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Case Title:

Ford’s ‘Drive One’ Campaign: Can Alan Mulally Drive through the Trough?

Publication Year :  2010

Authors: Vedadri Chiranjeevi, Saradhi Kumar Gonela

Industry:  Automobile

Region: US

Case Code: MM0046

Teaching Note: Available

Structured Assignment: Available


OR





Abstract:
Referred to as ‘industry of industries’ (Peter F. Drucker), the US automobile industry has gone through a metamorphosis. Not a pleasant one though. Some view it as a self-inflicted wound while others say, it just happens that way. But many others say, it is the beginning of a long-drawn end.

Henry Ford, father of automobile and founder of Ford Motors, states, “You can get a Model ‘T’ in any colour you want as long as it’s black”. And this statement – in a sublime and subtle way – spoke of the context. The company went on building its market share through mass production enabled by assembly line manufacturing. Powered by critical mass, Ford dominated US automobile industry during the first 3 decades of 20th century. Ironically, it took no longer than two decades for its strengths to become its weaknesses. General Motors captured the imagination of car customers by providing them with more stylish cars in a variety of designs and Ford had to play catch-up for the rest of the century. By the turn of the 21st century, Ford was braving insurmountable and inevitable odds in the form of rising healthcare costs, falling customer loyalty and steady decline in market share and profits. In 2007, its long held fortress, the second spot, was conquered by Toyota. Alan Mulally, an outsider, brought in by Bill Ford to change the gears and set for Ford a new direction, formulated a grand restructuring plan. At the heart of the plan, lies the ‘Drive One’ campaign targeted at complete image make-over of the company.

The case study can be used to analyse the company’s problems on three fronts – the steady decline in market share due to shift in consumer loyalty, out-of-control cost structure due to exorbitant legacy costs and growing competition from the foreign companies. These are increasingly exposing Ford’s weaknesses in product management. Can Alan Mulally drive through the trough with the help of his ‘Drive One’ campaign? Could the new medicine cure all the old ailments or at least the symptoms?

Pedagogical Objective:

  • To analyse how the critical success factors in the US automobile industry have changed
  • To analyse the business implications of the changing trends and industry dynamics
  • To analyse the reasons behind Ford's declining profits and falling market share
  • To discuss whether the new campaign could help Ford in emerging out of its troubles.

Keywords : Ford, US Automobile Industry, Big Three, Drive One campaign, Henry Ford, Model 'T'

Contents:

  • US Automobile Industry – From Mass to Niche
  • Ford's Problems: Can it Afford?
  • Pension & Healthcare Costs
  • Customer Loyalty
  • Inadequate R&D Spending

  • Overcapacity
  • Decline in Market Share and Profit Margins
  • Ford's 'Drive One' Campaign: The Saviour?
  • RoadAhead

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