Case Detail

Case Summary

At Ford, Turnaround Is Job One

Case Number: 5-211-250, Year Published: 2012

HBS Number: KEL663

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Key Concepts

Board of Directors, Change Management, Competitive Strategy, Corporate Governance, Decision Making, General Management, Leadership, Management Styles, Organizational Culture, Strategic Planning,

Abstract

The case opens with the Ford Motor Company seemingly on the path toward bankruptcy. Ford had been bleeding red ink for more than ten years when it decided in 2006 that continuing the same turnaround attempts was not going to right the ship. The company was facing significant external challenges, such as intense competition and changing consumer preferences, as well as internal challenges, such as quality and design issues and a stifling level of corporate complexity.

As the case begins, CEO Bill Ford has taken the unusual step of hiring an auto industry outsider as his replacement. Alan Mulally, a thirty-seven-year Boeing veteran and principal architect of the venerable airplane manufacturer’s own massive and successful turnaround, wasted little time in getting about the business of remaking Ford. He developed a plan to:

• Focus on the Ford brand and divest the numerous other brands the company had acquired over the years
• Simplify and streamline the company’s manufacturing operations
• Remake the corporate culture from one of fiefdoms and false optimism to collaboration and facing reality

With an ardent belief in the plan’s viability, Mulally raised nearly $24 billion and began to put his plan into motion.

The case explores the many causes of this once-great company’s decline and the steps it took to beat the odds and get back on the path of profitability.

Learning Objectives

This case demonstrates that internal issues alone can derail a company and emphasizes the importance of leadership in fostering the right corporate culture to turn a company around. Students will identify the key internal and external factors that can contribute to a company’s decline and learn the importance of diagnosing issues within each of three major aspects of a company—strategy, operations, and financials—in order to develop a successful turnaround plan.

Number of Pages: 15

Extended Case Information

Teaching Areas: Management

Teaching Note Available: Yes

Geographic: Detroit, Michigan, United States

Industry: Automobile

Organization Name: Ford Motor Company

Organization Size: Large

Decision Maker Position: CEO

Decision Maker Gender: Male

Year of Case: 2006