Q1. Read carefully the case Study CASE GENERAL MOTORS, FROM BIRTH TO BANKRUPTCY IN 2009, SURVIVAL AND DEPENDENY ON INTERNATIONAL MARKETS and answer all questions that follow Introduction and History- William clay ford, Jr. was staring out of 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 would 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 offering to adjust for higher fuel costs? How can food 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 cutting edge design an high quality; improved operation with more flexibity and lower costs; and improved marketing with better brand image and customer interest. Ford was at crossroads, and the way ahead remained shrouded in fog. Historically, Ford Company has gone through many evolutions since its humble beginnings on June 16, 1903. 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. Ford Motor Company continued along with minimal leadership problems until the death of its president, Edsel Ford, 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. Finally, in 1945 Henry Ford was forced to step down and Henry FordII assumed the role of president. Henry FordII 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 powerful professional oligarchy. Over the next 20 years, Ford Motors Companys presidents and CEOs turned over 13 times. The 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 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.These losses motivated Ford Company to search for a new CEO from outside the industry, Alan Mulally formerly of Boeing Corporation. Mulally stood out as qualified successor because he demonstrated the leadership skills Ford had established many years ago as critical to success. Dr Kitiabi2022-DSM501CASE: 2009 South Western. Ireland/Hoskisson/Hitt 2 Fords Global Strategy - When Alan Mullaly, the CEO of Ford, arrived he was shocked to learn that the company produced one Ford Focus for Europe and a completely different one for the United State. The strategy of designing and building different cars for different regions was the standard approach at Ford, due to which, Ford was unable to buy common parts for the vehicles and could not share development costs. The result was high costs. Ford based this strategy upon the assumption that consumers in different regions had different tastes and preferences, which required considerable local customization. When the global financial crisis rocked the automobile industry in 2008-2009, Mullaly decided it was time to change their strategy in order to control their costs. He also believed there was no way Ford could compete in large developing markets like India and China unless it produced low-cost cars. The result was Mulallys One Ford strategy, which aims to create a handful of car platforms that Ford can use everywhere in the world. Under this strategy, new models share a common design, are built on a common platform, use the same parts, and will be built in identical factories around the world. Ultimately, Ford hopes to have only five platforms to deliver sales of more than 6 million vehicles by 2016. Ford hopes that this strategy will bring down costs sufficiently to enable Ford to make greater profit margins in developed markets, and be able to make good margins at lower price points in hypercompetitive developing nations. Ford Motor Companys Strategic Leadership, recognizing the importance of human capital development in strengthening the company as a whole, developed a leadership training program in the late 1990s comprised of four separate courses, Capstone, Experienced Leader Challenge, Ford business Associates, and New Business Leader. These programs were designed to instill the mind-set and vocabulary of a revolutionary leader as well as to teach the tools necessary to steer a leadership and manufacturing revolution. Ford also planned to use its Business Leaders Initiative to get all 100,000 salaried employees worldwide involved in business leaders cascades intense exercises that combine trickle-down communications with substantive team projects. In 2000 Ford planned to guide 2,500 managers through one of its four leadership courses. Yet in 2006, Ford Motor Companys leadership structure remained complex, highly bureaucratic, and comprised of a six layered management scheme on which pay is based. The COO for the Americas affirmed, The company has too many layers, the company is too bureaucratic, and it takes too long to get things done. The Ford Motor structure was extremely tall with ten levels and a wide span of control of five, for the Ford senior leadership structure. Ford geared up for many changes under the leadership of Alan Mulally, including the replacement of many members of the top leadership team. Ford Motor Companys Board of Directors comprised of 13 extremely diverse members who have many different corporate and personnel backgrounds, ranging from professor of physics to publishing, banking, and auditing. Three of the directors are members of the Ford family, and six have served on the board of directors for more than 10 years. Despite the myriad of the backgrounds presented in the Fords board of directors, past decisions have shown that the Family retains most of the decision-making power and influence (i.e. Executive chairman position was held by William Clay Ford Jr.,). It was only after Ford Motor Company began to lose billions of dollars that William Clay Ford Jr., stepped down as CEO. Even with his resignation as CEO, it is still clear that William Ford still wields most of the power at Ford, Dr Kitiabi2022-DSM501CASE: 2009 South Western. Ireland/Hoskisson/Hitt 3 as evidenced by his renaming the board chair position, Executive chairman. William Ford was honoured as the 2006 automotive Industry executive of the year, a great honor considering the trends taking place within the automotive industry. For Over 76 years, General Motors (GM) was the global industry sales leader, but in 2007, Toyota became the worlds largest automaker, and Ford fell to hard times in addition to market share deterioration, GM has been struggling to earn positive returns in recent years. It finally returned to profitability in 2007 after experiencing several years of significant losses. Toyota sold 2.35 million vehicles in the first quarter of 2007, 900,000 more than General Motors. The Toyota brand has come to mean reliability at an affordable price. While sales of Toyota vehicles have levelled off in Europe due to European Union policies designed to limit their sales, the company plans to build five more large assembly plants in North America by 2016. That would bring Toyotas total to 13 plants and 50,000 employees in North America. Toyota first entered the Chinese market with exported cars built in Japan in the 1960s. Many of GMs problems stem from its competitive capabilities in the North American market, where Toyota and other foreign auto makers have made substantial gains. Interestingly, GMs return to profitability is not due to success in its North American operations as it continues to lose money there. Its recent profits have come from GMs international operations, especially sales in the Chinese market. China surpassed Japan to become the second largest vehicle market in the world. GM has the second highest market share in the Chinese market behind Volkswagen. GMs sales in China come from a 50-50 joint ve

DISCUSSION QUESTIONS a) Discuss the management issues this case and outline some of GMs biggest competitive challenges in the 2000s; why was it unable to meet them (5 Marks) b) Discuss the factors caused a crisis for GM in 2008 that led to its bankruptcy in 2009? And outline the three leveled strategies adopted by GM to regain its competitive advantage in the 1980-1990s (10 Marks) c) Discuss the strategy(ies) developed by CEOS Alan Mulally & Alfred Sloan giving GM a competitive advantage over Ford and why was it successful? 3. What structure did Sloan adopt for GM and how did its structure support its strategy? How did these strategies differ with those of CEO William Clay Ford Jr (15 Marks)?