Tuesday, December 3, 2013

Resurgence of Ford Motor Company

The resurgence of IBM as articulated in the article, “Lessons in Longevity, From IBM” by Steve Lohr is mirrored by the return to relevance of Ford Motor Company.

Ford recorded losses of $30 billion dollars between 2006 and 2008, as a result of a global economic slowdown, plummeting sales and operating inefficiency. With the appointment of new CEO, Alan Mullaly in 2009, the company began its resurgence.

Just as IBM had chosen to build upon its traditional strength in the mainframe market and gradually move into software and services, Ford’s revival was rooted in its traditional strength in the production of quality SUVs – Ford Escape – as the company successfully diversified into manufacturing smaller automobiles – Ford Fiesta, Focus and Fusion.

In addition to focusing on the production and sales of new models, Ford sought to boost its operation efficiency by cutting its losses in the Europe. In a sweeping action to cut cost and enhance efficiency, Mullaly reduced Ford’s operating capacity in Europe by 18%.

The outcome from these managerial actions have led to immense growth in sales and granted them a significant edge over their rivals in the automobile industry. While major competitors such as General Motors and Chrysler failed to fully recover from the forces of the economic slowdown, Ford’s ability to build on its past capabilities led to an 11.82% revenue growth, far superior than GM (3.74%), Toyota Motor (-8.83%) and Honda Motor (-0.15%).

Ford Motor Company’s successful turnaround lends credence to Lohr’s article and demonstrates that longevity requires not only innovative venture into new realms, but also, a solid foundation in past strengths.

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