1. What kind of global strategy did Ford pursue at the beginning? What kind of global strategy does it pursue now?

2. In what main ways has Ford changed its global structure to allow it to coordinate the production and sale of its products more effectively around the world? In particular, what different forms of organizational structure has it adopted?

FORD’S CEO DESIGNS A NEW GLOBAL STRUCTURE

Ford realized the benefits of overseas expansion very early on. It opened car-making units in Europe, Asia and Australia. Each unit was decentralized and developed cars for its own local market. In the 1970s and 1980s this became a problem as Ford faced competition from Japanese auto manufacturers. The company wanted to use the capabilities of its European divisions to help build smaller, more fuel- efficient vehicles for the United States. In the 1990s Ford tried to create a new global matrix structure.  But the divisions had never had to work together in the past and the effort failed. Ford restructured itself using a “world structure” in which one set of managers was given authority over the whole of a specific global operation, such as manufacturing or car design. The company then tried to develop global car lines. This still did not work and Ford went through several other reorganizations. By 2006, the company was in deep trouble and a turnaround plan was announced in September of that year. Alan Mulally was appointed the new President and CEO of Ford. Mulally had been an executive at Boeing and was an expert in organizational design. He changed Ford’s global structure to reduce costs and speed product development. He flattened Ford’s structure and re-centralized control, while at the same time emphasizing teamwork and a cross-functional approach to solving value chain problems. He removed two levels of hierarchy and had the heads of value chain activities report directly to him. Mulally hopes that a cross-functional approach will standardize global car making and allow units to improve on quality, productivity and speed of new product introduction. Even so, the new product team will have to continue to customize products for regional consumers. Ford will need to be successful at this transformation or it will become a target for takeover.