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Iacocca and Chrysler: How a Corporation was Saved

Iacocca and Chrysler: How a Corporation was Saved. Presented by: Steve Kaman. Outline. Background Life at Ford Chrysler Ripe for Change Enter Lee Iacocca Changes at Chrysler Iacocca’s Qualities of a Leader. Background. Lido Anthony Iacocca Born: October 15, 1924

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Iacocca and Chrysler: How a Corporation was Saved

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  1. Iacocca and Chrysler:How a Corporation was Saved Presented by: Steve Kaman

  2. Outline • Background • Life at Ford • Chrysler Ripe for Change • Enter Lee Iacocca • Changes at Chrysler • Iacocca’s Qualities of a Leader

  3. Background • Lido Anthony Iacocca • Born: October 15, 1924 • Allentown, Pennsylvania • Son of Italian Immigrants • Experienced Racism • Mechanical Engineering at Lehigh • Masters from Princeton

  4. Career at Ford Motor Company • Began as student engineer in August 1946 • Decided to leave engineering • First job in sales • Rapidly moved up the corporate ladder • The Mustang • 8 years as president • Fired July 13, 1978

  5. Conditions at Chrysler • Over $1.2 billion in debt • Debts with hundreds of creditors • Sales dropping • Increasing Federal regulations • Top management not aware of what was going on • Habit of treating suppliers poorly

  6. The Chrysler Years - Problems • Immediately recognized numerous problems • All sections worked independently • 35 vice-presidents with no committee setup • No centralized accounting department • $500 million in inventory (not at dealerships) • Leasing cars to Avis and Hertz

  7. The Chrysler Years - Solutions • Built his own team • Established “quality circles” • Fired two Ad agencies, and hired Kenyon & Eckhardt • Showed suppliers the future • Gave $62 million rebate to Army

  8. The Chrysler Years – The Loan • Asked for guaranteed loans from government • Had to prove company on new path • Concerns over effects on free enterprise • Numerous concessions

  9. The Loan – The Next Step • Began working on concessions: • Reduced own salary to $1.00 • Used “help or go bankrupt with us” with suppliers • Explained that helping was only way banks would get money • Work cuts through unions

  10. The Loan – The Payback • The K-car – American alternative for economy car • Tied K-car with K-Mart • Load repaid in full, seven years early

  11. Continuing the Upswing • Brought back the convertible • Brought in the minivan

  12. Iacocca’s Qualities of an Innovator • Preparation – Art of Thought • Decisiveness – Creativity in Business • Management is motivating people – The Owner’s Manual for the Brain • Speak to people in their own language – The Owner’s Manual for the Brain

  13. Iacocca’s Qualities of an Innovator • Consulting workers – Programming Pearls • Don’t judge too early – Creativity in Business • Providing a dominant design – Mastering the Dynamics of Innovation

  14. Summary • Skills cultivated at Ford • Chrysler ripe for help • Iacocca steps up • Management, process and product innovation saved company • Connections between Iacocca and our readings

  15. References • Iacocca, Lee with Novak, William. Iacocca: An Autobiography. New York: Bantam Books, 1984. • Levin, Doron P. Behind the Wheel at Chrysler: The Iacocca Legacy. New York: Harcourt Brace and Company, 1995.

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