Teaching Note: Case 33 – Is ONE Ford Really Working?
Case Objectives
1. To examine how external and internal forces affect competitive strategy.
2. To investigate the choices of business, corporate-level, and international strategies in a
3. To discuss how leadership can use strategic control and organizational design concepts to
See the table below to determine where to use this case:
NOTE: Although pointed primarily at strategic analysis and formation, this case is also
appropriate for an in-depth discussion of how implementation is aided by effective
Chapter Use Key Concepts Additional Reading
and/or Exercises
1: Strategy
Strategic management; vision, mission,
2: External
Industry competition five forces; general
NOTE: web links, stock
3: Internal
Value-chain analysis; resource-based view of
4: Intellectual
Assets
Intellectual and human capital
5: Business-Level
Strategy
Competitive strategy; generic strategies
6: Corporate-Level
Corporate strategy; diversification; synergy;
7: International
International expansion NOTE: additional reading,
8: Entrepreneurial
Strategies
Opportunity recognition
9: Strategic
Strategic control; informational vs.
10: Organizational
Design
Organizational structure
11: Strategic
Leadership NOTE: web links,
12: Managing
Innovation
Innovation; scope of innovation
Case Synopsis
In 2015 Ford Motor Company was forecasting slow but steady growth, with sales projected to be
the best they had been in years. Ford, which was one of the world’s most profitable companies
until 1999, had been struggling for survival since 2003 and had faced its largest single-year loss
Not only were there problems inflicted by previous leadership, there were also certain systemic
problems characteristic of large-scale organizations. Over the years, Ford’s product development
and manufacturing systems – once its distinctive competencies – had gone awry. The highly
In an attempt to improve the financial condition of the struggling automaker,
a new chief executive ocer, Alan Mulally, had been selected in September
2006. Mullaly, a former executive vice president of the Boeing Company, was
The vision was to have a smaller and more profitable Ford. Mulally’s “ONE Ford” message was
intended to communicate consistency across all departments and all segments of the company,
Mulally started by closing plants, cutting jobs and laying off employees; increasing plant
utilization and production levels; refocusing on the Ford brand by selling off the brands Jaguar,
Land Rover, Volvo, and Aston Martin, as well as discontinuing Mercury. He also made structural
By 2013, although problems remained in Europe, Asia, and South America, Ford had seen sales
recover in the U.S. to its best performance ever. This performance confirmed Mulally’s vision
and allowed him to retire, hand picking his successor, Mark Fields, to take over in July 2014.
Fields was facing an industry in disruption: not only were global markets hard to predict but
technology shifts and consumer preferences were changing the nature of the whole transportation
experience. This would require significant innovation, and an adaptable, nimble organization that
could deliver. Would Mullaly’s, and now Field’s, vision of “ONE Ford” help Ford Motor
Company accelerate its progress, drive organizational excellence and create profitable growth for
all?
Teaching Plan
Everyone should be familiar with the challenges facing the American automobile industry. The
Ford case provides an opportunity for an investigation of the entire arc of strategic management,
with special attention to how strategies are formulated under turn-around conditions. The case
can also be used for a discussion of strategic implementation, using control systems and
The instructor may wish to assign the General Motors case as well, earlier in the course, as a
warm-up, and point of comparison, and then assign the Ford case as a wrap-up of strategic
management concepts.
ICEBREAKER/UPDATE
Because almost every student has had the responsibility for the upkeep on an automobile, it
might be illustrative to ask:
How many of you own, or have ever had responsibility for the upkeep of a car made by GM,
Ford, or Chrysler?
What is your opinion of this vehicle?
How many of you would consider buying a Ford in the future?
It’s unlikely that a majority of students own or have responsibility for the upkeep on a car made
by an American auto company. It is likely that the opinion of these American cars is not that
high. The instructor may want to list the three companies (Ford, GM, Chrysler) on the board and
prepare students to enter strategy analysis mode – what are the forces that might work against
Ford as it tries to compete in the current environment?
It might be useful to visit this website http://www.ford.com/vehicles/ to take a look at Ford’s
current brands. As of 2015, Ford promoted Ford vehicles – the Fiesta, Focus, Fusion, Taurus, and
the new C-Max, with the F150 pickup, and iconic Mustang being among the top brands. The
Ford had divested its interest in Aston-Martin in 2007 and had sold off Jaguar and Land Rover to
Tata Motors of India in 2008.
New, “next generation” vehicles were being promoted, using the “small-vehicle platform,”
incorporating ideas from the Ford Silicon Valley Research Lab and advances in manufacturing
technology. See http://corporate.ford.com/innovation for current news, and see this video
After refusing the government bailout offered in the spring of 2009, Ford had the challenge of
doing business carrying a debt load, while rivals Chrysler and GM escaped this via bankruptcy.
The following article from July 2009 details the situation: “If auto sales don’t improve soon,
By 2013, these threats appeared to be in the rear-view mirror. In August 2013, Ford had had its
greatest sales month since 2006, with the F-Series trucks leading the way. According to reports,
Ford had been operating near full manufacturing capacity since 2012. This had had a positive
effect on profit margins, because it kept fixed costs low. But tight inventories for products like
There had been press about the challenges Ford had had with the Lincoln brand. Ford had
acknowledged this, planning a re-imagining campaign for 2013 to hopefully improve perception
And see this video from February 2013 of Mulally talking about Ford’s Lincoln re-launch
strategy, and its entry of Lincoln into China – suggesting that the Chinese people “love heritage”
Regarding Mulally and his pending retirement, he had stated he would stay at Ford as CEO at
least through 2014. What might happen then? See this 2013 video of Bill Ford discussing
Mark Fields became CEO of Ford in July 2014, and, according to this report from January 2015,
“started his tenure in an interesting way building on the framework set in place by Mulally while
For up-to-date status on the company, see this compilation of information from The New York
TEST QUESTIONS
Before engaging in discussion, you might want to test student’s basic knowledge regarding the
case and the major concepts. Here are some multiple-choice questions to use. (This will get the
student’s attention – they can’t answer these if they haven’t read the case!)
Which of the following statements is most true?
a. Ford was one of the firms that had needed a government bailout after the 2007-2008
b. Ford had to sell its Lincoln brand.
ANSWER: d. Ford was the only automobile firm that had NOT needed a government bailout
after the 2007-2008 economic downturn. Ford did not sell the Lincoln brand. (However, in 2012
Mulally set Lincoln up as a separate division under the name The Lincoln Motor Company.)
Ford was late to the China market, with a 2014 share of less than 5 percent, while General
Apple may have an electric or partially self-driving car ready for market by 2020.
a. Yes
b. No
ANSWER: a. In 2015, news surfaced that Apple might be entering the personal transportation
Summary of Discussion Questions
Here is a list of the suggested discussion questions. You can decide which questions to assign and
also which additional readings or exercises to include to augment each discussion. Refer back to
1. What are key forces in the general and industry environments that affect Ford’s choice of
strategy?
2. What internal resources and assets does Ford have that may give it a competitive
advantage?
3. How should Ford compete?
4. What has leadership done to implement strategy, and what challenges remain?
Discussion Questions and Responses
Prior to answering the specific case questions, the instructor might want to position the
Referencing Chapter 1: Strategic Management
Strategy is all about the ideas, decisions, and actions that enable a firm to succeed. See Chapter
1, Exhibit 01: Strategic management consists of the analyses, decisions, and actions an
organization undertakes in order to create and sustain competitive advantages:
●strategy directs the organization toward overall goals and objectives;
●includes multiple stakeholders in decision making;
Leaders face a large number of complex challenges. Leaders must be proactive, anticipate
change and continually refine changes to their strategies. This requires a certain level of
“ambidextrous behavior,” where leaders are alert to opportunities beyond the confines of their
See Chapter 1, Exhibit 06: The primary role of the organizational leader is to articulate vision,
mission and strategic objectives. Leaders must communicate their initial vision of the
organization’s purpose. What was the original goal that evokes a powerful and compelling
mental image of a shared future, one that would be massively inspiring, overarching, and long-
term, that represented a destination that is driven by and evokes passion?
The organizational mission also needs to be considered: a mission encompasses both the purpose
of the company as well as the basis for competition and competitive advantages. In writing a
Organizations must respond to multiple constituencies if they are to survive and prosper, and the
mission provides a means of communicating to diverse organizational stakeholders. Although
Anticipating that things might change, an organization’s leadership must then establish strategic
objectives to operationalize the mission statement. That is, objectives help to operationalize the
One thing CEO Mulally did early in his tenure was to refocus Ford’s vision – the “bigger-is-
His mission was to focus organizational stakeholders on the Ford and Lincoln brands, close down
Mercury, and sell off the other “premier” autos (Aston-Martin, Jaguar, Land Rover, and Volvo.)
In order to operationalize this focused mission, Mulally had to set some strategic objectives. His
overall strategy was to obtain operating profitability at a lower volume while changing the mix
of products to better appeal to the market. Mulally had to make structural and procedural changes
It’s also important to consider the concept of stakeholder symbiosis, that stakeholders are
dependent upon each other for their success and well-being; and that there is a need for
Although not in the case, the discussion over the fate of the auto industry in early 2009 clearly
demonstrated the dependencies among all stakeholders. Parts suppliers, unionized autoworkers
Stockholders and the overall U.S. financial system were dependent on a somewhat predictable
future. This is why the government felt it had to act to bail out General Motors and Chrysler in
Here is where students can be reminded of how the chapters in the book are linked. See Chapter
1, Exhibit 1.3 for a depiction of the strategic management process. During strategic analysis, the
leader does “advance work” to anticipate unforeseen environmental developments, identify
In strategy implementation, depending on the type of organization structure, the leader might
include key individuals in a discussion around selecting which strategies might be best to
The basic question strategic management tries to answer is: How can we create competitive
advantages in the marketplace that are not only unique and valuable but also difficult for
competitors to copy or substitute?
1. What are key forces in the general and industry environments that affect Ford’s choice
of strategy?
Referencing Chapter 2: Analyzing the External Environment of the Firm
Organizational leaders must become aware of factors in the overall environment that might affect
their ability to create a competitive advantage. So how do managers become environmentally
Environmental scanning involves surveillance of a firm’s external environment to predict
environmental changes and detect changes already under way. It is a BIG PICTURE viewpoint
Environmental monitoring is a firm’s analysis of the external environment that tracks the
evolution of environmental trends, sequences of events, or streams of activities. Leaders need to
What factors or trends might be most important to Ford? To assess how the external environment
might affect Ford’s strategy, it’s necessary to take a look at the factors in the general external
Political-Legal: Government intervention meant some firms lost flexibility, control; emission
Economic: The auto business was cyclical and the demand for cars was strongly impacted by
boom or recession in the economy; first rising gas prices, then the credit crunch, meant
Demographic/Global: Automakers needed to attract younger, more affluent buyers to high-status
Sociocultural: First the SUV was a status symbol; then going green (hybrid/electric) became the
Technological: The electric/hybrid option was dependent on new technological developments.
Based on the general environmental forces, the industry was under pressure, but there were also
opportunities. Things were changing quickly, especially customer tastes, yet the auto industry’s
It’s also necessary to assess the segments of the external competitive environment that include
Porter’s five forces model allows strategists to anticipate where the industry might be most
vulnerable. See Exhibit 2.7. Ford, like other automakers, was confronting two key threats:
●One was from the increased levels of rivalry.
●The second was the growing power of buyers such as corporate and government fleet
Clearly, there were a few large and equally balanced firms that were pitched in a battle for a
greater share of the global market. Slower industry growth was resulting in an increase in this
The other key threat was coming from the growing power of buyers. Most buyers were clearly
beginning to see more viable choices in terms of the firms from which they could buy. Although
Rivalry
Very High
Substitutes
Buyers’
Power
Med-High
Suppliers’
Power
Low
Suggested: A few large
and equally balanced
competitors fighting for
global market share;
Suggested: Consumers do
not have much price
negotiating power, but do
have choices; small
Suggested: Low – do not have
much power, except single
Suggested: No real
substitute for personal
automobile
transportation. –
firms, and the dealers themselves. Suppliers did not seem to have much power, but they did
Based on the external environmental factor analysis, the U.S. auto industry had many challenges
to profitability, primarily from slow industry growth. Equally balanced competitors made it
difficult for any one to achieve an advantage. There was always the possibility for overcapacity
This was true for most American companies, while Japanese companies were able to capture
better value by concentrating on offering much sophisticated product designs and technology.