Ford: Recent Decision Organization: Ford Motor Company

Ford: Recent Decision

Organization: Ford Motor Company

Nature: Global Automaker and owner of additional subsidiaries

Time Period: First and Second Quarters, 2011

Inputs Used: Global search features using ProQuest, Questia, Google Documents, The New York Times, Ford Motor Company website

Despite economic trials, Ford Motor Company has come out of some of the most difficult economic times for automakers in better shape than many other auto makers in 2011. In fact in April, 2011, Ford reported its largest first-quarter profits since 1998, particularly because of a shift to smaller, more fuel-efficient cars. This is a welcome shift and change in reporting since its decision to borrow almost $24 billion in 2006, which helped Ford move more quickly than GM or Chrysler to bring out new lines of more fuel-efficient cars, and even more important, a cash cushion when the entire automobile industry ran into problems in 2008. In addition, Ford sold off its luxury brands (Jaguar and Land Rover) and its portion of Volvo to concentrate on its core business and redefine itself (Ford Earnings, 2011).

In June, 2011, Ford's CEO, Alan Mulally, unveiled an aggressive new strategy that is designed, in part, to increase Ford's worldwide sales from 5.3 million to 87 million per year, putting the company back in the top tier of world production and back to strongly competing with Toyota. The strategy is an accelerated growth plan that is focused more on growing the business in Asia, and amping up in countries that Ford has seen a diminishing market share over the past few years. Mulally noted: "We're clearly transitioning into a growth mode after going through a horrific recession and industry collapse. We are now positioned to serve customers where the market is growing" (Vlasic, 2011).

There are several impacts to this decision. While Ford was able to weather its difficult times without Federal money, it did need to borrow significantly and sell off some brands so that it could concentrate on more fuel-efficient, smaller vehicles that the global gas crisis has made desirable, particularly in large urban areas. Ford earned an almost $7 billion profit in 2010, and increased its market share in the United States only the second time since 1993. It will need to retool some of the domestic factories to product more Fiestas and Focus sedans, perhaps cutting back on the standard Ford truck. China is a specific growth market for Ford, and the Fiesta and Focus are both poised to become the car of choice for that market. In fact, Ford is aggressively after some of General Motors' 14% market share, considering it has less than 4% share in this gigantic potential market. Over the past few years, Ford has not really been in a position to robustly peruse plans like this. Ford does not seem worried, either, about its low performance in China and Asia right now. Since Ford's performance is so low right now, anything significant will be a positive and will buttress its performance. Mulally said the Chinese were already quite aware of their product line from movies and the Internet, "the entire industry in China is growing, so it's not like you're taking share away from another competitor. You have all these new customers that are now entering the marketplace and looking for world-class products" (Vlasic). Clearly, Ford believes this new positioning will pay off sooner than later. In any case, it is likely to have a strong impact on what other competitors decide to do as well, and the fiscal dollars sent to shoring up this new brand push will possibly be a boon for Ford domestically as well.