Reviewing the One Ford Strategic Plan: Divestiture, Technology and Continuous Improvement Aided by...

1 | P a g e F o r d : G r o w t h a n d I n n o v a t i o n I g o r S . G a r c i a T h i s D o c u m e n t d o e s n o t c o n t a i n a n y t e c h n i c a l d a t a s u b j e c t t o t h e E A R o r I T A R

Reviewing the One Ford Strategic Plan:

Divestiture, Technology, and Continuous

Improvement Aided by Social Media

By

Igor S. Garcia, MBA, MS


Table of Contents Table of Exhibits ...................................................................................................................................... 3

Table of Tables ........................................................................................................................................ 4

Table of Figures ....................................................................................................................................... 5

Prologue .................................................................................................................................................. 7

Downfall of an American Car, Rise of a Global Icon .................................................................................. 8

The Missing Era ....................................................................................................................................... 9

The Way Forward: Red, White & Bold .................................................................................................... 10

One Ford ............................................................................................................................................... 12

A New Way to Market at Ford ............................................................................................................... 14

Conclusion............................................................................................................................................. 15

Exhibits & Tables ................................................................................................................................... 17

References ............................................................................................................................................ 21


Table of Exhibits

Exhibit 1 (a) Ford Automobile Production 1903-2000. (b) US Fuel Prices from 2000 to 2011. (c) Steel

prices vs. Gold and US$4 (d) US Automotive Fuel Efficiency from 1972 to 2015. ..................................... 17

Exhibit 2 1970s to 1980s (a) Paid advertising for Ford Pinto as a family vehicle (1970s). (b) Toyota

Corolla highlights fuel efficiency. (1980s) (c) Toyota Camry in paid advertisement highlights its reliability.

(1980s) (d) Ford Pinto circa 1980s, fuel tank explosion, known issue by Ford, chose to ignore it. ........... 18

Exhibit 3 Total Units produced from 2001 to 2011. Units take increased reduction, a result of the Way

Forward.11 ............................................................................................................................................. 18

Exhibit 4 Ford Cash Flow Statement from 2003 to 2012.9 ....................................................................... 19

Exhibit 5 (a) EcoBoost Engines increase by almost 50 fold after only 3 years. (b) Acknowledging the

absence of a fuel efficient small car segment, Ford creates a Super Segment, where they lead the way.

(C) 3 out of 10 fuel efficient vehicles are Ford and powered by EcoBoost Engines. (d) One out of 10

Electric Vehicles is a Ford Vehicle. ......................................................................................................... 20

Exhibit 6 Scott Monty at nmX expo presents metrics on social media marketing and the Ford Fiesta. (a)

What Millenials want when buying or repurchasing a new product. (b) How Millenials influence others.

(c) Response from Social Media World after 100 agents began to share their Ford Fiesta Experience.14 20


Table of Tables Table 1 Strategic Challenges and Strategic Solutions to remain competitive and profitable. .................. 11

Table 2 R&D and Advertising Costs for Ford Motor Company Pre & Post - One Ford Plan....................... 17


Table of Figures Figure 1 Henry Ford on his 1896 Quadricycle, one of two built.2 ............................................................. 8

Figure 2 (a) Ford Five Hundred designed to compete against (b) Chrysler 300, winner of 2004 Motor

Trend Car of Year Award. ....................................................................................................................... 19

Figure 3 (a) Ford Taurus 2010 to compete against (b) Chrysler 300 ........................................................ 19


Prologue

In selecting this topic as a choice for discussion, I will express, as the author, to have a level of

admiration and perhaps adoration, towards the way in which everything was done and how it was done.

In fact, evaluating the development of the situation at Ford Motor Company, and all possible calculated

outcomes, one would have counted Ford Motor Company out at its one hundredth anniversary, &

instead of a celebratory discussion on “Growth and Innovation at Ford”, this discussion could have been

titled, “Death of An Automotive Legend: Leadership At Its Worst”. Instead, Ford Motor Company, led by

a board to top executives, managed to revive an American Icon and bring it back from a disastrous loss.

Bringing the Blue Oval back, meant rethinking the entire strategy from Operations to end user

perspective and back. The plan to revive modern time FoMoCo was christened “The Way Forward”,

which later would shift to the “One Ford” strategy. In 2005, William Clay Ford II, asked the North

American President/Executive Vice President of FoMoCo Mark Fields to design a plan to return Ford

back to profitability. Mark did as he was requested, reviewing all aspects, considered within operations,

investment opportunities, and financing opportunities, all to reflect current condition of Ford in the

market place. The Way Forward was not simple, it was hard, it was painful, it left many unemployed, it

scarred not only Ford, but it scarred suppliers, Michigan and the US as whole; but the sacrifice had to be

done for the betterment of all. I know. I was there in Michigan, working at Chrysler; I saw the impact

first hand.

My own preference to pursue an MBA at a Top International Institution and Program was

inspired by Mulally and the execution of the revival at Ford. As I sat in my office in Miami, FL and read

about Mulally’s achievements, his accolades and background, I grew more and more interested in

developing my skills. He attended MIT Sloan School of Management, on my part I saw the future slightly

different and opted to apply an executive MBA program in Florida, close to my office and home. A

couple of weeks after applying, I was being interviewed by the program and shortly thereafter, I was

accepted into an MBA program. Unfortunately, family challenges delayed my academic progress, I

never enrolled and I endured a minor setback, nevertheless, family is always first, eventually I would see

light at the end of the tunnel. My family challenges required that I would relocate from Miami, FL to

Connecticut, at which point, re-invigorated by the vision of one day being in the same shoes as Mulally, I

opted to seek a top institution, so I arrived at the IE Business School. Unlike other top executive MBAs,

which are either full time or based on closed perspective views, in pursuing IE, I sought a program where

I can sharpen my Global Employee skills, while also increasing my understanding of Global Business, as I

interacted with other global employees; something not seen in other top Management Executive MBAs.

So, as I present this discussion, I aim to analyze each of the steps which were executed by

Mulally and other executives and evaluate the decisions made, and opt to present whether a more

elaborate solution could’ve been executed. Then again, the root cause for choosing the topic is because

I admire what they did and view the totality of the execution as quasi perfect. The Way Forward / One


Ford Strategic Plan showcased that not all business executives are out to become wealthier and seek

only to use the shareholder as an excuse for bad execution, and/or self-personal gains. Here, Alan

Mulally shines as a CEO, Mark Fields created the perfect plan to reduce operations, reflective of market

share & William Clay Ford, Jr. becomes a bigger man as he chooses to step down to allow more

experienced individuals to bring the plan to fruition. Additionally, an energetic Scott Monty provides a

means to channel the energy at Ford to the world. More importantly, Scott Monty has given Ford the

power to receive input from customers first hand by creating bridges via earned media.

Voicing my opinion and supported by data, I hope to present Ford Motor Company and how it

strategically made all the right decisions, leading to a game winner.

Downfall of an American Car, Rise of a Global Icon The United States has been an industrial powerhouse since the end of World War II.

Industrialization of the US gave rise to increased research and development and manufacturing, but

overall increased the nation’s brand equity, it yielded expansion of its brands from domestic brands to

global brands. It was here that we see the emergence of Ford, an American automotive icon. Yet, when

assessing the true beginning of the Ford Motor Company, it is possible to still travel 42 years further

back. Here In 1903, we will find a 40 year old, middle age man seeking recognition among his peers. He

worked for Thomas Edison and during his spare time he would invent a Quadricycle. Recognition for his

Quadricycle, see Figure 1, led Henry Ford to becoming a

member for a joint venture, named Detroit Automobile

Company (later renamed Cadillac). Discontent with the way

things were being managed, Henry decided to forge his own

path, leaving DAC and founding the Ford Motor Company. It

was here that in Dearborn, Michigan, that Henry decided to

find ways to make the automobile more affordable to the

masses, provide independence, increase and add value to

each one of the small business owners and families seeking

ways to mobilize across the newly forged nation. In all,

Henry Ford had one objective, which was to build the

perfect car for the everyday American, becoming a part of

their lives, enriching their lives.

Henry was not the first to invent the car, and lack of automobile history knowledge has

confused the masses who are not sure if Germany, France or the US was first to invent the automobile.

Well, this is not the stage to debate who was first to roll out a self-propelled unit. Yet, I will say, Daimler

was first, and I will stop here. Henry’s achievements lie not in being the first, but rather in making it

affordable to the masses, by doing two things: first, he built only one car, the infamous Model T, and

then he adopted the assembly line process to put it together. By integrating the assembly line to

automobile construction, Henry was able to initially drop prices for automobiles from $2000 to $850,

and the prices would continue to drop as the assembly process continued to be optimized, eventually

Figure 1 Henry Ford on his 1896 Quadricycle, one of two built.2

http://www.youtube.com/watch?v=S4KrIMZpwCY

http://www.youtube.com/watch?v=S4KrIMZpwCY


$2501, 2. Henry purchased the same part, in volumes, from a selected few suppliers. He also

manufactured some parts in his own facility and adopted an assembly line process to assemble the

Model T. The result was a vehicle ahead of its times, leading in quality, performance, price competitive

and affordable to the masses. Furthermore, with each opportunity available to improve his Model T,

may that be operations or innovation, Henry Ford invited the opportunity, the result was continuous

improvement, unending. The Model T would become the first global platform and recorded

approximately 15 Million units.

Henry saw the Ford Motor Company grow steadily from 1903 to 1930 see Exhibit 1(a), with a

couple of interruptions in 1927 and 1928, the initial stage of the Great Depression. Thousands of people

were laid off from Ford and entered the unemployment line. For two more years 1929 and 1930,

FoMoCo would deliver 1.5 and 1.1 Million units respectively. Not until 1949 would FoMoCo return to

building over a million units per year to return to profitability. It also did so at the helm of Henry Ford II,

son of Henry’s only son Edsel Ford. Edsel Ford died in 1943, while father & founder, Henry Ford, died in

1947. The Ford Motor Company endured its first economic challenge, almost bringing it to the brink of

extinction; yet tough decisions, good planning and an apparent immaculate execution gave Ford the

ability to tell the story its way.

The Missing Era As technology has diffused more and more in other areas of the globe, either via reverse

engineering, purchased technology or simply innate development, the rest of the world has become

more and more industrialized. This industrialization has given other countries the opportunity to put

winning automotive industries, with several qualities important to today’s consumers. These qualities

can be stated as fuel efficiency, quality, reliability, aesthetics and safety. In addition to rising

competitors, the automotive industry saw itself as a target to both systematic and unsystematic risks.

For instance, continuous rise of gas prices [Exhibit 1 (b)], while the efficiency of the engines has not

increased at the same pace in order to keep the consumers content, see Exhibit 1 (c). Steel prices have

also increased substantially as seen in Exhibit 1 (d), on the other side the ever increasing demands of the

UAW also compromised the livelihood of the FoMoCo. Energy prices continued to increase to limits only

seen in the 1980s. As opposed to middle east conflicts, which are also present today, there is one more

issue, that today other rising economies are demanding the same energy supply that 1st World Countries

have consumed from over a century. The rising fuel costs and global economic instability have made

certain automotive segments which were once lucrative, such as the Sports Utility Vehicle (SUV)

segment, no longer as profitable as they once were, given some of the risks mentioned above. Hence

the pendulum appears to be swinging back into the direction of smaller and more fuel efficient vehicles,

here Ford is carving out a niche in a known segment as the “Super Segment”. The Super Segment is

comprised of a combination of subcompact, compact, midsize and small sport utility vehicles.

Finally, globalization has made once known as domestic markets, world renown. As a result of

globalization, we now have Japanese auto manufacturers, such as Toyota sitting atop the volume

deliverer, Honda delivering top quality, and Mazda delivering aesthetics, while South Koreans having

http://www.modelt.ca/background.html


Hyundai and KIA are doing everything, from fuel efficiency to aesthetics. From Germany we have

Mercedes Benz, BMW and the Volkswagen Consortium, while still pending to arrive are Indian vehicles,

such as Tata or Chinese vehicles such as Geely and Chery.

During the 1970s, systematic risks such as the oil embargo, created a crisis of disproportionate

magnitude, making fuel scarce and hard to fill up the large vehicles from previous decades. Additionally,

Japanese competition began to arrive, analyzing and conquering the American public & hearts.

Meanwhile, challenges in quality began to plague the American Automotive Industry; one common

quality/safety issue was the Ford Pinto8. The Ford Pinto was known to have a fuel tank issue, which

would become active when bumped i.e. it would explode. Despite this challenge, the Ford Pinto saw

production of some 3 million units in the 1970s. Ford chose to do nothing about the potential risks, and

this would come back to haunt the brand. Ford noted that cost to repair the engineering challenge was

greater than the number of lawsuits which would be settled8. As a result of OEM complacency,

American consumers had very little option to demand quality, safety, aesthetics, fuel efficiency or

reliability. It is known that many OBMs sought to manufacture with the objective that the consumer

could be back in the shop buying spare parts as soon as possible, or that the consumer would be back at

the dealership as soon as possible to purchase a new vehicle. It was during this span of time, that

Japanese Manufacturers began to take notice of the inefficiencies of American Manufacturer and began

to produce vehicles that Americans would enjoy driving, while also save money at the pump. But, enjoy

can have a deep meaning, so I will define it, purchasing a vehicle and driving it worry free.

The 1980 - 2000 was an age of merger in the automotive industry. Many American companies

purchased European name plates to add a luxury brand to their book offerings. Ford acquired Aston

Martin, Jaguar, Land Rover, Volvo and a stake of Mazda. Later on, Ford would learn from managing

these companies how to save its own core business.

From the 1980s to the 2000s, Ford Motor Company saw several threats influence the domestic

and international market. The once American prowess shared only by German engineering, was now

being challenged by other international brands, stemming from Japan and Korea. From Japan, Toyota

led the pace and focused mainly in delivering cost, quality and reliability. From Germany, Volkswagen

began to collect automotive companies much like a boy scout on a mission, plus shared components

and/or operations, this allowed VW to be price competitive by reducing fixed costs. Ford, like other

American auto companies began to see the effect and impact that a bad reputation bared on their

names. Lack of quality, lack of reliability in previous years had driven domestic and international

customers away from Ford designs. The conservative image maintained young buyers from buying

vehicles that they could not identify with. Instead, young buyers would opt for imported vehicles. After

2005, the market would make shifts in trends and position Ford and other Detroit manufacturers below

Japan’s Toyota. Volkswagen was not too far behind.

The Way Forward: Red, White & Bold19 The Ford Motor Company, also known as the Blue Oval woke up on January 23, 2006. William

Clay Ford, Jr, called on Mark Fields, then President/Executive Vice President of The Americas to shake


things up and propose a plan that could bring Ford back to profitability by 2010. In response to his

request, Mark Fields defined “The Way Forward” plan, see Table 1, now a possible topic reviewed in

many Business Schools. The plan called on bold leadership and innovation to create changes in the

culture, operations, future investments to revamp the product line, improve quality. Yet above all, the

idea called for a plan to maintain the customer at the core of the business model.

“When I speak about operating like a smaller company, I’m not talking about

shrinking our size. I’m talking about the way we operate, the way we make

decisions and the way we relate as a team.”, Mark Fields, January 23, 2006

“Great Firms – Toyota, Nike, and General Electric, to name a few – evolve and change. So do great

strategies.” Cynthia Montgomery, Putting Leadership Back into Strategy.

This second quote will be seen as key in later sections, upon the arrival of Alan Mulally to Ford,

but also in marketing strategies, set forth by Scott Monty.

Table 1 Strategic Challenges and Strategic Solutions to remain competitive and profitable.

Exhibit 4 identifies the Cash flow statement from 2003 to 2012, hence identifying the impact the

Way Forward Plan had in Net Revenue at Ford, since its implementation began in 2006. It is also

possible to see that ahead of the Way Forward announcement, Ford Motor Corporation had begun to

divest operations; sale of assets had accumulated approximately $13.9 Billion over the course of 4 years

from 2003 to 2006.

Challenges Potential SolutionsGas Prices Up and Continue to Increase Reduced Production by 500 million thus far.

Steel Prices Up Focus on Core Brands, Ford, Mercury & Lincoln

Increasing number of name plates, increased from 215 in

2002 to 255 in 2005

Divest premium brands Volvo, Aston Martin, Jaguar, Land

Rover and Mazda.

Expected 300 name plates by 2010 Grow Ford Brand Equity Domestically and Internationally

Market Growth In US stagnant Utilize Innovation as the Marketing Differentiator.

Conservative Designs of years past did not see eye to eye

with targeted customer.

Reduce Operations - Cease operation of 14 plants.

Revenue can not be sustained with current costs and market

share.

Upgrade Operations to be Flexible and Complete more than

one platform.

Ford driven by Cost and Capacity not by Customers. Reduce workforce

Change Mentality through bold leadership and innovation. Change Mentality through bold leadership and innovation.

Gather customer feedback faster & create faster

development of platforms.

As part of restructuring, invest in small car platforms and

hybrids.

Ford - The Way Forward


Nevertheless, despite the Way Forward announcement Ford appeared to stall, unable to make

further progress, while Toyota continued to gain on Ford and GM, eventually claiming the largest

automotive producer in the world.

Just as Cynthia Montgomery has noted, in her “Putting Leadership Back into Strategy”, Great

Firms – Toyota, Nike, and General Electric, to name a few – evolve and change. So do great strategies.

William Clay Ford, Jr. made a couple of unprecedented announcements after 5 years at the helm

of Ford as CEO. William also devoted a lot of his time working with Mark Fields to create the Way

Forward Plan. The first announcement was a vow to the company, which would showcase his sacrifice

for the better of the company. He would not take any pay, until FoMoCo was back into being

profitable11. The second announcement was probably just as incredible. William realized that the job

ahead would require more than a strategic plan to bring the company back into the black; it would also

require an executioner. In 2006, months after the Way Forward Plan was announced, William Clay Ford

Jr. Chief Executive Office and the Executive Board Member at Ford announced that he had hired Alan

Roger Mulally as the new Chief Executive Officer.

One Ford Alan Mulally was a 30 year veteran at Boeing who had managed to bring back Boeing from the

brink of extinction, a scenario very similar to FoMoCo. He was a graduate from the University of Kansas

with a Bachelor of Science and a Master of Science, in Aeronautical Engineering, and a Master’s Degree

from MIT Sloan School of Management.

Upon his arrival, the rebranded the Way Forward Plan with One Ford, meaning One Team, One

Plan, One Goal. Yet his long term goals included the transformation of Ford from an econo-box into

something more appealing for the customers, value added. He would set goals to set best in class in

Quality, Fuel Efficiency, Safety, Smart Design and Value.12 Additionally, Alan Mulally sought to unite

Ford worldwide, to gather the best efforts across the world and project back to all the markets in the

world the best possible Ford effort. To do so, Alan would rely on experience, technology, innovation

and the most important asset of them all, the customer.

Among the first few things done by Alan were to restore the Ford 500 to Ford Taurus. Ford,

trying to be too much for everyone decided to change the name of a well-known vehicle, the Ford

Taurus, in 2005 in order to make it more appealing to buyers seeking to purchase a Chrysler 300 “Motor

Trend Car of the Year 2004). Unfortunately, the Ford 500 was not up to par with the Chrysler 300, which

was award winning model. Unfortunately the dull design and technology of the Ford Five Hundred

could not match against the powerful Chrysler 300. Sales of the 2005-2007 Ford Five Hundred failed to

capture the attention of Chrysler 300 customers. The Ford Taurus was redesigned in 2009 See Figure 2

for comparison. Eventually, the Ford Taurus would be redesigned in 2010 to incorporate a more

aerodynamic design, as well as include more up-to-date technology, such as the Ford Sync.

Upon Alan’s arrival, the state of emergency at Ford had been heightened by the Global

Economic Recession. Fresh on the job, Mulally undertook the role of executioner at Ford, particularly


executing the Way Forward Plan / One Ford. There seemed to be just one small problem…….the

company was running out of funds. By 2008, the recession was in full effect and Michigan was one of

the worst hit states in the US, noted by the large unemployment rate, and the state with the most home

foreclosures.

Between 2008-2009 the automotive crisis, pushed the Big Three to travel to Washington, DC in

search of Troubled Assets Relief Program. As it appears, politicians were not too content by having car

guys arrive in private jets, to pursue government loans, financed by the tax payers and so, the politicians

sent the CEOs back to Michigan, requesting that they should come prepared next time, but to also come

by car, not private jets. The media made a huge debacle over the incident.

Although the CEOs for the other Detroit companies did return to Washington, D.C., in pursue of

the TARP also known as the Troubled Asset Relief Program, Alan already had a plan in mind. Alan had

already financed future projects by refinancing the fixed assets of the Ford Motor Corporation back in

2006, so his claims in visiting the 1st time are noted as those of a fellow CEO lending support for the

cause, when accompanying the other CEOs. The move not only gave Ford independence at a time,

when government TARP, meant partial ownership of the companies by government, but the move

added Brand Equity to Ford………Bold leadership & Innovation…..The $24 Billion provided FoMoCo’s

fixed assets, gave Alan Mulally, Mark Fields and William Clay Ford, Jr. exactly what they needed and thus

began the execution of the Way Forward. Over the next few months, one would see one of the biggest

corporate revivals in the history of modern corporate America. Additionally, Alan would employ his

leadership characteristics by striking a formidable deal with the UAW in 2007 where benefits went from

defined benefits to defined contribution. Not to be outdone by Volkswagen AG, Ford invested heavily in

China, by seeking out partnerships as it sees the Pacific as a fertile ground for growth.18

Alan reduced operations and requested standardization of the Ford brand across the globe. It

was known that Alan would drive a Ford Vehicle every other week to get a feeling for the product. As it

turned out, all vehicles appeared to have different interior panels, different light blinker switches and

windshield wiper levers, different feelings. Allan was not very content and addressed the Ford

managers by reminding them that how was it that each one of the cars had a different system to

operate the blinker lights or the windshield wiper system. The managers would refer to

decentralization, the ability and freedom to do as pleased, enough liberty to be different from the next

car. Allan would remind his managers, that successful global car companies don’t execute design in this

fashion. From there going forth, Allan requested to design towards having a Ford Feeling, that

regardless who would get in the car, anyone would know that they are inside a Ford vehicle13. One

example can be provided by the fact that he sought to employ import from around the world the global

presence of the Ford Focus and Ford Fiesta. The 85% of the Ford Focus parts are standard, and 15% of

the parts are customized to fit the market where the vehicle is sold. The Ford Fiesta is 65% the same for

all countries where it is present, while 35% of the vehicle is fitted to suit the market where it is sold.

These two vehicles also provided what Allan needed, fuel saving technology, pizazz for the younger

customers, while also offering reliability and quality. How to excite the customers about these new

products will be seen later.


The overhaul would not stop here, from 2006 Allan participated in sales, by pitching vehicles at

auto shows but also invested R&D for the development of new fuel efficient technology, see Table 217.

It may be said that R&D per platform, increased post Mulally’s arrival, given that after his arrival the

main focus is only Ford and Lincoln, all other name plates were sold. Allan personally saw that the sale

of Jaguar and Land Rover be made to Tata. Eventually, he would also cease the production of the

Mercury badge, leaving only the Ford and Lincoln badge as the core brands for FoMoCo. A new engine,

the EcoBoost 2.0L, see Exhibit 5 (a), would not only be utilized to power some of Ford’s vehicles but

would also be sold to other OBMs, such as Range Rover for its new Range Rover Evoque. Much like the

EcoBoost a 2.0 fuel efficient engine, Ford has gone on to become one of the leading hybrid vehicle

manufacturers, as well as electric, such as the Ford Focus Hybrid and Electric, the Fusion Hybrid and the

C-Max Hybrid.

The safety margin at Ford can be measured by the government agency SaferCar, part of the

NHTSA (National Highway Traffic Safety Administration), where Ford scores an average of 4.5 / 5 stars

for its vehicles on average. In addition to the structural integrity of the vehicles, Ford has also made

available other technology, such as Crash Avoidance System Effectiveness14. Ford has also excelled in

some areas for resale value of its cars particularly the Focus and the Mustang, while other sources

acknowledge the 2013 models such as the new Ford Fusion, the Fusion Hybrid, the Ford Focus Electric,

Ford Explorer, Other characteristics have placed Ford Vehicles among the top fuel efficient vehicles in

the market; again another customer driven desire implemented by Ford as a means to cater to the

customer and not vice-versa.

Alan, in collaboration with others at Ford, takes the credit for bringing Ford Motor Company

back into profitability ahead of schedule in 2009, as oppose to 2010.

A New Way to Market at Ford Scott Monty was a consultant for Ford, before he became Head of Social Media for the Ford

Motor Company in 2008. It was here that Scott Monty unleashed the entire arsenal of marketing

capabilities that today’s interconnected world has to offer. Scott worked arduously to provide all

possible marketing channels and use each as effectively as possible, from Earned Marketing, to Paid

Marketing to Owned Marketing. A couple of examples should be reviewed which create a vision of what

may be going on at Ford marketing, where social media has breathed new life into a 110 year old

corporation.

The first example should be referred to the 2009 launch of the Ford Fiesta in the US, the Fiesta

Movement. The Fiesta has for long been a vehicle available in Europe. Nevertheless, this is the message

behind “One Ford” shared by Alan Mulally upon his arrival. The vision to sell one car in multiple

markets, optimize operations.

The vehicle was initially designed in Dearborn, MI and assembled in Valencia, Spain. Yet today,

it is assembled in several other locations. The vehicle has sold over 16 million units worldwide, third to

the Focus and F-Series17. In order to bring the vehicle over the ocean, Ford was aware that the

http://www.safercar.gov/

http://editorial.autos.msn.com/12-best-resale-value-cars-2012#2

http://www.kbb.com/new-cars/best-resale-value-awards/best-resale-mid-size-car-2013/

http://www.kbb.com/new-cars/best-resale-value-awards/best-resale-hybrid-car-2013/

http://www.kbb.com/new-cars/best-resale-value-awards/best-resale-electric-car-2013/

http://www.kbb.com/new-cars/best-resale-value-awards/best-resale-full-size-suv-2013/

http://www.linkedin.com/in/scottmonty


demographics they sought to pursue was outside of their conventional marketing strategies; this new

demographics are called the Millenials, people born between 1980 and 2000. Reaching out to this

crowd, Ford’s Scott Monty first wanted to identify the wants of the millennial generation [Exhibit 6], he

then proposed a project whereby 100 people within the Millenial age group, would receive a Ford Fiesta

for a period of six months. In return, the 100 “Agents”, would have to create a video, Tweet, and post

on the net about the vehicle and their experience. Nevertheless, Ford sought to have as candid videos

recorded as possible. Ford showed confidence, by allowing their customers to tell the story their way,

yet, Scott on behalf of Ford was aware that this is the new generational approach, “Adapt or Die”, and

Social Media was where Ford needed to be in order to reach the customers of today, which will provide

a Customer Lifetime Value for the next 40-50 years. In response to this social media strategy, Ford had

an incredible reception within the age group, see Exhibit 6 . Within this exhibit one can see the power

of social media, first in identifying the interests of the customers, but also how modern grassroots

marketing can impact and influence new buyers. In the case of the Ford Fiesta and the Social Media

experience, Ford was able to get 82% market reception from new potential customers. Additionally,

and just as important, 30% were under 25 years of age. More importantly, the number of customers

reached also provided input for future work to be done with the Ford Fiesta. This opportunity provided

a stepping stone for other new vehicles, such as the Ford Explorer, the Ford Fusion (Mondeo), the Ford

C-Max and the Ford Focus.

In further analyzing the subject one can conclude that the power of social media and

commercialization may be more powerful than the paid campaigning these days. The substance behind

the comment may be tied to the fact that social media may provide the opportunity for direct customer

feedback. Nevertheless, this directness can also have a negative impact, if the product does not

perform as expected. Just imagine how all would fair if during the Ford Pinto era of the 1970s, such an

accident would have taken place and 6.5 million people or more would view in almost real time the

disaster. Additionally find out the root cause for the error and see the response from the company. Yes,

yesterday’s customers appear to have been more forgiving than today’s customers, because in my

honest opinion, it could be the end of any company, including Ford.

Conclusion The following document underscores that after the absence of the founder Henry Ford, many

other CEOs who navigated and had the chance to make a difference in the existence of the Blue Oval,

chose to do the complete opposite, as seen in the case of the Ford Pinto. Instead of listening to the

customer base, Ford Motor Company deviated from the core philosophy set in place by Henry Ford,

which was to give to the people what the people want, for those who do listen to their consumer base,

have a greater impact in differentiating from the pack. In drifting away from the core philosophy set in

place by the founder, Ford leadership steered so far away from the core value, that in attempting to

“sell a car” in every segment, it chose to purchase technology rather than developing it, i.e. Aston

Martin, Land Rover, Jaguar, Volvo, Mazda, while retaining domestic markets with less impacting

Mercury, Lincoln and Ford. The Ford Motor Company was not doing much with any of the name plates.

Inefficiency at the core of the operation, as presented in the document was among the key drivers for


losses. Additionally, in collecting name plates, Ford did not have the right people to lead FoMoCo, let

along other nameplates. As a result of negligence, bad leadership, loss of touch with customer base,

and lack of innovation meeting market trend demands, Ford had found itself exactly where it

deserved………Striving to Survive, at the Brink of Extinction. Fortunately, Henry Ford managed to live

vicariously through his lineage in William Clay Ford, Jr. It was William who identified the “adapt or die”

mindset and set the wheels in motion to make changes at Ford. More important, he showcased his

leadership, when he acknowledged that the work to be done was above his capability; additionally, the

fact that he forwent pay until FoMoCo would come back to profitability, providing a great example of

humility, a great asset of leadership, worth of praise not only at Ford but in Corporate America and the

World.

Fortunately, with the rise of William Clay Ford, Jr. after Jacques Nasser, Ford Motor Company

began to breath fresh air once more. William’s openness allowed for other leaders to rise to the

occasion and provide alternate ideas capable to thrusting Ford back into profitability, exemplifying

recruitment and development of leadership. Mark Fields’ operational stunt placed many people in the

unemployment line, but it was a requirement in order to succeed. Today, Ford is hiring once again, as it

grows, offering opportunities at all pay scales. Mark, as a visionary, saw the need to reduce operations

in order to grow, because at the size that Ford was operating at the time, Ford simply was not successful

enough. There simply weren’t enough resources for all the nameplates.

When things appeared to stall once more, William acknowledged his limitations and stepped

down and allowed for an entirely new person, not from Ford, but an outsider to come in and identify the

problems and solve them. Alan did just that. With the support of other internal great leaders, Alan and

the team at Ford Motor Company pushed ahead, solving one problem at a time. Alan set the

deliverables from the inception, identifying quality, technology, reliability, safety, aesthetics and fuel

efficiency as the deliverables. Moreover, incorporating the need to have the customer’s input and

setting the customer at the core of everyday activities, for every product going out the door. By setting

these deliverables from inception, Ford was able to move fast, synchronized and achieve profitability

ahead of schedule.

Finally, Ford has found a new way to move forward under One Ford, Innovation. Innovation

works as the lubricant between all the parties involved. One Ford no longer stands for the global

investments of Ford in Spain, Germany, England, US, South Africa, Mexico. Rather it is all these global

investments plus the MVP (Most Valuable Person), the customer. Scott Monty has provided ears to

Ford which Ford had apparently lost with the death of Henry Ford. If one was to assess of all the

innovations adopted in the past 7 years, I would rank marketing, incorporating social media into their

business plan, as the most powerful innovation. Particularly, because it allows FoMoCo to view how it is

being perceived, without having to wait for the end of the year to see Net Revenues. Instead, FoMoCo

can impact the Net Revenue by listening to the customer and responding in a manner suitable to its

consumers. More importantly, this is one innovation which will breed and allow FoMoCo to continue

growth in the years to come. Innovation yields Innovation, as customers always will have something to

add, and the total sum of all is greater than the total sum of 1.


Exhibits & Tables

Table 2 R&D and Advertising Costs for Ford Motor Company Pre & Post - One Ford Plan.

Exhibit 1 (a) Ford Automobile Production 1903-2000. (b) US Fuel Prices from 2000 to 2011. (c) Steel prices vs. Gold and US$4

(d) US Automotive Fuel Efficiency from 1972 to 2015.

Item / Year 2004 2007 2010 2012

Research and Development 7.4$ 7.5$ 5.0$ 5.5$

Advertising 3.2$ 5.4$ 3.9$ 4.0$

Some Operational Costs of Interest [$Billions]


Exhibit 2 1970s to 1980s (a) Paid advertising for Ford Pinto as a family vehicle (1970s). (b) Toyota Corolla highlights fuel efficiency. (1980s) (c) Toyota Camry in paid advertisement highlights its reliability. (1980s) (d) Ford Pinto circa 1980s, fuel tank explosion, known issue by Ford, chose to ignore it.

Exhibit 3 Total Units produced from 2001 to 2011. Units take increased reduction, a result of the Way Forward.11


Exhibit 4 Ford Cash Flow Statement from 2003 to 2012.9

Figure 2 (a) Ford Five Hundred designed to compete against (b) Chrysler 300, winner of 2004 Motor Trend Car of Year Award.

Figure 3 (a) Ford Taurus 2010 to compete against (b) Chrysler 300


Exhibit 5 (a) EcoBoost Engines increase by almost 50 fold after only 3 years. (b) Acknowledging the absence of a fuel efficient small car segment, Ford creates a Super Segment, where they lead the way. (C) 3 out of 10 fuel efficient vehicles are Ford and powered by EcoBoost Engines. (d) One out of 10 Electric Vehicles is a Ford Vehicle.

Exhibit 6 Scott Monty at nmX expo presents metrics on social media marketing and the Ford Fiesta. (a) What Millenials want when buying or repurchasing a new product. (b) How Millenials influence others. (c) Response from Social Media World after 100 agents began to share their Ford Fiesta Experience.14


References 1. Colt, Sarah, Ford, H., American Experience: Henry Ford, DVD, Public Broadcasting Service, January 29,

2013.

2. Barefoot, The Ford Model T Assembly Line: A Beginner’s Guide, http://www.barefootsworld.net/ford-

model-t.html , April, 2007.

3. Geoghegan, T., “Why are Americans so angry about petrol prices?” http://www.bbc.co.uk/news/world-us-

canada-13338754 , May 10, 2011.

4. W11_TRI_ Scrap Steel in Gold Equivalent Value, http://aacemahakam.blogspot.com/2012/10/w11tri-

scrap-steel-in-gold-equivalent.html, October 12, 2012.

5. Office of Transportation and Air Quality: US Environmental Protection Agency, “Light-Duty Automotive

Technology, Carbon Dioxide Emissions, and Fuel Economy Trends: 1975 Through 2012”,

http://www.epa.gov/otaq/fetrends.htm , March 2013

6. Toyota Camry Advertisement in July 1986 National Geographic Magazine," in Car Ads Published

in National Geographic Magazine (1946 -- 2008), Item #198,

http://lw4.gc.cuny.edu/nml/students/sfraser/items/show/198 (accessed August 1, 2013).

7. Toyota Corolla Advertisement, http://farm4.staticflickr.com/3385/3256601832_95e47408f7_z.jpg?zz=1

8. Legget, Christopher, The Ford Pinto Case: The Valuation of Life as it Applies to the Negligence – Efficiency

Argument, Law & Valuation, Spring 1999.

http://users.wfu.edu/palmitar/Law&Valuation/Papers/1999/Leggett-pinto.html

9. http://en.wikipedia.org/wiki/Ford_Pinto

10. http://www.wikinvest.com/stock/Ford_Motor_Company_(F)/Data/Cash_Flow_Statement#Cash_Flow_Sta

tement

11. Associated Press, “In sign of good times, Ford to pay Bill Ford again”, The Blade: One of America’s Great

Newspapers, August 8, 2010. http://www.toledoblade.com/Automotive/2010/08/06/In-sign-of-good-

times-Ford-to-pay-Bill-Ford-again.html

12. World Motor Vehicle Production by Manufacturer 2001-2011,

http://oica.net/?s=Production+Statistics+1980&x=0&y=0

13. Shein, James B., At Ford, Turnaround is Job One, Kellogg School of Management, KEL663.

14. Moore, Mathew, Measuring Crash Avoidance System Effectiveness with Insurance Data, SAE International

– 2013 Government / Industry Meeting, January 30, 2013

15. Monty, Scott, Ford Motor Company’s Social Media Journey, nmX: Where Content Meets Commerce,

January 2013. http://www.youtube.com/watch?v=KTE5uYknopY.

16. Ford Annual Reports 2002 -2012, http://corporate.ford.com/our-company/investors/reports-financial-

information/annual-reports?releaseId=1244753689627

17. Ford Fiesta - http://en.wikipedia.org/wiki/Ford_Fiesta

18. Mulally, Alan, Distinguished Innovator Speaker Series (Podcast Video – 54 minutes), University of

Michigan, September 17, 2010.

19. Fields, Mark, Staff Report, Ford’s “The Way Forward”, Blue Oval News, January 23, 2006

http://www.barefootsworld.net/ford-model-t.html

http://www.barefootsworld.net/ford-model-t.html

http://www.bbc.co.uk/news/world-us-canada-13338754

http://www.bbc.co.uk/news/world-us-canada-13338754

http://aacemahakam.blogspot.com/2012/10/w11tri-scrap-steel-in-gold-equivalent.html

http://aacemahakam.blogspot.com/2012/10/w11tri-scrap-steel-in-gold-equivalent.html

http://www.epa.gov/otaq/fetrends.htm

http://lw4.gc.cuny.edu/nml/students/sfraser/items/show/198

http://farm4.staticflickr.com/3385/3256601832_95e47408f7_z.jpg?zz=1

http://users.wfu.edu/palmitar/Law&Valuation/Papers/1999/Leggett-pinto.html

http://en.wikipedia.org/wiki/Ford_Pinto

http://www.wikinvest.com/stock/Ford_Motor_Company_(F)/Data/Cash_Flow_Statement#Cash_Flow_Statement

http://www.wikinvest.com/stock/Ford_Motor_Company_(F)/Data/Cash_Flow_Statement#Cash_Flow_Statement

http://www.toledoblade.com/Automotive/2010/08/06/In-sign-of-good-times-Ford-to-pay-Bill-Ford-again.html

http://www.toledoblade.com/Automotive/2010/08/06/In-sign-of-good-times-Ford-to-pay-Bill-Ford-again.html

http://oica.net/?s=Production+Statistics+1980&x=0&y=0

http://www.youtube.com/watch?v=KTE5uYknopY

http://corporate.ford.com/our-company/investors/reports-financial-information/annual-reports?releaseId=1244753689627

http://corporate.ford.com/our-company/investors/reports-financial-information/annual-reports?releaseId=1244753689627

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http://www.blueovalnews.com/plugins/p2_news/printarticle.php?p2_articleid=117

Reviewing the One Ford Strategic Plan: Divestiture, Technology and Continuous Improvement Aided by...

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