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 Gaston Martin, Jaguar, and Land Rover, and cut truck and SUB production by 40 percent.
Despite these drastic moves. Ford still lost SSL 2. 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 downsizing, Ford is a complex company with 205,000 employees, multiple product lines, and international operations on four continents. Surprisingly, Ford’s managers only stay in their Jobs a few years. And, If you’re off to your next Job and don’t have to live with the consequences of your decisions, why are about whether you meet your department’s or division’s goals?
The final Issue Is that contentious relationships between Ford’s divisions have produced dysfunctional decision making. Different geographic regions and functional divisions, such as engineering, production, and sales, are more interested in doing what they want than what is best for Ford as a whole. Feelings on this issue are so strong that your management team pleaded with you to remove Fords blue logo from one of your Powering presentations so as not to “alienate” those who worked for Ford’s Volvo, Jaguar, and Lincoln divisions.
At the time you agreed, but now realize it was a mistake. Three years ago, you arranged for $23 billion in loans to get the company through tough times. And with Chrysler and GM in bankruptcy, and industry sales off 35 percent, you’ve needed every dime. But, you’re 65 percent through those funds, so you’ve got to address these key Issues. Ford’s survival depends on it. If you were the CEO AT For a, want would you 00? Questions 1 . Should Ford continue to make different cars for Europe and the United States? If so, how do you lower expenses?
If not, then how do you get the company to produce the “world cars,” when it has failed to do so before? What should Ford’s strategic objective be here? 2. Beyond making managers stay longer in their Jobs, which won’t be popular, how will you change Ford’s culture so that managers pay attention to company plans and feel accountable for meeting performance targets? 3. Finally, what will you do to address the dysfunctional way in which decisions are made, where different departments and units care more about their issues than the company’s issues? Sources: M. Dolan, J. Stool, and N.