CASE STUDY

FORD MOTORS AND GENERAL

MOTORS

Submitted By:
Rohini Dusane 17
Dhrupal Rachh 44
Manali Wyavhare 51
SYNOPSIS OF THE CASE

FORD MOTORS:
• Founded by Henry Ford in, 1903.
• Henry Ford Strategy:
 Mass Production
 Centralization
 Developed Mass Market - One Model “T”
 Limited Product Differentiation
 Low – Cost
 Mfg. Distinctive Competence -
Standardization of Quality Component Parts for
easy and cheap Assembly
Problems at FORD MOTORS
• Leadership
• Style of Management
• Resistance to change( No Innovation).
In 1980’s:
• No. of product had reputation for shoddiness.
• Competition from Japanese manufacturers.
• High Fixed Cost.
Strategy Adopted
• Adopted broad based cost-cutting effort.
• Cultural change- Cutting layers of management
(Flat Structure).
• Focusing more on Product Quality.
• Participative management style.
• Restyling of Cars.
Organogram of Ford Motors
Organogram of Ford Motors
CEO
Allan Mulally

Chairman of the Board

William Ford

Director Directors Directors

GENERAL MOTORS:
• Founded by William C. Durant in 1908
• Alfred P. Sloan was the president in 1923.
• His Strategy:
 Broad Differentiation of Product
 Decentralization - Profit Centers
 Five Divisions - Five Market Segments
 Mass Production
Developing Problems at G.M.
• Vertical Integration carried too far - 60%

• Transfer Pricing Problems - Corporate Control

• High Cost - Poor Quality

• Product Differentiation Between Divisions
Became Excessive - Destructive Competition

• ROI Declined
• Too Many Models And Platforms
Oil Crisis and Japanese Competition
• Small Cars - G.M. Little Experience
• Lean Production - Low Cost
• High Quality

• G.M. European Division Had These Skills But

Could Not Transfer Them To U.S.
ROGER SMITH ERA - 1980’S at G.M

• An Attempt to Reduce Cost, Increase Quality, and

Improve Customer Responsiveness
• Business - Level Strategy
 80 Models And 15 Platforms
 Reduction Of Models And Platforms
 Consolidation Of Functional Activities
 Lost Its Differentiation - Division Models All Began
To Look Alike
 Divisions Lost Their Autonomy
• Functional - Level Strategy
 $50 Billion Investment
 Automation And Robotics - People Ignored
 Toyota Nummi Joint Venture - Lean Production
• CORPORATE - LEVEL STRATEGY

 Costs Reduced but still too High: $1,800 - $600

 Reduced Level of Vertical Integration - More
Outsourcing.
 Car Divisions Divided and Combined into Two Business
Groups: CPC (Small Cars) - Chev And Pontiac And BOC
(Large Cars) - Buick, Olds, And Cadillac.
 Did Not Work: Costs Still High, Lack Of Differentiation
Among Models, Divisions Lost Autonomy
ISSUES AT G.M
• Leadership, Vision, And Mission: Focus
• Technology Vs. People
• Profit Vs. Market Share
• Financial Considerations
• Competition: Quality, Cost, And Product
Differentiation
• Vertical Integration Vs. Outsourcing
• Strategy - Structure Link
 General
GeneralMotors’
Motors’Organization
OrganizationStructure,
Structure,1921
1921

Board of Directors

President Executive Committee

Financial GM Acceptance Legal General Advisory

Staff Corporation Department Staff

Chevrolet Sheridan Canadian Oldsmobile Buick Cadillac GM Export

Division Division Division Division Division Division Company

GM Truck Samson Oakland Inter- Scripps

Division Tractor Division company Booth Corp.
Division Parts
Division

Source: A.P. Sloan, My Years with General Motors, Orbit Publishing, 1972, p. 57.
 General
GeneralMotors’
Motors’Organization
OrganizationStructure,
Structure,1997
1997

Board of Directors

President’s Council Corporate Functions

North Delphi GM Acceptance International Hughes

American Automotiv Corporation Operations Electronics
Operations e Systems

GM Europe
Midsize Small GM Vehicle Development
& Car Power Sales, & & Technical Asian &
Luxury Group Train Marketing Cooperation Pacific
Car Group Group Group Operations
Group
Latin
American,
African, &
Middle East
Operation
RECOMMENDATIO NS

• Focus resources on core products, cars, & trucks .

• Realignment of organizational structure to support core

products and meet costs & quality goals.
▫ Example: self managed creative work teams to figure
out how to speed-up product development & improve
product development.
• Implement common systems & processes where
possible.
• Balance needs of employees and unions with needs of the
company.
CUT COSTS BY:

• Dropping Unsuccessful Product Lines

• Trimming Its Product Line
• Standardizing Component Parts Across Models
• Streamlining Operations by Consolidations Within the
Corporation
• Decentralizing Decision Making
• Integration of It Design & MFG Activities
• Better Managing Its Supplier Relationships
THANK YOU
Any Questions??????