Managing in Troubled Times Case Study

Ford: Built for the Road Ahead

OR

Abstract:

In 2004, with the entry of Japanese, Chinese and Asian automakers into the US automobile market, the Big Three-GM, Ford and Chrysler experienced a decline in their market share and sales. Their warranty and pension costs had increased and consumers complained of low quality parts used in their vehicles. GM and Ford were downsizing their work force to compensate over their lost sales. The year 2005 turned out to be a major shake-up for Ford as it had to recall about 6 million vehicles to rectify defects. Though key players like GM, Toyota and Chrysler recalled their vehicles to revamp defects, Ford recalled its vehicles 17 times.

Ford had quality problems in the past years, but in 2005, it was facing a crisis of confidence. The National Highway Traffic Safety Administration was grilling Ford for details of problems in Ford vehicles that had resulted in fire accidents in the Middle East, South America, and Southeast Asia. In order to regain its position in the US automobile market, Ford planned to revitalise its brands and to improve the quality of its vehicles. It also planned to introduce low cost models in segments where the auto makers had been largely absent. With the entry of automakers like Chery and Geely, into the US automobile market, apart from local competitors like GM and Chrysler, would Ford regain its credibility in US market in the near future?

Pedagogical Objectives:

• To understand how Big Three in the US automobile industry dominated the market
• To understand how deterioration in quality affected Ford
• To analyse the turnaround strategies of Ford.

Keywords : Quality; Managing in Troubled Times Case Study; Big Three; Accident Rate; Suppliers; Turnaround; Layoff; Closure of Factories; Toyota; Recall of Vehicles