Ford's e-Business Strategy

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Case Details:

Case Code : ITSY002
Case Length : 09 Pages
Period : 1999-2002
Pub Date : 2002
Teaching Note : Available
Organization : Ford
Industry : Automobiles
Countries : USA

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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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Background Note

Ford was established in June 1903 by Henry Ford. The company's first car Model A was introduced in July 1903. Several manufacturers launched expensive car models to compete with Model A, but failed. A few years later, Ford launched Model T, which became very successful because of its durability and easy reparability. In the early 1920s, Ford entered the luxury car segment by acquiring Lincoln Motor Company. However, in the 1920s, General Motors (GM) launched a variety of styles, an assortment of colors and became Ford's biggest competitor.

In the 1930s, Ford faced major problems during the Great Depression. Henry tried to deal with the depression by increasing wages and reducing prices.

Ford also obtained an order to supply to the US Military 500 liberator bombers1 per month to support the World War II, as a result of which the company survived. In the 1940s, Henry Ford II (Henry Ford's grandson) took over as the CEO of Ford. He made several changes in the company including establishing of 'Profit Centers', to identify areas that were not making money. He also closed obsolete plants and initiated moves to retrain workers. In January 1956, Ford made an initial public offering of 10,200,000 shares. In the 1960s, Ford expanded its operations to Europe. 

The oil crisis of 1974 had a major impact on the automobile industry. While the US market shifted towards small and fuel-efficient cars, Ford had excess capacity in large cars. Ford responded by diverting a part of its production capacity to Pinto, its small car. By the mid 1980s, Ford's profitability had improved and for the first time in 60 years, Ford generated more profits than GM worldwide. In 1988, Ford reported the highest level of profits ever for a US car company. In 1993, Ford's Board of Directors appointed Alex Trotman as the new CEO. According to Fortune, Trotman's entrepreneurial instincts and his remarkable self-confidence helped him get the coveted post. In 1998, Ford acquired the Audi's racing engines unit.

Excerpts >>

1] Liberator bomber was the finest bomber design of the Americans, used during World War II. It was a much sought after bomber as it was fast (300 mph at 30,000 feet), capable of carrying 8000 LB of bombs, and had an operational range of approximately 2290 miles.

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