Ford, GM, and DiamlerChrysler victims of their own mistakes

Posted by jd
January 25, 2006

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I had been expecting the layoffs and plant shutdowns for months, if not years. I am still disappointed though that the companies have opted to choose the simpler route (almost anyone can layoff employees and shut down plants to become profitable) rather than addressing some very fundamental problems affecting them. After all, foreign carmakers are thriving right here in the USA selling cars to the same folks that GM, Ford, and DaimlerChrysler are selling to.

So what can we learn from the poor strategy of these companies?

    Make sure that you understand your cost structure. Get outside help if you are afraid that your own managers will not give you an accurate picture.
    There is nothing worse than competing on price alone to improve short-term results. As I had said previously, aggressive discounting during 2005 has caused permanent damage to these companies. It will be almost impossible to get premium pricing for their cars even if they are superior.
    If you know you are in trouble (and I hope that these executives knew it all along), it is better to act as soon as possible. Delaying action only makes the tasks more difficult and hope for success small. Just ask Merck management.

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