GM, Ford and Porter We

GM, Ford and Porter

We should point out from the beginning of our analysis that all important companies in the marketplace rely on some form of strategy that allow them to grow and produce revenues for the shareholders. In this sense, some of the definitions and descriptions for strategy from Michael Porter's article are common to both Ford and General Motors. In this sense, all companies try, at some point, to be different, whether if in the services they provide, the products they are offering, the prices they set out for their products, their distribution chain etc.

As such, each of the two companies has a mission, a vision and strategic objectives that were defined by the board and the companies' leadership. The attainment of these objectives relies on a set of strategic plans and actions, to what Mintzberg refers to as "means of getting from here to there." Following on Porter, there are different ways of getting from here to there, which means that despite the fact that the strategic objectives may often be quite similar (in GM's and Ford's case, for example, the main strategic objective, shared by both companies, is to return to profitability), the means by which this is done is different.

From Porter's 'different' perspective on strategy, the individuals that lead the companies are often different in the way they decide to achieve the proposed goals. In this sense, actions and decisions are all tied to one or a couple of central decision making figures, willing to coordinate and assume decisions and responsibilities.

Both companies rely greatly on their CEOs to make the differences in turning the two companies around and making profit. Indeed, this was their fixed strategic objective. Alan Mulally, CEO at Ford, traveled throughout the U.S. during the first quarter of 2007, meeting with dealers, recreating the Taurus brand and making personal efforts towards reaching the fixed objective: making profit. This was what he decided that needed to be done and the decisions that needed to be made in order for the company to return to profitability.

On the other hand, Rick Wagoner, CEO at General Motors, took a different approach. Rather than a proactive response to market conditions, he chose a reactive response by which, in response to market variables, he acted. This meant job cuts, attempts to reduce production costs etc.

The driving forces by which the two companies rely when creating their strategies are also significantly different. The particularities of the automobile industry mean that each of the two companies will have the products offered as the driving force behind their strategy. The strategic actions taken by the companies strongly support this idea. For example, GM has attacked the hybrid car segments of the market, in an attempt to remain competitive with the likes of Toyota, for example. Indeed, the choices in terms of portfolio diversification through the introduction of newer car models on the market, in an attempt not only to retain existing customers, but to bring forth new ones, are obvious for both Ford and GM.

As such, in the automobile industry, the method of distribution (or rather the distribution network in this case) is quite important. Ford's CEO was willing to travel across the U.S. In order to meet the dealers, evaluate their performances and decide on future action in this area. Ford's approach was to encourage dealers in their activities through the direct presence of the company's CEO.

In terms of differences between the two companies on the road to recovery, probably the most important example is given by Tom Krisher. He points out towards the fact that "the essential difference between Ford and GM, according to some industry analysts, is that GM went into the tank first and is ahead in the restructuring game." This meant a different approach in facing the company's problems. The fact that the restructuring was begun earlier and more forceful at General Motors than at Ford meant that the company was also able to enjoy the changes brought about by corporate cultural change much quicker. Ford is still facing uncertainties in the new realities of the global market.