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Running head: LEE IACOCCA

 

Lee Iacocca

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Lee Iacocca

"Apply yourself. Get all the education you can, but then, by God, do something! Don't just stand there; make something happen. It isn't easy, but if you keep your nose to the grindstone and work at it, it's amazing how in a free society you can become as great as you want to be. And, of course, also be grateful for whatever blessings God bestows on you." http://www.saintrochtree.com/articles/000251.htm

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Introduction

The above statement clearly explains the reasons behind the success of Lee Iacocca.

Lee Iacocca, a great industrialist, born on October Fifteenth 1924, was the son of Italian immigrants Nicola and Antoinette Iacocca. His father was known as a hard-driving businessman. He opened restaurants and rental car companies. He had a strong personality and did not give up easily. Even after the Great Depression in the 1970’s he worked hard and survived. Similarly,Lee displayed his passion for hard work & managerial ken at a very young age. When he was 10 years old, he would take his wagon to the grocery store and wait outside. As shoppers came out he would offer to pull their groceries home for them for a tip. By the time he was 16, he worked 16 hours a day in a fruit mart.

Iacocca graduated from Lehigh University, Bethlehem, Pa., in 1945 and received a master's degree in engineering from Princeton University in 1946. In the same year he was hired by Ford Motor Company, as an engineer but he quickly proved that he was better suited for sales. His birth name was Lido but he changed it when he joined Ford because he believed that it would be easier to communicate.He worked his way through the company, becoming the general manager of the Ford division and vice president of the company in 1960. Iacocca became president in 1970.

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Lee, although being bashful and gutsy, was hardworking and intelligent. He knew the keys to success and was soon promoted to a salesman. This was when Lee showed his actual talent. He was a born salesman. In 1956 sales were slumping at Ford. Iacocca suggested offering a new 1956 Ford for a modest down payment, followed by three years of $56 payments. (http://www.emediaplan.com/admunch/Biographies/LeeIacocca.asp)

The "56 for 56" idea took off like a rocket. This was the first payment plan that was structured to be affordable for the customers. This plan resulted in sales of over seven hundred and fifty six thousand vehicles in 1956. After 10 long years of hard work Lee became an over night success. Soon he was promoted to work as manager for Ford's national truck marketing, then another promotion to head the company's car marketing.

Not stopping there, Iacocca set out to develop his own style of car. In 1964 Ford introduced the Mustang. Ford dealerships were literally mobbed with people wanting to buy the car and a new yearly sales record was established.

In 1970, Lee was promoted to the ultimate position, president of Ford Motor Company, second in command under Henry Ford II. But this was the time when trouble came when he did not get along with Henry Ford II. Lee being strong-headed and gutsy could not handle the situation. He wanted to be allowed to make decisions and control the company. This created fear in the mind of Henry that he would want to take over the company. Therefore they managed to fire him in June 1978.

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But Lee like his father did not give up and soon joined Chrysler in November 1978 as the President. But the company at this time was in a state of distress. In fact, the day it was announced that Lee Iacocca was hired as President the Chrysler CEO also announced the company’s greatest deficit.

Everything at Chrysler was in a mess. The management at the top level was in haywire. There was extreme tension within the company. Initially Lee tried to create harmony among the people at top-level management. But things did not work well. In addition to all these problems the economic conditions were also bad and the fuel prices had hiked up. Therefore people preferred imported cars with low fuel requirement. This was another set back for Chrysler.

But Lee did not give up and approached the US Congress for loans. He went well prepared and convinced the Congress that if Chrysler went down it would cost the country $2.75 billion dollars in unemployment benefits. Therefore, Iacocca succeeded in getting a loan.Congress agreed to $1.5 billion in loan guarantees if Chrysler could raise another $2 billion in capital. (http://dailycelebrations.com/101500.htm)

With brilliance and guts, he inspired labor unions to accept wage cuts. Iacocca met with union leaders and boldly told them he had thousands of jobs for $17 an hour, but none at $20. A pay cut or bankruptcy he proposed, having cut his own salary to $1 a year. The unions took the cut. (http://dailycelebrations.com/101500.htm). His $1 salary motivated entertainers like Frank Sinatra to do ads for Chrysler for a buck and Bill Cosby to entertain employees for free.

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(http://dailycelebrations.com/101500.htm). He believed in the concept to convince the others to agree with you rather than forcing on them. He once said, "You can have brilliant ideas, but if you can't get them across, your ideas won't get you anywhere." (www.bourton.co.uk/quotations.html)

Iacocca had excellent leadership qualities. He had the ability to convince people on his ideas, because he believed on himself. His persistence and "never give up" attitude and his willingness to do whatever measures it took to ensure the viability of the company worked.

He started a countrywide ad campaign of a fuel-efficient car K-car. This car made excellent sales and the company was on the road again.

In  1981 fiscal year the company showed a small profit. Chrysler paid back the loans seven years ahead of their due date. In 1984, Chrysler generated $2.4 billion in profits after reforming its vehicles and entire company. (http://www.exsands.com/History/People/leeiacoccabiog_wip_ex.htm)

Lee Iacocca was able to save Chrysler from bankruptcy. No doubt that the existence of Chrysler today is due to no one other than the great business genius Lee Iacocca. He moved on to become the CEO in 1979 till he retired in 1992.

The success of Lee Iacocca was due to many factors which managers usually cease to give importance. The core of successful management is the application of the management principles and implementation of the management process. To understand better we must first understand what is management.

Management Defined

For our purposes let's define management as "accomplishing the objectives of the organization through others." There are many other possible definitions, but this seems the simplest and most straight forward. As Frederick Taylor, the father of Scientific Management, told us, the work of managers is distinctly different from the work that actually produces and delivers the product or service. Generally, Taylor indicates that the purpose of management is "preparation" for the work of those who will be producing and delivering the product or service. (http://www.hsu.edu/faculty/greenk/mgmtprin.htm)

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This is exactly what Lee Iacocca did. He managed to make people work. He knew how to get the best out of the worst situation. He believed that managers don't get to handle the product directly or provide the service directly. Managers must somehow get the people working for them to produce the product or provide the service. And there's the rub - managers can't accomplish organizational objectives directly. They've got to work through others. This working through others is difficult and at times emotionally draining. According to Henri Fayol management is an art rather than a science.

There are three things, which are required to become a successful manager. They are your personality and communication skills, the principles of management and the management process. The principles and process are the bedrock of successful management. Successful managers must work to ensure that the principles are not being violated in the portion of the organization for which they are responsible, and they must be disciplined in their application of the management process. The principles and process will only take you so far, however, Lee believes that the principles and process get you half way home - only make you an average manager. The artistic ability that comes from experience, intuition, imagination take you all the way - make you an excellent manager.

The management principles that have been stated by Henri Fayol in General and Industrial Management, in 1916 are important, as an organization cannot function optimally while violating these principles. In fact there should be an annual audit in an organization to check if there are no violations; similarly the management process, which is a combination of the theories of Edwin Locke (Goal Theory) and Peter Drucker (MBO) and the application of the theory by Lee Iacocca. The management process requires that the following activities be completed for all subordinates on a monthly or quarterly basis.

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Meet with each subordinate individually for no more than 2 hours. Identify areas of responsibility. Ask how things are going (both good and bad) in each area. Identify and agree upon objectives to be accomplished before the next meeting. Specify additional resources and support needed by the subordinate to accomplish the objectives.

Provide the additional resources and support needed by the subordinates. Leave the subordinates alone and let them work.

Meet with each subordinate individually according to the established schedule. Discuss completion status for objectives on the past objectives list. Ask the subordinate how things are going (both good and bad) in each area of responsibility. Identify and agree upon a new set of objectives to be accomplished before the next meeting. Specify additional resources and support needed by the subordinate to accomplish the objectives.

Cycle back to step (a). (http://www.hsu.edu/faculty/greenk/mgmtprin.htm)

From the success of Lee Iacocca we can see that he used all these approaches in order to achieve his targets. He believed that communication is an important tool in the success of an organization. The employees should feel that they are part of the organization. This results in cooperation and harmony within the employees, which increases productivity and therefore profits.

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Furthermore, there are also many other factors, which have to be taken into consideration by managers. For example discipline, business ethics, delegation of authority and Lee Iacocca, former CEO of Ford Motor Company, expressed it well when he once advised, "Delegate everything that others can do just as well as you can."
(www.eb-asia.com/registrd/issues/0104/0104vp.htm)

Motivation is also another important factor in which Lee Iacocca strongly believed. In the Chrysler case it was his motivation that workers agreed for a wage cut. He persuaded and motivated the entire Chrysler team to get up and work hard. He said, "Motivation is everything. You can do the work of two people, but you can't be two people. Instead, you have to inspire the next guy down the line and get him to inspire his people."
(www.bourton.co.uk/quotations.html)

The real character of a corporation is expressed in the way it exercises authority, the manner in which it exerts its will to influence people. Every organization must exercise authority in order to survive. There was a time when this was done almost entirely through negative means, through discipline and threat of punishment. Today discipline is not a very popular concept; yet no organization can exist without it.

When Lee Iacocca arrived at Chrysler for his very first day on the job, he observed several clear signs that the organization was in deep trouble. The office of the president was being used as a thoroughfare to get from one office to another. Executives kept coming and going from the President’s office. He knew right away that the first thing he had to do was to bring discipline and order.

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Without discipline, the energies and talents of an organization cannot be fully harnessed and put to work. Every company, even the most people-oriented, has areas where it insists on obedience and discipline. Wherever high performance levels are considered absolutely critical, negative forms of authority are employed.

Conclusion

Lee Iacocca is a person of strong will, and commitment. He has the urge to fight back; he does not let problems and difficulties to push him back. He survived after being fired from the highest post at Ford Motor, which was a big blow in his career. He saved Chrysler from bankruptcy. In fact it is due to him that Chrysler is still alive. After retiring from Chrysler in 1992 he did not sit back and get bored, in fact, he has come up with the concept of E-bike and has started a company called EV Global Motors. An E-Bike works like either a motor scooter or a traditional bicycle. The privately held EV Global Motors Inc. has about 20 employees and 150 E-Bike dealers across the United States.

At the age of 75 Iacocca is not only chairman and CEO of EV Global Motors, but also chairman of the Boston-based Iacocca Foundation; and chairman of the Committee for Corporate Support of the Joslin Diabetes Foundation.

"I do it to keep busy," Iacocca said. "It's supposed to keep you young.It keeps your mind young, no doubt.”(http://boston.bcentral.com/boston/stories/2000/10/23/tidbits.html)

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References

Lee Iacocca, King of Detroit - by Dave Cole - February 17, 2001. Retrieved from the World Wide Web on November 5, 2001

http://www.saintrochtree.com/articles/000251.htm

Retrieved from the World Wide Web on November 5, 2001 http://www.emediaplan.com/admunch/Biographies/LeeIacocca.asp

Retrieved from the World Wide Web on November 5, 2001 http://www.exsands.com/History/People/leeiacoccabiog_wip_ex.htm

Retrieved from the World Wide Web on November 5, 2001 http://dailycelebrations.com/101500.htm

Retrieved from the World Wide Web on November 5, 2001
www.bourton.co.uk/quotations.html


“Gearing up for supply chain success” Andreas Muelchi. Retrieved from the World Wide Web on November 5, 2001 
www.eb-asia.com/registrd/issues/0104/0104vp.htm
 

Management Principles and Process, edited by Ken Green, August 23,2001. Retrieved from the World Wide Web on November 5, 2001 
http://www.hsu.edu/faculty/greenk/mgmtprin.htm

 


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