Case Synopsis In 2015 Ford Motor Company was forecasting slow but steady growth,

Question

Case Synopsis

In 2015 Ford Motor Company was forecasting slow but steady growth, with sales projected to be the best they had been in years. Ford, which was one of the world’s most profitable companies until 1999, had been struggling for survival since 2003 and had faced its largest single-year loss in 2006. Although foreign automakers had been aggressively targeting the U.S. market during this time, some of the important reasons for Ford’s decline had been internal: frequent leadership and organizational changes, poor leadership, loss of touch with customers, and a failed diversification plan. Not only were there problems inflicted by previous leadership, there were also certain systemic problems characteristic of large-scale organizations. Over the years, Ford’s product development and manufacturing systems – once its distinctive competencies – had gone awry. The highly bureaucratic organizational culture impaired communication and hampered the firm’s effectiveness. Competitors had proved better in creating customer value. Ford’s leadership needed to bring back the company’s purpose, focus on re-building distinctive competencies, and create a culture dedicated to excellence and ethical (cooperative) behavior. This culture was critically necessary for creating customer value and achieving corporate success.

In an attempt to improve the financial condition of the struggling automaker, a new chief executive officer, Alan Mulally, had been selected in September 2006. Mullaly, a former executive vice president of the Boeing Company, was expected to use his expertise and leadership skills to rebuild the corporate culture and regain Ford’s ability to compete in a global industry. Mulally stated that “the bigger-is-better worldview that has defined Ford for decades was being replaced with a new approach: Less is More.” Ford needed to pay more attention to cutting costs and transforming the way it did business than to traditional measurements such as market share. The vision was to have a smaller and more profitable Ford. Mulally’s “ONE Ford” message was intended to communicate consistency across all departments and all segments of the company, requiring people to work together as one team, with one plan, and one goal: “an exciting viable Ford delivering profitable growth for all.” Mulally started by closing plants, cutting jobs and laying off employees; increasing plant utilization and production levels; refocusing on the Ford brand by selling off the brands Jaguar, Land Rover, Volvo, and Aston Martin, as well as discontinuing Mercury. He also made structural and procedural changes in the company, especially in top management. Mulally had had the full support of the Ford family, including chairman of the board Bill Ford. This confidence appeared well-founded when Ford was able to avoid the bankruptcy scenarios used by GM and Chrysler and posted sales in 2010 that made it the world’s top-earning automaker once again. By 2013, although problems remained in Europe, Asia, and South America, Ford had seen sales recover in the U.S. to its best performance ever. This performance confirmed Mulally’s vision and allowed him to retire, hand picking his successor, Mark Fields, to take over in July 2014. Fields was facing an industry in disruption: not only were global markets hard to predict but technology shifts and consumer preferences were changing the nature of the whole transportation experience. This would require significant innovation, and an adaptable, nimble organization that could deliver. Would Mullaly’s, and now Field’s, vision of “ONE Ford” help Ford Motor Company accelerate its progress, drive organizational excellence and create profitable growth for all?

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Required:

Question 01: How many of you own, or would consider buying a Ford in the future? What is your opinion of this vehicle? (800 words)

Question 02: How do you compare this American brand with other counterparts such as GM, and Chrysler and also with other global players from Japan, Korea and Germany etc. (800 words)

Explanation / Answer

Would I buy a Ford? What is my opinion on the car-maker?

Ford has traditionally been perceived as raw, oil guzzling machine characteristic raw American power. Now for a long time all these elements were romanticized and made it a popular brand in North America and other parts of the world. However, present times are way different. Crude oil prices are volatile if not increasing. Economy in most parts of the world is in shambles. Environment degradation as a concept has moved from being a textbook chapter to a reality that we face every day. Rapid urbanization along with the problem of road infrastructure not being able to cope up – all of these factors have led people to re-look at transportation in a new light.

Shared economy and aggregator models of businesses have spawned a new industry with leaders such as Uber, Hertz and Avis. With a ever burgeoning population which is conscious of the environment, sustainability has become an important factor and hence more and more people are going for hybrid and electric cars. With these new changes facing us in recent time, Ford has a lost a lot of brand equity. People almost feel guilty to be driving around in a Ford Expedition or an Explorer.

I think the brand association with Ford is largely in terms of what the company used to be rather than what it is. Our parents would always talk about Ford very highly but we talk about Tesla more often. So is it a brand which still has a recall value? Yes. But would it be able to emerge as a powerhouse in the coming times? Not if they continue to invest in high powered oil guzzlers. If Ford was to reposition itself as a trendy, technology laden, environmentally friendly vehicle which runs on electricity or even hydrogen as fuel, then there is a possibility that Gen Xers and beyond will start re-investing their faith in the company.

Comparison with other American brands and global players

If one is to compare “the big three”, then by far Ford is much ahead in terms of innovation and market agility. Ford HAS started to invest in hybrid vehicles, Ford HAS started to make its manufacturing plants eco-friendly and Ford HAS started investing in technological innovations.

In terms of brand loyalty, as per a 2017 HIS Markit survey, Ford won the most number of votes in the category “Overall Loyalty to Make”. However, like I said earlier, Ford’s brand recognition is more in terms of what they used to make as opposed to who they are.

Chrysler is definitely a much smaller firm in comparison to GM and Ford and further it is plagued by frequent management changes.

When compared to Asian giants, Ford has a long way to make. In terms of technological prowess and agility, brands such as Toyota are far ahead. Combined with their proprietary Toyota Production System, they are a much leaner company with cost effectiveness at the top of their minds. I think in terms of brand perception, the Japanese makers are looked at as a much younger company who invest in sustainable methods without compromising in “under the hood” power.

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