MGT 526 Wk 1 – Practice: Introduction to Business Management

The Outsider at Ford

Today’s competitive global environment presents many challenges to managers. One of the main challenges is building a competitive advantage by increasing efficiency and customer responsiveness. This case analysis details the challenges faced by former Ford Motor Company CEO Alan R. Mulally.

Founded by Henry Ford, the Ford Motor Company had many problems, its bureaucratic nature and hostility to new ideas among them. Formerly of Boeing, Alan R. Mulally’s tasks when he took over as CEO at Ford included changing the organization’s culture to one that embraces transparent decision making, encouraging once fractious divisions to work together to produce cars of a better quality, and finding ways to move faster from design studio to showroom. These changes, however, did not come without struggle and strife.

Read the case below and answer the questions that follow.

As a traditional automobile manufacturer, Ford Motor Company possessed a strong corporate culture that began with its founder, Henry Ford. Part of this corporate culture included predominantly family-only management, ventures into luxury brands like Jaguar and Land Rover, turf wars over brands, and poorly executed decision making. In light of these issues, Ford needed to enact a turnaround strategy that included a cohesive and cooperative management strategy.

Because he was an industry outsider, many doubted Alan Mulally’s ability to turn Ford around when he arrived in 2006. Other outsider executives had tried, mostly unsuccessfully, to venture into unfamiliar businesses. At Ford, not only were industry outsiders previously not encouraged, but they were often isolated and even hazed. Mulally, however, was committed and resolved to be a quick study of the company and industry. With the assistance of Executive Chairman Bill Ford, Mulally realized that major work needed to be done to change a culture in which one’s own career came before the company’s needs, and employees waited for their leaders to tell them what to do instead of being proactively involved in the decision-making process. “That doesn’t work for me” would be heard when Mulally faced the old ways of doing things.

Decision making and management of data became key factors of Mulally’s new corporate culture. He included more people in the decision-making process and asked that they be coached as well. Unpopular decisions included reducing head count and closing factories according to the “Way Forward Plan” so that Ford could modernize plants in order to handle multiple models rather than just one. Other decisions included implementing transparency, which made it difficult to hide problems with the production line. Mulally also mandated a constant stream of data that could give his team performance information with profit targets. This constantly changing information was used to anticipate problems and alter strategy.

The changes were successful enough that Ford was the only United States auto make that did not need a government bailout in 2008–2009.

Mulally’s factory closures and layoffs combined with the modernization of plants were intended to increase