...EXECUTIVE SUMMARY Ford Motor Company started in Michigan in 1903. They have focused on designing and manufacturing that had been successful, however with increasing competition globally and increase capacity it needs to look at ways to improve profitability. Ford Challenge is to continue to research ways to be viable in the market and industry conditions. Dell Computers had been very successful with their virtual integration. However, since Dell and Ford are different types of industries, computer manufacturing and auto industry respectively, it does not seem right for Ford to implement exactly what Dell has which is “virtual integration model”. Realizing an urgent need to change their supply chain in order to make it more cost effective and more profitable, what I am thinking is Ford can partially implement and execute the virtual integration direct business model that has been used by Dell should be applied to Ford’s supplier base, distribution system and dealership. Through this model, Ford will use the emerging information technologies as well as new ideas from new technologies of other industries in order to transact with their dealers, suppliers, affiliates and customer. Ford can also boost its sales by providing better customer service and faster communication between dealers, suppliers, affiliates and customers in value chain. By measuring the performance of this model, Ford should schedule periodical review and evaluation meetings. All improvements along the...
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...2014 Subject: Ford’s Shareholder Value Enhancement Plan (VEP) Evaluation Ford Motor Company Ford Motor Company is an American automaker, it is the world's fifth largest automaker based on worldwide vehicle sales. Its headquarters are based in Dearborn, Michigan, which is a suburb in Detroit. Henry Ford founded Ford Motor Company on June 16, 1903 and it became one of the largest and most profitable companies in the world, as well as being one of the few to survive the Great Depression. Ford Company is the largest family-controlled company in the world; it has been in continuous family power for over 110 years. Ford now incorporates two brands: Ford and Lincoln. Ford once owned 5 other luxury brands which where were Volvo, Land Rover, Jaguar, Aston Martin and Mercury. But over time those brands were sold to other companies and Mercury was discontinued. Nasser was CEO of Ford Motor Company from 1998 to 2001. Todays CEO is Alan Mulally. Brief Summary of the Article The article talks about how in April 2000, Ford Motor Co. announced a shareholder Value Enhancement Plan (VEP) to recapitalize the company’s ownership structure. Ford had accumulated $23 billion in cash reserves and under the VEP would return as much as $10 billion of this cash to shareholders. For each share currently held, the plan would give stockholders one new share in addition to choosing either $20 in cash or additional new Ford common shares. Shareholders that would choose to receive cash would be taxed...
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...R D E F E N S E A NA LYS E S Ford Motor Company’s Investment Efficiency Initiative: A Case Study James L. Nevins Robert I. Winner Danny L. Reed, Task Leader April 1999 Approved for public release; distribution unlimited. IDA Paper P-3311 (Revised) Log: H 99-001057 This work was conducted under contract DASW01 98 C 0067, Task AD-1-950, for the Office of the Deputy Director, Systems Engineering, Office of the Director, Test, Systems Engineering and Evaluation, Office of the Under Secretary of Defense (Acquisition and Technology). The publication of this IDA document does not indicate endorsement by the Department of Defense, nor should the contents be construed as reflecting the official position of that Agency. © 1999 Institute for Defense Analyses, 1801 N. Beauregard Street, Alexandria, Virginia 22311-1772 • (703) 845-2000. This material may be reproduced by or for the U.S. Government pursuant to the copyright license under the clause at DFARS 252.227-7013 (NOV 95). Preface This document was prepared for the Office of the Principal Deputy Under Secretary of Defense (Acquisition and Technology) under the task order Defense Manufacturing Strategy, and addresses a task objective, to provide a case study on integrated product/process development implementation. This case study will be used for acquisition and technology training purposes by the sponsor. Many of the incentives, strategies, and implementation approaches at Ford have parallels in and implications...
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...Perspectives Paper Part I: Please provide answers to the following: 1. Identify the relevant facts of the Ford Pinto case: In 1970 Ford introduced the Pinto, a small car that was intended to compete with the then current challenge from European cars and the ominous presence on the horizon of Japanese manufacturers. The Pinto was brought from inception to production in the record time of approximately 25 months, where a normal car usually takes 43 months. This showed an expedited time frame for the Pinto. On top of time pressure the team was also required to follow a limit of 2000, that meaning it could not exceed $2000 in cost and it could not weight more than 2000lbs. When it came to routine crash testing of the Pinto, it was revealed that the Pinto’s fuel tank often ruptured when struck from the rear at a relatively low speed. This was because the fuel tank was positioned between the rear bumper and the rear axle, and when impact was made studs from the axle would puncture the fuel tank, spilling gasoline that could be ignited by the sparks. In crash testing 11 vehicles, 8 of the cars suffered potentially catastrophic gas tank ruptures. There were several possibilities for fixing the problem, but given the restrictions of limit of 2000, they made no changes. The most controversial reason for rejecting the production change was because of Ford’s cost-benefit analysis. Ford believed that the cost of rebuilding the Pinto to make it safer were far more expensive than the cost of...
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...FORD PINTO CASE The Ford management has chosen to be unethical and morally unworthy to be trusted with the lives of its customers. Can you just imagine the number of individuals riding every day in the cars that they produced, who are unaware that they could be in an injury any moment? Ford management has chosen not to follow the safety guidelines and standards in producing such products because at that time, the government is still not that strict in implementing such rules. And because of their eagerness to meet the production schedule, they have reduced the time allotted for the rear-end impact testing just to introduce such product on the market on time. They disregarded their customer’s safety and the possibility of injury or death just for the sake of small profit or share in the market. Ford with its utilitarian perspective, which the decision not to recall such products or even warn its customers, served the greater amount of good to those who are affected, hose who will benefit from the profit it will get. It has also regarded its decision as to having no instinctive value even when it is showing obvious consequences. The cost-benefit analysis that was used by Ford was also to blame. The cost amounting to $137M versus the $49.5M estimated for the cost of injuries, deaths, and car damages has been the deciding factor for Ford not to implement the design changes that would have made the cars safer. Ford used the formula so as not to legally implement the changes. However...
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...Utilitarian Analysis The Case of the Ford Pinto The Ford Pinto first rolled off the Ford Motor Co. production lines in 1971 and stayed in production in its original state until 1978. The vehicle engineers were tasked to develop the vehicle and put it into production within 25 months, which was nearly half the time in which the average new vehicle is put into production. The Ford engineers were aware that rear-end impact safety tests were pretty standard at the time, but they were not required by the National Highway Traffic Safety Administration at that time. The vehicle was rushed into production anyway to compete with foreign compact cars being developed by the Japanese during that time period. Only after the vehicle was made available to the public was the vehicle tested. The Ford Pinto ended up failing the rear safety test, due to the fact that it was susceptible to fire from rear end collisions. Ford engineers determined that the problem could be resolved by installing a baffle, which protected the gas tank from being punctured during rear-end collisions. The part would have only cost between $6.65 and $11 to be install, but the Ford Motor Co. determined through cost-benefit analysis that the cost of lawsuits would be less than the cost of installing the baffle and decided not to install the baffle. Ford Motor Co. also failed to notify customers of the problem and offer them the option to have the baffle installed. Between 1971 and 1978 the Ford Pinto would be involved...
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...21 June 2013 The Ford Pinto Case The big question which needs an answer in this case is if Ford should have installed a device to prevent the Ford Pinto from exploding into a fiery ball upon impact for the safety of its occupants. Before an answer can be determined, let’s look at the facts of this case. “In the late 1960s, American automobiles were losing market share to smaller Japanese imports (DeGeorge 298).” Ford felt the need to compete to keep ahead domestically so it developed the subcompact care, the Ford Pinto. Lee Iacocca, the CEO at the time ordered Ford to produce a car for 1971 that weighed less than 2,000 pounds and priced at less than $2,000. The engineers of Ford came out with the Ford Pinto. It took 25 months to design and produce the Ford Pinto. The industry norm it should take is 43 months. Due to the shorter production period, Ford tested the Pinto for rear-impact safety after production. The Pinto failed the test with 37 out of 40 attempts. The crash test revealed a serious defect in the gas tank. The gas tank would rupture by four sharp bolts on the rear axle with an impact of over 25 mph spilling fuel on the ground. The engineers designed the Pinto so the gas tank would set behind the rear axle to allow for more trunk space. The Federal Motor Vehicle Safety Standard 301 required vehicles to withstand rear-end collisions of 28 mph. The three times the Pinto passed was in cars equipped with three different modifications to the fuel tank. Installing a plastic...
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...Appendix 2: Ford Pinto Case and Cost Benefit Analysis Edited by Richard Brooks In 1968 in response to strong foreign competition, Ford decided to build a subcompact car — the Pinto — on a 2×2×2 plan (2,000 pounds, $2,000, in 2 years). In pre-launch tests, Ford discovered that rear end collisions propelled the gas tank onto the real axle, which had protrusions that ruptured the tank and caused the car to catch fire. Yet Ford did Figure 1: Ford Pinto not modify the Pinto’s rear axle. Nor did it follow through on an idea to place a rubber bladder in the fuel tank. Why? The reason seems to have been that these changes would have increased the price, lowered sales and reduced profit. That reason is given credence in a cost/benefit study done on modifying the Pinto. So the Ford Pinto went on sale with dangerous design faults in the position of the fuel tank and nearby bolts, and the tendency for the fuel valve to leak in rollover accidents. Design and production was rushed and cost of the vehicle kept down to sell it at $2000. It sold well, until 1972 when four people died and one young boy was horrendously burned and disfigured; these are only a few of the incidents that resulted from the Pinto’s flaws, many more followed, costing Ford millions in compensation. The engineers were fully aware of the flaws, yet the company continued to sell the car as it was, without safety modifications. Ford applied a generic cost/benefit analysis to accidents based on National Highway Traffic...
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...“Ford Pinto Case” After watching this video about the Ford Pinto Case, I think their decision was no ethical, because of the cost-benefit analyses they applied, trying to determine if the flaw in Ford Pinto automobiles is worth the financial risk in comparison to the value in human life, which is unconscionable and indefensible. Ford estimated that each dead that could be avoided would be worth $200.000 and each major burn injury $67.000 and average for repair cost of $700 per car involved in an accident. Moreover, it assumed that there would be 2100 burned vehicles, 180 serious burn injuries and 180 burn deaths. And when they made some math, the cost was calculated to be $137 million, which are much greater than the $49.5 million benefit. Furthermore, Ford chose to pay for possible lawsuits instead of repairing the Ford Pinto. If Ford had the right business ethic and moral integrity to put consumer safety first, instead of profit and competition, then there would have been no loss of life or financial suffering. Sometimes, you have to believe that the end justify the means. And that happened to me, four months ago. I had to go to Cuba, for an emergency. And I had no money in that moment to pay for it, so I applied for a credit card, which, one of the point while applying, was to say what my annual income was, and I had to lie about it. Because, if you say it is less than 20.000, the credit card company will only give you a credit line of 2000, or less. Now, if you say that...
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...Ford Pinto Case In the late 1960s Ford Motor Company developed the idea of the Ford Pinto. Foreign automobile such as Germans and Japanese manufactures dominated the small car market. Ford Motor Company did not want to stay behind in production. Chief Executive Officer, Henry Ford II and Lee Iococca’s rushed building new compact cars out in the market within two and half years which, was the Ford Pinto and the shortest production planning. Production and distribution of the 1970s Ford Pinto stirred controversy regarding safety concerns. Ford’s desire to compete with the foreign manufacturers led Ford to overlook known design flaws and their own ethics while in search of higher profits. Ford assigned a team of engineers to work on nothing but the Pinto. This team was required to stick to Iacocca’s goal of “the limits 2000”; this meant that the car could not weigh more than 2000 pounds. This became a challenge for the engineers and created concerns regarding the placement of the fuel tank. Because of the accelerated production the testing was not done thoroughly. Out of 11 Pintos subjected to rear end collisions, eight failed the test. Only the three with baffles between the tank and bumper and a special interior tank lining met safety standards. The project was almost complete, and it was not possible to make redesign revisions and meet the deadline for the release of the Pinto. The car met the requirements for the American public. It was not long before...
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...Assignment # 1 - Chapter 5 Case - “Ford Motor Company” Fred Baylor Principles of Management - BUS 302 Professor Khaki Weber October 31, 2010 The case creates four options to choose from. Discuss at least three criteria the company should use to decide which of the four listed options is best and the reasons why each criterion should be used. Ford is a household name and has been around for over 100 years. Their slogan, “Built Ford Tough”, is engraved in the hearts of a lot or people, both employees and dedicated customers. In order for things to start to look up for Ford, they must develop a project plan that will work, but make the plan flexible enough to adapt if market conditions change. A solid project plan should include making certain that they are compliant with the United Auto Workers (UAW), so that jobs, benefits and retirement is impacted and falls under the guidelines that are in place. It will be impossible to make changes and this area not be impacted. The plan should include selling all or some of the products from their luxury car line, maybe not all at one time, but a gradual dissemination. The demand for luxury cars these days have declined and consumers are not sure if they have the value that they have had in the past. Lastly the plan should include extending their presences in the international market where they have been successful. Europe, South America, and China have been very...
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...The Ford Pinto Case Back in the 1970s the Ford Pinto was debuted without regard to proper safety features and concern for proper ethics while producing this automobile. Buyers wanted lower pricing and bigger trunk space more than the consideration for safety. Lee Iacocca, president of Ford, ran the business striving for higher profits and cutting costs. His lack of interest for human life initiated many lawsuits against Ford and, in the end, was a far bigger cost than installing safety features in the Pinto in the beginning. The biggest concern regarding the role people played in the Ford Pinto case was the concern for cutting costs and making the biggest profits over the concern for human life. Severally jeopardized in this case were proper corporate morals and ethics. This started when Lee Iacocca acquired the position of president from the former President Semon Knudson. Lee Iacocca celebrated much success with the Mustang and wanted to market small cars to compete with the foreign car markets. Lee Iacocca drove to promote the Ford Pinto by 1971. Because it typically takes three and one-half years for the production of an automobile, to have the Ford Pinto to the showrooms by 1971, only left two years to launch the Ford Pinto. During the production process, crash tests revealed safety issues with the gas tank in the rear of the car. If the car were struck from behind even at a slow speed, the gas tank would rupture, and explode upon impact. Lee Iacocca’s decisions...
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...1970’s, Ford had been criticized by the public due to a defective fuel system design. Although Ford had access to a new design which would decrease the possibility of the Ford Pinto from exploring, the company chose not to redesign the system, which would have cost $11 per car, even though the analysis showed that the new system would result in 180 less deaths (1999, The Valuation of Life As It Applies To the Negligence-Efficiency Argument). The company defended itself by using the accepted risk/benefit analysis to indicate that costs of making the change were higher than the fatality costs. This analysis was based on Judge Learned Hand’s BPL formula, where if the expected harm exceeded the redesign costs, then Ford must make the change, whereas if the redesign costs were higher than fatality costs, then it didn’t have to. Ford legally chose not to make the fuel system changes which would have reduced the fatality rate. However, it was legal doesn’t mean that it was ethical to the society. It is hard to accept how companies can put price tag on a human life. To me, it is unethical to determine that people should die or be injured because it would cost too much money to prevent it. Some things just can’t be measured in price, and that includes human life. Christopher Leggett stated in his case analysis: “Ford adopted a policy of allowing a certain number of people to die or be seriously injured even though they would have avoided it. From a human rights perspective, Ford disregarded...
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...In 1968, the Ford Motor Company, based upon a recommendation by then vice president Lee Iacocca, decided to launch a subcompact car which is Ford Pinto. In order to gain a large market share, the Ford Motor Company plans for the project was the 2000/2000 rule. The car’s designer was designed and developed Pinto could weigh no more than 2000 pounds and it could cost no more than 2000 dollar. The Product Planning Committee instituted this rule because of the extreme competition between all of the automotive companies at the time (Daniel Boyce, n.d). Due to the Ford Motor Company was implemented the 2000/2000 rule, the car’s designers had to cut corners and restricted their ability to design a car the way it should be designed. Therefore, the Ford Pinto is known to be one of the most dangerous cars produced in automotive history due to several serious design flaws. Daniel Boyce wrote an article titled “Ford Pinto Case Information”. In his article, he claimed that “Pinto’s problems originated with the placement of the gas tank. At that time of automobile production, it was customary to place the gas tank between the rear axle and the bumper, which would give the vehicle more trunk space. The only other place the gas tank would be mounted was above the rear axle, but that eliminated trunk space, and the developers of the Pinto wanted the most practical car they could produce. The gas tank was nine inches away from the rear axle. This might not seem like a big deal, but there were...
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...Case Study of Ford Motor Co. Executive Summary Ford Motor Co. was second largest automobile company in the word, with revenue $.144 billion and more than 370,000 employee (in 1996), with extended operations to 200 countries. Ford dealing with a huge number (thousands) of suppliers and dealers in daily basis, which create high level of complexity combined with other internal and external factors have pushed Ford to search for solutions in order to overcome the costly supply chain challenges that they are facing and may continue to face in the future if they didn't find a proper solution . the main issues with their current system is: the inefficient control of their large data base and complex network of suppliers, the existence of independent distributors and their inability to communicate and serve their customers directly. Ford realized that they should modify their supply chain in order to make it more cost effective and more profitable, in order to solve this issue for launched a full organization re-structures business process plan called (FORD 2000), by segmenting their market to 5 Vehicles Centers (VCs) for product development activates, each (VC) was responsible about for developing of vehicles in a particular customer market, By partly adapting the virtual integration direct business model of Dell Co., Ford can use the emerging information technologies and internet as well as new ideas from high tech industries in order to interact and transact with their...
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