Running head: Effective Strategies 1 Effective Strategies Alan Mulally MGT/312 February 23, 2015 Effective Strategies 2 Effective Strategies Alan Mulally took over as C.E.O of Ford in 2006 after a successful career in Boeing. With his considerable experience in customer satisfaction, manufacturing, supply relations and labor relations, the challenges that were facing Ford at the time were very familiar to Allan since he had dealt with the same at Boeing and emerged fruitful. In the verge of desperate economic crisis and a great recession, Ford had lost a market share of 25% since the earlier decade. The company had brands like Jaguar, Land Rover, Aston Martin and Volvo that were not faring well as compared to the enormous capital they needed to compete. The company had huge operating margins brought about by the large workforce with high labor cost per hour ($76/hour) making it uncompetitive. The iconic company at the time had 12billion in losses and hemorrhaging cash with losses amounting to $1.4 billion recorded and 30,000 jobs cut down at the beginning of the year. To add to his woes the company was lagging by months in development of new automobiles compared to its competitors in Japan who even had a shorter cycle time. Within four years of joining, the company logged a $6.6 billion profit in 2010 and in 2013 it was valued at revenue of $146.91 billion, operational income of $5.42 billion, net income of $7.15 billion, total assets of $202.02 billion and a total equity of $26.38 billion Alan realized that the business was in the final phase of collapse and had to come up with a strategy to restructure and turn around in order to get Ford back to its toes. On an analysis, he identified the major causes of failure and came up with a master plan to smooth things out. In his agenda issues to do with streamlining the products, closing plants, efficiency, dealer and customer satisfaction from design of existing cars were essential to success towards his company vision. Effective Strategies 3 Alan refused to get government money and instead started by using existing assets to get bank loans worth $23 billion (close to all the assets) which was a huge gamble and made tough changes to make a comeback that rose above the recession. He quickly realized that there were many Fords (Ford for Europe, Ford for Asia a host of other divisions) which hindered uniformity and coordination and cooperation between its many parts. He worked towards making all of them one by an internal merger and bringing all the Fords under one name and by so doing realized economies of scale by laying off 35,000 workers to create an effective multinational company. One Ford vision did not depend on visionary thinking and new products but the ability to propel new thinking from team to team and partner to partner. The plan comprised of four elements: a global team, leverage Ford’s knowledge and assets, build vehicles that people value, arrange for financing for necessary pay. Mulally had excellent team building skills and understood perfectly that the company’s culture needed to change so that senior managers and executives could collaborate trust and report bad news without fear of the consequences. The various executives were called to weekly business plan review meetings to share and discuss ideas to get things off the ground and get rid of the tension that existed among the executives. This is what is seen as making everybody part of the team (connection culture) and bringing everyone on the same page hence it created a sense of openness and belonging among the members. Statistically, it was reported that connection culture provides a competitive advantage with its lack jeopardizing 70% of workers in America and 88% globally in terms of not giving in the best effort at work. His team building skills are evident through the policies and ideologies he presented and stood for. One was the positive attitude he bared and knew that someday Ford would rise again. This was important to instill in the minds of the workers to have a good attitude that would gear Effective Strategies 4 towards success and build a healthy company culture in the end keeping everyone focused and motivated. Accountability and collaboration across leadership structures laid the foundation for the company to innovate. This allowed change in the cost structure by negotiating lower labor rates with the United Auto Workers to $55 /hour which was a knock off of $20 /hour since data could be shared without blame improving collaboration and setting stage for innovation. To navigate through the complexity a traffic light system was introduced at the weekly management meetings where direct reports were handed in to indicate their progress in key initiatives. Green meant well, yellow meant attention needed while red meant a critical situation. In the past, different members were used for different audiences and Ford had many excuses and there were always reasons for things not working out well even though it rarely had anything to do with the dysfunctions in Ford. Mulally insisted on rigid reliance on the facts with each executive availing themselves in the weekly review meetings and comprehensive progress of the departments in relation to the turnaround plan. Any miscalculations of presented data were easily exposed since all senior executives were available. High concentration on the performance of the firm was observed as no explanation whatsoever was needed In an earlier time it was noticed that Ford was locked to the union contracts negotiated in better times that prevented retrenchment of workers or closing of dysfunctional plants that brought about filling with cars that were sold at a loss. There was a need to cut down from 97 to 20 of what they were offering. Mulally had a plan for a top-down restructuring of the product lineup. This was geared towards making automobiles that had built-in technology (Ford Sync and currently My Ford Touch), were liked by the people and met customer needs and demands. He had realized that the future of Ford did not only lie on cars and trucks but with the technology Effective Strategies 5 they had. A different perspective was taken to view issues concerned with quality, fuel, efficiency, safety, smart design and offering best value for the money paid. The pre-Mullaly era was marked by different plans every year even though they did not work. Mulally insisted on having a single plan and sticking to it. This was what he envisioned and had it known through the one Ford plan since he realized that with this attitude in his team there was going to be a gradual change and eventual turnaround. The one Ford phrase described the plan towards the vision making it more credible by communication of a credible vision. In the same phrase it was made known how the leader expected people to progress towards the set vision. The phrases he used were a constant reminder of “one Ford”, ” one team” , ”power of the teams” and “working together always works” to communicate how much he valued team players since it was important to make known his values. As a leader he facilitated meetings, discouraged humor made at the expense of colleges and encouraged leaders to work together in facing the obstacles. This prevented focusing completely on the problems at hand. A win-win mindset helped him realize other individuals and organizations were not competitors therefore brokering a deal with the United Auto Workers and consolidated company purchases to suppliers that were willing to partner to reduce cost in return for greater shares. The restructuring and turnaround strategies widely depend on clear identification of the problem. It could either be the strategy is flawed, strategy is good with poor implementation or poor strategy with poor implementation Strategies that could have worked may have made use of self-assessment to focus on the critical areas like the strategy which entails the direction of the business, the problem it solves and the customer target. The people would be evaluated to see if the right people were running the company and in the right places. The employees could have Effective Strategies 6 been evaluated for commitment towards business success. The incentives to share in the success of the firm, commission plans could have introduced to gear the sales team towards gross revenue and total profits. The behavior towards employees could have been reviewed to see if certain individuals were dragging down the collective effort of the team. The customer needs would have been evaluated to know if they liked and trusted the brand .it would be in order if it were known if the right customers were targeted to distinguish between profitable and unprofitable clients. Product evaluation could have been carried out to check if innovative products were being offered and at the same time consider technology to cut down on the costs and improve competitive advantages. The process could have been reviewed to see if systems in place were working efficiently and done in the right way. The policies in place could have been examined to evaluate if they were hindering or facilitating the work for high-performance structure The financial aspect could be evaluated to gauge the company competitiveness and its ability to sustain ongoing commitments and operations and so communicate if it were highly in debt. The strategies can be achieved through the objective for crisis stabilization is to conserve liquidity that in turn opens doors to opportunities to turnaround and restructure the business, stakeholder buy-in, strategic focus, organizational change and critical process improvement and financial restructuring. Effective Strategies 7 References Saving An Iconic Brand: Five Ways Alan Mulally Changed Ford's Culture. (2010, March 12). Co. Create. Retrieved February 19, 2015, from http://www.fastcocreate.com/1680075/saving-an-iconic-brand-five-ways-alan-mulallychanged-ford-s-culture Leadership to love: how CEO Alan Mulally changed ford’s culture and transformed its business. (2012, June 12). OC Tanner. Retrieved February 19, 2015, from http://www.octanner.com/blog/people-who-achieve/leadership-to-love-how-alan-mulallychanged-fords-culture Business Turnaround Strategy - GaryRushin.com. (2013, April 30).GaryRushincom RSS. Retrieved February 19, 2015, from http://garyrushin.com/business-turnaround-strategy/ Why Ford's Alan Mulally Is An Innovation CEO For The Record Books. (2014, June 25). Forbes. Retrieved February 19, 2015, from http://www.forbes.com/sites/sarahcaldicott/2014/06/25/why-fords-alan-mulally-is-aninnovation-ceo-for-the-record-books/ ...