Rescue of FordResearch Paper

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Ford Motor Company

Over the last several years, the issue of government bailouts has become very controversial. This is because of conflicting views about how, when and if they should be utilized to stimulate the economy. In the case of Ford, the firm was able to avoid receiving any added assistance. Instead, the leadership implemented a new strategy which is helping the company to redefine itself.

At Ford Motor Company, one of the biggest challenges has been adapting with changes inside the sector. This is because there is a history of infighting and disputes, about who will run the company after shifts in the leadership. These issues go back to 1945, when Henry Ford II had to fire Harry Bennett in order to take over for his ailing father. Then, in 1979, these issues resurfaced with Henry Ford II firing Lee Iacocca. This was a significant move, as he was the innovator behind the Mustang and Lincoln's turnaround. Ten years later, the situation became even more bizarre, when Don Peterson was forced out. This is after Peterson, claimed publically, how he planned to "repot" himself. The final chapter in these challenges; occurred in 2001 when Bill Ford was forced to fire Jac Nasser as the CEO. This is following months of public disputes between the two. (Belcourt, 2013) (Taylor, 2013)

During the last 9 years, the firm has been very stable with Allan Mulally coming over from Boeing. He rebranded the organization and helped Ford to make a turnaround in one of the worst economic environments since the end of World War II. The effects are that the company did not need any assistance from the federal government to avoid bankruptcy. Instead, he created a plan that allowed the firm to reduce its debt levels and liabilities. This enabled it to restructure and offer vehicles which are most in demand (i.e. The fuel economy class). These changes meant that the entire organization had to transform its thought process and incorporate innovative thinking into the way its vehicles are manufactured. (Belcourt, 2013) (Taylor, 2013)

The result is that the firm's business model and balances sheets have evolved to reflect these changes. This helped Ford to avoid needing any kind of government bailouts during the Financial Crisis. To fully understand what happened requires focusing on the issue, the financial strategy, the impact of corporate governance, evaluating the situation and if Ford was successful. Together, these different elements will illustrate the way the firm was able to adjust with these issues and remain solvent during the crisis.

Background and Significance

Over the decades, the automotive industry has continued to evolve. This is occurring with stakeholders demanding improvements to product safety and technology. These areas are designed to enhance efficiency and ensure the vehicle has the most in demand products / services. However, those firms which are unable to keep up will face tremendous challenges associated with the loss of market share and cliental. The result is that manufacturers must be able to continually innovate in order to keep up with the competition.

According to Xia (2011), he determined that there are several factors that are directly impacting the competitive position of producers (i.e. cease, control and combine). These areas are concentrating on the way a firm can stop manufacturing models which are out of date, the best avenues for controlling the marketplace and combining operations. Those who are able to do this will be more flexible in adjusting to the needs of stakeholders. (Xia, 2011)

Ford is at a unique crossroads, as the company must learn to adapt and evolve with this environment. The result is that their ability to avoid bailouts is a testament to the strategies they are utilizing and the long-term effects. However, a major challenge is continuing to adapt and evolve. This requires strong leadership and having a sense of vision about the future.

In this case, the auto industry is facing tremendous challenges to include: plunging demands due to economic downturn, the gloomy trend in technology development, and fierce global competition. This was determined by looking at the management theories, collecting information from managers at different levels of the auto industry's supply chain management and developed a novel theoretical model of sustainability in supply chain management for the auto industry. What was determined is that outsourcing to low cost countries -- the current supply chain strategy -- is not only unsustainable but also irresponsible for the auto industry and society. A triple-C (cease-control-combine) remedy is proposed for the auto industry to reduce inventory and enhance supply chain management. The proposed triple-C strategy will save the auto industry money in R&D investment, reduce quality cost and inventory waste, help the industry go through the volatile economy, and achieve sustainable development. With close relationships and strong supports from suppliers, the industry can speed up technology development, introduce new gas efficiency models quickly, and become less dependent on gas price. Finally, it will help the industry keep jobs and generate new jobs in the U.S.A. These activities lead to public support and restored corporate image.

In the case of Ford, Mulally's strategy was successful in implementing these changes by making fundamental shifts to the firm's business model. The result is that the firm did not receive any kind of bailout. Instead, its competitors GM and Chrysler both received financial assistance from the federal government. GM was provided with $49.5 billion and Chrysler was loaned $11.9 billion. In exchange the government received an 80% stake in common stocks of both companies. The financial terms were that the two would enter an organized restructuring and reduce the underlying amounts of debt. Over the course of 10 years, they are supposed to pay back the funds that were borrowed. In exchange, the federal government would slowly reduce its stake. Ford did not receive any assistance and the government never owned a percentage of the company. This is illustrating how Mulally's strategy was successful in helping the firm to retool. (Barofsky, 2013)

Recently, Mulally has announced that he will step down as CEO in the near future. His replacement is raising concerns that the company could go through similar issues when there is a change in power. In this case, there are worries that the new CEO could have an adversarial relationship with employees, the Ford family or the Board of Directors. If this were to happen, the firm would lose any kind of strategic advantages it gained under Mulally.

This has happened inside many of the strongest companies, who have faced similar challenges with these kinds of changes. A good example of this can be seen with Jack Welch stepping down as the CEO of GE in 2001. At the time, he was regarded as one of the best CEO's the firm ever had. He played an integral part in selecting his follower (i.e. Jeffrey Immelt). This did not help GE to expand at the same pace under Welch. Instead, the firm experienced a series of canceled mergers, unprofitable divisions hurting revenues and slower amounts of growth. These factors meant that the price of the stock would linger during his tenure. (Belcourt, 2013) (Taylor, 2013)

This is a classic example of leadership succession challenges, in spite of having an effective strategy to select the next CEO. In the case of Ford, its succession plans in the past have often failed. To avoid similar issues requires understanding its strengths, weaknesses and suggestions for improving its effectiveness. These elements will offer specific insights that will help to adjust the plan and increase the chances of it being successful.

In the case of Ford, they can address these challenges by developing a social media strategy that is combined with collaborative selling. Collaborative selling involves working with the customer to understand how a specific product or service is useful to them. According to Barrera (2006), in these situations, the individual will look at the way it can achieve the client's objectives, the benefits it provides and if it is worth the investment. As a result, this approach is not about persuading the customer to buy. Instead, it is concentrating on matching the product to them and allowing the person to make the best choices for their situation. This is illustrating how these techniques are useful in identifying and addressing the needs of the cliental subtly. (Barrera, 2006)

Social media evolved over the last ten years. It is using sites such as Facebook, LinkedIn, blogging, article writing and forums to connect with cliental. The basic idea is create topics of interest which are geared towards those individuals the seller has forged a relationship with. This is used to give them some useful advice and then direct them to a location where they can learn more. The primary strategy is to increase the odds of closing more people by reaching out to them using a modified form of mass marketing. Over the course of time, the firm's sales will rise by reaching out to enough people, who share similar views… [END OF PREVIEW]

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