Effective strategies Paper

Romeo Guthridge
MGT/312
01/12/2015
Tina Emrich

Since the time of a great recession, Ford Motor Company has earned close to $6.6
billion dollars in the past years, since the hiring of Alan Mulally and implementing his
building techniques and strategies. Prior to Alan Mulallys hiring, Ford Motor company
lost close to $30 billion dollars during the recession. Ford Motor Company was close to
filing for bankruptcy before Alan arrived. Ford Motor companys credibility and reputation
were both damaged severely throughout the recession. In fact, during the recession
Ford Motor Company had lost ground on its competitors and were considering cutting
jobs and closing plants throughout the Unites States. In 2002, Ford Motor company was
considered the laughing stock of the automobile industry and while talks of closing
approximately 14 plants in which would have eliminated around 34,000 jobs. Action was
eventually followed these talks and Ford closed plants in Toledo and in Brook Park,
Cleveland. Soon after, President and CEO of Ford Motor Company resigned and then
Alan Mulally was introduced to the company.
Alan Mulally was introduced in September of 2006 to Ford Motor Company and has
served as president and chief executive officer since. Alan Mulallys objective was to
help carry out his fascinating visions by working together as a team. A few of Alan
Mulallys steps to achieve success were comprehensive strategies and persistent
implementation to drive profitable growth for all shareholders for Ford Motor Company.
In addition, Alan Mulally strived very hard to ensure customer focus and demands that
were needed to produce a strong product. Alan ensured that Ford Motor Company
appealed more to the middle income demographics by creating more options for small,
medium, and larger vehicles that served multiple purposes in the market. Therefore, this

is the time Ford introduced the Crossover SUV, smaller trucks, large and smaller
sedans, smart cars, hybrids, fuel efficient larger SUVs and trucks.
Alan Mulally didnt come to Ford to reinvent the wheel and change everything that Ford
stood for, he in fact carried out Ford Motor Companys original plan in 2002, which was
to lower production cost and focus more on mass producing cars faster to hit the
market. In the very beginning for Alan, he reached out to the consortium banks and
borrowed more than $25 billion dollars. At the time, this was a very risky move but was
deemed necessary by Alan in order to get Ford Motor Company back in production and
to be very competitive once again. Of course Alan was met with much resistance and
criticism from industry watchers and shareholders. During this time, Ford Motor
Company lost approximately $13 billion dollars. As the year 2008 approached, a spike
in gas prices and job loss really started taking a toll of the Ford Motor Company and in
specific their truck and SUV market suffered tremendously. Alan then made a statement
in 2009 saying As long as conditions get better, we will turn a profit for this year.
Things unfortunately didnt work out as planned for Ford, things began taking a turn to
worse instead of better. For instance, the mortgage industry collapsed, banks went
under, and consumers credit were destroyed. So, with these factors now present, it was
nearly impossible for consumers to afford purchasing new cars let alone get approved
for them. Therefore, Alan contacted the United States government asking for a bail out
with having no other options to imply.

Ford Motor Company had a lot of people

concerned with the future of the company including lawmakers. As expected, lawmakers
blamed the collapse of Ford due to poor decision making and lack of effective
management. Lawmakers began pressing the executives at Ford Motor Company

asking questions like How much is you (Alan) willing to sacrifice to get these loans?
They also asked the other executives if they were willing to work for $1 per to accept
these loans. Alan responded with I think Im okay where I am. Alan had already taken
out large loans prior to asking the government for help. Things eventually worked out for
Alan and Ford and did not need a government bailout. Sales continued to drop in 2008
and stayed consistent into 2009, which led to the lowest numbers the company had
ever seen globally. However, due to Fords competitors such as Chrysler and GMs
receiving government bailouts, their prices car prices began to spike and consumers
stated buying Ford cars. Consumers at the time felt that Ford offered the best value to
them for the money. During this time of automobile bailouts, Ford had lowered their cost
of production and continued producing more and more cars which gave consumers
many more options then their competitors at a lower price point.
Ford started seeing the light at the end of the tunnel in late 2009. Sales were still down
18% ($27 billion dollars down from 2008) for the company, but a profit of $2.7 billion
dollars was made. With sales finally improving for the company, their earnings started to
double. In 2010, Ford Motor Company surpassed General Motors to once again be the
number one automaker in the world. Competitors like Toyota noticed that Fords car
sales were starting to surpass them as well. Today, Ford still continues to focus on low
production costs and high output while focusing on the consumers demands for a better
product. Since 2011, Ford has consistently been on one of the top automakers in the
world and in August of 2014, Ford Motor Company has created 300 new jobs and
bought $129 million dollars worth of investments to a Louisville assembly plant. Critical
executive reorganization were one of them many strategies that Alan used to execute

his visions. Although there were many obstacles and setbacks and things didnt seem
promising at times for Alan and Ford Motor Company, Alan stood steadfast on riding the
wave and going against the grain to achieve his goals. In addition, there was a lot of
resistance initially and people opposing his strategies such as borrowing billions of
dollars and moving Ford Motor co. Production to the United States in order to set a
foundation for the future of Ford Motor Co. Alan Mulally is now known for his innovative
and creative ideas to expand Ford Motor Co. and introduce a much wider variety of
products to the consumer. Alan understood that innovation is seen through the lens of
sustainability and achieving growth and vision that isnt dependent upon constrained
resources. Alan Mulally made sure to have compelling vision with a comprehensive
plan. He had a positive mindset and that affected his leadership ability to motivate
others to continue to push forward. He incorporated everyone into hi vison and
communicated throughout the company of what his initiatives were and how the
company was going to achieve these goals by working together. Alan, was very active
and engaging with the outside world and saw things from the perspective as a
customer. The Ford Motor company has embraced Alans work and have adopted his
values and vision into their company. Today, Ford Motor Company remains one of the
strongest automobile makers in the world. Ford Motor Co. hangs their hats and continue
to remind todays consumer that they didnt need a government bailout and that they are
on pace to be better than ever.
Reference:

Leading in the 21st Century: Alan Mulally is president and CEO of Ford Motor Company.
This interview was conducted by Rik Kirkland, senior managing editor of McKinsey
Publishing, who is based in McKinseys New York office.
www.Ford.com : Alan Mulally Leadership Transformation Plan