Case Solution of a Ford Business Strategy.

1. FORD’S GLOBAL
STRATEGY

2. Ford's regional model strategy was based on the belief that consumers in different
regions had different preferences.
But Mulally questioned why cars like the Focus were not built on the same platform and
did not share common parts.
In 2006, Ford CEO Alan Mulally took over the company and was surprised to find that
Ford produced different versions of cars like the Ford Focus for Europe and the
United States, leading to inefficiencies.
The global financial crisis in 2008-2009 forced Ford to reevaluate its practices and
control costs. Mulally introduced the "One Ford" strategy to create a few common car
platforms that could be used worldwide.
Summary of the case

3. Under the "One Ford" strategy, new models share common designs, platforms, and
parts, and are built in identical factories worldwide. Ford aims to reduce the number
of platforms from 15 in 2006 to just five, achieving significant cost savings.
This strategy is expected to reduce the cost of developing a new car by one-third and
significantly decrease the annual budget for component parts.
While enabling knowledge transfer between identical factories, resulting in cost
savings.
Ford hopes that the "One Ford" strategy will lower costs, improve profit margins in
developed markets. And allow the company to compete effectively in developing
markets like China, with the goal of increasing sales from $5.5 million in 2010 to $8
million by 2015.
Summary of the case

4. Aims:
Goal:
Ford plans to reduce the number of platforms from 15 to just 5 and achieve
significant cost savings by sharing design and tooling costs.
Ford aims to take about one-third of the $1-billion cost of developing a new car model
and significantly reduce its $50-billion annual budget for component parts.
Summary of the case

5. 2013
2010
2008- 2009
2006
Alan Mulally becomes CEO of Ford
and discovers that the company
produces different versions of
cars like the Ford Focus for
Europe and the United States.
Global financial crisis impacts
the automotive industry,
causing a significant drop in
sales.
Ford sets a sales growth target
from $5.5 million in 2010 to $8
million by 2015.
New models like the Fiesta,
Focus, and Escape start sharing
common designs, platforms, and
parts while being built in
identical factories around the
world.
Timeline of the case

6. “ Question 01
Why do you think that ford historically
made different cars in different region?
What are the advantages of ford’s historic
strategy? What are the drawbacks?

7. Regulatory Differences
Different regions often have
varying safety and environmental
regulations, which necessitated
modifications to vehicles to
comply with local laws
Regional Preference
Market Segmentation
Market Segmentation:
Automakers believed that
segmenting the market by
region and offering
specialized models for each
segment could potentially lead
to higher sales and market
share.
Legacy and Tradition
Over time, producing region-
specific cars became a deeply
ingrained tradition and part of
the corporate culture for some
automakers, including Ford.
Regional Autonomy
Many large multinational
corporations, including Ford,
operated with a high degree
of regional autonomy
Market Competition
Competition in the automotive
industry was fierce, and
automakers believed that
offering unique models for each
region could provide a
competitive edge.
A
E
S S
W
B
Reasons
Reasons for ford historically made different cars in different
region
consumers in different
parts of the world had
distinct tastes and
preferences

8. 01
Customization for
Regional Preferences
Ford believed that
tailoring its vehicle
offerings to the
specific preferences
and needs of
different regions
allowed them to
better meet customer
demands.
02
Local Autonomy
Ford's strategy
allowed its regional
divisions to have a
degree of autonomy,
which could be seen
as an advantage in
responding to local
market dynamics and
customer preferences
03
Market Segmentation
By offering different
vehicles in different
regions, Ford could
segment the market
more effectively,
potentially maximizing
sales and profits in
each region.
04
Brand Positioning
Differentiating
products by region
allowed Ford to
position its brands
differently in various
markets
05
Risk Mitigation
By producing region-
specific models, Ford
might have believed it
could reduce risks
associated with
market fluctuations
Business Plan Advantages of ford’s historic strategy

9. Drawbacks of ford’s historic strategy
Lack of Economies of Scale
Building different cars for different regions
resulted in missed opportunities for
economies of scale. Common parts, platforms,
and production facilities couldn't be shared
across regions, leading to higher production
costs.
Inefficiency
The regional approach led to inefficiencies in
product design, production, and procurement. It
also hindered knowledge transfer and best practice
sharing between regions, resulting in wasted
resources.
9

10. Global Market Challenges
Ford's fragmented approach made it less
competitive in emerging markets like China
and India, where cost-effective, globally
standardized models were in demand. This
hindered Ford's ability to compete
effectively in these rapidly growing
markets.
Complexity
Managing a wide array of region-specific
models added complexity to Ford's
operations. This complexity resulted in
higher development and production costs,
potentially eroding profit margins.
10
Disadvantages of ford’s historic strategy

11. “ Question 02:
What global developments forced Ford to re-
think its historic strategy?

12. Answer for Q2
First:
▪ The global development that forced
Ford to rethink its historic
strategy was the financial crisis of
2008-2009 that rocked the world’s
automobile industry.
Second:
▪ Ford needed to get its costs under
control, so it resulted in the “One
Ford” strategy created by Mark
Fields and implemented by Alan
Mulally.
12
01 02

13. Answer for Q2
Third:
▪ Ford had originally built different
model cars for Europe and the
United States;
Forth:
▪ In 2008-2009, there was a global financial
crisis that greatly affected the automobile
industry and led to the biggest drop in sales
Ford had experienced since the Great
Depression.
13
03 04
✓ because Europe was more focused
on driving smaller, more fuel-
efficient cars and the United
States enjoyed driving trucks and
SUVs.
✓ This caused them to leverage its global scale to
produce low-cost cars in order to compete in the
large, developing markets of China and India.
✓ This led to Ford creating the “One Ford” strategy,
which aims to create a handful of car platforms
that Ford can use anywhere globally

14. “ Question 03:
How will the 'One Ford’ strategy benefit Ford?
What does this strategy mean for Ford’s ability
to compete in established markets like the
United States and Europe, and emerging markets
like China?

15. Q4. How will the 'One Ford’ strategy benefit Ford?
Under the “One Ford” strategy, benefits include new car models that share a
common design, are built on a common vehicle platform, use the same parts,
and will be built in identical factories around the world.
✓ The “One Ford” strategy allows Ford to compete in established markets
by sharing costs of design and tooling, and it can attain much greater
economies of scale in the production of component parts.

16. Q4. How will the 'One Ford’ strategy benefit Ford?
When the global financial crisis hit in 2008-09 it rocked the automobile
industry and precipitated the steepest drop in sales since the great
depression.
✓ During this time there was a large developing market in China and India,
Ford would have to leverage their global scales to produce low cost cars
to compete effectively.
✓ The result of this was the “One Ford” strategy that aims to create a
handful of car platforms that ford can use everywhere in the world.

17. “ Question 03(B)
What does this strategy mean for Ford’s ability to
compete in established markets like the United
States and Europe, and emerging markets like
China?

18. 02
0303
0404
01
This slide is an editable slide
with all your needs.
Previously Ford was
unable to buy common
parts for the vehicles,
couldn’t share
development costs and
couldn’t use its European
focus plants to make cars
for the united states or
vice versa
Answer of Q3(B)
This strategy also benefits
ford as they can share the
costs of design and tooling and
they’ll be able to attain greater
scale of economies in the
production component parts.
Under this strategy ford hopes to share
a common design for models which are
built on a common platform, use the
same parts, and will be built in identical
factories around the world
With this strategy they
would reduce their
platforms from 15 to 5.
:
They will also significantly
reduce their current annual
budget for component parts.

19. Answer for Q3(B)…Continued
for Ford’s
ability to
compete in
established
markets
They will also significantly
reduce their current annual
budget for component parts.
Ford trails global rivals such as
Volkswagen and General motors
in this market interest
05
06 07
This strategy should significantly
reduce costs to enable them to
improve their profit margins in
developed markets and achieve
good margins at lower price points
in hypercompetitive developing
nations such as China, now the
world's largest car market.

20. “ Question 04
How would you describe Ford’s global strategy?

21. Answer for Q4
21
A global strategy means building market dominance without sacrificing
what makes your brand unique.
There are four basic strategies:

22. Global standardization strategy
-A business model based on pursuing a low-cost strategy on
a global scale.
-This strategy makes sense when there are strong
pressures for cost reductions and demands for local
responsiveness are minimal .
A localization strategy
A localization strategy focuses on increasing
profitability by customizing the firm’s goods
or services so that they provide a good
match to tastes and preferences in
different national markets.

23. Transnational strategy
• A transnational strategy tries to simultaneously achieve low costs
through:
o location economies,
o economies of scale,
o and learning effects differentiate the product offering across
geographic markets to account for local differences foster a
multidirectional flow of skills between different subsidiaries in the
firm’s global network of operations .
An international strategy
• An international strategy involves taking products first produced for
the domestic market and then selling them internationally with only
minimal local customization .
• When there are low cost pressures and low pressures for local
responsiveness, an international strategy is appropriate

24. Ford’s global strategy
-Ford’s global strategy can be described as a global
localization strategy;
-A strategy focused on increasing profitability by
customizing a company’s goods or services.
- So that they provide a favourable match to tastes
and preferences in different national markets1.
-And where cost pressures are not too intense.

25. -Ford is pursuing a strategy of establishing
top-to-bottom design and production facilities
in each region so that it can better serve local
demands.
-Companies pursuing a localization strategy
still need to be efficient and, whenever
possible, capture scale economies from their
global reach.

26. “Are there any global company or
business follow this strategy or any
cases”

27. The fast-food giant McDonald's is a classic
example of a company that follows a global
standardization strategy.
While it adapts its menu to cater to local tastes
to some extent, it maintains a core set of menu
items and standards that are consistent
worldwide. This allows McDonald's to achieve
cost efficiencies and maintain a strong global
brand identity
McDonald's.
Apple is known for its standardized
approach to product design and user
experience. Whether you buy an iPhone in
the United States, Europe, or Asia, or in
Mymensingh Bangladesh the product's core
features and interface remain largely
consistent.
Apple
Yes , There are Several Companies follow this strategy : One Ford
Strategy – Global Standardization Strategy
Also There are Several Companies : Yamaha , Samsung

28. This slide is an editable
slide with all your needs.
Some Core point Need To be Highlighted
Emerging
Markets:
Economies
of Scale
Leadership &
Change
Management
Resistance to
Change .
Achieving economies of scale is a
critical factor in the success of the
"One Ford" strategy. It directly
impacts the cost efficiency and
competitive advantage that Ford
seeks to gain.
especially the role of CEO Alan
Mulally, and effective change
management are essential for
implementing and sustaining such a
significant strategic shift in a large,
multinational corporation.
The focus on emerging markets like
China and India is a key driver of the
strategy. Recognizing and capitalizing
on opportunities in these high-growth
regions is vital for Ford's growth and
profitability
the case hints at potential
resistance to change within the
organization due to a historical
emphasis on regional autonomy and
decision-making.

29. Thank you
If All of you Have any query Feel Free to ask any
Question regarding to this case