Does Ford Need to Change Its Corporate Culture?
Introduction – Segment length: 1:00. Total: 1:00
Relationship of Topic to Course
Power and Politics
Organizational Culture and Development
Topic question: Does Ford need to change its corporate culture? c.
Answer: Yes, mistakes in corporate decision making and failure to keep up with competition has left Ford’s market share dwindling. d.
Supporting Arguments - Segment length: 4:00. Total: 5:00 a.
When it debuted in 1990, the Explorer quickly became the best selling sport-utility vehicle in the US. It held that spot for most of the next 16 years. In 2007 the Explorer was 10th in sales. While some of the numbers were dampened by Ford’s own Edge and Escape, the three best selling SUVs were a Honda, Toyota, and a Chevrolet (Edmunds). ii.
The Taurus was the number one selling car in America from 1992 through 1996. In 1997, as part of a recurring theme, it lost its title to a Japanese rival, the Toyota Camry (wikipedia). 2.
In 2006, it didn’t even make the top 10 list. (Vella)
Ford’s crucial mistake
In the late ‘90s and early 2000’s, Ford saw its SUV sales skyrocketing. It decided to put its eggs in that basket. A corporate culture of arrogance and entitlement led them to neglect their cars. They assumed that the cars had always sold well and would no matter what. Because of this lackluster approach, the Japanese cars blew right by them in quality and design. 2.
With gas prices up and the economy not as good as it was in the late 1990’s, people began to steer away from gas guzzling large SUV’s. 3.
In the 8 years from ’00 to ’07 of that Ford Taurus’s design run, there were three different Camry’s. Toyota stayed fresh and cutting edge in design, while continuing to build on its reputation of quality and reliability. Ford barely tried to advertise the Taurus, assuming it would just sell itself. b.
History: What happened? (Kiley)
How did Ford evolve from one of the most admired companies in the world into one where losing money has become the norm? Until the mid 1960’s, it was considered a management shrine. Under U.S. Defense Secretary Robert S. McNamara, one of a celebrated group of military veterans at the company dubbed the Whiz Kids, Ford developed scientific consumer research techniques that are now commonplace throughout the business world. It was one of the first auto companies to create products that were based on hard data rather than the personal tastes of executives. ii.
McNamara exited in 1961, Henry Ford II gradually assumed a bigger role in management. He built a high-testosterone culture where up and coming executives were often pitted against one another to prove themselves. As the auto industry's postwar growth slowed, limiting opportunities for an overstaffed field of managers, executives turned on one another. They became more cautious. "The bureaucracy at Ford grew, and managers took refuge in the structure when things got tough rather than innovate or try new ideas that seemed risky," says Allan Gilmour, a former CFO at Ford iii.
Personal ties with the Ford family, always important at the company, sometimes trumped actual performance in promotion decisions. 1.
Ambitious managers focused increasingly on kissing the right rings instead of racking up results. It became "something of a palace atmosphere," says Gerald C. Meyers, a professor at the University of Michigan School of Business. 2.
Critics also blame the family, which has many members who depend on dividends as their main source of income, for encouraging a focus on current profits rather than long-term planning over the decades. iv.
In the royal hierarchy at Ford, an elaborate system of employment grades clearly established an employee's rank in the pecking...
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