Ford and Customer Satisfaction

Quality and Customer Satisfaction: The Ford Experience

This study of the relationship between quality and customer satisfaction at Ford Motor Company was undertaken to identify the ways in which a firm committed to quality can simultaneously experience difficulties in maintaining high levels of customer satisfaction. The study is valuable in that it permits an assessment of economic principles in real-world applications. Using selected principles of economics, data were obtained from a

thorough-going search of relevant literature on the performance of Ford Motor Company in terms of its quality effort and its customer satisfaction level. Previously published studies and industry analyses were used for this purpose.

The target company and the student preparing such an analysis benefit from a narrowly defined qualitative study of company performance and behaviors. Such a study facilitates the identification of critical elements in a quality transformation. It provides for an objective description of successful and unsuccessful management policies and activities and can point the way to further improvements leading to increased profitability.

Ford Motor Company, which made quality "Job 1," recently introduced a "comprehensive action plan" to boost the company's quality ratings, which had been assessed by a J.D. Power Quality Study at lower than expected levels (Ward's Auto World, 1999a). Company spokesperson Louise Goesser wrote in an inte

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third-quarter profits due, in part, to robust truck sales in a prosperous U.S. economy. In the third quarter, Ford earned $1.1 billion, up 11 percent over 1998. The net income included a one-time charge of $125 million to adjust retiree health-care and life-insurance liabilities at a parts subsidiary, Visteon. Where Ford did not do well was Europe and South America. In the third quarter, Ford lost $171 million (less than 1998's third-quarter losses of $273 million) and in South America Ford experienced a third-quarter loss of $72 million largely as a consequence of the weak Brazilian economy (Connelly, 1999b). Other key economic indicators that provide an overview of Ford's economic position include the following: . U.S. marketing costs as a percentage of gross revenues totaled 10.5 percent in the third quarter of 1999; . Total costs were down $300 million in the quarter, leading to a reduction in costs of $700 million for the first nine months of 1999 at constant volume and mix; . The company amassed $25.7 billion in cash (Connelly, 1999b). These data paint a picture of a financially sound business entity. Ford executives and industry analysts have argued that the primarily explanation for Ford's

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