Ford Motor Company Case

Henry Ford created the Ford Motor Company in 1903 with a vision to make automobiles accessible and affordable to every American. A hundred years later, Ford has gained the status of the largest producer of trucks and the second largest car maker. The company has endured many ups and downs throughout that period. This paper will address the organizational changes the company experienced and the consequences, focusing on the ones caused by external events.

Background statement:

The managers at Ford Motor Company understand the importance of an organizational mission. It is after all the reason for the company's existence; it must inspire employees and provides a focus and direction for setting goals. To focus on that, Ford's approach was: One Ford, One Plan, and One Goal (http://corporate.ford.com/our-company-2013). Ford Motor Company is the pioneer of the American automobile industry, located in Detroit, Michigan, commonly known as the automobile capital of the world. To ensure those core values, the company has set out to achieve that by emphasizing on people working together as a lean team for automotive leadership, to be measured by its customers, employees, investors and market satisfaction.

The One Ford Plan segment of the mission will be to aggressively restructure to operate profitably at the actual demand and changing model by applying the right decision making style.

The one man who would oversee that job is Alan Mulally. He was approached by Bill Ford to run the company. Alan is a risk taker, " Before accepting Bill Ford's offer, he asked for assurances that he would have the money he needed to pay for his plans. Convincing the Ford family to mortgage their birthright would be a far tougher sell. They had not cashed in their shares when they were worth a fortune, and they certainly were not going to be eager to bet them all on a make-or-break gamble"

[American Icon: Alan Mulally and the Fight to Save the Ford Motor Company (page 110)]

He became the president and CEO of the company. Leading a company of 171,000 employees (http://Wikipedia.org/wiki/Ford-2012), he knows a great deal about risk taking. Mr. Mulally saved Boeing when the airplane industry was floundering after the September 11th attacks in 2011. (http://www.octanner.com/blog/2012/04/leadership-to-love-how-alan-mulally-changed-fords-culture)

History of change:

The 2008 economic crisis has hit the U.S. domestic automobile industry with a sledge hammer.

That crisis wreaked havoc on the auto industry."A time of crisis makes people particularly alert to cues in their environment and tends to reinforce norms that emerge from that period"

[Management- Hitt, Stewart, Lyman (2012) (page 284)]

This crisis was the product of mortgage fraud, greed and the government inability to control banks and financial institutions.

Before the crisis, Ford Motor was going through a steady decline of car sales and its inability to get credit for new product development and restructuring. The quality of its products was in contrast to what it claimed in TV ads. "Ford Motor Company's advertising slogan, "Quality Is Job One," points out how important the concept of quality can be to an organization. However, the firm's less than stellar performance in achieving this objective against Toyota illustrates that it's not slogans but actual delivery of quality that matters to customers and influences a firm's financial performance, such as sales and market share"

[Management- Hitt, Stewart, Lyman (2012) (page 362)]

Additionally the previous CEO, William Clay Ford Jr. insisted on transforming the company into a model of sustainability despite the economic climate. Once the crisis hit the global market, it caused a major decrease in demand .The impact of drop in that demand for cars has resulted in huge job loss.

Ford stopped production, closed 14 manufacturing plants in North America and cut between 25,000 to 30,000 jobs as a way to stem losses and adjust to the new significantly lower market share. The impact didn't stop at the financial sector, the whole concept of running the company with yesterday's ideals are no longer valid. Ford needed a new strategy to achieve a turnaround and to get the competitive edge in the global automotive industry. To explain that, I would like to propose a SWOT analysis for the company.

Swot Analysis:

The strengths, weaknesses, opportunities and threats of Ford Motor Company are:

o Strengths:

* It is the fourth large automaker in the world.

* Ford has good market share in Europe

* Ford is the seventh company in 2008 Fortune 500 list.

 In 2008, Ford produced 5.532 million automobiles and employed about 213,000

 Ford received initial quality survey award from J.D Power and Associates in year 2007.

 One of the best known brands in the world.

 Ford motors develop vehicles under several names.

 Manufacturing facilities in more than 30 countries.

 Ford motors make cars that are dependable and stylish

 Good relations with employees by offering better work environment and competitive wages

* 39th on the Best Companies for Minorities List

* Worldwide car sales

* Top leader in compact vehicles

* Alliances with Suzuki and Isuzu Motor Companies

* Technological Alliances with Toyota and Honda Motor Companies

o Weaknesses:

* The company sales dropped in 2008 as compared to year 2007.

* Ford fired number of employees due to outsourcing.

* Firestone Tire recalls caused Stock Price to bear 14.70, Lowest in Years.

* Due to the diversity factor, it might lose focus on some lines

* Keeping up with foreign car makers

* The more outsourcing = the less popular

o Opportunities: