Enterprise Risk Management at Ford
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Case Details:
Case Code : ERMT-003
Case Length : 12 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : -
Industry : -
Countries : USA
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Please note:
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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Introduction
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Ford Motor (Ford), one of the leading automobile manufacturers in the world had
two broad business segments: automotive and financial services. The automotive
segment included the designing, manufacturing and sale of a variety of cars,
trucks, and sport-utility vehicles (SUVs). The company's famous brands included
Ford, Mercury, Lincoln, Jaguar, Mazda, Volvo, Land Rover, and Aston Martin. Ford
also participated in the financial services industry through Ford Motor Credit
Company and The Hertz Corporation.
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The Ford Motor Credit Company was the world's largest auto
financing company. Ford offered credit services in over three hundred locations
around the world. The Hertz division offered rental services.
Till the late 1990s, Ford had been regarded as one of the best managed companies
in the industry.
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But since the early 2000s, Ford had been a company
in trouble. CEO Bill Ford faced the daunting task of leading, the
company, out of the current scenario of declining sales and
deteriorating market share.
In 2002, Ford faced plant closures, employee downsizing and other
drastic cost cutting measures aimed at trimming excess production
and streamlining operations.
But Bill Ford had publicly acknowledged that just cutting costs
would not be enough to turn Ford around. There were other
initiatives that Ford was contemplating to help address the various
problems it faced. |
Overview of Risks
The automotive market was highly competitive. The major
players competed on the basis of product quality, advertising, promotion and
price. Ford faced several risks. First, competition in the industry, often led
to price wars. In addition, the stagnant economic conditions in America might
lead to a decline in sales and leases.
A third risk facing Ford stemmed from its relationship with the United Auto
Worker's union. In the past, striking workers had halted production at plants
across the world. A fourth risk facing Ford resulted from litigation against the
company. In the recent past, deaths caused by Ford's use of certain Firestone
Tires had resulted in lost sales, as well as a tarnished reputation. A fifth
risk arose from defects and recalls of cars...
Excerpts >>
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