What Would You Do?Ford Motor Company Headquarters, Dearborn, Michigan
Case Assignment - What Would You Do?FORD MOTOR COMPANYHeadquarters, Dearborn, Michigan.
“You turned Boeing around from billion-dollar losses to huge profits and increased market share. But when you became Ford Motor Company’s CEO, people asked, “What does an airplane guy know about the car business?” Well, on your first day as CEO, you reviewed the product lineup and discovered something missing, the Ford Taurus, the best-selling car in company history. “Where was it?” you asked. “We killed it. After a while, they didn’t sell very well, so we stopped.” Incredulous, you replied, “You stopped? How many billions of dollars did it cost to build brand loyalty around the Taurus name? Well, you’ve got until tomorrow to find a vehicle to put the Taurus name on. Then, you have two years to make a new Taurus which had better be the coolest vehicle that you can possibly make.” So, in less than four hours, you made your first billion-dollar decision. It wouldn’t be your last. With billions of dollars in losses, you eliminated 46,000 jobs, sold off Aston Martin, Jaguar, and Land Rover, and cut truck and SUV production by 40 percent. Despite these drastic moves, Ford still lost $12.6 billion your second year and $2.7 billion your third.
With losses still mounting, the first major issue you need to address is vehicle customization, that is, maximizing consumer choice by producing different cars with different parts for different world markets. Vehicle customization originated in 1967 when Ford’s European operations were created to design and manufacture cars just for Europe. Consequently, when Ford attempted to cut costs by creating a common “world car” to be sold in Europe and the United States, it failed. The resulting cars (yes, “cars”), one designed in Detroit and the other in Germany, were completely different except for two shared parts.
The second major issue is that Ford’s management teams have difficulty staying on target and tracking company performance. Even with
“You turned Boeing around from billion-dollar losses to huge profits and increased market share. But when you became Ford Motor Company’s CEO, people asked, “What does an airplane guy know about the car business?” Well, on your first day as CEO, you reviewed the product lineup and discovered something missing, the Ford Taurus, the best-selling car in company history. “Where was it?” you asked. “We killed it. After a while, they didn’t sell very well, so we stopped.” Incredulous, you replied, “You stopped? How many billions of dollars did it cost to build brand loyalty around the Taurus name? Well, you’ve got until tomorrow to find a vehicle to put the Taurus name on. Then, you have two years to make a new Taurus which had better be the coolest vehicle that you can possibly make.” So, in less than four hours, you made your first billion-dollar decision. It wouldn’t be your last. With billions of dollars in losses, you eliminated 46,000 jobs, sold off Aston Martin, Jaguar, and Land Rover, and cut truck and SUV production by 40 percent. Despite these drastic moves, Ford still lost $12.6 billion your second year and $2.7 billion your third.
With losses still mounting, the first major issue you need to address is vehicle customization, that is, maximizing consumer choice by producing different cars with different parts for different world markets. Vehicle customization originated in 1967 when Ford’s European operations were created to design and manufacture cars just for Europe. Consequently, when Ford attempted to cut costs by creating a common “world car” to be sold in Europe and the United States, it failed. The resulting cars (yes, “cars”), one designed in Detroit and the other in Germany, were completely different except for two shared parts.
The second major issue is that Ford’s management teams have difficulty staying on target and tracking company performance. Even with