Ford Motor Company is the world’s leading automobile-manufacturing American multinational company. The automotive brand was experiencing a series of challenges and crises in the late 1990s and early 2000s. the leadership of the company responded to the crisis situation by hiring Allan Mulally as the company’s CEO to bring the company back on track. Today, we’ll discuss Ford Crisis management; the challenges and crises Ford was experiencing; strategic approach of Ford to deal with the crisis.
Crisis and Challenges to Ford
Some of the main challenges the automobile brand was experiencing in the Ford crisis management and they’re as follows;
Inefficient & Weak Vehicle Line
In the early 2000s and 2006s, Ford had a weak automobile line they were popular among customers and caused losses of approximately 12.7 billion USD. Poor financial decisions and poor management led the company to jeopardize its market value and leadership position in the automotive market.
Unhealthy Working Culture
Ford had an unhealthy and toxic working environment culture comprising a lot of conflicts among top management and executives. The company was failing to reach a conclusion on the critical matters and they were impacting the company’s position. However, they were making decisions in the team meeting and it was jeopardizing the spirit of teamwork among top management. Slower and poor decision-making contributed significantly to the overall poor financial performance of the company.
Defective Tires
Ford was using the Firestone Wilderness tires in its automobiles during the period of 1980s and 1990s. They have many inherent flaws in them causing 500 injuries and 150 deaths of people due to the defective product. It was gradually decreasing the company’s market and stock value reaching 11.78 USD per share and negatively impacting the company’s reputation. However, the company was avoiding the core problem that it would go away by itself.
Financial Crisis
The global economic and financial crisis of 2008 had a severe negative impact on the automobile industry. The top three US automobile brands like Chrysler, GM, and Ford experienced significant financial difficulties. However, it was highly difficult for them to keep up with operational costs and expenses. Ford had a net loss of 14.06 billion USD billion in 2008 and the company’s stock price reached the lowest level of 1.01 USD.
Close to Bankruptcy
Ford was very close to bankruptcy during the period of 2006 to 2010. The company’s crisis management, leadership, and engineering team played a key role in bringing the company back to its glory. Strong leadership and streamlined decision-making processes developed efficient short-term and long-term strategies; which helped the company to reverse the financial crisis.
Strategic Approach of Ford Crisis Management
Some of the main strategic approaches of the automotive brand in Ford crisis management are as follows;
Recruitment of Alan Mulally
Bill Ford, the chairman of the automobile brand recruited and appointed Allan Mulally as the new CEO of the company Ford Motors to guide and lead the brand in the crisis phase. He implemented the “best-self” strategic approach, which focuses on boosting the morale and confidence of the employees to show commitment towards a common objective. However, the leadership change helped the company to clarify its vision to the public and stakeholders of launching a series of projects and strategies by focusing on teamwork and collaboration.
One Team Strategic Approach
Mulally implemented the one-team strategic approach focusing on removing all the conflicts at different levels of management. The simplified leadership style and structure promoted commitment among employees and team members. In fact, he made it mandatory for everyone to participate in the weekly meeting with the senior management. Both Bill and Mulally used to prefer informal meetings with their team members and workers to openly discuss various issues. It played a key role in the success of the company by promoting devotion among team members towards the company’s vision.
Securing Credit Deal
Mulally managed to close the credit deal with the financial institution and received the credit of 23.6 billion USD by leveraging the company’s assets. It helped the company to avoid the federal bailout that would have caused financial bankruptcy to the company. Most importantly, it saved the shareholding companies from diluting, because the bankruptcy would have finished them.
Lower Workforce
The management of Ford took another daring decision of cutting down expenses and costs by letting go of approximately 40000 employees. The workforce cut helped the company to save approximately 4 billion USD in operational expenses.
Fuel-Efficient Small Cars
Ford had taken another important decision of launching fuel-efficient smaller cars and vehicles. It was like redesigning the Taurus Sedan model, and the introduction of a new model helped the company to amplify its brand image in the automobile and customer market.
Conclusion: Ford Crisis Management | Strategic Crisis Management
After an in-depth case study of Ford’s crisis management; we have realized that Ford is the world’s leading automobile manufacturing brand. If you are learning about the crisis management of Ford Motor Company; then you should keep in mind the abovementioned challenges and crises; and the strategic approaches of Allan Mulally in directing the company during the crisis.
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