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Chapter 10 Case Study—Ford Motor Co.: One Ford; One Big Turnaround

TRUE/FALSE

1. Ford’s new emphasis on small cars is a classic example of “greening.”

ANS: F
Greenwashing is when a product or company attempts to give the impression of environmental
friendliness whether or not it is environmentally friendly.

PTS: 1 OBJ: LO-5 TOP: AACSB Reflective Thinking

KEY: CB&E Model Product MSC: BLOOMS Level I Knowledge

2. Small cars are already making Ford a more profitable company.

ANS: F
CEO Mullaly is confident that Ford will continue to produce solid profits with the realization that Ford
will “make less money on smaller cars, but … can make a return”).

PTS: 1 OBJ: LO-3 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Level I Knowledge

3. Selling off noncore brands is not always beneficial for a company heavily dependent on design and
R&D staffs such as Ford.

ANS: T PTS: 1 OBJ: LO-3 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Level I Knowledge

4. Ending the Mercury division and selling off its stakes in luxury cars helped Ford transition to being a
greener company.

ANS: T PTS: 1 OBJ: LO-5 TOP: AACSB Reflective Thinking

KEY: CB&E Model Product MSC: BLOOMS Level I Knowledge

MULTIPLE CHOICE

1. When you purchase a new Ford F150 from the dealer with every option as well as a custom airbrushed
painting of your horse farm, you have purchased a __________ product.
a. consumer
b. business
c. shopping
d. specialty
e. convenience
ANS: A
b, d
One product can fit more than one label depending on the context, since this pickup truck can serve as
personal vehicle, a rolling advertisement, and its paint and luxury appointments make it a specialty
item.

PTS: 1 OBJ: LO-0 TOP: AACSB Reflective Thinking

KEY: CB&E Model Product MSC: BLOOMS Level II Comprehension
2. When Ford sold its stake in Volvo, Jaguar, .Aston Martin, and other brands, it __________.
a. reduced its product items
b. repositioned its product lines
c. contracted its product mix
d. engaged in a rebranding strategy
e. all of the above
ANS: C
Contracting product lines (brands in this context) is a strategic way to deal with overextension, which
is why Ford divested itself of non-Ford brands.

PTS: 1 OBJ: LO-3 TOP: AACSB Reflective Thinking

KEY: CB&E Model Product MSC: BLOOMS Level II Comprehension

3. The Focus and Fiesta lines use a single platform for each worldwide market. How does that benefit
these product lines?
a. advertising economies
b. package uniformity
c. equivalent quality
d. product line depth
e. standardized components
ANS: B
Standardize components reduce manufacturing and inventory costs, and this is especially true for
automobile makes and models.

PTS: 1 OBJ: LO-3 TOP: AACSB Reflective Thinking

KEY: CB&E Model Product MSC: BLOOMS Level II Comprehension

4. That Ford offers five Focus variants based on one platform, i.e., four-door, hatchback, SUV, minivan,
and commercial vehicle, is and example of __________.
a. standardized components
b. functional modification
c. product line depth
d. style modification
e. all of the above
ANS: C
Product line (in this context, the Ford Focus) depth is the number of product items in a product line..

PTS: 1 OBJ: LO-3 TOP: AACSB Reflective Thinking

KEY: CB&E Model Product MSC: BLOOMS Level II Comprehension

5. There are three major benefits when a firm contracts. When Ford divested itself of its unprofitable
foreign luxury brands and Volvo, and discontinued its Mercury brand, which of the following was the
most important benefit discussed in the case?
a. managers no longer waste resources on poorly performing brands
b. new product items have a greater chance of being successful
c. resources become concentrated on important Ford products
d. reposition Ford as a domestic carmaker only
e. all of the above
ANS: C
Divesting noncore brands allowed Ford to focus on recharging the Ford brand and making it great.
 PTS: 1 OBJ: LO-3 TOP: AACSB Reflective Thinking
KEY: CB&E Model Strategy MSC: BLOOMS Level II Comprehension

6. Mercury was a long-time division of the Ford Motor Company. What kind of branding did Ford
eliminate when it ended the Mercury product line?
a. noncore brand
b. Ford family branding
c. co-branding
d. the automotive equivalent of a captive brand
e. individual branding
ANS: D
The former Mercury line was intended to appeal to a target market that existed between two economic
segments—people who bought Fords and those who bought the luxury Lincoln vehicles, which Ford
still carries as an individual brand.

PTS: 1 OBJ: LO-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Product MSC: BLOOMS Level II Comprehension