Ford And The World Automobile Industry Case Study

Register to read the introduction… Although multinational growth extends back to 1920s, when Ford and General Motors established their European subsidiaries, until the 1970s the world auto industry was made up of fairly separate national markets. Each of the larger national markets was supplied primarily by domestic production, and indigenous manufacturers tended to be market leaders. For example in 1970, the Big Three (GM, Ford, and Chrysler) held close to 85 percent of the US market, VW and Daimler Benz dominated the market in Germany, as did Fiat in Italy, British Leyland (later Rover) in the UK, Seat in Spain, and Renault, Peugeot, and Citroen in France. By 2004, the industry was global in scope——the world’’s leading manufacturers were competing in most of the countries of the world. Internationalization required establishing distributors and dealership networks in overseas countries, and often building manufacturing plants. Foreign direct investment in manufacturing plants had been encouraged by trade restrictions. Restrictions on Japanese automobile imports into the North America and Europe encouraged the Japanese automakers to build plants in these regions. Table 4.12 shows some of the North American auto plants established by overseas (mainly Japanese) companies. Similarly, the high tariffs protecting the motor vehicle markets of most Asian and Latin American countries obliged the major automakers to set up local assembly. [Table 4.12 about here] Different companies has pursued different internationalization strategies: Toyota and Honda had expanded throughout the world by establishing whollyowned greenfield plants. Ford, which had initially internationalized by creating wholly-owned subsidiaries throughout the world, extended its global reach during 1987-1999 by acquiring Mazda, Jaguar, Aston Martin, Land Rover, and Volvo. GM extended its global reach through a series of alliances and minority equity stakes. notably with …show more content…
The world market was also segmented by types of product. The market passenger cars was traditionally segmented by size of automobile. . At the top end of the market were ““luxury cars”” distinguished primarily by their price. There were also specific types of vehicle: sports cars, sport-utility vehicles, small passenger vans (““minivans””), and pickup trucks. Although industry statistics distinguish between automobiles and trucks——the latter being for commercial use, in practice, the distinction was less clear. In the US small pickup trucks were a popular alternative to automobiles; sport utility vehicles were also classed as trucks. Margins varied considerably between product segments. Chrysler’’s position as one of the world’’s most profitable auto manufacturers during for much of the 1990s was primarily a result of its strong position in SUVs (through Jeep) and minivans (through its Dodge Caravan and Plymouth Voyager models). The luxury car segment too was traditionally associated with high margins. By contrast, small and medium sized family cars have typically lost money. However, mobility barriers between segments tend to be low. Modular product designs and common platforms and components have facilitated the entry of the major manufacturers into specialty segments. As the pressure of competition has increased across all market segments, manufacturers have sought differentiation advantage through introducing models that combine design features from different segments. During 2000-03, an increasing number of ““crossover”” vehicles were introduced into the US market. Notably, SUVs that adopted the integrated body and