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Lee iacocca

Lee Iacocca

Lee Iacocca, born Lido Iacocca on October fifteenth 1924, was the son of

an Italian immigrant named Nicola Iacocca. He had one sister named Antonette.

The family lived in Allentown, Pennsylvania. His father was some what of an

entrepreneur in the food service industry. The family business was called the

Orpheum Weiner House in Allentown, Pennsylvania.

The company is still standing today, operating under the name Yocco's,

his uncles' are still making hot dogs for the public. Growing up in Allentown

was difficult for Lee, because of his ethnic background. Allentown was

primarily made up of Dutch immigrants. In his early years of education he was

ridiculed for his heritage. An his senior year in high school Lee came down

with rheumatic fever. He had a harsh bout with the disease because there was no

modern medicine to aid in the recovery. In 1941 during the World War he was

very excited about joining the military. Ironically, the illness that had almost

killed him, saved him from going to war. Most of his classmates that joined the

service had been killed over-seas and abroad. For college Lee chose Lehigh

University for its engineering program, although he wanted to go to Purdue, he

did not get a scholarship. Lehigh University was one of the sights that Ford

Motor Company used to recruit new employees. He was able to secure a place in

the Ford training program, it was difficult for him to get admission but he

survived. During his time in the training program Lee had become less

interested in the engineering aspect of the business and more in sales. He

dropped out of the program to pursue areas in sales with the Ford Corporation.

During his time at Ford Lee Iacocca came out with several very innovative

purchasing concepts. One concept was the 56 for 56 payment plan. This payment

plan would allowed the consumer to purchase a new Ford vehicle with a twenty

percent down payment and a $56 monthly payment until the vehicle was paid off.

This was one of the first payment plans that was structured to be affordable for

the consumer. The system was responsible for selling over seven hundred fifty

thousand vehicle in 1956. Although his career with the Ford Motor Company was

extensive, all that would come to an end with the production of one vehicle the

"Pinto". After Ford was able to settle law suits over the compact car for

explosive reasons, (the Pinto was noted for exploding from rear end collisions),

they recalled over a million and a half Pintos. This was June of 1978, one

month before Lee was fired.

In 1979 Lee Iacocca was employed with the Chrsler Corporation. Within

his first few month there he had seen Chrysler cancel production of over sixty

thousand cars. After a short period of time he found out there were no dealers

to sell cars for them. Their inventory was bulging because of cars that were

made with no destination. These vehicles were part of Chrysler's sales bank.

It was a large inventory of cars that were manufactured only to keep plants


One of his first ideas was to get rid of the sales bank. He put

pressure on all local dealers to empty the inventory. He made the dealers take

up the slack so he could implement a just in time form of inventory. They would

be manufacture specific orders so no capital would be wasted. Another problem

with Chrysler was they were leasing vehicles to rental agencies instead of

selling to them. Chysler had been running the worlds largest leasing company.

Every six months they would buy them back. The new car dealers wanted nothing

to do with the rented cars. With this policy in effect, Chrysler also made

itself the worlds largest used car broker.

In late 1979, early 1980 Chrysler had wrote off almost 88 million

dollars in used car losses. Between the inventory problem and the leasing issue,

Chrysler's loss was in the five hundred million dollar range.

The next item was the staff. He needed to replace over thirty five stop

level managers, and replace then with people that knew what they were doing.

With over twenty years of experience with Ford it was clear were the

replacements would come from. Sales continued to drop steadily until the

creation of the K car. These were compact vehicles that would put Chrysler back

in the market place or finish them off.

The present problem was that Chrysler had such a large debit already

with no fresh capital. Through the help of government loans and an improving

economy Chrysler was able to save itself. By giving more of the market share

Chrysler was on the way to recovery. Presently the corporation holds a very

large piece of the market from large trucks to compact vehicles.

Lee Iacocca was able to save a failing company by establishing a

competent management team, cutting production runs of vehicles without

destinations and arranging guaranteed loans from the Federal Government during

an uncertain time. Interest rates were very high and the customer base was low.

He had an extensive amount of fore thought by staying with the firm. His

guidance was able to save and American corporation.

With the successful turn around of the Chrysler Corporation there was a

lot of gossip and allegations that Lee would be seeking a political career. In

1983 he signed a three year contract with Chrysler to close his career. In 1986

he retired from the car manufacturing industry completely. In my opinion Lee

Iacocca was blackballed from one of the worlds largest auto manufactures, then

was placed in charge of a company that had little chance of survival in the

present economy. He turned the struggling company around and repaid all debits

owed by the Chrysler Corporation. There is one phrase he also said that will be

remembered for years to come, "If you can find a better car, buy it."

Source: Essay UK -

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