Alan Mulally's Challenges at Ford Motor Company
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Case Details:
Case Code : BSTR263
Case Length : 16 Pages
Period : 2006 - 2007
Pub Date : 2007
Teaching Note :Not Available
Organization : Ford Motor Company
Industry : Auto and Ancillaries
Countries : USA, World
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Mulally Joins Ford Motors
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When Bill Ford appointed Mulally to step into his shoes as the president and CEO
of Ford Motors in September 2006, the company was in a state of crisis with a
string of problems on the organizational and operational fronts. Bill Ford felt
that the company's problems were so deep-rooted that an insider would find it
extremely difficult to bring about a turnaround.
He felt that the job required the "emotional detachment of an outsider" who
could take some drastic measures to save the company. Bill Ford believed that Mulally was somebody
"who knows how to shake the company to its foundations."...
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Challenges at Ford Motors
For Mulally, the immediate challenge at Ford Motors was to stop the company
bleeding. The company had posted a loss of US$ 12.7 billion for the year ended
December 2006, the biggest ever loss in its history. The losses were further
expected to continue in the year 2007. Ford Motors was expected to have just a
14% market share in 2008, compared with the nearly 25% it had enjoyed during the
late 1990s. On the organizational front, Mulally had to make Ford Motors'
employees snap out of their lethargic and bureaucratic style of functioning,
while depending on these very same people to understand the company's business...
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The Road Ahead
Ford Motors was expected to face a tough road ahead in 2007. Brian
Johnson, an auto analyst with Lehman Brothers, had written, "Ford will
suffer the most severe market share decline among the Big Three in
2007…We expect Ford's decade-long share loss to accelerate in 2007."
There were also mixed opinions initially on whether Mulally could
achieve a successful turnaround at Ford Motors and put the company back
on the profit track by 2009. The cost-cutting moves going on and a
slightly higher revenue helped Ford Motors post a much smaller loss of
US$ 282 million in the first quarter of 2007 compared to a loss of US$
1.4 billion for the same period in 2006. |
Exhibits
Exhibit I: Ford Motors' 'Way Forward' Restructuring Plan
Exhibit II: Income Statement of Ford Motors
Exhibit III: Ford Motors' Share Price Movement
Exhibit IV: Popular Brands of Ford Motors
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