Ford Motor Company: Implementing the 'One Ford' Strategy

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Case Details:

Case Code : BSTR423
Case Length : 18 Pages
Period : 2006-2012
Pub Date : 2013
Teaching Note :Not Available
Organization : Ford Motor Company
Industry : Automotive
Countries : US; Global

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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About the Company

Ford's origins date back to the early part of the 20th century. On June 16, 1903, Henry Ford Sr., together with 11 investors, incorporated the Ford Motor Company in Michigan. A few weeks later - in July 1903 - the first unit of the Model A, the earliest vehicle model launched by Ford, was sold to Ernst Pfennig, a Chicago dentist, for $850.3 It was the first vehicle to be mass-produced by the company. Soon after, the company received several orders for the model and within a month, cars worth $20,000 had been sold. Ford was able to mass-produce cars by employing the moving assembly line, a revolutionary innovation at the time. The new system involved workers remaining at one place and executing the same task over and over on several vehicles that passed by them.

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This system boosted efficiency enormously and helped the company increase production levels even while bringing down production costs and making its vehicles more affordable. In 1922, Ford acquired the bankrupt Lincoln Motor Company for $8 million.4

While the Great Depression wiped out many auto companies, Ford managed to survive even though it incurred annual losses of around $68 million in this period.5 What saved Ford was the success of the Model A, which sold around 4.5 million units between 1927 and 1931.

During the Second World War (1942-1945), the company completely shut down civilian vehicle production and devoted all its production capacity to the Allied war efforts.6 After the War, the company returned to manufacturing automobiles. Henry Ford II enlisted the services of outside styling consultant George Walker to come up with the '49 Ford. The car, appreciated for its sleek and modern design, was a runaway hit mainly because it could be modified to fit personal styles. This model played a vital role in moving the company along the road to post-War prosperity.

In the 1950s, Ford launched several new models such as the Crestliner, the Victoria Mainline, the Thunderbird, the Fairlane, the Galaxie Club Sedan, etc. In 1956, Ford set up Aeronutronic, a division that was to operate in the defense and aerospace industry. In December 1961, the company acquired Philco Corporation and renamed it Philco-Ford Corporation. In 1976, the aerospace division was renamed Ford Aerospace & Communications Corporation (FACC). This company was sold in 1990 to Loral Space Systems for $715 million.7

In 1979, Ford acquired a seven percent stake in Japan-based Mazda Motor Corporation, which it upped to 27 percent in the 1980s.

In the mid-1980s, Ford diversified into the financial services industry, mainly in an effort to protect itself from the cyclical nature of its primary business. In the late 1980s, Ford acquired assets worth around $5.5 billion in the financial services space. These acquisitions catapulted it to the second rank in the financial services industry, after Citicorp. In 1989-90, the company acquired the reputed British car manufacturer Jaguar Cars Ltd. for $2.5 billion.8

Excerpts - Next Page>>

3] "15 July 1903: Ford Makes First Sale, Company Milestones,"
4] "Acquiring the Lincoln Brand, Company Milestones,"
5] Bill Senefsky, "Ford Motor Company,", March, 2010.
6] "We Played a Major Role in the 'Arsenal of Democracy' During World War II," Company Milestones,
7] Kurt Eichenwald, "Ford Aerospace Unit Fetches $715 million,", August 4, 1990.
8] Jerry Flint, "Ford in Wonderland," October 8, 2006.

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