Corporation needs because it will rob the company of its competitive advantage. However, a positive outcome to the voting that is in progress promises an increased competitive advantage for the company. A positive outcome will show that the management and the labor Union are united. This will create a picture of organizational stability that will increase investor confidence and stakeholder support. This outcome is necessary to increase Ford’s competitive advantage.

This situation illustrates the difficulty of responding to dynamic business challenges. The Corporation is doing its best to ensure that it does not lay off workers in the next four years. In addition, it wants to increase production and in the process, create more jobs. This agreement will secure the jobs of current employees and open up new jobs shortly. On the other hand, the Union wants the same future because it does not want any of its members to lose their jobs. However, it is not yet clear how the vote will go. The preferred outcome is for a positive vote. In this case, the four-year plan will roll out. However, a negative outcome will bring another set of factors into play. The Union will issue a strike notice and start the process all over again. From a strategic point, both parties have considered the possibilities of either outcome and they are ready to take the next step as soon as the results are out.


The uncertain outcome of the elections makes it imperative for both the Union and the Corporation to brace for a new future at Ford. The dire economic times complicate the situation further. While a positive outcome is welcome to both parties, the individual members will have the final say. Their vote will determine the direction Ford Motor Corporation takes. This situation shows the significance of workers as stakeholders in an organization. It also illustrates the tough choices business managers and Union officials must deal with under the current economic climate. It shows the pressure most companies are operating under. At a strategic level, the need for strategic forethought comes out clearly. Each party must consider its priorities and prepare for the outcome of this issue. Having options to deal with the outcome is crucial for survival. This applies to both parties.


Sharon Terlep, Matthew Dolan, and Jeff Bennett, Ford Contract on Edge, 2011

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