Free Essays,College Free Essays,Free College Essays at Anti Essays

Ford has faced the same issues for years: excess capacity, inefficient operations, a powerful and richly compensated union and robust foreign competition. Its recovery from each downturn has been weaker and weaker. U.S. market share has tumbled for many years. Its excess capacity and decrease in operating margins have put Ford at a financial disadvantage. In September 2006, Ford’s balance sheet showed a working capital deficit exceeding $35 billion with cash and cash equivalents balance of $25.5 billion with total current assets of $64.8 billion. The magnitude of ford’s current situation seemed overwhelming. How to overcome these challenges? It seems that Ford should restructure every aspect of its business.
Automotive industry is mature in the U.S. market. In addition, competition is extremely fierce. The average growth rate has been less than 1% over the past seven years. The automotive industries growth only comes with the addition of new markets such as China, India, and Brazil. Rapidly rising commodity prices — particularly steel prices — and higher gasoline prices that are accelerating consumers' shift away from large trucks and SUVs together are having a tremendous impact on Ford’s sales. Ford is also cutting North American production of its large trucks and sport utility vehicles in the face of rising gasoline prices and the weak U.S. economy. Ford's R&D spending is very high relative to its size, but has fewer new models to show for it. “Alan Mulally also identified Ford's basic problems - too much complexity, too little cooperation, not enough transparency.” Mulally stated that prior to him being on board, “The company was being managed as a collection of six or seven Fords, each pursuing its own agenda.” The complexity of company structure and the bureaucratic culture slow down the decision making processes.
With the new CEO in place, many changes have been executed. Mulally is determined to decrease the influence of the finance...