FORD Vs THE GENERAL

INTRODUCTION FORD MOTOR CO. AND GENERAL MOTORS

REASONS FOR FAILURE OF FORD

Henry ford feared change and loved control less reluctant to adapt changes in the old models.

No delegation of authority , decision making was too centralized.

Low market reputation. Its cars were nondescript. Low market share of 16 % with a autocratic management.

REASONS FOR SUCCESS OF GENERAL MOTORS

ALFRED SLOAN adopted a decentralized authority with a centralized control. Separate divisions for each cars to focus on specific market segments to compete with the competetors. Proper allocation of its financial resources through an extensive reporting system. Huge market share of 35 % and a better market control. All employees participated in decision making.

THE TURN AROUND

During the 1980s general motors tracked a different route which resulted in fall of its market share from 48% of the U.S market to 35%. The money started slipping out of the hands of Ford motor company from 1980-1982 but at the end of the decade saw its shares increasing by 22 %. The earnings of ford surpassed GMs despite of the fact that its sales were only 2/3rd of the Generals.

ACTIONS TAKEN BY FORD FOR SURVIVAL

Introduction of cost cutting effort , by redesigning the old culture and by adopting decentralization policy.

More employees involvement in the production process , cutting down defects and improving of quality.

The

Focus on increasing managers and non-managers commitment and creativity through increase level of participation.

(CONT)
Replacement of companys autocratic style of management through management training.

Restyled cars like Tauras and sable, the sporty probea nd the new models of lincoln continental and ford thunderbird attracted the consumers.

Reduction of break even point by 40% and labour hours per car getting reduced to the same as in 1979 with fewer employees.

REASONS FOR DOWNFALL OF GMS

Faulty assumptions that gas prices would rise and fuel shortages would prevail so the demand for small cars will increase.

Wastage of its vast financial resources to compete with its U.S and foreign competitors.

More focus on generating huge economies of scale ,rather than to focus on product styling.

(CONT)
Not able to produce large cars as demanded by customers .

GM lost its market share due to huge capital investment to buy several of its japanese competitors product.

Lack of taking competitive advantage from the outside suppliers. GM attained parts at a higher price than ford and chrysler used to get

RESTRUCTURING OF GM

Concentrated on producing more stylish and differentiated cars and redesiging the company structure to produce fewer cars with more efficiency. Shut-down of its 26 north american auto assembly plant and cutting down One lack jobs from its 6 lack person work force. These efforts let to an increase in profits.

Thank You