This document compares Ford Motor Company and General Motors Corporation. It summarizes that through strategic decisions, Ford was able to survive the 2008 economic crisis without government assistance, while GM had to file for bankruptcy and be bailed out by the US and Canadian governments. The document then provides an abstract and introduction to each company, followed by chapters discussing their strategic planning, organizational structure, finances, social responsibility, and innovation approaches. It analyzes why Ford was successful in navigating the crisis while GM was not based on differences in these areas.
Internal and external analysis of fords motor. to bettter understand the automobile industry.this includes its SWOT, PESTEL, FINANCIAL analysis. plus trends and future.
AS Level History - Causes of the First World WarArm Punyathorn
The First World War is one of the most important event in human history not only because it results in so many deaths and such widespread destruction but because it highlights a certain flaw in human nature and the nature of civilization that has plagued mankind for 4000 years. Up until the start of the -called "Great War", humanity is doomed to remain in a cycle of war and destruction. It is the first world war, its futility and prevent-ability that forever changed human's perspective to conflicts and civilization.
• PRODUCTIVIDAD
Alcanzar/mejorar los niveles de productividad de Toyota.
Aumentar la utilización de recursos.
Estandarizar las prácticas/procesos óptimos.
Sistema de producción Ford estandarizado.
• SATISFACCION DEL CLIENTE
Mayor sensibilidad hacia los clientes.
Decisiones rápidas e implementación ágil.”
Así, el objetivo que Ford Motor Company persigue es "producir mejores productos más rápidamente y a un precio más bajo para satisfacer a más clientes en todo el mundo". Para conseguirlo va a llevar a cabo un rediseño tanto de sus procesos como de su estructura, basando la misma en sus productos y no en las áreas geográficas, como venía actuando desde su creación.
In 2005, General Motors (GM) – the world's largest automotive manufacturer is now stepping to the point, where strategic thinking, planning and breakthrough are necessary. Three consecutive years of global market share declines, high pressure from world-class competitors, health care and retirement burdens, and rapid changes in consumer profile are the reason of that. How GM should minimize such threats and in the same time capture potential opportunities with its strengths is very interesting issue in term of strategic management and policy.
This presentation was composed to fulfill the requirement of my masters degree subject. The analysis and solution in this presentation were originated from a business case blended with my knowledge, research and idea. Even though, they may not 100% correct, or not reflect the current situation and solutions of GM, I still hope that this presentation would help those who is interested the situations occurred in 2005
A half-billion vehicles over 106 years equals billions in commerce, payroll, investments and infrastructure in communities all over the world. For customers, these vehicles played roles in weddings, family vacations, graduations, new businesses and countless milestones along life’s journey.
Internal and external analysis of fords motor. to bettter understand the automobile industry.this includes its SWOT, PESTEL, FINANCIAL analysis. plus trends and future.
AS Level History - Causes of the First World WarArm Punyathorn
The First World War is one of the most important event in human history not only because it results in so many deaths and such widespread destruction but because it highlights a certain flaw in human nature and the nature of civilization that has plagued mankind for 4000 years. Up until the start of the -called "Great War", humanity is doomed to remain in a cycle of war and destruction. It is the first world war, its futility and prevent-ability that forever changed human's perspective to conflicts and civilization.
• PRODUCTIVIDAD
Alcanzar/mejorar los niveles de productividad de Toyota.
Aumentar la utilización de recursos.
Estandarizar las prácticas/procesos óptimos.
Sistema de producción Ford estandarizado.
• SATISFACCION DEL CLIENTE
Mayor sensibilidad hacia los clientes.
Decisiones rápidas e implementación ágil.”
Así, el objetivo que Ford Motor Company persigue es "producir mejores productos más rápidamente y a un precio más bajo para satisfacer a más clientes en todo el mundo". Para conseguirlo va a llevar a cabo un rediseño tanto de sus procesos como de su estructura, basando la misma en sus productos y no en las áreas geográficas, como venía actuando desde su creación.
In 2005, General Motors (GM) – the world's largest automotive manufacturer is now stepping to the point, where strategic thinking, planning and breakthrough are necessary. Three consecutive years of global market share declines, high pressure from world-class competitors, health care and retirement burdens, and rapid changes in consumer profile are the reason of that. How GM should minimize such threats and in the same time capture potential opportunities with its strengths is very interesting issue in term of strategic management and policy.
This presentation was composed to fulfill the requirement of my masters degree subject. The analysis and solution in this presentation were originated from a business case blended with my knowledge, research and idea. Even though, they may not 100% correct, or not reflect the current situation and solutions of GM, I still hope that this presentation would help those who is interested the situations occurred in 2005
A half-billion vehicles over 106 years equals billions in commerce, payroll, investments and infrastructure in communities all over the world. For customers, these vehicles played roles in weddings, family vacations, graduations, new businesses and countless milestones along life’s journey.
The CFED 2006 Annual Report encompasses inspiration, innovation & ambition all molded into a substantial strategy to further CFED's mission and vision statement. Cultivating a solid business and financial model to propel entrepreneurial goals, housing initiatives and asset building, the 2006 annual report prepares CFED for what's to come next.
You need to listen carefully for clues that your organization has failed to engage in a deep examination of the company’s core values. If you sense this, or inherit a listless organization, resolve to do something about it right away. Nothing is more important if you want to build a leadership culture.
Introduction William Clay Ford, Jr., was staring out the window of.pdfcharanjit1717
Introduction
William Clay Ford, Jr., was staring out the window of
his office in Dearborn, Michigan, lost in thought. The
future of Ford Motor Company was hanging in the
balance, and no one was certain how best to save this
once-great company. Question after question without
any easy answers kept going through his mind. . . . How
much longer can Ford survive with the large losses? Will
it have to sell off assets or financially restructure? Can
it cut enough costs, and where should it cut? Will the
union leaders realize the situation, and how much will
they be willing to help? When will Chinese competitors
enter the U.S. market? How can Ford develop its product
offerings to adjust for higher fuel costs? How can
Ford improve its product offering to reverse or at least
stop the market share losses? How much more market
share will it lose?
The magnitude of the situation seemed overwhelming.
In order to overcome these challenges, it seemed as if
Ford would have to restructure every aspect of its business.
It would require improved product offerings with cuttingedge
design and high quality; improved operation with
more flexibility and lower costs; and improved marketing
with better brand image and customer interest. Ford was at
a crossroads, and the way ahead remained shrouded in fog.
History
Ford has gone through many evolutions since its humble
beginnings on June 16, 1903.1 Henry Ford began this
corporation, now synonymous with the assembly line,
the Industrial Revolution, and the American Dream,
with 11 business associates and $28,000 in capital.2 Ford
Motor Company continued along with minimal leadership
problems until the death of its president, Edsel Ford,
Case 10
in 1943. Intense dissension about who should succeed
Edsel Ford continued until Henry Ford, at the age of 79,
returned from retirement to lead the company. For the
next two years under Henry Ford the company operated
with massive losses of $10 million dollars per month.3
Finally, in 1945, Henry Ford was forced to step down and
Henry Ford II assumed the role of president.4 Henry Ford
II managed to successfully maneuver the company back
to productivity and empowered Robert McNamara and
his group (planning and financial analysis) to transform
Fords leadership style from a tyrannical dictatorship to a
powerful, professional oligarchy.5 Over the next 20 years,
Ford Motor Companys presidents and CEOs turned over
13 times.6 The current CEO, Alan Mulally, was appointed
in September 2006 to take over for William Clay Ford, Jr.,
who had served as both president and CEO since 2001.
William Clay Ford, Jr., led Ford Motor Company to three
straight years of profitability followed by a sharp decrease
in profits marked by a $1.44 billion loss in the first half
of 2006.7 These losses motivated Ford Motor Company
to search for a new CEO from outside the industry, Alan
Mulally, formerly of Boeing Corporation. Mulally stood
out as a qualified successor because he demonstrated the
leadership skills Ford.
I need a paragraph of information added in the appropriate place to .docxursabrooks36447
I need a paragraph of information added in the appropriate place to my paper with in-text citing along with citing the source. The source has to be from Securities Exchange Commission (SEC). The PAPER is located below.
Comprehensive Analysis of Ford Motor Company
Bigfella15
Institution
Abstract
Since its beginning in 1903, the Ford Motor company has gone through some phases to enable it to reach its current market position. The Ford Motor Company possesses a good supply chain management status that enables it to receive raw materials and sell its products to the domestic and international market. Its possession of 90 plants and more than 213,000 employees in three major regions of the world makes it manufacture $5 million vehicles yearly, generating approximately $100 billion. The market is highly demanding and possesses dynamic changes that affect automobile companies such as Ford Motor. The market also comprises of some challenging factors such as fluctuating prices of oil and petroleum, competition, and political instability among others that affect the operations of Ford Motor Company. The SWOT Analysis of Ford Motor Company influences the company to adapt effective strategies that save it from falling in the market. Developing the right approaches in the company’s operations makes it easy for the company to beat the competition and remain relevant.
Comprehensive Analysis of Ford Motor Company
Introduction
The paper discusses the Ford Motor Company through an extensive and conclusive research. It uses the available public information about the company and its operations. It carries out an analysis of its products and services, and how it relates to the market. The paper discusses the relationship between Ford’s operations and the stakeholders found in its market (external and internal stakeholders). The stakeholders have a significant status in its operations as they affect the business operations launched by the company on them. Ford Motor Company is also affected by both its internal and external operational environment. The paper discusses the external and internal factors that affect its performance through SWOT (Strength, weakness, opportunities, and threats) Analysis.
The paper also has a key focuses on the corporate strategy provided by Ford Motor Company to survive in the market. Ford Motor Company has come through a period of financial challenges to reach where it is today. The company has employed some strategies that have influenced continuous survival in the market about the competitors. The paper focuses on the corporate strategies that the managers employ to beat the competition and remain relevant in the market. The conclusion session develops a summary of the content of study and gives recommendations to create a clear understanding of the topic of study.
Background Information on Ford Motor Company
Henry Ford, a prolific engineer, born by immigrant farmers, established Ford Motor Company in .
1
8Week 3 Assignment 1
Nicole Lynn Sowards
Strayer University
BUS499 Business Administration Capstone
Dr. Joseph Keller
April 20, 2020
Week 3 Assignment 1
Ford is an American multinational automobile company founded by Henry Ford in 1903. Firstly, the paper will also discuss the impact of globalization and technology on the Ford company. Secondly, it will further shed light on the industrial organization model and the resource-based model to assess the returns of the corporation. The paper will finally discuss the vision and mission of the company, including the impact of stakeholders on the success of the company.Globalization
According to Grant, the key element in changing an industry's profitability is in the evolution of an industry's structure. Industries around the world have changed due to globalization and maturity. Both components have contributed to competition. The competition has increased as globalization has bought firms together by shrinking the space between them and providing them with the same market (Grant, 2008). The same is true for the Ford company. Globalization means using and being a part of the world economy and profiting from it.
Companies in the global economy need ways to supply and produce automobiles that don't only cater to the needs of international clients but develop something that caters to the needs of locals. To overcome the problem of attending to local needs, Ford, for example, has created a global scale network to assemble plants to get access to the greater supply-base. Ford's partnership with Mazda, for example, has made it easy for Ford to get Mazda's well-established supply base in Thailand. Given the hassle of building local supply and the pressure, companies go through to create local content; such partnerships help companies like Ford in globalization ( (Sturgeon & Florida, 2002).
But before adjusting to the world global economy, Ford has to struggle to be a part of the globalization. The reduced restrictions in trade in the emerging market after globalization has led to a wave of investment across the globe. Before the 1970s, the companies of automobiles were dominating the market in the U.S., which was called "Big Three." But after globalization permitted foreign vehicles to enter the market, the U.S. market for automobiles changed. For example, Japanese cars that were high-quality cars and introducing new modes of manufacturing changed the industry. Ford's competition was threatened by globalization and the other two companies' restrictions in trade in the emerging market after globalization has led to a wave of investment across the globe. Before the 1970s, the companies of automobiles were dominating the market in the U.S., which was called "Big Three." But after globalization permitted foreign vehicles to enter the market, the U.S. market for automobiles changed. For example, Japanese cars that were high-quality cars and introducing new modes of manufacturing changed the indust.
Type Discussion BoardResearch Design and AnalysisTue, 6.docxcandycemidgley
Type: Discussion Board
Research Design and Analysis
Tue, 6/12/17
Assignment Details
Assignment Description
Course Comprehensive Project
Collaboration in a business environment is a best practice that leverages the collective knowledge of the team assembled. Peer evaluation and support, provided in the spirit of continuous improvement and organizational success, result in higher quality deliverables than generally possible by the efforts of an individual. Please describe the process you plan to use to conduct research, identify findings, and develop the Comprehensive Project due in Unit 5 and present a preliminary outline indicating how you intend to organize the project deliverable.
Unit 5 project located below:
Comprehensive Analysis of Ford Motor Company
Name
American InterContinental University
Abstract
Since its beginning in 1903, the Ford Motor company has gone through some phases to enable it to reach its current market position. The Ford Motor Company possesses a good supply chain management status that enables it to receive raw materials and sell its products to the domestic and international market. Its possession of 90 plants and more than 213,000 employees in three major regions of the world makes it manufacture $5 million vehicles yearly, generating approximately $100 billion. The market is highly demanding and possesses dynamic changes that affect automobile companies such as Ford Motor. The market also comprises of some challenging factors such as fluctuating prices of oil and petroleum, competition, and political instability among others that affect the operations of Ford Motor Company. The SWOT Analysis of Ford Motor Company influences the company to adapt effective strategies that save it from falling in the market. Developing the right approaches in the company’s operations makes it easy for the company to beat the competition and remain relevant.
Comprehensive Analysis of Ford Motor Company
Introduction
The paper discusses the Ford Motor Company through an extensive and conclusive research. It uses the available public information about the company and its operations. It carries out an analysis of its products and services, and how it relates to the market. The paper discusses the relationship between Ford’s operations and the stakeholders found in its market (external and internal stakeholders). The stakeholders have a significant status in its operations as they affect the business operations launched by the company on them. Ford Motor Company is also affected by both its internal and external operational environment. The paper discusses the external and internal factors that affect its performance through SWOT (Strength, weakness, opportunities, and threats) Analysis.
The paper also has a key focuses on the corporate strategy provided by Ford Motor Company to survive in the market. Ford Motor Company has come through a period of financial challenges to reach where it ...
Canadian Red Cross Tainted Blood ScandalLeo de Sousa
The Canadian Red Cross Tainted Blood Scandal spanned decades and to this day, individuals, families, groups and the nation feel its deadly impacts. The Canadian national blood supply was contaminated with two infectious viruses, Hepatitis-C and HIV during the late 1970s, 1980s and the early 1990s. This was the worst tragedy in Canadian medical history with over 20,000 Canadians infected after receiving blood or blood factors to treat their illnesses or during surgery.
This paper describes the risks and impacts to be considered when planning a secure partner portal. Research organizations looking for efficiencies and cost savings seek to build trusted, collaborative relationships with other organizations. This approach introduces new IT security risks that do not exist in a closed business technology platform. As organizations choose to provide access to their internal systems, they need to consider how to manage risks from authentication, authorization and information security.
This paper describes the interaction between the IT Infrastructure Library (ITIL<sup>®</sup>) and IT Security Architecture (ITSA) within the overall context of Enterprise Architecture (EA). Enterprise Architecture provides a holistic approach to the integration and management of an organization’s strategy, business and technology.
This paper describes how a continuous improvement IT Security Governance process provides effective planning and decision making capabilities for a cybersecurity program. Governance can be thought of “doing the right things” while management is “doing things right”. IT Security Governance focuses on doing the right things to protect organizations and agencies.
This paper takes an enterprise architecture approach to describe the IT Security Architecture impacts of migrating from an employer supplied “use what you’re told” (UWYT) model to an employee purchased “bring your own device” (BYOD) model. More and more employees and executives demand the option to use their consumer IT devices to do their work. This blend of work and life, combined with flexible work hours also contributes to an atmosphere where people want to be able to work with the tools of their choice.
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This paper explores an approach to build intrinsic motivation in High TechnologyWorkers which motivates them to work on their personal learning plans to earn rewards in their personal, educational and career objectives in a work environment governed by a Collective Bargaining Agreement.
Leaders, who are self-aware, create personal guiding principles and are flexible in their leadership approaches, will have success navigating any situation. There are a set of leadership traits, behaviors and styles that support flexible leadership. Leaders need to develop self-awareness. Understanding what their strengths and weaknesses are and how they react to different situations is the foundation for a flexible leadership style. Next, the leader needs to create their guiding principles defining who they are and how they work. Finally, leaders need to provide structure and flexibility in their organizations.
Unveiling the Secrets How Does Generative AI Work.pdfSam H
At its core, generative artificial intelligence relies on the concept of generative models, which serve as engines that churn out entirely new data resembling their training data. It is like a sculptor who has studied so many forms found in nature and then uses this knowledge to create sculptures from his imagination that have never been seen before anywhere else. If taken to cyberspace, gans work almost the same way.
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[Note: This is a partial preview. To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
Digital Transformation and IT Strategy Toolkit and TemplatesAurelien Domont, MBA
This Digital Transformation and IT Strategy Toolkit was created by ex-McKinsey, Deloitte and BCG Management Consultants, after more than 5,000 hours of work. It is considered the world's best & most comprehensive Digital Transformation and IT Strategy Toolkit. It includes all the Frameworks, Best Practices & Templates required to successfully undertake the Digital Transformation of your organization and define a robust IT Strategy.
Editable Toolkit to help you reuse our content: 700 Powerpoint slides | 35 Excel sheets | 84 minutes of Video training
This PowerPoint presentation is only a small preview of our Toolkits. For more details, visit www.domontconsulting.com
Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
Improving profitability for small businessBen Wann
In this comprehensive presentation, we will explore strategies and practical tips for enhancing profitability in small businesses. Tailored to meet the unique challenges faced by small enterprises, this session covers various aspects that directly impact the bottom line. Attendees will learn how to optimize operational efficiency, manage expenses, and increase revenue through innovative marketing and customer engagement techniques.
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Vat Registration is a legal obligation for businesses meeting the threshold requirement, helping companies avoid fines and ramifications. Contact now!
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LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
Have you ever heard that user-generated content or video testimonials can take your brand to the next level? We will explore how you can effectively use video testimonials to leverage and boost your sales, content strategy, and increase your CRM data.🤯
We will dig deeper into:
1. How to capture video testimonials that convert from your audience 🎥
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Premium MEAN Stack Development Solutions for Modern BusinessesSynapseIndia
Stay ahead of the curve with our premium MEAN Stack Development Solutions. Our expert developers utilize MongoDB, Express.js, AngularJS, and Node.js to create modern and responsive web applications. Trust us for cutting-edge solutions that drive your business growth and success.
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Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
Ford and GM A Comparison of 2 Fortune 500 Companies
1. IST 614 – Ford and GM Final Project Leo de Sousa
Comparison Study of Two Fortune 500
Companies
Ford Motor Company and General Motors
Corporation
Leo de Sousa – IST 614
December 9, 2011
1
2. IST 614 – Ford and GM Final Project Leo de Sousa
Abstract
This paper compares and contrasts two top ten Fortune 500 automotive companies: Ford
Motor Company (Ford) and General Motors Corporation (GM). Through a series of strategic
decisions and initiatives, Ford was able to survive the 2008-2009 global economic crisis.
General Motors had similar opportunities to make strategic changes but remained entrenched
in their approaches and strategy. The result was General Motors filed for bankruptcy, and had
to ask the US and Canadian governments for loans in order to restart business. The “new” GM
is now owned mostly by the governments of the United States and Canada and the United Auto
Workers Pension Trust; essentially GM is a division of the US Department of the Treasury and
being run by a government appointee. Ford remained independent, survived the crisis and is in
control of its own destiny with profitable plan for the future. Ford is led by a forward thinking
leaders in Bill Ford Jr and Alan Mulally. This paper explores the differences between the
companies and draws some conclusions about why Ford survived and why GM failed.
The paper begins by introducing each company, providing basic corporate information, some
details about the industry they operate in, their customers and what resources they rely and
compete for. The subsequent chapters describe each company’s approach to Strategic
Planning, Organizational Design, Finance, Social Responsibility and Innovation.
The conclusion summarizes the key points in each chapter and presents some differences that
may have contributed to the very different outcomes as each company worked through the
global economic crisis of 2008-2009 and looks towards the future.
2
3. IST 614 – Ford and GM Final Project Leo de Sousa
Chapter 1 – An Introduction to Ford and General Motors
Ford was founded by Henry Ford in 1903 and became the number one US automaker with the
production of the Ford Model T car in 1908. General Motors was founded by William “Billy”
Durant in 1908. GM added many other auto brands over time and became the largest
automotive company in the world. Ford began public trading in 1956 on the New York Stock
Exchange and ranked third on the Fortune 500 in the same year. In 1956, General Motors was
the number one ranked company on the Fortune 500 and traded on the New York Stock
Exchange. (CNN Money, 2011) In the most recent publication of the Fortune 500 for 2011, Ford
ranked tenth and General Motors ranked eighth.
Below are descriptions of each company from their respective 2010 Annual Reports. “Ford
Motor Company, a global automotive industry leader bases in Dearborn, Michigan,
manufactures or distributes automobiles across six continents. With about 164,000 employees
and about 70 plants worldwide, the company’s automotive brands include Ford and Lincoln.
The company provides financial services through Ford Motor Credit Company.” (Ford Motor
Corporation, 2010, p. 1)
“The new General Motors has one clear vision: to design, build and sell the world’s best
vehicles. Our new business model revolves around this vision, focusing on fewer brands,
compelling vehicle design, innovative technology, improved manufacturing productivity and
streamlined, more efficient inventory processes. The end result is products that delight
customers and generate higher volumes and margins – and ultimately deliver more cash to
invest in our future vehicles.” (General Motors Corporation, 2010, p. 6)
3
4. IST 614 – Ford and GM Final Project Leo de Sousa
Comparison Table: Ford Motor Company and General Motors Corporation
Corporate Information Ford Motor Company General Motors Corporation
Founder Henry Ford William “Billy” Durant
Year Founded June 16, 1903 Sept 16, 1908
Headquarters Dearborn, Michigan, USA Detroit, Michigan, USA
CEO Allan Mulally Daniel F. Akerson
Divisions Automotive and Financial Automotive and Financial
Services Services
Global Reach North America, South North America, South
America, Europe, Asia Pacific, America, Europe, Asia Pacific,
Africa Africa
Brands Ford and Lincoln (minor Cadillac, Chevrolet, Buick and
ownership in Mazda) GMC, Opel, Vauxhall,
Daewoo, Izuzu, Holden, FAW,
GMC, Jiefang, Wuling, Baojun
Number of Employees 164,000 202,000
Worldwide Wholesale Unit 5,524 8,390
Volume (thousands)
Sales and Revenues (millions) $128,954 $135,592
Net Income/(Loss) (millions) $6,561 $4,668
Diluted Net Income/Share $1.66 $2.89
Debt (millions) $19,100 $17,018
Publicly Traded On New York Stock Exchange: F New York Stock Exchange: GM
Toronto Stock Exchange:
GMM
Publicly Traded Date June 1, 1955 June 10, 2009*
Outstanding Shares (millions) 3,707 1,600
Fortune 500 Rank 10 8
* General Motors Corporation declared bankruptcy and was reformed as a division of the US Department of the
Treasury
Both Ford’s and General Motors’ main business is building automobiles for a global
marketplace. Both companies forecast over 70% of sales coming from global markets versus
North America. Their product mix includes electric cars, hybrid vehicles, automobiles, light and
4
5. IST 614 – Ford and GM Final Project Leo de Sousa
heavy duty trucks. Both companies also have financial services that provide loans for
purchasing automobiles as well as extensive lease services for corporate automobile fleets.
On June 1, 2009, General Motors Corporation filed for bankruptcy. A “new” General Motors
Corporation was formed with the US Treasury, the Canadian Federal Government and the UAW
Retiree Medical Benefit Trust as the major shareholders. The “new” GM founding date was
June 10, 2009. Ford Motor Company was able to weather the economic crisis and did not have
to ask for government bailouts to continue their over 100 years of business.
The contrasting outcomes are a result of how each company positioned themselves in the years
leading up to the significant environmental change caused by the 2008-2009 global economic
crisis. Both companies compete for customers, employees, suppliers, financing and resources
for manufacturing. Ford specifically cites the following competition factors: excess capacity,
pricing pressure, commodity and energy price increases, consumer spending and credit,
increasing sales of smaller vehicles, currency exchange rate volatility and other factors like
government debt and interest rates. (Ford Motor Corporation, 2010, p. 24) Similarly, the “new”
GM notes the following competition factors: instability in the global economic environment,
automotive price competition, relatively high cost structure, unfavorable commodity prices,
unfavorable regulatory and tax environments and a challenging foreign currency exchange
environment. (General Motors Corporation, 2010, p. 241)
Ford made four key strategic decisions leading up to the 2008-2009 economic crisis. Former
CEO and Chairman Bill Ford Jr. brought in an outsider to lead the company with no experience
in the automotive industry. Ford mortgaged all its assets to secure a large cash cushion to fund
5
6. IST 614 – Ford and GM Final Project Leo de Sousa
the redesign of the company while interest rates were low. Ford renegotiated its contracts
with its union workers reducing labor costs significantly. Finally, Ford took a consolidation
approach by selling off non-core brands. “In recent years, we have eliminated a number of
brands from our portfolio in order to devote fully our financial, product development,
production and marketing, and sales and services resources toward further growing our core
Ford brand and enhancing Lincoln. We have sold Aston Martin, Jaguar and Land Rover and
most recently Volvo.” (Ford Motor Corporation, 2010, p. 25)
General Motors had similar opportunities to get advice from outside of their entrenched
automotive industry, executive culture. GM chose not to accept or follow the advice. GM
insisted that their large number of automotive brands was the correct mix for the company
while every other automotive maker was consolidating brands. Finally, GM relied on zero
percent financing and cash incentives to boost sales levels due to stagnant wages since 2001.
The result for automakers is to “sell vehicles only by luring individuals into their showrooms
with near suicidal incentives.” (Bloomberg, 2009) All the above practices were done away with
when GM moved into bankruptcy. General Motors was forced to make the changes that Ford
did in order to gain government loans to restructure and restart their business.
Ford continues to capitalize on its success by incorporating their ability to survive with no
government help into their marketing campaigns. They appeal to American patriotism.
General Motors will continue to have the stigma of failing as a corporation and causing
significant damage to the US economy, people’s lives and requiring tax payers to bail them out.
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7. IST 614 – Ford and GM Final Project Leo de Sousa
Chapter 2 – Strategic Planning
Strategic Plans are “overall company plans that clarify how the company will serve customers
and position itself against competitors over the next two to five years.” (Williams, 2011, p. 86)
Both Ford and GM have strategic plans that arose from the challenges of the 2008-2009
economic crisis. Strategic plans incorporate vision, mission, tactical plans, and management by
objectives, operational plans, standing plans and single use plans. (Williams, 2011, p. 86)
Ford’s strategic plan is branded “One Ford – One Team, One Plan, One Goal. One Ford expands
on the company’s four-point business plan for achieving success globally. It encourages focus,
teamwork and a single global approach, aligning employee efforts toward a common definition
of success and optimizing their collective strengths worldwide.” (Ford Motor Corporation, 2010)
“One Team – people working together as a lean, global enterprise for automotive leadership, as
measured by: Customer, Employee, Dealer, Investor, Supplier, Union/Council and Community
Satisfaction. One Plan – aggressively restructure to operate profitably at the current demand
and changing model mix, accelerate development of new products our customers want and
value, finance our plan and improve our balance sheet, work together effectively as one team.
One Goal – an exciting viable Ford delivering profitable growth for all.” (Ford Motor Company,
2011) The key observation is that Ford is the maker of their own destiny and that they continue
to focus on people first in their strategic thinking. Ford’s approach matches Drucker’s concept
of Management by Objectives guidance of “each manager, from the “big boss” down to the
production foreman or the chief clerk, needs clearly spelled-out objectives.” (Drucker, 2001, p.
115) Ford’s message is clear that there is one team that will execute one plan to achieve one
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8. IST 614 – Ford and GM Final Project Leo de Sousa
overall company goal. Ford’s ability to fund their way through the economic crisis places it in a
strong strategic position in the market place.
General Motors articulates its strategic plan as “the strength of the new GM: a new business
model centered on our vision of designing, building and selling the world’s best vehicles; a
leader’s leverage to economic growth in key mature and emerging markets worldwide; and a
new balance sheet with a significantly improved risk profile.” (General Motors Corporation,
2010, p. 3) One other key document from the “new” GM is the General Motors Corporation
2009-2014 Restructuring Plan from Feb 17, 2009. The plan articulates how GM will manage its
path out of bankruptcy. Some of the key requirements are: “product mix and cost structure
competitiveness, competitive labor cost agreement, compliance with federal fuel efficiency and
emission regulations, domestic manufacture of Advanced Technology Vehicles, rationalization
of cost, capitalization and capacity, financial viability (positive NPV) and repayment of federal
loans.” (General Motors Corporation, 2009, p. 6) In comparison to Ford, GM’s strategic plan
approach resembles what Drucker calls “Management by Drives”. GM is mandated to focus on
improving its bottom-line as a condition of being able to restructure with federal loans.
General Motors was forced to adopt the strategies outlined above due to its failure to remain
profitable. Until all conditions of the restructuring agreement are complete in 2014, GM will be
forced to struggle with “all emphasis on one phase of the job to the inevitable detriment of
everything else.” (Drucker, 2001, p. 117)
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9. IST 614 – Ford and GM Final Project Leo de Sousa
Overall the automotive industry continues to face significant threats and risks to profitability.
The table below contains both threats and opportunities from both company’s 2010 Annual
Reports. (Ford Motor Corporation, 2010, p. 24) (General Motors Corporation, 2010, p. 241)
Threats Opportunities Commentary
Excess Capacity Increasing Sales of Smaller Cars Both Ford and GM were caught
over producing trucks
Automotive Pricing Pressure Concentrate on Fewer Brands Ford did this sooner and GM was
forced to do this
Commodity and Energy Prices Energy Diversity and Efficiency GM killed its electric car program
in mid 2000’s and is playing
catch up
Consumer Spending and Credit Manufacture and Sell Vehicles Both companies recognize
Globally growth of 70% in global sales
Currency Exchange Rates Review of business practices Ford is focusing on this for
business planning
Global Economic Instability – Use of facts and data to make Ford explicitly references this
Debt and Interest Rates decisions capability
High Cost Structures Partnership and People Focus Ford specifically mentions
engagement with customers
Unfavorable Regulatory/Tax Bottom-line focus GM is specifically tasked to
Environments accomplish this
Introduction of Cheap Cars from Both companies are watching
China this closely for impacts
While both automotive manufacturer’s describe optimism for the coming few years, there are
significant challenges. Based on a Bloomberg Businessweek report, the automotive industry is
facing two opposing factors. There are approximately 250 million cars on the road in North
America today and they will need replacing at some point. This suggests that there will be an
upturn in new automobile purchases. High unemployment, stagnant and falling wages and
poor consumer credit continue to plague the economy and automobile sales. “When income
disappears as quickly as it has in the last eight years, one of the first purchases to be deferred is
a new automobile.” (Bloomberg, 2009)
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10. IST 614 – Ford and GM Final Project Leo de Sousa
Chapter 3 – Organizational Design
Organizational Structure defined as “the vertical and horizontal configuration of departments,
authority and jobs within a company”. (Williams, 2011, p. 159) Geographic
departmentalization structures a company into separate work units who do business in
particular geographic areas. (Williams, 2011, p. 163) Functional departmentalization organizes
work into units that are responsible of business functions. (Williams, 2011, p. 161) Product
departmentalization organizes work into units responsible for producing a particular product or
service. (Williams, 2011, p. 162)
Ford Motor Company is organized in a combination of geographic, functional and product
departmentalization. Ford’s two operating sectors are Automotive and Financial Services. The
Automotive sector is divided into the following segments: Ford North America, Ford South
America, Ford Europe and Ford Asia Pacific Africa. Each segment contains all functions of
development, manufacturing, distribution, service and parts. Until recently (when Ford
divested these segments), Ford also had product departments for Mazda, Volvo and Jaguar
Land Rover. The Financial Services sector has two segments: Ford Credit and Other Financial
Services. These two segments demonstrate functional departmentalization. William Ford Jr is
the Chairman of the Board and Alan Mulally is the President, CEO and Director. Each segment
(geographic, functional and product) has a Vice President who reports up to the President and
CEO. There are 19 people in the Ford Executive Officer Group. (Ford Motor Corporation, 2010,
p. 5)
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11. IST 614 – Ford and GM Final Project Leo de Sousa
General Motors has a very similar organizational structure as Ford. GM is also organized in a
combination of geographic, functional and product departmentalization. Unlike Ford, GM
reports all 5 of its segments together, mixing automotive and financial segments of the
company. The four automotive segments are: GM North America, GM Europe, GM
International Operations, and GM South Americas. Each automotive segment is responsible for
all operations in their geography. General Motors Financial Company handles the financial
business for GM. GM has one product segment focusing on GM Daewoo. This segment
reports up through GM International Operations. GM is led by Daniel Akerson who holds the
joint roles of Chairman and CEO. This differs from the split leadership at Ford between Bill Ford
and Alan Mulally. There are 18 people on General Motors’ Management team.
With each company having very similar organizational structures, we can infer that this was not
a contributing factor to explain why GM went bankrupt and Ford did not. One significant
difference between the companies is at the senior leadership level. In 2006, Bill Ford decided
to break from conventional automotive industry practice and hired Alan Mulally from Boeing.
Mulally is an engineer by training and had a long and successful career at Boeing. (US News,
2010) He left Boeing as the Executive Vice President of The Boeing Company and the President
and CEO of Boeing Commercial Airplanes where he is credited for BCA’s turnaround. (Ford
Motor Company, 2011) Bill Ford commented on the collaborative relationship he has with
Mulally. “I talk to Alan many times a day, every day. The way we like to work, our styles are
very similar, we don’t have formal meetings, we bounce back and forth between each other’s’
offices … The other thing is that it gives each of us someone to talk to.“ (The Urban WallStreet,
2011) In November, 2006 Mulally is credited with the bold move of mortgaging all of the
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company’s assets to give Ford “a cushion to protect for a recession or other unexpected event.”
(Vlasic, 2009) This cushion proved to be the saving grace for Ford when GM had to declare
bankruptcy. This action fits with Collins and Porras’ view of Ford as a “visionary” company and
their definition of a “Big Hairy Audacious Goal – BHAG” (Collins & Porras, 2002, p. 94)
Meanwhile, GM needed the Federal government to fire the “old guard” GM Executives
including then CEO Rick Wagoner. (US News, 2010) At the time of the GM restructure, Daniel
Akerson was appointed to the board of directors representing the US Treasury department. In
September 2009, Akerson was named CEO and became Chairman of the Board in January 2011.
Akerson has an expertise in finance with a diverse background in telecommunications,
government and consulting but no experience in the automotive industry. Interestingly, GM
had a similar opportunity to take advantage of an outsider’s view in 2005, when Jerry York was
appointed to the GM Board. In 2006, York detailed a list of fixes that he felt were necessary for
GM to remain competitive. He called it a “clean sheet approach to the business”. (Carty, 2009)
York was ignored and ironically, the bankruptcy proceedings implemented the changes he
recommended three years earlier. Perhaps this would have saved GM from bankruptcy.
Peter Drucker provides some insight into GM’s failure to heed Jerry York’s advice. “Basic
assumptions about reality are the paradigms of social science, such as management.” and “The
discipline’s basic assumptions about reality determine what it focuses on.” (Drucker, 2001, p.
69) These quotes describe the mindset of GM executives who stuck to their assumptions
about their industry and in the economy they worked, in spite of evidence that their business
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models were not sustainable. “The assumptions also largely determine what is being
disregarded or is being pushed aside as an “annoying exception”.” (Drucker, 2001, p. 69)
In GM’s case, they focused on sales volumes without realizing that each sale was at a loss due
to the zero percent financing and cash incentive schemes used. They insisted their large
number of brands was appropriate. This quote is an example of GM’s entrenched mindset “The
symbol of GM's swing too far toward trucks is the high-end Hummer. GM launched the big SUV
in 2003, the compact H3 in 2005. As buyers edged away from trucks, then fled as fuel prices hit
records in 2008, GM wound up with pricey models that not only didn't sell, but also gave it an
environmental black eye. Some of the heftiest Hummer H2s barely managed 10 miles per
gallon.” (Carty, 2009)
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Chapter 4 – Finance
This section analyzes Ford and General Motors’ 2010 consolidated balance sheets based on four
types of key ratios: liquidity, debt, profitability and investment. This report does not make any
recommendations about whether Ford or General Motors is a better investment. Investing in
companies is a personal decision based on the investor’s personal risk and investment profile.
The financial ratios listed in the table have commentaries that explain the differences between
Ford and General Motors.
Table of Values from Ford and GM 2010 Financial Statements (Ford Motor Company, 2010)
(General Motors Corporation, 2010)
Ford Financial = 76%, GM
135,555 63,985
Ford General Motors Commentary
Financial = 17%
GM has higher current liabilities
Current Assets
40,935 54,516
than Ford
Ford Financial = 78%, GM
Current Liabilities
113,028 45,842
Financial = 20%
35,771 26,616 Ford has more cash than GM
Cash + Receivables
Ford Financial = 83%, GM
Cash
102,140 4,630 Financial = 65% *GM's debt was
forgiven in bankruptcy
Total Debt
165,793 138,898 Ford has more assets than GM
166,435 101,739 Ford has more liabilities than GM
Total Assets
(642) 36,180 Ford Liab>Assets, GM Assets>Liab
Total Liabilities
6,561 4,668 Ford more profitable
Shareholder Equity
3,449 1,500 Ford has 2x as many shares
Net Income
1.90 3.11 GM has fewer shared = higher EPS
Number of Shares
Earnings per Share
1.57 21.96 GM has less debt than Ford
Book Value per
11.74 25.39 GM has higher share price
Share
200 Day Moving
Ford has larger Market
40,491 38,085
Average Price
Capitalization
Market Cap
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15. IST 614 – Ford and GM Final Project Leo de Sousa
Table of Financial Ratios Calculated from Ford and GM 2010 Financial Statements (Ford
Motor Company, 2010) (General Motors Corporation, 2010)
Ford General Motors Commentary
Ford has more cash to pay down
Liquidity
3.311 1.174
debt
Current Ratio =
Current Assets/
Ford has more cash to pay down
Current Liabilities
2.761 0.841
debt
Quick Ratio = Cash
+ Receivables /
Ford has more cash to pay down
Current Liabilities
0.874 0.488
debt
Cash Ratio = Cash /
Current Liabilities
Ford is more financially leveraged
Debt Ratios
1.004 0.732
than GM
Debt Ratio = Total
Liabilities / Total
Ford is more financially leveraged
Assets
0.616 0.033
than GM
Long Term Debt
Ratio = Total Debt
/ Total Assets
Ford is more financially leveraged
-259.245 2.812
Debt to Equity
than GM
Ratio = Total
Liabilities /
Shareholder Equity
Ford earned more income per
Profitability
0.040 0.034
asset
Return on Assets =
Net Income / Total
Assets
GM has a positive ROE, Ford had
-10.220 0.129
negative Shareholder Equity
Return on Equity =
Net Income /
Shareholder Equity
Investment
Investors are willing to pay more
6.172 8.159 for $1 of GM earnings than they are
Price Earnings
of $1 of Ford earnings
Ratio = Market
Value Per Share /
Earnings per Share
Ford and GM do not offer
0 0
dividends
Dividend Yield =
Dividends /
Earnings per Share
Indicates that the market considers
Price to Book Ratio
7.478 1.156 Ford overpriced compared to its
= Market Value Per
book value compared to GM
Share / Balance
Sheet Value Per
Share
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16. IST 614 – Ford and GM Final Project Leo de Sousa
In the liquidity category, Ford has more debt than GM because Ford chose to mortgage their
assets to create a cash cushion which helped them survive the 2008-2009 economic crisis. The
financial ratios show that Ford has more liquidity than GM and is better able to pay down its
debt. In the debt category, General Motors has very little debt as they were forgiven their debt
when during the bankruptcy. There will be tight restrictions on GM in the next few years as
they must meet their restructuring plan with the federal governments of the United States and
Canada. In the profitability category, Ford has more income than GM but GM had a higher
positive return on equity. Ford’s return on equity is negative as they have more liabilities than
assets. This fits with Ford working to pay down its “mortgage the company” strategic plan. In
the Investment category, investors are willing to pay more per dollar of GM earnings over Ford.
Neither company currently offers dividends to investors. The price to book ratio indicates that
the market believes Ford to be over priced per share compared to GM. Conservative investors
may see General Motors as the safer investment (lack of debt) and perhaps that is why they are
willing to pay more for their shares. Value investors may choose Ford as they have a strong
cash flow, have significantly reduced costs and are actively paying down their debt which will
free up more capital to invest in the company.
Finally, if the analysis done by Jim Collins and Jerry Porras holds true then visionary companies
like Ford Motor Company will continue to outperform comparison companies like General
Motors over the long term by six times. (Collins & Porras, 2002, pp. 5-6)
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17. IST 614 – Ford and GM Final Project Leo de Sousa
Chapter 5 – Social Responsibility
Social responsibility is “a business’s obligation to pursue policies, make decisions, and take
actions that benefit society”. (Williams, 2011, p. 72) Social responsibility may arise from social
impacts of the institution and “deals with what an institution does to society”. (Drucker, 2001,
p. 51) Or they may arise from existing societal problems and “is concerned with what an
institution can do for society”. (Drucker, 2001, p. 51) Another way to look at this involves two
perspectives of social responsibility. The first is the Shareholder model where “the
organization’s overriding goal should be to maximize profit for the benefit of shareholders”.
(Williams, 2011, p. 73) The second model is the Stakeholder model where “management’s
most important responsibility, long-term survival, is achieved by satisfying the interests of
multiple corporate stakeholders.” (Williams, 2011, p. 74) Most successful companies blend
these two approaches as they conduct business.
Ford creates an annual Sustainability report and has Susan M. Chischke, Ford’s Group Vice
President, Sustainability, Environment and Safety Engineering appointed to oversee these
functions. Ford focuses on three areas: Economy, Environment and Society. (Ford Motor
Company, 2011) Bill Ford Jr. states “Creating a strong business and building a better world are
not conflicting goals – they are both essential ingredients for long-term success.” (Ford Motor
Corporation, 2010, p. 19) Ford Volunteer Corps is a permanent part of the Ford Fund and
Community Services. The Corps is made up of employees and retirees and in 2010, they
volunteers over 112,000 hours. Ford has been a national sponsor for breast cancer prevention
and research for 16 years and raised over $100M of the cause. Ford tried to live up to its
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18. IST 614 – Ford and GM Final Project Leo de Sousa
Stakeholder Model in the late 1940’s and early 1950’s by introducing seatbelts in their cars.
Unfortunately, sales dropped and they reverted to the Shareholder Model and pulled the cars
from production. (Drucker, 2001, p. 52) Another Ford example, demonstrates that focusing on
the Stakeholder Model actually provided Stakeholder benefits. In 1913, Ford announced that
they would pay $5 per day wage for skilled workers. This tripled their salary costs overnight.
After implementing this program, Ford actually saw labor costs go down as they were able to
retain skilled workers (they used to have to hire 6 workers for every 1 job annually due to
turnover). This established Ford as the dominant automaker and allowed them to deliver more
profit per car sold. (Drucker, 2001, pp. 56-57)
General Motors created the GM Foundation as the source of their social responsibility work.
GM focuses on Education, Health and Human Services, Environmental and Energy and
Community Development. (General Motors Corporation, 2011) The GM Foundation has
donated more than $350M to their programs. Unlike Ford, GM does not appear to put as much
focus on social responsibility. There is no Vice President position and unlike Ford they do not
link the economy into their plan for corporate responsibility. (General Motors Corporation,
2011) With the new restructuring of General Motors, it will be interesting to observe if there is
more emphasis on the Shareholder model (short term) over the Stakeholder model (long term).
The company is being run by a political appointee and is essentially a division of the US
Department of the Treasury. This puts significant oversight and focus on repaying the
government loans given to General Motors over planning the company’s future.
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19. IST 614 – Ford and GM Final Project Leo de Sousa
Drucker wrote that management’s social responsibility was to “not knowingly to do harm.”
(Drucker, 2001, p. 65) In the years leading up to the 2008-2009 economic crisis, Ford and GM
behaved in two very different ways in responding to the expectations of their stakeholders.
Social responsiveness strategies can be placed on a continuum from doing nothing to doing
much. There are four main strategies – reactive, defensive, accommodative and proactive.
(Williams, 2011, pp. 77-78)
Ford, under Mulally’s leadership, put itself in a position to weather the economic crisis by
ensuring it had secured funds in advance. They took a proactive strategy by looking at their
business, identifying which areas were harming long-term success and came up with proactive
approaches like reducing the number of automotive brands, selling off ownership in non-core
assets and making good deals with their unions. (Bloomberg, 2007) Ford is a clear example of
taking a proactive social responsiveness strategy and succeeding.
General Motors, on the other hand, continued to insist its business model was sound including
keeping all its automobile brands while other manufacturers were rapidly downsizing. (Vlasic,
2009) GM killed its electric car program and sold off its financial unit GMAC (which brought in
more profit than the automotive segment). (Carty, 2009) These actions cause significant harm
to GM stockholders, employees and the US and Canadian taxpayers. The actions of the GM
executive team demonstrate a reactive social responsiveness strategy which ultimately ended
in bankruptcy.
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20. IST 614 – Ford and GM Final Project Leo de Sousa
Chapter 6 – Innovation
Organizational innovation is defined as “the successful implementation of creative ideas in
organizations.” (Williams, 2011, p. 119) Both Ford and General Motors have a history of
innovation. Henry Ford’s integration of the assembly line, interchangeable parts to create a low
cost automobile, the Model T was the first in a long history of innovations. Unfortunately for
Ford, the success of the Model T led to complacency within the company and by Henry Ford.
General Motors was able to capitalize on Ford resting on their success. GM introduced
installment selling, used car trade-ins, closed car models and annual model changes – and
colors other than black! (Harvard Business Review, 2011) Throughout their shared histories,
each company followed S-curve patterns of innovation. The S-curve pattern of innovation is a
pattern of technological innovation characterized by slow initial progress, then rapid progress
and then slow progress again as a technology matures and reaches its limits.” (Williams, 2011,
p. 120)
Research and Development Spending (millions of USD)
Company 2008 2009 2010
Ford $7,100 $4,700 $5,000
General Motors $8,012 $6,051 $6,962
Both companies also struggled with introducing innovation into their products. Ford tried, in
the late 1940’s and early 1950’s, to introduce seatbelts in their cars. Unfortunately, sales
dropped and they pulled the cars with seatbelts from production. (Drucker, 2001, p. 52)
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21. IST 614 – Ford and GM Final Project Leo de Sousa
General Motors started a small electric car program in the late 1990’s called the EV1. “It was a
public relations debacle when the test cars had to be reclaimed and GM then scrapped them.”
(Carty, 2009) GM CEO Wagoner killed the program and set GM back almost 10 years. Finally in
December 2010, GM launched the Chevy Volt electric car. “Al Benchich, a retired union
president, says with the failure of the EV1, GM squandered the opportunity to keep the U.S. a
dominant manufacturing force in a green era.” (Carty, 2009)
Ford specifically mentions innovation as part of their “improved safety and quality” focus. Ford
introduced inflatable seat belts and curve control as new innovations in the Explorer. Ford also
uses simulation technology to simulate employees on the assembly line to provide data to
predict and eliminate issues. (Ford Motor Corporation, 2010, p. 11)
General Motors mentions innovation in their description of “The Road Ahead”. They
specifically mention the Volt, electric car, and the innovations in the automotive battery,
electric power control as well as in “processes to accelerate the pace of innovation across the
company.” (General Motors Corporation, 2010, p. 4)
Drucker details four entrepreneurial strategies. The first “Being fustest with the mostest”
describes how GM took the lead in introducing information technology into their vehicles over
15 years ago. (Drucker, 2001, p. 161) This strategy is also known as “first to the market”.
OnStar provides “in-vehicle safety, security, communication and convenience services … to over
six million subscribers” globally. OnStar is an added cost, bolt-on feature available for GM
vehicles. (General Motors Corporation, 2011) GM pioneered this technology and is the industry
leader.
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22. IST 614 – Ford and GM Final Project Leo de Sousa
Ford used a different strategy that Drucker calls “Hit them where they ain’t”. (Drucker, 2001, p.
165) Ford is demonstrating being a “conservative innovator” and a “creative imitator” with its
partnership with Microsoft Corporation to create “Sync” and MyFord Touch Smart
Technologies. A “conservative innovator” is conservative and “they are not risk-focused; they
are opportunity-focused”. (Drucker, 2001, p. 279) Creative imitation “describes a strategy that
is “imitation” in substance. What the entrepreneur does is something somebody else has
already done. But it is “creative” because the entrepreneur applying the strategy …
understands what the innovation represents better than the people who made it and who
innovated”. (Drucker, 2001, pp. 165-166) Ford took the features of OnStar, enhanced them
with newer technology from Microsoft and made changes to their vehicle design to make the
technology a “part of the car” instead of a bolt-on. (Ford Motor Company, 2010, p. 12) Ford
has been successful in imitating and improving on GM OnStar’s leadership position.
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23. IST 614 – Ford and GM Final Project Leo de Sousa
Conclusion
Ford Motor Company and the “new” General Motors Corporation will continue to be large
drivers of the economy especially in North America. Both companies employ large numbers of
people, conduct business globally and are looking at alternative sources of fuel to power the
cars of the future. Ford made four key decisions that contributed to helping them survive the
economic crisis in 2008-2009. They first brought in an outsider to lead the company as CEO.
Alan Mulally came from Boeing and was able to make changes that Chairman Bill Ford Jr could
not. Mulally implemented a BHAG by mortgaging the assets of the company to build a $23B
cash cushion to restructure and help the company survive the downturn. This proved to be a
stroke of genius even when industry analysts saw it as a sign of desperation. Mulally also
renegotiated the union labor agreements and was able to significantly reduce labor costs.
Finally, Ford implemented a consolidation program of their brands by selling non-core brands
so that they could focus on the Ford and Lincoln brands leading to cost savings and positioning
the company to more agilely respond to changing markets and economies. Ford’s Stakeholder,
long term approach makes them a visionary company that determines its own future.
General Motors was not nearly as foresighted in their approach. They chose to ignore advice
from a member of their board, who was not part of the automotive industry, to consolidate
their brands. GM stayed entrenched in their belief that keeping many brands would be the way
to succeed. They failed to consider the high cost of labor in their factories and did not work to
renegotiate labor contracts. Finally, the implemented zero percent loans and huge cash
incentives that resulted in selling vehicles for a loss. These failures led to GM declaring
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24. IST 614 – Ford and GM Final Project Leo de Sousa
bankruptcy in June 2009. The “new” GM is a division of the US Department of Treasury and
also answers to the Government of Canada and a UAW Pension trust. GM’s new CEO is a
political appointee from the Department of the Treasury. General Motors was forced to
significantly downsize and to implement the changes Ford had started over 3 years earlier. It
will be difficult for GM to take full control of their strategy and future direction as long as they
are beholden to the parties that rescued the company from bankruptcy. General Motors will
continue to take a Shareholder, short term approach for the future as they pay down their
debt. Ford on the other hand, actively manages its debt burden with a strong cash flow and
does not have the constraints of being a pseudo-government company.
Ford has the edge from a customer perspective particularly in the United States. They can
rightly point to their ability to survive and now thrive as a company without taking one cent
from the tax paying public. Ford’s focus on quality and innovation is showing in the new
vehicles and features they bring to the market. The leadership of Ford blends a long history of
automotive industry experience in Bill Ford Jr with the innovative leadership of Alan Mulally.
Looking over the long history of the company should give customers and investors confidence
that Ford will continue to be a visionary company. The “new” General Motors is not the same
company that went bankrupt. Going through bankruptcy, badly damaged GM’s reputation and
created internal turmoil that will take years to recover from. Daniel Akerson, GM’s CEO is a
political appointee from the Department of the Treasury. He has a mandate to lead the
company out of bankruptcy and ensure the government loans are paid back. This focus puts
GM years behind Ford. The focus on consolidating brands and cutting costs will hamper their
ability to innovate.
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25. IST 614 – Ford and GM Final Project Leo de Sousa
From a CEO perspective, Ford seems to be doing all the right things. They proactively
recognized the problems with their business model and secured funding in a low interest
environment to allow them to restructure early and more importantly survive. The company’s
focus on people comes through in their strategy and their product delivery. Ford leadership
must continue to focus on paying down its debt especially as they continue to benefit from
being profitable. Building strategic partnerships with industry leaders like Microsoft will allow
Ford to share the costs of innovation and continue to deliver features customers demand for
many years to come. Ford cannot rest on their success and they need to keep a Shareholder
model focus to remain a visionary company.
General Motors needs to find a way to look past their restructuring plan that ends in 2014.
Some key areas to focus on are managing the organizational impacts of consolidating their
brands. It is not clear today what damage was done to the culture of the organization from the
bankruptcy and forced restructuring process. GM needs to look at their strategy and find a way
to focus on people. The current strategy is very much focused on loan repayment and
restructuring. A serious marketing effort should be implemented to communicate to the public
(particularly in the US and Canada) that their ability to pay back all the government loans is on
track. Now that GM has launched their Chevy Volt electric car, they need to invest more in
research to gain back a leadership position in that area of sustainability. Current CEO Akerson
should begin to look for a successor with the right blend of automotive experience and
innovative leadership style. This is not a simple task and may require several years to cultivate.
If a group of leaders can be cultivated then GM will be in a position to move the company
forward after the restructuring period is over.
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References
Bloomberg. (2007, Jun 4). The New Heat on Ford. Retrieved Dec 2, 2011, from Bloomberg Businessweek:
http://www.businessweek.com/magazine/content/07_23/b4037036.htm
Bloomberg. (2009, Jun 23). The U.S. Auto Industry in 2012. Retrieved Dec 2, 2011, from Bloomberg
Businessweek:
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