IACOCCA

An Autobiography

LEE IACOCCA
WITH WILLIAM NOVAK

Review

Submitted To: Submitted By:

Prof. Abid Shareef M. Usman Khan Durrani

(CIIT/SP09-BBA-100/LHR)

Date:

17 December 2012

COMSATS Institute of Information Technology

1

Summary:
In this autobiography, the story has 4 sections and 28 chapters of the book from start to the end. Every chapter leaves suspense. I will summarize it in terms of four sections. Made in America The Ford Story The Chrysler Story Straight Talk

MADE IN AMERICA
Nicola Iacocca, Lee Iacoccas father, was an immigrant. He arrived at New York in 1920 at the age of 12 with his poverty and loneliness but with his hope to become an independent. He was from San Marco, Italy. He has worked in Gerrett and Allentown, Pennsylvania. After a short while in 1921, he was able to save some money to take his mother & his newly married wife in America. Lee Iacocca was born three year after marriage in October 15, 1924 and spends his early childhood in Allentown with his sister Delma. Lees father loves his children and made them always happy by giving some motivational advices. Nicola and Lee had lots of small Businesses in their life in Allentown and Nicola preferred Food Business. He used to say to Lee, Never get into a capital-intensive business because bankers will end up owning you. And when times are tough be in the food business because no matter how bad things get, people still have to eat. Nicola always tried new things and he loved cars. So the love for cars in Lee must be come from genetics. In teenage, Lee also had done small job after school & on weekends. With their small jobs & businesses, they had ups and downs in their life. In a depression period, Lees Mother Antoinette also contributed her part as a family in small businesses & jobs. Nicola was a self-motivated & joyful man. In his whole life, he never lost hope and he always advice to his family to not to lose hope. He always cheered up his family with his motivational advice. He used to say, Youll never know what is happiness is unless you have something to compare it to. Lee was eleven when he realized that he was Italian. It was abused to be an immigrant in to only students but in teachers too. It wasnt only immigrant but two Jews also were taunted. This was the ethnic problem there. At 6th grade, in election of captain of students petrol, some guys cheated and Lee complained to his teacher but she didnt give any response. It has a first dramatic lesson for Lee that life wasnt always going to be fair. Lee was a diligent student and had a chance to have good teachers. He almost got A grade in every subject. Lee had become president of his class in 7-9 grades. When he passed the school and ready for college, he had a solid background of reading, writing and public speaking. At that time, Japan has attacked the Pearl Harbor. In those days, Lee wanted to be a part of Army but couldnt took part because of rheumatic fever he had a few month ago. Now Lee had admitted Lehigh College in the department of engineering where he studied multiple subjects and performed well in almost every subject. Even before graduation, Lee wanted to work in Ford. For this purpose, Lee met a Ford Motor Companys recruiter Leander Hamilton McCormick-Goodheart after Lee has passed the companys recruitment exam and stood first. But there was a problem that lee had also got another opportunity at the same time, he got scholarship Princeton. However, this problem was solved soon when McCormick

promised Lee to reserve his seat after finishing his studies. So, when Lee has finished his studies, He got a job in Ford Motor Company.

THE FORD STORY

In August 1946, Lee began working in Ford as a student engineer. He had a nine-month program in engineering department where he got to learn how to make a car but he didnt want to spend whole of his life in engineering. He wanted to stay in marketing & sales where the real action was. For this purpose, he tried a lot to get in but one time he refused but the other time he had convinced the other district sales officer in Chester, Pennsylvania, where he was hired as low-level desk job in fleet sales. Gradually, he learned the skills that was actually required for this job and stated to grow in this field. As a zone manager, he met his one of great mentor Charlie Beachman, who was regional manager for East Coast. He had a great impact on Lees heart as a manager, as mentor and as good friend. He was a very talented man with his marketing capabilities. He had given an excellent piece of advices to Lee, which made him a good marketer. In 1953, Lee as promoted to Assistant Sales Manager in Philadelphia district. That was a time when the sale of trucks was not moving. Then had introduced a safety package in which he had illustrated the crash padding for dashboard as throwing the eggs from height in front of public. This idea of 56 for 56 was very successful about purchasing cars for 20% of down payments and three years of monthly payments of $56. In this way, Ford had extra sale of 75,000 cars in one division. During that time, Lee has married to Mary McCleary on September 29, 1956. Beachman had bought Lee to the National Truck Marketing Manager in Dearborn. Robert McNamara was Lees new boss who had a financial mind. Lee has done his job well and in November 10, 1960, promoted to vice-president & general manager of Ford Division. At this position, McNamara & Lee together took Falcon at highest selling point of 417,000 unit n a single year. But Falcon did not bring much money as they had hoped because it was an economical car and its profit margin was limited. Later at Ford, Lee had introduced a quarterly review system, which had a great result of keeping workers & supervisor moving and not stuck on one place. According to Lee Iacocca, the management style should be smooth and it has inborn skills which no one can learn at Harvard Business School. Every manager should take risk with its intuitions and not always believed in 100% estimation. In public speaking, manager should speak the audience own language, manager should write things down on paper. These were the minimum standard the good manager should meet. At the post of General Manager at Ford, Lee with some market research, had figured out that there they have got more young educated consumers than ever they demand a stylish high-engine performance car. Now Ford had talent, money as well as this research, all they needed a car that can satisfy the young customers. So they start designing it and they had planned to launch this car on The New York Worlds Fair in April 1964. They had built the car on time and name it as Mustang. It had a price tag of $2,368, which was unexpected price with such a good car. On its launch, people were dying to buy this car. Mustang has sold like hot cake or hot cakes were selling like Mustang to 418,812 units in first year. This car had generated $1.1 billion & made Lee Iacocca a star of Ford. After Mustangs success, Ford had another product line of cars, which were not selling. Lee has ordered to rub some Mustangs ointment onto the Lincoln-Mercury. So Lee has done it by modifying their looks and changing some part of it and launched these new cars in a very special way. Ford had brought their dealers in a big ship and on an island, they launched it. It was also a successful plan of Mr. Iacocca, which leads him to a famous personality at Ford as well as in Public. By 1968, Lee had expected a promotion on the post to the president of Ford. But Henry Ford II, grandson of founder of Ford Henry Ford I, didnt think that Lee was ready. He brought a new president 3

of Ford from GM Motors ex-head of Pontiac Division, Semon Knudsen (Bunkie). This hiring of Ford had disappointed Lee because he deserved the presidency. But Henry Ford took Lee into his trust that youll be the next president at any cost. Soon, the Bunkie had fired by Henry himself because of the reason that every time he came to Henrys office, he came without knocking. After that Bunkie gone, Lee had become president of Ford in December 10, 1970. Now Lee has raise to top with extra power but still he was number 2. King Henry was there. In 1973, during Arab-Israel war and oil crisis, Lee wanted to build fuel-efficient cars as there was a big need of it, but Henry Ford didnt agreed. His point of view was mini car, mini profit. Iacocca came up with Mark III and Fiesta after Mustang. He was getting popular by his performance and was making $970,000 annually. Suddenly, Henrys attitude toward Mr. Iacocca was completely changed. He now was starting to reduce his power of presidency by putting 3 designations equal to Lees designation in 1977. Now Mr. Iacocca was at number 4. On July 12, 1978, Henry eventually fired Iacocca. The reason he gave to Lee had connection with Mafia and after the death of Henry, man on number 2 will take over the control and thats Henry didnt want.

THE CHRYSLER STORY

After being fired, Iacocca had many opportunities. NYU & many universities wanted him as Dean. But he didnt get anywhere because he thought that the cars were in his blood. So he joined Chrysler in 2 November 1978 as president by accepting request of Chryslers CEO John Riccardo; he had no idea about Chrysler. It was totally opposite to what it seems in the papers. There was a big problem that not even top management know what was going on. Chrysler had a $50 million annually contract of tanks to government. Chrysler was not functioning like a company at all. There were 36 presidents and everyone was working independently. Nobody was doing anything right. Chrysler was in urgent need of financial people. Now Lee started thinking of building a perfect team that will ultimately turn the company around. He put Jerry Greenwald, Gar Laux, Hans Matthias, George Butts, Steve Sharef, Dick Dauch, Paul, Bergmouser, Kenyon & Eckhardt-Fords Advertising Company, Sperlich and himself togather. Iacocca brought more people from the Ford retired executives. They were ready to work. They improved the operations and quality. They assembled all the financial data. They communicate with labor. They made public image of Chrysler better through quality and advertisement. In July 1976, shah of Iran left the town and the gas price had been doubled. Chrysler new management sold all their abroad operations to different companies and sold their tank operations to general dynamics. They laid off their thousands of employees and cut the salaries of remaining. At the end, they soon realized that they dont have enough money to survive in the market, to run daily operations. Chrysler was under new management and they got new ideas to survive in the market. All they need was money. They already got loans from national and foreign banks and insurance companies. Finally, they decided to knock the government door for the loan guarantee. There was no other alternative but bankruptcy. But after weeks of hearings, plenty of convincing speeches by Iacocca and bundles of documents and all assets collateral, government issued the loan guarantee. They took $1.5 billion guaranteed from U.S Congress and $655 million from four hundred lending institutes such as banks of London, Toronto, Ottawa, Frankfurt, Paris, Tokyo, Tehran and some rich individuals. Iacocca and all others at Chrysler made sacrifices to save the company and save thousands of jobs. He cut his salary to $1.00 annually from one million per year. They made deals with the banks for 4

concessions. After done with the banks he concentrated on the production and came up with K-Car and minivan T115. After the strong market research and strong advertising, these were become market winners in 1983 & 84. Lee also got a chance to come on Chryslers Advertising Campaign because he had become very famous so K&E suggested that it would be great for the company. Gradually, Chrysler was healthy again and they beat Ford in those years by making an honest profit $925 million-best by Chryslers history. They returned all the money to government seven years earlier. Chrysler stock price went to 25 and shortly after up to 35 dollars from 16$. In spring of 1983, Mary got very sick with her diabetes & she died on May 15. Lee wanted to merge with Ford when the situation was not so good but it didnt happen. In 1984, Chrysler is making more profit than the Ford.

STRAIGHT TALK

In this section, Iacocca suggests how to drive safely on the road and to do this, seat belt compulsory law should be enforced. He insists that there should be laws to fasten seat belts instead of air bags while driving. He said that the seat belts are safer than air bags. Safety equipments advertisement doesnt make a good impression. Many countries of the world had made it compulsory to fasten seat belts while driving. Researchers showed that the use of seat belt prevent harm to body and eventually prevent from death. He has struggled to made law enforced but after all his efforts, there was nothing happened. He also said that they were talk about high labor costs that company should consider. He said COLA, medical benefits and thirty and out, are some of the main reasons we have to pay a lot to the labor. It is invalid in Japan and many countries. Cost of living adjustment is increasing day by day and the medical benefits turned out to be millions of dollars per year. Thirty and out was a bad agreement. A person who has worked for thirty years could be of fifty years of age. This is not the perfect time for retirement. They have a bundle of experience with them. They can use their experience that they got in a plenty of time in a particular field. They left the job and start their own work or sit idle. These laws should be changed. Then he talked about the competition of U.S automobile market with Japan. He said that Japan has captured the auto industry of Japan by 25% till 1984. Americans export them wheat and rice and in return they export them cars. They are creating unemployment in America. Most of the countries have imposed restrictions on a specific quota in number or percentage. America had not yet. They have captured all electronics industry. Iacocca suggests government to restrict them. Japanese has cut their defense budget and they are making and exporting valuable things to the world. They work for their self-interest. They protect their domestic industry. Then he talked about how to make America great again, Iacocca had suggested that there should be industrial policies in America. They had farmer policies; they had defense policies but not the industrial policies in an industrial county. In the industrial policy, he wrote his whole plan in magazine to spread his word to the public of America. Then he had invited to President House Washington, to talk about that plan. When he came to president, he came back disappointed because President had declared the plan un-implemented. He said there were rumors that Iacocca is running for the presidential elections. He claims that was all due to the advertisement in which people got wrong message. To deny these rumors he signed three more years with Chrysler. After that, he told the readers he had been appointed chairman of statue of liberty and Ellis Island. He said that American Indians are the real American and all others in this country are immigrants or the children of immigrants. He says this statue of liberty is sign of freedom for us and

finally he asked for donations for the statue of liberty and Ellis Island to every reader who is reading his autobiography.

Lesson to be learn:
Well after reading this book, I learned that: We should believe in ourselves. If you are hardworking, smart and little bit lucky, nobody can stop you. I also learned that, we should read different books other than our course book because that teaches you those lessens which you can never learn in any school. I have a great motivation after reading it about marketing because if a mechanical engineering student can be a marketing guru, then the one who is studying marketing can also be a pioneer in marketing, no matter how things are bad. I especially impressed with the tactics of marketing and management style that he suggested The quarterly review system and public speaking tactics.