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Global Strategic Planning: The Case of Ford

A company which is global in nature will need to employ a global competitive strategy. Initially, the competitive strategy of Ford during the time of introduction of Model T by Henry Ford revolved around mass production and mass marketing. Low-cost end user vehicles were possible through the reduction of the costs to result in large amount of sales. Higher volumes would lead to further lowering of costs. Ford latter on adopted the strategy of GM (General Motors) of segmenting the automobile market according to price point and production of vehicles to meet the demands of these segments.

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The presence of the company oversees by 1970s would necessitate global competition in the automobile industry which was globalizing. Ford also has had to partner with other companies in order to be a global player. This is referred to as strategic alliance formation (Yoshino Michael & Srinivasa Rangan, 1995) or strategic alliances and international joint ventures (Studer-Noguez, 2002). The alliances were made with auto companies like Mazda and were used by the companies to engineer, develop, design, market and produce vehicles jointly in the United States and abroad and enabled it to maintain competitive position locally and globally.

Ford has also tried the world-car projects with no success. World cars “were supposed to create corporate synergies” that would form the foundations of a globally integrated organization but the project failed. Ford produced its first world car Fiesta which was the output of joint work by different plants in Europe. Its second program was Escort which was designed and engineered by Ford North America and Ford of Europe. Challenges of incorporating the tastes and manufacturing preferences of the Europe and the American market were encountered. The project of the World car returned in the name of “global car” where Ford of Europe and Ford North America participated. Main components that would be single-outsourced or supplied by affiliates and subcontractors in the two region would be shared, in addition to shared research and development and basic designs according to the partners’ focus.

Although the global car described above faced challenges, there was continued fight to achieve a global car through usage of a lean-manufacturing process of global re-engineering introduced by the Ford 2000 strategy. These were the Ford Focus and the Escort replacement (Studer-Noguez, 2002).

Ford 2000 which was launched in 1994 sought to transform the company’s organization from being based on regional profit centers to that of global car manufacturing business which would be organized by product line. Global priorities in manufacturing, processes of purchasing and technology resources and platform were maintained in the modification of the Ford 2000 strategy in the year 2000. Hand in hand with this strategy (Ford 2000) which was a worldwide reorganization strategy, Ford realized that focus on a fewer vehicles and more focus on those vehicles would translate to a higher market share and they therefore abandoned from their traditional strategy of having e vehicle in every segment by dropping several vehicle lines. The dropped lines included Mark VIII, Aspire, Aerostar among others.

Ford has been employing different strategies in order to market its products. One such strategy is a manufacturing strategy referred to as delayed differentiation. Usage of such strategy helps Ford to have a “common platform for the auto and therefore be speedier and more efficient” in using world wide resources.

This refers to a situation where the differences between models are delayed as long as possible in the manufacturing process. These differences are what make the products attractive to the local markets. The alterations in the vehicles are added towards the end of the manufacturing in all markets in the case of Ford. These include suspension, shifting gears and body style.

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In addition to usage of the above strategy, Ford has established a link with its suppliers worldwide to help them reach the least expensive suppliers of parts, leading to saving of about $2-3 billion per year (Video: Ford’s Global Auto Strategy).

In line with its global product development strategy, the company planned to produce only one Focus model whose unique styling and specifications will suit major markets and have 87% of parts commonly shared. This model is due in 2010 (Vijayenthiran, 2008). Ford was reported to have had a plan of reducing the number of parts to be assembled as well as the complexity of parts through reduction of platforms used worldwide from 32 to 16, gear box families from 22 to 15, and engine architectures from 30 to 14. The company also was reported to have had plans to increase the share of its identical parts in all its group models from 21 to 50% (International Labor Office, 2000).

References

Report for discussion at the Tripartite Meeting on the Social and Labor Impact of Globalization in the Manufacture of Transport Equipment. 2000. Web.

Studer-Noguez Isabel. (2002). Ford and the Global Strategies of Multinationals: The North American Auto Industry. Routledge.

Video: Ford’s Global Auto Strategy. An overview. Web.

Vijayenthiran Viknesh. Next-gen Ford Focus to get global design. 2008. Web.

Yoshino M., and Srinivasa R., (1995). Strategic Alliances: An Entrepreneurial Approach to Globalization. Edition: 3. Harvard Business Press.

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StudyCorgi. (2021) 'Global Strategic Planning: The Case of Ford'. 6 December.

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