Expert answer:Presentation script for the case

Solved by verified expert:The case reading is in the attached file. I need to present the case in the class. So, I need a short presentation script that includes two things:(1) General explanation about the case.(2) Answering the following question: What strategy is
Mullaly trying to get Ford to pursue with his One Ford initiative? What are the
benefits of this strategy? Can you see any drawbacks?
presentation.docx

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Ford’s Global Strategy
When Ford CEO Alan Mulally arrived at the company in 2006 after a long career at
Boeing, he was shocked to learn that the company produced one Ford Focus for Europe and a
totally different one for the United States. “Can you imagine having one Boeing 737 for Europe
and one 737 for the United States?” he said at the time. Due to this product strategy, Ford was
unable to buy common parts for the vehicles, could not share development costs, and couldn’t
use its European Focus plants to make cars for the United States, or vice versa. In a business
where economies of scale are important, the result was high costs. Nor were these problems
limited to the Ford Focus. The strategy of designing and building different cars for different
regions was the standard approach at Ford.
Ford’s long-standing strategy of regional models was based upon the assumption that
consumers in different regions had different tastes and preferences, which required considerable
local customization. Americans, it was argued, loved their trucks and SUVs, while Europeans
preferred smaller, fuel-efficient cars. Notwithstanding such differences, Mulally still could not
understand why small car models like the Focus, or the Escape SUV, which were sold in
different regions, were not built on the same platform and did not share common parts. In truth,
the strategy probably had more to do with the autonomy of different regions within Ford’s
organization—a fact that was deeply embedded in Ford’s history as one of the oldest
multinational corporations.
When the global financial crisis rocked the world’s automobile industry in 2008–2009
and precipitated the steepest drop in sales since the Great Depression, Mulally decided that Ford
had to change its long-standing practices in order to get its costs under control. Moreover, he felt
that there was no way that Ford would be able to compete effectively in the large developing
markets of China and India unless Ford leveraged its global scale to produce low-cost cars. The
result was Mulally’s One Ford strategy, which aims to create a handful of car platforms that Ford
can use everywhere in the world.
Under this strategy, new models—such as the 2013 Fiesta, Focus, and Escape—share a
common design, are built on a common platform, use the same parts, and will be built in
identical factories around the world. Ultimately, Ford hopes to have only five platforms to
deliver sales of more than 6 million vehicles by 2016. In 2006, Ford had 15 platforms that
accounted for sales of 6.6 million vehicles. By pursuing this strategy, Ford can share the costs of
design and tooling, and it can attain much greater scale economies in the production of
component parts. Ford has stated that it will take about one-third out of the $1 billion cost of
developing a new car model and should significantly reduce its $50 billion annual budget for
component parts. Moreover, because the different factories producing these cars are identical in
all respects, useful knowledge acquired through experience in one factory can quickly be
transferred to other factories, resulting in systemwide cost savings.
What Ford hopes is that this strategy will bring down costs sufficiently to enable Ford to
make greater profit margins in developed markets and be able to achieve good profit margins at
lower price points in hypercompetitive developing nations, such as China (now the world’s
largest car market), where Ford currently trails its global rivals such as General Motors and
Volkswagen. Indeed, the strategy is central to Mulally’s goal for growing Ford’s sales from 5.5
million in 2010 to 8 million by mid-decade.
After reading the above case, write a short presentation script of the general explanation of what
the case is about, and answer the following question: What strategy is Mullaly trying to get Ford to
pursue with his One Ford initiative? What are the benefits of this strategy? Can you see any drawbacks?
…
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