How Ford Survived the Automotive Apocalypse

Topics: Ford Motor Company, Alan Mulally, Dearborn, Michigan Pages: 15 (5631 words) Published: February 19, 2011
The Ford Motor Company was founded by Henry Ford and incorporated on June 16, 1903 in Detroit. Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce using elaborately engineered manufacturing sequences typified by moving assembly lines. Henry Ford's methods came to be known around the world as Fordism by 1914.

At around year 2005 “the Detroit big three” viz. GM, Daimler and Ford were facing intense challenges in their home market. By the advent of year 2009 at the outset of global recession the Automotive Industry also suffered worst slow down in the history. Such acute was the ailment of these companies that the former two could not survive and filed bankruptcy. Later these were saved by the national Government funded bail-out packages except for the Ford Motor Company which not only survived the slump but also flourished in the later years.

In 2005 the US automakers were incurring huge losses due to spiraling fuel costs and economic slowdown across the globe. Adding to the losses were rising prices of components and reversals of vehicles for product complaints. By the end of the first quarter of year 2006 the balance sheets of the three giants were deep in red and strategies for saving the corporations from Chapter 7 of the US Codes were broadly discussed. Major chunks of the businesses were being sold and massive lay-offs accompanied with shut downs were a common phenomena globally.

Quite similar was the situation of the Ford under the leadership of then Chairman and CEO William Ford Junior, better known as Bill Ford among the peers. Having the legacy and vision of his forefather Henry Ford, Bill took strategic decisions which saved the company bankruptcy. The then SWOT analysis of the company is as under


-4th on the Fortune 500 List (U.S. only)
-4th on the Global 500 List
-39th on the Best Companies for Minorities List
-One of world’s best known brands
-Their Web strategy has cut car build costs by as much as $380 per car -Have already invested heavily in alternate fuel sources
-Ford are seen as supportive e.g.
- Gave Generously after the September 11 Attacks
- Give Generously to Help Fight Breast Cancer
- Support Racing Teams, NASCAR , Formula One Etc


-Firestone Tire recalls caused Stock Price to Suffer--$14.70, Lowest in Years -CEO Jacques Nasser and Chairman Bill Ford Jr. could not get along leading to Bill Ford taking over as the CEO of the company

-Cash Reserves Have Sunk to $4.1 Billion
-$13 Billion on Acquisitions
-$3.5 Billion to Cover Tire Recalls
-Sometimes seen as "safe", "boring"
-By 2005 the global losses in the first quarter accounted for almost $ 1.5 billion -“Product Marketing” approach rather than “Customer centric” approach


-Have a chance to become more environmentally friendly with cleaner engine emissions and by working with environmental groups to help clean the environment -Ford have already started investing in alternative energy sources like Solar Power, and have a chance to become a market leader -They can use their Web strategy to cut costs further

-They can take advantage of their perceived generosity by giving to more charities, and using the fact in their targeted advertising. Thus setting a benchmark for Corporate Social Responsibility and enhancing the brand value and association further -Brand loyalty ensuring high rate of return customers

-Stronger products and classic cars in portfolio


-Competition is huge.
-Internal strife may hurt the company.
-Threat of substitute products such as Natural gas, Electricity, Ethanol, Vegetable oil, Sunlight, Water
-Intensity of Rivalry among competitors worldwide
-Worldwide markets threatened due to the "War on Terrorism"
-Large scale reversals on product issues might dent the brand image

Ford’s Strategic Policy

In January 2002, Ford launched a major revitalization strategic plan...
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