Credit Crunch

Credit Crunch

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Credit crunch, the sudden reduction in the availability of liquidity (loan or credit) in the financial market that lead to higher rates of borrowing, has occurred at 9 August 2007 ((National Council for Voluntary Organisations, 2010; Investopedia ULC, 2010; Anon., 2009). This mainly due to the housing bubble in between 2000 to 2007 (Xu, 2009) that dampen the confidence of financial institutions to lend which thus increased the interest rate by 20%, make it nearly impossible for companies to borrow (Xu, 2009; Buzzle.com, 2010; Investopedia ULC, 2010). This has therefore impact every form of business, as well as, the multinational enterprise - that based in one country, but has operate various business activities through a network of subsidiaries in one or more foreign countries (Hodgetts, R.M & Rugman, A.M., 2003)

One of the multinational enterprises that being affected is Ford Motor Company, an automotive manufacturer, based in Dearborn, America which founded and incorporated by Henry Ford on 16th June, 1903 (Iloveindia.com, 2010; Anon., 2010).

Prior to this credit crunch issues, Ford is aggressively on investing in foreign countries and acquisition of other companies. It has begun its foreign investment after the first manufacturing plant build in the small town of Walkerville, Canada on August 17, 1904. (Novelguide.com, 2010), and has started to take over other companies, such as Mercury, Volvo (Sweden), Aston Martin (UK) and a 33% of Mazda (Japan), after the first acquisition of Lincoln Motor Company in 1925 (Answer.com, 2010; The Super Cars, 2010). Furthermore, in the mid-1980, Ford has diversified into financial services, namely Ford Motor Credit Company (FundingUniverse, 2004; Anon., 2010), and has soon become the country's second largest provider of diversified financial services, ranking only behind Citicorp after take over The Associates, a Dallas-based finance company in 1989 (FundingUniverse, 2004).

It has thus expanded the manufacturing, assembly and sales facilities in 34 countries (Freeonlineresearchpaper.com, 2009) which group in four principal regions – North America (parent country), South America, Europe and Asia Pacific (Ford Motor Company, 2008). In order to manage the huge organization smoothly, Ford seeks a balance between centralized leadership and decentralized implementation in its parent and host country (Bazak, et al., 1998.). Hence, the management in each region company has maintain a corporate jurisdiction, where, each had its own manufacturing processes , product development systems, suppliers, and other duplicative structures the regions along but still under the general supervision of the main office. (Ford Motor Company, 2008).

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Hence, Ford uses regiocentric approach of staffing selection in each region, where, staff can be transfer through out the particular region (xxx).

Furthermore, on purpose to compete with its competitors, GM and Chrysler, Ford continuous modify its operation style – despite the introduction of Fordism 1914, which held that the sole contribution of employee was manual work in the form of repetitive assembly-line task (Zacharatos, et al., 2007; Anon., 2010), Ford has also one of the foremost of just-in-time system (Wilso, 1995), where insisted that raw materials and parts arrived just as they are needed (Daniels, Radebaugh & Sullivan, 2007).

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