Ford and the World Automobile Industry

Ford and the World Automobile Industry

Throughout history automobiles have been a stable mode of transportation. Since the development of the, "first internal-combustion powered vehicles" (Grant, 2010a, p.48) in1880 automakers have strived to be the best. Automakers throughout the U.S. and European market offer numerous varieties of different vehicles for every consumer. In 2009 U.S. automakers faced stressful economic times that forced them to make tough decisions. Ford has to use appropriate calculated strategies to be successful.

Synopsis of the Case

Since the "beginning of the twentieth century" (p.51) the automotive industry has played a leading role in the industrial economy. The U.S. was facing an economic recession that led the automobile sector to review their business practices. "By June of 2009, Ford Motor Company was the only remaining member of Detroit's "Big Three" to have escaped bankruptcy" (p.46). Ford and other automobile makers had external factors affecting their internal operations.

Relevant Factual Information about the Problem or Decision the Organization Faced

The looming threat of bankruptcy motivated Ford to stay ahead of the competition and out of financial trouble. "The Chief Financial Officer of Ford, Lewis Booth, had to shift gears and look at the longer term financial outlook for Ford" (p.47). To avoid the pitfall of bankruptcy Ford had to cut excess costs. The initiatives taken to accomplish this included worldwide outsourcing, just in time scheduling, shifting manufacturing to lower-cost locations and collaboration with other automakers (p.56). "Even after costs were reduced the major automakers were unable to achieve the unit costs of upstart producers in China, India, and other low labor cost countries" (p.57). Ford had to look at other ways to maximize its own profits by creating a competitive edge. The U.S. was facing rising oil prices during the plunge of the automobile industry causing the shift of consumers to purchase smaller cars instead of larger trucks. This inspired Ford to investigate newer "green" technology.

Explanation of Relevant Concepts, Theories and Applications Derived from Course Materials

The escalating difficulty that Ford was facing from global and U.S. competitors encouraged them to seek for a competitive advantage. "Innovation not only creates competitive advantage; it provides a basis for overturning the competitive advantage of other firms" (p.212). Ford had to identify the driving forces behind competition, the internal and external factors. At the 2010 Detroit Auto Show "Ford's Chief, Alan Mulally unveiled the car that embodies his strategy for returning Ford to its status as a leader in the global industry"