Question

International Business

Chapter 12 - Management Focus: Ford’s Global Strategy

Summary

The Management Focus describes the changes in U.S. automaker Ford’s global strategy after former Boeing executive Alan Mulally was appointed CEO in 2006. At the time, Ford produced models targeted for specific regions of the world. Under Mulally’s leadership, Ford implemented its One Ford strategy that uses just a few car platforms to serve the entire world. Discussion of the closing can revolve around the following questions:  

QUESTION 1: How would you characterize the strategy for competing internationally that Ford was pursuing prior to the arrival of Alan Mullaly in 2006? What were the benefits of this strategy? What were the costs? Why was Ford pursuing this strategy?

QUESTION 2: What strategy is Mullaly trying to get Ford to pursue with his One Ford initiative? What are the benefits of this strategy? Can you see any drawbacks?

QUESTION 3: Does the One Ford initiative imply that Ford will now ignore national and regional differences in demand?

Answer 1

“Reference taken from Chapter 12 - Management Focus: Ford’s Global Strategy” (International Business)"

Answer 1 -

Prior to the arrival of Alan Mullaly, Ford had the strategy of producing, designing and building their cars differently for the different regions. As Americans loved their trucks and SUVs, while Europeans preferred smaller, fuel-efficient cars.

Benefits of this old strategy were that it helped the ford to serve as per the tastes and preferences of people which resulted in good sales of the company.

Ford was making all together different products for different regions so it involved high costs. They were also not able to share development cost.

Ford was pursuing this strategy because they thought consumers in different regions had different tastes and preferences, which required customization of products and by doing that only they can increase their sales.

Answer 2 -

Mulally's One Ford strategy aims to create a handful of car platforms that Ford can use everywhere in the world. Mullaly aimed at producing cars that share similar design, built on common platform, use the same parts and will be built in identical factories around the world.

Benefits of the strategy are –

• With this strategy they can achieve economies of scale in the production of component parts.
• Increase their profit margin by cutting down costs.
• Compete with other markets like China and India.

Drawbacks of this strategy are –

• Changing its long-standing practices can affect the goodwill of the company.
• Sub parts and components cannot be customised as per the cultural or regional requirements.

Answer 3 -

One Ford Initiative will not ignore national regional differences thoroughly. Company will produce the same components and sub parts that can be assembled to make a customised product as per the requirement of specific region. Company main motive is still to compete globally with lowering their costs.