REORGANISATION OF FORD MOTORS

An assignment work submitted to school of management and business studies

Mahatma Gandhi University Kottayam

Submitted by

Submitted to
Prof. Dr. SIBY ZACHARIAS
Head of the Department
School of Management and Business Studies

SCHOOL OF MANAGEMENT AND BUSINESS STUDIES

MAHATMA GANDHI UNIVERSITY, KOTTAYAM
TITANS MEMBERS

• AKSHAY SURESH

• AMINA BIJILI

• ASWATHI O.S

• R. GOKUL DAS

• RESHMA M.S

• SAJITH SREEDHAR K
 SCHOOL OF MANAGEMENT AND BUSINESS
STUDIES
MAHATHMA GANDHI UNIVERSITY KOTTAYAM

CERTIFICATE

This is to certify that the Assignment work titled “Reorganisation of Ford Motors” is an
authentic record of the assignment work carried out by TEAM “TITANS” with the complete
participation of all the group members for the internal assessment of MBA degree of School of
Management and Business Studies, Mahatma Gandhi University during the academic year
2020-2021.

Prof. Dr. SIBY ZACHARIAS

Head of the Department
School of Management and Business Studies
 DECLARATION

We, hereby declare that this assignment entitled “Reorganisation of Ford Motors” is a
bonafide record of research work done by us and that no part of this assignment has been
presented before for any Degree, Diploma, Associate ship, Fellowship or other similar title or
recognition of any university or institution to the best of our knowledge and belief.

Place: KOTTAYAM
Date: 10-12-2021

• AKSHAY SURESH
• AMINA BIJILI
• ASWATHI O.S
• R. GOKUL DAS
• RESHMA M.S
• SAJITH SREEDHAR K
 ACKNOWLEDGEMENT

First and foremost, praises and thanks to God, the Almighty, for His showers of blessings

throughout our project endeavour to complete the work successfully.

We take this opportunity to express our profound gratitude and deep regards to Prof. Dr. Siby

Zacharias, Head of the Department, School of Management and Business Studies for his

exemplary guidance, monitoring and constant encouragement throughout the course of this

project. The blessing, help and guidance given by him carried us a long way in the journey of

life on which we are about to embark. Without his supervision and constant help this

assignment would not have been possible.

We are obliged to express our thanks to all the Teachers of School of Management and

Business Studies for their valuable suggestions and help during this project.

We feel proud to record our gratitude to our Parents for their love, prayers, caring, and keen

interest shown to complete this project.

 TABLE OF CONTENTS

SI.NO CONTENTS PAGE.NO

01 INTRODUCTION 01

02 CASE SUMMARY 01-02

03 PROBLEMS IDENTIFIED 02

04 THEORIES ASSOCIATED 03-05

05 SOLUTIONS TO THE QUESTIONS 05-06

06 CONCLUSION 06
INTRODUCTION

A case study is a research strategy and an empirical inquiry that investigates a phenomenon
within its real life context. Case studies are based on an in depth investigation of a single
individual, group or event to explore the causes of underlying principles and arrive at a
conclusion based on these findings.

The case study entitled “Reorganisation of Ford Motors” is about the idea of introducing
Ford 2000, which is a visionary moment from the part of the management. The case study is
about the Ford company reorganisation and its after effects. We need to identify the key issues
of this case and analyse the case using relevant theoretical concepts through proper
Investigation. It’s an attempt to analyse the case by means of writing a summary of the case,
identify the problems and theories associated to the case. And then to find the solutions to the
questions and deriving at a conclusion.

CASE SUMMARY

In 1995 Ford Motor company announced an idea called “Ford 2000”, championed by chairman
and CEO, Alex Trotman and vice chairman Edward E. Hagenlacker, eliminated more than a
dozen engineering design centres around the world and consolidated them into only five of
which four are in Dearborn, Michigan, and one in Europe.

The one in Europe was responsible for creating one basic design for small acres for the world
market and then marking minor modifications for local markets. The four design centres in
Dearborn will do the same for large front-wheel drive cars, rear-wheel drive cars, pickup trucks,
and commercial vehicles. The consolidation effort requires that more than twenty five thousand
salaried employees relocate or at least report to new managers. Manufacturing and assembly
will still take place in plants around the world.

The purpose is to integrate Ford's operations around the world and revolutionise the way it
designs and builds more than seventy lines of cars and trucks, which it sells in more than two
hundred markets. Part of the new plan is a top secret strategic document that outlines every
new car and truck Ford will design, produce, and sell around the world through 2003. The plan
calls for reducing the basic design platforms from 24 to 16 and increasing the total number of
models by 50%, while saving billions of dollars.

In structure, the system is really a matrix. rather than working in a functional organization with
traditional hierarchies and centralized decision making, employees are assigned to a design
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centre, such as small cars, and then to a group according to their specialties, such as drive trains.
Employees will have to change their ways of doing their work as they design cars and trucks
to fit global markets rather than a single, relatively homogenous one. Management knows that
employees feel a great deal of insecurity and uncertainty about the company and their jobs as
they make the shift.

By mid 1996, reorganisation was not going so well. The transaction had left many employees
still wondering whom they worked for and with a feeling that everything was out of control.
Trotman now plans to reduce the number of designs centers from 5 to 3. Group vice president
Jacques A. Nasser, who may succeed Trotman by 1998 or so, has promised $1.1 billion in
savings under the new system.

Some have claimed that updating the idea really puts things back the way they were before the
first reorganisation. However, there design centers are a lot fewer than dozens that existed
before. But this second reorganisation, before employees really got settled into the first one,
may have devastating effects.

PROBLEMS IDENTIFIED

• Employees has to relocate and report to new managers, because they consolidate the
design centres into five, after that they plan to reduce number of designs centres 5 to 3.
That may lead to more conflict in the organisation
• Lack of organizational structure and centralized decision-making process, instead the
employees are assigned to different groups according to their specialties.
• Sudden change in the way of work from the single market to the global market create
difficulty between the workers. The adaptation power of employees is different from
one to another.
• After the implementation of the new project (Ford 2000) employees felt like insecure
and uncertainty about the company.
• Employees doesn’t have a proper communication with their managers. That was also a
main problem faced by the employees.
• Due to the lack of proper structure disputes between design centres and the specialties
are high.
• Employees have to change their way of doing their work as they design cars and trucks
to fit the global market. That was a completely different standardisation to meet up to
the new expectation of the global scenario.
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 • Both the suppliers and employees do not know whom to contact to get questions
answered or disputes solved, all they get is a voice mail through phone.

THEORIES ASSOCIATED

CONTINGENCY MODEL OF CHANGE MANAGEMENT: DUNPHY AND STACE’S

MODEL OF CHANGE

The contingency model is an extended version of Lewin’s three step in which Dunphy and
Stace (1988, 1992 and 1993), explained the process of change from the transformational
organization perspective.

Dunphy and Stace (1993), put forth a situational or contingency model of change, which
emphasized on the fact that organizations should vary their change strategies in accordance
with the environmental changes for arriving at an ‘optimum fit’. It further discussed that
organizations differ in terms of structure, processes and key values which they espouse, and it
is due to these differences; the organizations may not be influenced by the similar situational
variables. Dexter Dunphy and Doug Stace, through their contingency model proposed that
depending upon the environment, both the managers as well as the change agents should vary
their change strategies. They focus on the environmental factors as well as the forces of
leadership which play a crucial role in any change process.

According to them, change can be categorized into four different types: fine tuning, modular
transformation, incremental adjustment and corporate transformation. Both the authors
reckoned that the change need not only happen on an incremental basis but can also take place
on a radical or discontinuous basis. They equally highlighted that the transformational change
could be both consultative as well as coercive in nature.

In continuation with this, both argued that:

• Incremental change can be more appropriate when an organization is already maintaining

its best fit and require small changes in certain parameters. Hence the change need not be
implemented rapidly or abruptly to ensure smooth organizational transition.
• Transformational change can be necessary in situations when an organization is faced
with a position of disequilibrium or is out of the fit, as a result of which a quick action is
needed or transformational change is required for ensuring the survivability of the
organization.

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 • Collaborative mode of change can be more useful under situations when the target
employees or the interest groups support and cooperate in the entire process of change
and no oppositions are being met with in the ensuing process.
• Coercive modes of change can be useful if at all any change faces large-scale opposition
from the target interest groups.

KURT LEWIN’S CHANGE MANAGEMENT MODEL: THE PLANNED

APPROACH TO ORGANIZATIONAL CHANGE

Kurt Lewin’s Three Stages model or the Planned Approach to Organizational is one of the
cornerstone models which is relevant in the present scenario even. Lewin, a social scientist and
a physicist, during early 1950s propounded a simple framework for understanding the process
of organizational change known as the Three-Stage Theory which he referred as Unfreeze,
Change (Transition) and Freeze (Refreeze).

According to Lewin, change for any individual or an organization is a complicated journey

which may not be very simple and mostly involves several stages of transitions or
misunderstandings before attaining the stage of equilibrium or stability.

For explaining the process of organizational change, he used the analogy of how an ice block
changes its shape to transform into a cone of ice through the process of unfreezing.

1. Stage 1 - Unfreezing: This is the first stage of transition and one of the most critical stages
in the entire process of change management. It involves improving the readiness as well as
the willingness of people to change by fostering a realization for moving from the existing
comfort zone to a transformed situation. It involves making people aware of the need for
change and improving their motivation for accepting the new ways of working for better
results. During this stage, effective communication plays a vital role in getting the desired
support and involvement of the people in the change process.
2. Stage 2 - Change: This stage can also be regarded as the stage of Transition or the stage
of actual implementation of change. It involves the acceptance of the new ways of doing
things. This is the stage in which the people are unfrozen, and the actual change is
implemented. During this stage, careful planning, effective communication and

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 encouraging the involvement of individuals for endorsing the change is necessary. It is
believed that this stage of transition is not that easy due to the uncertainties or people are
fearful of the consequences of adopting a change process.
3. Stage 3 - Freeze (Refreezing): During this stage, the people move from the stage of
transition (change) to a much more stable state which we can regard as the state of
equilibrium. The stage of Refreezing is the ultimate stage in which people accept or
internalize the new ways of working or change, accept it as a part of their life and establish
new relationships. For strengthening and reinforcing the new behaviour or changes in the
way of working, the employees should be rewarded, recognized and provided positive
reinforcements, supporting policies or structures can help in reinforcing the transformed
ways of working.

SOLUTION TO THE QUESTIONS

1. Describe the changes in structure that Ford expects from the Ford 2000.

The Changes in structure that ford expects from the Ford 2000 Project is Cost Reduction by
doing product common across global automobile industry. Eliminated more than a 12
engineering design to centre’s around the word and consolidated them into only 5 business
process re-engineering. This will boost their product and design, engineering. Modified in the
organisation structure system and process should be given to right person in the right position.

2. How do you explain the continuing problem that employees are having with
adapting to the new structure of Ford 200?

There are various reasons that continuing problem that employee is having with adapting to the
new structure of Ford 2000.

• Resistance to change. As everyone was in comfort zone. As employee behaviour

observed, employee don’t change job and retain due to safe & comfort zone.
• Unrealistic expectation.
• Unable to understand the new process & strategy. Company re-engineering fast move
employee take time to be familiar.
• Employee Lack of trust on each other’s new managers placed.
• Insecurity of employment due to relocated after the new project implemented.

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c) Is a matrix structure the proper structure for Ford 2000?

Yes, this matrix is structured rather than the traditional hierarchies and centralised decision
making, employees are assigned to a design center, such as drive trains system. Employees will
have to change their ways of doing their work as they design cars and trucks to fit global
markets rather than a single relatively homogeneous one. Mutual understanding & good
environment behaviour. But over the time it created conflict in employee’s mind as the
reporting & authorised person changes. Employee as well as vendors don’t know whom to
approach for get question answer or how get disputes resolve. Every time when try to reach its
direct to voice mail. Everyone was busy with top management meetings trying to work out the
new re-organisation.

CONCLUSION

In conclusion, we can this case, in 1995 Ford Motor company announced an idea called “Ford
2000” which eliminated more than a dozen engineering design centres around the world and
consolidated them into only five of which four are in Dearborn, Michigan, and one in Europe.
Ford's operations around the world and revolutionize the way it designs and builds more than
seventy lines of cars and trucks, which it sells in more than two hundred markets. Trotman
continues to have the support of the Ford family, who still controls 40% of the voting stock in
the company. Trotman now plans to reduce the number of designs centers from 5 to 3 Group
vice president has promised $1.1 billion in savings under the new system.

Part of the new plan is a top secret strategic document that outlines every new car and truck
Ford will design, produce, and sell around the world through 2003. For example, the new 1996
Taurus serves as the platform for several other models, both in the United States and around
the world. Mangers then mediate the disputes that occur between the design centers and the
specialties. Management knows that employees feel a great deal of insecurity and uncertainty
about the company and their jobs as they make the shift. Carrying the message to all employees
has been a constant job for Trotman and Hagenlacker since the original announcement. The
cars that resulted were rarely the cost savers Ford hoped for, and were so dull in their design
that no one bought them. Trotman expects different results this time because of the
consolidation of the design centres, the new organization structure, and because advances in
technology have made the inner working of cars so similar that only the outer, visible portions
of the cars need to be different to satisfy regional tastes. The culprit seems to have been a
reorganisation of the reorganisation.