Question

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?

Answer 1

1. Prior to the arrival of Alan Mullay, Ford was following a strategy of offering products that were modified as per the tastes and preferences of the local market. It did not pusrue a strategy of standardization. For Ford, the focus was to meet the particular demands of local consumers. The benefits of this strategy was that particular tastes and preferences of loacl consumers were satisfied by producing models with different specifications for different markets. For example, Americans love SUVs and trucks while Asian and European consumers have a preference for fuel efficient cars. This strategy helps Ford to cater to all the different needs.

In terms of costs, such a stratgey increased the production and operations costs as the economies of scale could bot be achieved. Further advantages of standardization like common parts, sharing of development costs could not have been reaped by Ford, thus increasing costs. Ford was pursuing this strategy due to the autonomy of different regions within Ford's organization.

2. With the One Ford initiative, Mullay is trying to create car platforms that can be used accross the globe without any need for modifications and customizations. The benefits of this strategy is that development costs will be shared among different markets, common parts can be procured for a car model and eventually economies of scale can be achieved. For example, small cars like Focus will have the same set of requirements accross the globe and can be standardized easily. In terms of drawbacks, Ford will not be able to cater to regional nuances in the taste of customers belonging to different markets.

3. The One Ford initiative does not imply that Ford will now disregard national and regional differences in demand. It will merely cut down the number of platforms that stands at 15 currently to around five platforms. Minor modifications will be allowed under the platform and these minor modifications will ensure that national and regional differences in demand is satisfied. This is specially the case for smaller cars like  Focus, or the Escape SUV.