FORD CASE STUDY

AISHWARYA SHARMA

ROLL NO: - IGSM/PG2020/0588

Q1) How did Ford one of the most autocratic and political companies in America shift to
Participative style of functioning?

ANSWER 1. - The process that leads to the change at ford was not a top-down effort rather
there was a set of independent initiatives that flowed together and became mutually
reinforcing.

The first real change happened in the form of EI plans implemented by the top management,
after the manager’s visit to Japan, and understanding the fact that if you involve the hourly
worker, he will willingly contribute far more than management could imagine. Initially when
the EI plan was launched only 4 out 60 managers took initiatives to implement the program.
But after their success EI stared gaining momentum and as EI got underway trickle of new
ideas grew into stream of initiatives A key factor in EI's success at Ford has been the
agreement that management will not dictate what projects employees work on. The company
also generously funded a training and development program for employees. Ford paid 5 cents
for every hour worked. The consent of the union and the company could not divert or claim
the funds if a stall occurred. These restrictions prevented management from exiting the
program during difficult times. Ford has negotiated a profit-sharing program with the
workers. The program paid off. Ford paid $ 636 million in profit-sharing "the highest salary
in US corporate history at the time," with an average hourly employee receiving a check for
more than $ 3,700.But the returns were fabulous. The company produced 400,000 more cars
in plants that were already equipped with nominal capacity. The increase is equivalent to
adding a new factory of one and a half. The next step in the change effort was to improve the
caseworker. A management task force recognized that Ford had transitioned from a
manufacturing-dominated culture to a finance-driven culture. One of the biggest challenges
for the administration was addressing this problem. but it is "not surprising" "that managers
were slowly losing faith in their beliefs and starting to make suboptimal decisions. The
Harvard case study provides several examples of the problem, such as a plant manager
holding a plant-wide meeting Communicating details of a large assembly line setup failed to
do so, as the session resulted in a $ 100,000 loss of wages (workers would be paid if the
management's challenge was to maintain the strengths of the finances and still the weakened
areas of the Technology, manufacturing, and design. It was approached through three main
axes: maintaining financial literacy but decentralizing and delegating some of its activities to
superiors; Update product disciplines by investing in new tools and giving these roles more
say in policy matters, and reducing the number of finance staff and shifting their roles from
the police force to a supervisor service organization. Result: The lack of bogus end-of-month
figures alone enabled the company to spend more time and energy on day-to-day business.
Fascinating lessons for top executives at India Inc., many of whom still view employee
involvement in management as a complete waste of time.

Q2) Ford won employee commitment to involvement and cooperation with management.
Even while eliminating 45% of hourly jobs and many salaried positions. How did Ford
manage cooperation?

ANSWER 2: In 1988 productivity increased percent from Ford also managed inventory
better, reduced working capital requirements, and reduced both repairs and scrap. Ford
reduced its workforce in the US from 244,000 in 1979 to 161,000 in 1982. During the same
period, the global workforce steadily declined from 495,000 in 1979 to 358,000 in 1988.
Productivity increased steadily during this period. In 1979 Ford sold 5.8 million vehicles
worldwide, or about 11.7 per worker; In 1988 it sold more than 6.5 million cars and trucks,
more than 18.2 per worker. In 1979 he made $ 2,400 per employee, and in 1988 more than
six times that amount ($ 14,800 per employee). Advantage of Japanese design and
production. Ford had manufacturing facilities in 15 countries. In terms of European sales,
Ford GM consistently led the way. In 1988 Ford had 11.3% of the market compared to GM's
10.Ford ranks fourth in Europe with 1.5 million registered vehicles.5 With its global market
share, Ford is the second largest automobile manufacturer in the world after GM. everything
in the world was fine. Paine Webber cited many of the reasons for Ford's turnaround
discussed earlier, as well as the high value of the yen and stable working relationships around
the world. The Report Card from Chilton Automotive Industries gave Ford an overall rating
of “A” in 1989. This positive rating Derived from a quality improvement as measured by the
J.Power Customer Satisfaction Index, a high profit per unit (USD 1,014 profit per vehicle)
and a return on sales (5.7%), an improved market share in the face of tougher competition
and the loss of GM -Share and more efficient processes, measured in terms of productivity
and inventory turnover. Caldwell heard positive things about employee engagement. In 1979
he published a principle memorandum (the 21st in Ford history) that encouraged EI. It was an
"event" on paper, at best a sanctions document. But the policy memo made the managers a
little more open-minded and gave our pilots a better chance.