Heloise V. Posey
Professor Marla Boulter
Principles of Management (Bus 302)
January 28, 2011
Ford Motor Company was founded in 1903 by Henry Ford who lived in Detroit, Michigan therefore giving birth to Detroit's title of automobile capital of the world. The first retail dealership was opened by Stephen Tenvoorde in 1903 in St Cloud, MN. Mr. Ford was a visionary of the idea of mass production. Mr. Ford's ability to make automobiles affordable is cited as a driving force behind the automobile industry and the creation of a middle class in America.
1. The case creates four options to choose from. Discuss at least three criteria the company should use to decide which of the four listed options is best and the reasons why each criterion should be used.
Closing down older plants in an effort to realign production and sales would not be a
good option at this time. This will involve a trickle effect of layoff which leads to loss of wages
and or pay cuts, unemployment rising families suffering.
Moving Ford to produce only smaller car and eliminate/reduce the SUV and truck lines
would possible help and eventually hurt Ford. Today's economy and the high price of gasoline
will support Ford's decision to produce smaller cars on one hand but then the consumer will have
to go to other companies to purchase their SUV and trucks thus causing Ford the loss of this
Selling the entire Premium Automotive Group (PAG) and letting someone else figure out
how to make money selling so few vehicles a year. Selling the PAG would bring Ford back in
line with Ford's way of doing business anyway possibly exclusively with Lincoln and Mercury.
The PAG was a group within the Ford Motor Company and was formed in 1999 to oversee the
business of Ford's high end automotive operations.
Of the four options I think Ford's efforts of taking dramatic steps to dramatically reduce
their North American presence and focus on the more successful International Markets of
Europe, South America and China because of their receptiveness to Ford and the fact that the
company does very well in these markets is the best option for the following reasons
1.Decision making is the process of choosing a solution from available alternatives.
Ford is using Rational Decision Making in deciding to dramatically reduce their North American
presence. Ford has defined a problem of declining economy and the fact that they produce more
vehicles than they can sell causing them to lose money which is leading them to chose the
optimal solution of closing the North American plant because they feel this will provide the
company maximum benefit. Another issue is producing vehicles under very difficult personnel
2.Decision Criteria - Ford's decision to reduce the North American presence are
based on the economical judgment that Ford Motor has been steadily losing revenues for years in
its North American operation. Another factors is the UAW representation of Ford's employees'
who do not seem to want to give up something to gain something. Ford has come to the
conclusion that their North American presence seems to no longer be economically compatible
and do not have the ability to compete with their counterparts.
3.Weighing the Criteria is the reason Ford has decided to close the North American
operations. Relatively Ford is and has always been a very compatible company. Losing the
North American operations will give Ford the benefit of additional cash flow to restructure and
focus on the International market where they have had the most success.
2. In light of the possibility that market conditions can and do change, discuss at least three examples of how the company should build-in flexibility to back-up its decision-making process.