Enterprise Risk Management at Ford

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Case Details:

Case Code : ERMT-003
Case Length : 12 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : -
Industry : -
Countries : USA

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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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Introduction

Ford Motor (Ford), one of the leading automobile manufacturers in the world had two broad business segments: automotive and financial services. The automotive segment included the designing, manufacturing and sale of a variety of cars, trucks, and sport-utility vehicles (SUVs). The company's famous brands included Ford, Mercury, Lincoln, Jaguar, Mazda, Volvo, Land Rover, and Aston Martin. Ford also participated in the financial services industry through Ford Motor Credit Company and The Hertz Corporation.

Enterprise Risk Management | Case Study in Management, Operations, Strategies, Enterprise Risk Management, Case Studies

The Ford Motor Credit Company was the world's largest auto financing company. Ford offered credit services in over three hundred locations around the world. The Hertz division offered rental services.

Till the late 1990s, Ford had been regarded as one of the best managed companies in the industry.

But since the early 2000s, Ford had been a company in trouble. CEO Bill Ford faced the daunting task of leading, the company, out of the current scenario of declining sales and deteriorating market share.

In 2002, Ford faced plant closures, employee downsizing and other drastic cost cutting measures aimed at trimming excess production and streamlining operations.

But Bill Ford had publicly acknowledged that just cutting costs would not be enough to turn Ford around. There were other initiatives that Ford was contemplating to help address the various problems it faced.

Overview of Risks

The automotive market was highly competitive. The major players competed on the basis of product quality, advertising, promotion and price. Ford faced several risks. First, competition in the industry, often led to price wars. In addition, the stagnant economic conditions in America might lead to a decline in sales and leases.

A third risk facing Ford stemmed from its relationship with the United Auto Worker's union. In the past, striking workers had halted production at plants across the world. A fourth risk facing Ford resulted from litigation against the company. In the recent past, deaths caused by Ford's use of certain Firestone Tires had resulted in lost sales, as well as a tarnished reputation. A fifth risk arose from defects and recalls of cars...

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