Ford
CASE NO: 1 FORD
Summary:
Ford has been in Auto industry for more than a century. During this period it has come across different situations and problems from time to time. This case talks about the different strategies that Ford has used over time to manage its environment.
In its early years, Ford depended on different suppliers for the input of various parts and it only bolted them together into a finished vehicle. However, soon it had the problem with the quality of equipments and compatibility of parts made by different manufacturers. Ford decided to produce parts itself, merged few suppliers and also started its own supply operation. In 1950, this strategy became too expensive and was costing very high as compare to buying from independent suppliers. So once again Ford resumed contract with suppliers and used its buying power to negotiate favorable prices to gain advantage over competitors like GM. Prior to 1980s, Ford did not find much competition. Big 3 carmakers, GM, Chrysler and Ford coordinated their pricing policies to avoid competition. The three mainly competed over quality and features.
However, than competition became hostile, as Japanese carmakers entered the market to capture the ultimate resource: customers. Japanese carmakers had an advantage over American carmakers in terms of new technology. They gained competitive advantage over American carmakers with strategies like, Keiretsu and Just-in-time inventory. Toyota and Nissan owned significant stake of suppliers and were better able to control the prices.
Realizing the situation, Ford also started to increase its efforts to compete and stay in the business. It established its own Keiretsu-type arrangements. It bought minority interest in Cumming U.S., Excel and Decoma Int'l. which manufactured different body parts and wheels. Ford also forged links with rivals, by owning 25% of Mazda, established strategic alliances...
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