Ford Motor Company in Crisis 2007

Table of Contents

Situation Analysis 2

Profitability Analysis 3

Competitive Analysis 4

Future Key Issues 6

Key Success Factors of Industry 6

Most Successful Companies 7

Improvement 8

Situation Analysis

This case study is about the Ford Motor company in crisis in the year 2007. Although the main company in the case study is Ford Motor Company but the case study talks about the automobile industry in general. Ford Company had changed 3 CEO's in the past 4 year prior to 2007. This just told that how much the company was in trouble and how much their CEO's were unsuccessful in bailing the company out of trouble. The company was clearly sailing through troubled waters and unstable leadership, as Alan Mullaly was made the new CEO. Ford Motor Company was going through a major financial crisis as car sales has dropped drastically cash and liquidity was increasingly becoming a major issue as Ford was facing losses to take desperate measures such as discharging 35,000 employees from their jobs and implementing an array of other cost-cutting measures to save the company from insolvency. Ford went into further debt, as new leader financed US 18 billion to revive the company back to its glory days. Ford's troubles were far from over, as Mullaly had to forge a new pathway for Ford to sustain itself in the new automobile era. During 2005, the world's 34 largest automotive companies earned an average net margin of 2.1%; 2006 profitability was unlikely to be significantly higher. In autos, Ford was one of the 12 major international players all battling for more market share. Until 2006, Ford was the second largest car manufacturer North America and General Motors was Ford's main competitor and market leader. Ford was one of the pioneers in the industry to emphasize optimizing the production process during the 'Fordism ' era. However, following Ford's recent difficulties, Toyota and Daimler Chrysler have overtaken Ford in the automobile business. All of Ford's previous attempts such acquisitions and new product introductions had miserably failed. Ford's car sales had steeply plummeted by 10% during the past few years. One of the most import aspects of successful car manufacturing is to maintain a good relationship with component suppliers. Japanese manufacturers such as Toyota outsource have excellent relationship with their suppliers and therefore ensure they get quality products at reasonable prices. Ford relies on Delphi, which