Ford Motor Company has a long history of operating in Europe. Starting with exports to the United Kingdom in 1903, the company established sales branches in France and England in 1908 and 1909. Later assembly plants were set up in those countires. In Germany, Ford established a plant in 1926. For several decades, the European operators were separate subsidiaries, each being accountable to the headquarters in the United States with little coordination among them. The rat ionale for the organisation structure was that each country’s customers have different needs, tastes and preference. In addition, each country had its own tariff regulations.
In 1994, a new strategy emerged that was named Ford 2000. In 1995, Ford merged its automotive operating in North America with that of Europe. Again, an important reason was to be more competiive and cost reduction through the elimation of unnecessary car platform and engine duplication. This meant fewer basic vehicle platforms as well as engines and transmissions. Moreover, the regional profit center concept was replaced by product line concentration specifically, the Ford automotive operation consistuted of five vehicle centers with worldwide development for cars and trucks. The 21st Century brings new challenges in Ford. In the past, European car-makers were protected by quotas on Japanese cars. But these restrictions are going to be reduced or eliminated in the new Century. This means
that Japanese and Korean car manufacturers will market their cars in Europe. Also, the introduction of the European currency will enable customers to compare prices across borders and select the best price. Finally, the global car industry is plagued with overcapacity that may result in fierce competition. Ford may have to review its
1. What are the advantages and disadvantages of centralization and decentralization ?
2. Why did Ford establish a luxury car division ?
3. Do you think Ford will be in the competetive global market ? Why or Why not ?