Ford and Relationships

Table of Content

1. Introduction
1.1. Background Information
1.2. Aim of the Paper
1.3. Delimitations

2. Analysis: Managing relationships
2.1. Past Problems with managing relationship
2.1.1. Lead In
2.1.2. Leadership
2.1.3. Organization
2.2. Professional relationship management
2.2.1. Lead in
2.2.2. Managing internal Relationships
2.2.3. Managing external Relationships

3. Recommendations
3.1. Lead in
3.2. Future problems
3.3. Future Recommendations

4. Conclusion

Reference List

Exhibits
Exhibit 1 World sales of cars between 1978 - 1987
Exhibit 2 US sales of vehicles from 1978 - 1987
Exhibit 3 Vehicle sales outside America from 1978 - 1987

1. Introduction

1.1. Background Information

In today’s world, companies are part of a complex environment. At the latest with the change from seller to buyer market in the 70s, companies cannot see themselves apart from their surroundings. Technological, economic and social change directly influence companies. The company Ford is one of the best known American automobile manufacturer. They strongly depend on their environment as product specifications need to respond to governmental regulation, economic factors such as oil prices, customer demands or technology standards.

When fierce competition in the automobile market turned the market around during the 70s, Ford seemed to loose market share so quickly to Japanese firms, that the company even had to shut down plants. Ford was found in 1903 and has a long tradition of influencing the car industry. The assembly line is only one example where Ford was able to drop prices for an automobile from 850 to 260 Dollars in 1923 to bring cars to the masses.^[1] Though influential in the past, the company seemed to loose against Japanese car producers with only little historic background. A true success story seemed to end during the late 70s and early 80s when losses where at their peek. It is interesting to see, how this situation came across.

In the 90th, Ford was back and introduced superior quality cars. The turning of the company seems to be a hundred percent from completely classical to a more adaptive strategy making. This seems mysterious for such an old and traditional American company.

1.2. Aim of the Paper

The aim of the paper is to analyse managing relationships at Ford, looking at the mismanagement and former problems with leadership and organization and than show how internal and external relationship were built to lead towards good quality cars.

1.3. Delimitations

Due to the complexity of the case, I left out information that had little to do with relationship management. Those include details about the Taurus Organization and Ford’s investments in technology.

2. Analysis: Managing relationships

2.1. Past Problems with managing relationship

2.1.1. Lead In

Ford started of as a family owned company and was influenced by ownership for a long time. Profit was the only measurement and relationships played a minor role. This reflects classical strategy making. Ford’s past can be seen as a warning on how leadership and organisational structure can lead towards isolated business areas leading to losses of car sales (see exhibit one).

2.1.2. Leadership

Like in other US companies, Ford believed in a strong manager who makes all the decisions for the company. This is true also in accordance to the classical school, where one leaders must provide discipline^[2] and the ordinary work is done by employees.^[3] This let to less response to surroundings and self-centred operations.

Strategy making at Ford only concentrated on one leaders, where preferences of that person greatly influenced products. The Carnegie school applies the psychological realistic theory where, one leader can only consider some factors. Subjectivity in the interpretation of data leads to the satisfaction of the leader but not to the best solution for the company.^[4] As “Ford’s strategic decisions had a more personalized character because of Mr. Ford’s presence”, big cars were produced. The outside world with suppliers and dealers had no word on the company strategy and external relationships basically did not exist. This also shows by the fact that suppliers were changed quickly. When consumers suddenly demanded small cars in 1979, Ford had nothing to offer just because Mr. Ford preferred big cars. One can say that the company Ford did not make their strategy efficiently because Ford did not take its surroundings into account.

Leaders never considered employees as knowledge base and neglected internal relationships. At Ford, some employees wanted to add own ideas, but were not heart. People were supposed to work and not to think. This is also true in the classical strategy making where ideas should never come from the bottom line.^[5] Also, leaders at Ford only decided after profits and did not think of people as valuable asset. They used the evolutionary perspective, where inefficient plants were shut down and people were sent home rather quickly. Employees were seen as cost factors that should lead to operational efficiency.^[6] They were easily exchangeable. This leadership approach must naturally lead towards frustration of the employees and influences their commitment negatively.

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^[1] Galgerle (1999). p. 51

^[2] Williamson (2002), p.77

^[3] Williamson (2002), p. 55

^[4] Williamson (2002), p. 21

^[5] Williamson (2002), p. 118

^[6] Williamson (2002), p. 118, 19f