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Ford Student Driver Takes the Wheel

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Submitted By josephg
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In the 3rd Quarter of 2006, Ford Company recorded a $5.8 billion loss and right after they hired a new CEO under the name of Alan Mulally. As he was presented for the first time in front of the automotive analyst and business journalist, he clearly defined what Ford must do to cut their losses back. They must streamline, cut cost and move faster. He defined what his first big move would be, “A weekly business plan meeting”.
Ford has been to through many crisis before. But there is always something, whether a hot car or a change in the economy that rescues the company. In the late 70’s and early 80’s, the second oil embargo affected the company until they earned $1.8 billion in 1983. Upon the introduction of Ford Taurus in the market, the company posted a high profit but then again in the latter part of the 80’s, Ford experience another setback only to be rescued by another hot product, the Ford Explorer. In the 90’s, Ford recorded profits as they entered the truck and SUV market but due to stiffening competition, safety concerns and higher gasoline prices, the company staggered down again.
Its 2006 third quarter loss is just one of the signs that Ford is not in a good situation. Ford used $3.1 billion of cash for operations in the 3rd quarter and forecasted $3 billion for the fourth quarter. In the past 13 months, seven executives at or above the senior VP level left the company. Its R&D is spending much larger as compared to its competitors but has only presented a fewer new models in the market. The company is considered to be the least globally integrated automaker in the world, which makes it size a handicap and not an asset.
The problem with Ford can be summarized into three; too much complexity, too little cooperation and not enough transparency. Ford’s culture are characterized by executive ranks careerism, turf battles and high turnover rate. Finance and

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