FORD’S GLOBAL

STRATEGY
 Summary of the case

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.

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.

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

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

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.

Aims:
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.
 Timeline of the case
Global financial crisis impacts
the automotive industry,
causing a significant drop in
sales.
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.
New models like the Fiesta,
Focus, and Escape start sharing
common designs, platforms, and
parts while being built in
identical factories around the
world.
2013
2010
Ford sets a sales growth target
from $5.5 million in 2010 to $8
million by 2015.
“ 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?
 Reasons for ford historically made different cars in different
region
Regional Preference
consumers in different
parts of the world had
distinct tastes and
preferences
Regulatory Differences
Different regions often have
varying safety and environmental
regulations, which necessitated
modifications to vehicles to
comply with local laws
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.
Regional Autonomy
S S
Many large multinational
corporations, including Ford,
operated with a high degree
E W of regional autonomy
Legacy and Tradition
Reasons
Over time, producing region-
specific cars became a deeply
A B ingrained tradition and part of
the corporate culture for some
automakers, including Ford.
Market Competition
Competition in the automotive
industry was fierce, and
automakers believed that
offering unique models for each
region could provide a
competitive edge.
Business Plan Advantages of ford’s historic strategy

01 02 03 04 05

Customization for
Regional Preferences Local Autonomy Market Segmentation Brand Positioning Risk Mitigation

Ford believed that Ford's strategy By offering different Differentiating By producing region-
tailoring its vehicle allowed its regional vehicles in different products by region specific models, Ford
offerings to the divisions to have a regions, Ford could allowed Ford to might have believed it
specific preferences degree of autonomy, segment the market position its brands could reduce risks
and needs of which could be seen more effectively, differently in various associated with
different regions as an advantage in potentially maximizing markets market fluctuations
allowed them to responding to local sales and profits in
better meet customer market dynamics and each region.
demands. customer preferences
 Drawbacks of ford’s historic strategy

Lack of Economies of Scale Inefficiency

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

9
 Disadvantages of ford’s historic strategy
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.
10
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.
“ Question 02:
What global developments forced Ford to re-
think its historic strategy?
Answer for Q2
First: 01
▪ 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.
12
Second:
02
▪ 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.
Answer for Q2
Third: 03
▪ Ford had originally built different
model cars for Europe and the
United States;
✓ because Europe was more focused
on driving smaller, more fuel-
efficient cars and the United
States enjoyed driving trucks and
SUVs.
13
Forth:
04
▪ 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.
✓ 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
“ 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?
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.
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.
“ 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 ?
 Answer of Q3(B)
Under this strategy ford hopes to share
a common design for models which are
built on a common platform, use the
01 same parts, and will be built in identical
factories around the world

With this strategy they

Previously Ford was would reduce their
unable to buy common 02 platforms from 15 to 5.
parts for the vehicles, :
couldn’t share This strategy also benefits
development costs and ford as they can share the
costs of design and tooling and
couldn’t use its European
they’ll
This slide be
is anable to attain
editable slide greater
focus plants to make cars 0303 scale
with of economies
all your needs. in the
for the united states or production component parts.
vice versa

They will also significantly

0404 reduce their current annual
budget for component parts.
 Answer for Q3(B)…Continued

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

05
“ Question 04
How would you describe Ford’s global strategy?
 Answer for Q4
A global strategy means building market dominance without sacrificing
what makes your brand unique.
There are four basic strategies:

21
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.
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
Ford’s global strategy

- Ford’sglobal 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.
-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.
 “Are there any global company or
business follow this strategy or any
cases”
Yes , There are Several Companies follow this strategy : One Ford
Strategy – Global Standardization Strategy

McDonald's.
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
Apple
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.

Also There are Several Companies : Yamaha , Samsung

Some Core point Need To be Highlighted
Achieving economies of scale is a
critical factor in the success of the
Economies "One Ford" strategy. It directly
of Scale impacts the cost efficiency and
competitive advantage that Ford
seeks to gain.
especially the role of CEO Alan
Leadership & Mulally, and effective change
management are essential for
Change
implementing and sustaining such a
Management significant strategic shift in a large,
multinational corporation.

The focus on emerging markets like

Emerging This slide
China andisIndia
an editable
is a key driver of the
Markets: slide with all
strategy. your needs.and capitalizing
Recognizing
on opportunities in these high-growth
regions is vital for Ford's growth and
profitability
the case hints at potential
Resistance to resistance to change within the
Change . organization due to a historical
emphasis on regional autonomy and
decision-making.
Thank you

If All of you Have any query Feel Free to ask any

Question regarding to this case