Ford Motors
Table of Contents
Introduction…….......……………………………………………………………………………...1
Environmental Analysis…………………………………………………………………...............1
Company Analysis………………………………………………………………………...............4
Decision Options…………….…………………………………………………………………….6
Recommendation………………………………………………………………………………….8 Problem Definition:
In early 2007, Ford Motor Company is struggling to stay afloat with flat sales and increasing costs in an incredibly competitive market. Over the past five years, despite many attempts at restructuring and cutting costs, Ford Motors is suffering falling market shares and serious financial losses. They posted a loss of $12.7 billion for 2006, the largest full year loss in the company’s history, and their stock price is following the same trend, falling by 60% since the end of 2001.
In an effort to thwart the company’s decline, the board had decided to recruit an outsider to lead a turnaround. Alan Mulally, a design expert from the aerospace industry, was elected President and CEO, giving new hope to the company’s stakeholders. He is leading a new restructuring and cost-cutting plan with a “less is more” vision, a strategy that stands in stark contrast to Ford’s traditional “bigger is better” approach. With fierce Japanese competitors using lean operations to fight for industry leadership, Mulally’s strategy has to make an impact quickly.
Considering Ford’s financial situation and the need for a quick turnaround, several questions loom. What strategy will be most efficient: is the “less is more” vision appropriate? What other strategic decisions should Mulally make?
Environmental Analysis:
The automotive industry in the United States is a multi-billion dollar industry, but it is extremely competitive, with many large players trying to leverage their competitive advantages to gain market share. Let us set the stage by discussing the key factors that are imperative for any motor vehicle manufacturer to be successful. These factors
Introduction…….......……………………………………………………………………………...1
Environmental Analysis…………………………………………………………………...............1
Company Analysis………………………………………………………………………...............4
Decision Options…………….…………………………………………………………………….6
Recommendation………………………………………………………………………………….8 Problem Definition:
In early 2007, Ford Motor Company is struggling to stay afloat with flat sales and increasing costs in an incredibly competitive market. Over the past five years, despite many attempts at restructuring and cutting costs, Ford Motors is suffering falling market shares and serious financial losses. They posted a loss of $12.7 billion for 2006, the largest full year loss in the company’s history, and their stock price is following the same trend, falling by 60% since the end of 2001.
In an effort to thwart the company’s decline, the board had decided to recruit an outsider to lead a turnaround. Alan Mulally, a design expert from the aerospace industry, was elected President and CEO, giving new hope to the company’s stakeholders. He is leading a new restructuring and cost-cutting plan with a “less is more” vision, a strategy that stands in stark contrast to Ford’s traditional “bigger is better” approach. With fierce Japanese competitors using lean operations to fight for industry leadership, Mulally’s strategy has to make an impact quickly.
Considering Ford’s financial situation and the need for a quick turnaround, several questions loom. What strategy will be most efficient: is the “less is more” vision appropriate? What other strategic decisions should Mulally make?
Environmental Analysis:
The automotive industry in the United States is a multi-billion dollar industry, but it is extremely competitive, with many large players trying to leverage their competitive advantages to gain market share. Let us set the stage by discussing the key factors that are imperative for any motor vehicle manufacturer to be successful. These factors
References: Michael E Porter (2008). The Five Competitive Forces That Shape Strategy. Harvard Business Review: Special HBS Centennial Issue, 86(1), 78-93.