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"The secret of success is to know something nobody else knows." - Aristotle Onassis (1906-1975)

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Location: Pittsburgh, Pennsylvania, United States

Thursday, September 28, 2006

Ford Motor Company : Under Siege


It seems like the automotive sector is taking a huge hit or let me rephrase american auto manufacturers are in deep distress. The leaders of this miserable run, as you must have already guessed - GM & Ford. Both giants are undergoing some radical restructuring to get out of their slump. The question is will that cut the chase against the very successful Japanese & German counterparts? Or do they need to go all out and beyond to quell investor fears?

Competition in this industry has always been stiff. If you are not cutting costs by capitalizing on economies of scale you need to rethink operational strategies. Toyota has become massive and is growing comfortably on this front. Their cost leadership is working very fine and revenues from sales are showing huge spikes. On the other hemisphere BMW is raking good profits with its excellent branding and product differentiation strategy. They also seem to be finding innovative ways of doing this by being both effective and efficient. Either way, both are leaders in their segment.

But Ford is the one that is seeking guidance under the mentorship of Alan Mulally from Boeing. Billions to be invested in layoffs, buyouts, buybacks, restructuring, re-engineering (BPRs) are on the cards for Ford. Like 'The McKinsey Way' describes, identifying mutually exclusive key issues to a problem and deriving a rigid hypothesis is crucial. One hypothesis might be 'Giving Ford a corporate Image makeover' or 'Repositioning Ford cars'. In the last few years the industry has seen a major shift of focus. There are more and more organizations/auto manufacturers investing on fuel efficiency, economy, reliability and environmental causes. Billions of $'s are being flushed into R&D towards this cause! At this hour, is Ford lagging on those fronts still struggling with its "high durable, rugged, pick-up truck image" when small, economy, efficiency and environment friendly is in.

Will the new Chief, Alan Mulally help pull Ford out of its slump? Personally this would be an excellent strategy management case study for a B-school!

Chintu.

Not until recently did I know that Ford owned volvo cars. Read more on http://en.wikipedia.org/wiki/Volvo

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