Alan Mulally's Challenges at Ford Motor Company
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Case Details:
Case Code : BSTR263
Case Length : 16 Pages
Period : 2006 - 2007
Pub Date : 2007
Teaching Note :Not Available
Organization : Ford Motor Company
Industry : Auto and Ancillaries
Countries : USA, World
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An Icon in Distress Contd...
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To ensure that this restructuring exercise was aggressively implemented, William
Clay Ford Jr. (Bill Ford) had roped in Alan R. Mulally (Mulally) in September
2006. Mulally was to succeed Bill Ford as the president and CEO of the company.9
Mulally had been the executive vice-president at the Boeing Company (Boeing), a
major aerospace and defense corporation, and head of its commercial airplanes
division before joining Ford Motors. He was well known for his role in turning
around Boeing's airplanes division especially during the slump the airplanes
industry experienced after the September 11, 2001 terrorist attacks in the US.
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Mulally was expected to effect a similar turnaround at Ford
Motors. However, there were apprehensions about his selection for the top job at
Ford Motors as he was a complete outsider to the auto industry, which analysts
said, differed from the airplane industry in many ways.
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Analysts felt that Mulally would have to face a
string of challenges at Ford Motors as a part of his turnaround efforts
there. Ford Motors was known for its complex hierarchy and bureaucracy,
which had created a lethargic environment within the company.
The company was not able to integrate the brands it had acquired over a
period of time and evolve a comprehensive winning strategy. This had led
to a state of crisis at Ford Motors. Some analysts even predicted that
the company would go bankrupt in a few years. It had lost US$ 12.7
billion for the year ended December 2006, one of the worst losses in the
company's history. |
In the face of these challenges, Mulally had a huge
responsibility on his hands. He had to take some drastic steps to save the
company and bring it back to profits and gain the confidence of customers and
investors.
Background Note
Ford Motor Company
Henry Ford, along with 11 business associates, founded Ford Motors in 1903 with
just US$ 28,000 in hand. Soon the company started selling its Model A. Within a
few years of the inception of the company, there were differences of opinion
between Henry Ford and the other investors when he insisted the company should
focus on producing affordable cars for a mass market. With some of the investors
opting to leave, Henry Ford acquired more company stock to increase his share to
58.5%. He became president of the company in 1906, replacing John S. Gray, who
had served as the company's first president...
Excerpts
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