Strategic Alliance - Ford

Analysis of Strategic Alliance with Ford
MINOR PROJECT REPORT ON
STRATEGIC ALLIANCES – FORD MOTOR

COMPANY
BUILT FOR THE ROAD AHEAD.
Submitted for fulfillment of the requirement

for the award of the degree of
Bachelor of Business Administration

To
Guru Gobind Singh Indraprastha
University
Under the guidance of:

Mrs. Nidhi Prasad
Submitted by:
Sandeep Singh Sethi
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SANDEEP SINGH
Roll No.: 05910601709
ANSAL INSTITUTE OF TECHNOLOGY
TO WHOMSOEVER IT MAY CONCERN
This is to certify that the minor project report titled STRATEGIC ALLIANCES
– FORD MOTOR COMPANY carried out by SANDEEP SINGH has been
accomplished under my guidance and supervision as a duly registered BBA
student of the ANSAL INSTITUTE OF TECHNOLOGY (G.G.S I.P. University,
New Delhi). This project is being submitted by him in the partial fulfillment of
the requirements for the award of the Bachelor of Business Administration
from I.P. University.
His dissertation represents his original work and is worthy of consideration for
the award of the degree of Bachelor of Business Administration.
____________________
(Name and Signature of the Internal Faculty Advisor)
Title:
Date:
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SANDEEP SINGH
ACKNOWLEDGEMENT
The Project Report is the outcome of many individuals without
whom it cannot be molded, so they deserve thanks.
I thank my teacher, Mrs. Nidhi Prasad under whose guidance

I have been able to successfully complete this project.
I thank all of my friends and fellow classmates for their

assistance in this project.
– Sandeep Singh
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SANDEEP SINGH
CONTENTS
Page no.
COMPANY PROFILE …………………………………………………………..

6
ORGANIZATION STRUCTURE ………………………………………………

6
ORGANIZATION HISTORY …………………………………………………...

7 In 1903 …………………………………………………………………….. 7
In 1908 …………………………………………………………………….. 7
In 1919 …………………………………………………………………….. 8
In 1939 …………………………………………………………………….. 8
In 1947 …………………………………………………………………….. 8
In 1950 …………………………………………………………………….. 8
COMPANY PRODUCTS ……………………………………………………….

10
EXECUTIVE SUMMARY ………………………………………………………

11
The Strategic Alliance Boom ……………………………………………… 11
INTRODUCTION ……………………………………………….……………….
13
Scope of the Study ………………………………………………………… 14
Objective …………………………………………………………………….14
Porter’s Five Forces ………………………………………………………....17
COMPANY PROFILE (Analytical Report)

……………………………………. 19
Competitor Analysis ……………………………………………………….. 19
Sales Analysis ……………………………………………………………… 19
Recent Sales at Ford ………………………………………………………... 20
Sales Comparisons (Most Recent Fiscal Year) ……………………………..
21
Recent Stock Performance ………………………………………………….
21
Summary of company valuations …………………………………………...
22
Dividend Analysis ………………………………………………………….. 23
Profitability Analysis ………………………………………………………. 23
Profitability Comparison ………………………………………………….... 24
Inventory Analysis …………………………………………………………. 24
Research and Development ………………………………………………....
25
Financial Position …………………………………………………………... 25
GLOBAL STRATEGY…………………………………………………….. 26
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SANDEEP SINGH
Ford’s Promotional Leadership ……………………………………………..

27
Ford Motor Company to increase its Investment in South Africa
…………. 28
BRAND MANAGEMENT AT FORD …………………………………….. 28
Applications of Brand Management in Ford’s Globalised Structure
……….. 29
INDUSTRY ANALYSIS: GLOBAL SCENARIO

……………………………… 30
Overview 30
THE LARGEST CAR PARKS IN THE WORLD ………………………… 31
United States ………………………………………………………. 31
WESTERN EUROPE ……………………………………………... 33
Japan …………………………………………………….……….... 34
India …………………………………………………….………… 36
Rest of Asia ……………………………………………………….. 37
Future trends and outlook ……………………………………….……….....
37
Porter’s Model ……………………………………………………………... 38
Porter’s generic strategy …………………………………………………… 40
LITERATURE REVIEW ………………………………………………………...

41
INTRODUCTION TO STRATEGIC ALLIANCES ………………………. 41
Summary …………………………………………………………... 41
What is a business network? ……………………………………….
41
Why network? ……………………………………………………... 41
Characteristics of a business network ……………………………...
42
What do networks do? ……………………………………………... 42
Why network now? ………………………………………………… 44
MODES OF ENTRY INTO FOREIGN MARKET ………………………... 44
Different forms of strategic alliances ……………………………....
45
CHOOSING STRATEGIC PARTNER …………………………………….. 47
Alliances and Risk …………………………………………………. 48
MANAGING STRATEGIC RISK …………………………………………. 49
RELATIONSHIP RISK IN ALLIANCES …………………………………. 49
How companies can manage relationship risk
……………………... 49
Alliance strategy ……………………………………………………. 51
A dynamic approach ………………………………………………... 51
Alliance portfolios ………………………………………………….. 52
Build capability ……………………………………………………... 52
CRITICAL ANALYSIS …………………………………………………………...

54
ALLIANCE HISTORY …………………………………………………….. 54
A BRIEF OVERVIEW OF ALLIANCE ………………………………….... 55
Ford and Mazda ……………………………………………………. 55
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Ford and Nissan: A Brief Alliance Overview ……………………....

56
Technology frontier ………………………………………………… 56
Critical analysis of Ford’s alliances ………………………………...
56
LIMITATIONS ……………………………………………………………………
60
RECOMMENDATIONS ………………………………………………………….
61
CONCLUSION …………………………………………………………………….
65
REFERENCES …………………………………………………………………….
66
BIBLIOGRAPHY …………………………………………………………………
67
APPENDIX ………………………………………………………………………...
68
COMPANY PROFILE
FOUNDER : Henry Ford
ESTABLISHED : 1903
SECTOR : Consumer Goods
INDUSTRY : Auto Manufacturers – Major
HEAD OFFICE : Ford Motor Co.

One American Road
Dearborn, MI 48126
United States
Phone: 313-322-3000
Fax: 313-845-7512
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ORGANIZATION STRUCTURE
CHAIRMAN : Mr. William Clay Ford Jr.
CEO : Mr. Alan Mulally
EMPLOYEES : 283,000
HISTORY
Henry Ford
IN 1903
Ford was launched in a converted factory in 1903 with $28,000 in cash from twelve
investors, most notably John and Horace Dodge, who would later found the Dodge
Brothers Motor Vechicle company. Henry Ford was 40 years old when he founded
the
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SANDEEP SINGH
Ford Motor Company, which would go on to become one of the largest and most
profitable companies in the world, as well as being one of the few to survive the great
depression. The largest family-controlled company in the world, the Ford Motor
Company has been in continuous family control for over 100 years.
IN 1908
Henry Ford introduced the Model T. Earlier models were produced at a rate of only a
few
a day at a rented factory on Mack Avenue in Detroit, Michigan with groups of two or
three men working on each car from components made to order by other companies.
In 1919
Edsel Ford succeeded his father as president of the company, although Henry still
kept a
hand in management. Although prices were kept low through highly efficient
engineering, the company used an old-fashioned personalized management system,

and
neglected consumer demand for improved vehicles.
In 1939
The Nazis assumed day to day control of Ford factories in Germany.With Europe
under
siege, Henry Ford's genius would be turned to mass production for the war effort.
In 1947
Henry Ford passed away. Ernest Breech was hired and became the Executive Vice
President. Then later became Board Chairman in 1955.
In 1950
Ford introduced the iconic Thunderbird in 1955 and the Edsel brand automobile line
in
1958. Edsel was cancelled after less than 27 months in the marketplace in November
1960. The corporation bounced back from the failure of the Edsel by introducing its
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SANDEEP SINGH
compact Ford Falcon in 1960 and the Mustang in 1964. By 1967, Ford of Europe was
established.
Lee Iacocca was involved with the design of several successful Ford automobiles,
most
notably the Ford Mustang. He was also the "moving force," as one court put it, behind
the
notorious Ford Pinto. He promoted other ideas which did not reach the marketplace as
Ford products. Eventually, he became the president of the Ford Motor Company, but
he
clashed with Henry Ford II and ultimately, on July 13, 1978, he was famously fired by
Henry II, despite Ford posting a $2.2 billion dollar profit for the year. In 1979 Phil
Caldwell became Chairman, succeeded in 1985 by Don Petersen
Harold Poling served as Chairman and CEO from 1990-1993. Alex Trotman was
Chairman and CEO from 1993-1998, and Jacques Nasser served at the helm from
1999-
2001. Henry Ford's great-grandson, William Clay Ford Jr., is the company's current
Chairman of the Board and was CEO until September 5, 2006, when he named Alan
mullay Boeing as his successor. As of 2006, the Ford family owns about 5 percent of
Ford's shares and controls about 40 percent of the voting power through a separate
class
of stock.
The company expects to burn through $17 billion in cash before turning a profit. The
action was unprecedented in the company's 103 year history.
FORD PRODUCTS
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➢ FORD SUPER DUTY22380

 47660
 NA
 NA
 3
 Pickup
 Pickups
➢ FORD E-SERIES
➢ FORD TAURES
➢ Ford Taurus X
➢ Ford Ranger
➢ Ford Mustang Convertible
➢ Ford Fusion
➢ Ford Edge
➢ Ford F-150
25920
33600
NA
NA
8
Vans
Vans
23245
26845
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18
28
5
Sedan
Sedans
Sync
13995
22485
21
26
3
Pickup
Pickups
19250
31845
17
26
4
Coupe
Performance,Coupes,Performance
EXECUTIVE SUMMARY
Alliances are the hallmark of contemporary corporate business. Different companies

including a number of global giants, Global conglomerates and reputed business
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SANDEEP SINGH
groups are entering into long-term strategic alliances with other companies to enhance
the prospects of their business gains and widen the base of operations throughout the
world. Over the last few years- and this is too striking a fact to be lost sight of –
global business alliance has emerged as an extremely significant component of overall
operational strategy of various market players. Though the measure of expected
success which such alliances are meant for, is yet to be analyzed in many cases, one
can presuppose it by referring to what our precedents moving on this trail have
achieved in the pat. No doubt, trail of alliance is not altogether smooth because it has
to be paved and determined by mutually agreed business goals, long-terms as well as
short-term strategies, business mission, motto and philosophy involving all those who
make such alliances, but a business alliance does not offer an entirely ‘democratic’
space wherein all parties concerned do necessarily have an equal say on every matter.
In other words, one has to take precedence over the other over the other even though
‘the bigger and stronger’ cannot afford to be authoritarian in its approach so as to
marginalize ‘the smaller and weaker’ party. In many cases, however, a business
alliance does not stand for an alliance between two parties of which one is ‘bigger and
stranger’ than the other in terms of business network, operational base and
resourcefulness. Such alliances are entered into by various parties concerned as
alliances for ‘symbioses. It has been observed that this type of business alliance has
more chances to avoid frictions and get the best out of the circumstances under which
they join their hands.
The Strategic Alliance Boom
In the new global environment, with greater competition form more and more
products and choices, alliances are not just a planning option but a strategic necessity.
As Jim Kelly, CEO of UPS, which has a number of global alliances, puts it, “The old
adage ‘If you can’t beat ‘em, join ‘em,’ is being replaced by ‘Join ‘em and you can’t
be beat. “In fact, new technology companies in software, biotechnology, or
telecommunications are now usually “born global”. HDM, a computer mapping
company, had a joint venture in Japan and development groups in Canada and Russia
within two years of its formation. “Virtually everything we do is partnerships,” says
Tom Parameter, president of Protein Polymer Technologies, Inc., biomaterials
manufacturer in San Diego Alliances are crucial because Protein Polymer can’t build
markets on its own.
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Strategic alliances are booming across the entire spectrum of industries and services
and for a wide variety of purposes, According to Booz, Allen & Hamilton, the number
U.S. firms with partners in Europe, Asia, and Latin America are growing at a rate of
25 percent annually. Why the boom? Here are several strategic reasons companies
enter into alliances:
 Fill gaps in current market and technology
 Turn excess manufacturing capacity into profits
 Reduce risk and entry costs into new markets
 Accelerate product introductions
 Achieve economies of scale
 Overcome legal and trade barriers
 Extend the scope of existing operations
 Cut exit costs when divesting operations
Despite the many good reasons for pursuing alliances, a high percentage end in
failure. A study by McKinsey & Company revealed that roughly one-third of 49
alliances failed to live up to the partner’s expectations. Yet such painful lessons are
teaching companies how to craft a winning alliance. Three keys seem to be:
1. Strategic fit: Before even considering an alliance, companies need to assess

their own core competencies. Then they need to find a partner that will
complement them in business lines, geographic positions, of competencies. A
good example of strategic fit is AT&T and Sovintel, a Russian telephone
company. The two joined forces to offer high-speed ISDN services for
digitized voice, data, and video communication between the two countries. By
joining together, the two telecommunications companies can offer new
services for more business customers than either could do alone.
2. A focus on the long term: Rather than joining forces to save a few dollars,
strategic partners should focus more on gains that can be harvested for years to
come. Corning the $5– billion-a-year glass and ceramics make, is renowned
for making partnerships. It has derived half of its products from joint ventures
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and even defines itself as a ‘network of organizations.” That network includes

German and Korean electronics giants Siemens and Samsung, and Mexico’s
biggest glassmaker, Vitro.
3. Flexibility: Alliances can last only if they’re flexible. One example of a

flexible partnership is Merck’s alliances with AB Astra of Sweden. Merck
started out simply with U.S. rights to its partner’s new drugs. For the next
phase, Merck set up a new corporation to handle the partnership’s $500-
million-a-year business and sold half the equity to Astra.
INTRODUCTION
Contemporary world of business is characterized by the emergence of numerous

trends and strategies of unprecedented potentials. The essential thrust of all these, as
it can be seen in the way of their formulation, structuring, paradigms of execution and
pragmatic fallouts, is not only on widening the horizons business operations to a
formidably global extent, but also on realizing the prospects of a safe future amidst
the key sectors of business and economy. Among these strategies, the strategy of
global alliance has come up as perhaps the most ‘talked about’ and ‘sought after’ one,
which the global business managers of different companies are striving indefatigably
to work out, each in accordance with one’s set targets and objectives. The benefits
and bottlenecks which the attainment of a global business alliance involves; the pre-
requisites and demands of such alliance; the way it compels the alliance partners of
bring about fundamental policy changes in different spheres of their business
operations in different spheres of their business operations; the way it inculcates in
them a fresh sense of reciprocity by bringing into focus new set of operational
urgencies and attitudinal imperatives arising out of the ‘merger of objects’ as well as
the ‘merger of interests’; the futuristic implications of imbibing and putting into
practice the terminologies of the new business sense underlying such alliance – are
some of the basic issues which have been taken up by the present study.
Scope of the Study
This study highlights the present and future scenario of alliance with reference to the
business operations of the U.S.-based automobile giant Ford in its bid to adopt the
strategy of global alliance. It incorporates in its purview different aspects and
dimensions of this company’s business operations in the US, Europe and Asia. As it
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has been brought to the fore in this study, every alliance that a company enters into
doesn’t always turn out to be so successful as it is usually presupposed. The study
touches upon not only the advantages but also the disadvantages of alliance by
dealing with their possible implications in the context of Ford.
Objective
One whole section of this study is devoted to a profile of the automobile industry as it
exists today in different parts of the world. Here, an attempt has been made to dwell
upon different players with their global operational network. However, the basic
purpose is not to highlight the performance and strategic initiatives of different
companies ‘per se’, but to emphasize the striking ‘push’ and ‘pull’ factors that
constitute the fabric, contours and orientations of global automobile market on
national, transnational and continental scales. This section is followed by another
chapter under the heading ‘company analysis’, which aims to briefly trace the origin
and evolution of Ford as a global automobile giant along with its internal restructuring
and the process of structural strategic readjustment triggered by its management to
reckon with the driving forces of automobile market in different contexts.
The study also seeks to trace the causes of alliances being worked out by the
automobiles giant Ford as part of its global business strategy. Besides the problems
and deadlocks of strategic alliance have also been dealt with through the focus is
largely on the problems and deadlocks faced by Ford.
The study also focuses the sales trends, marketing trends, technology advancements,
demand and supply situation as well as different aspects of automobile business
extensively. In this regard, I deem it significant to mention a few characteristics
differences between situations and patterns of European as well as American
Automobile markets on the one hand and Asian market on the other. One major
difference lies in what can be termed as the facility of replacement for different target
groups of consumers. In European and American markets, consumers may get their
old vehicles replaced by brand-new ones and thus, are able to save the cost and labour
of repairing. On the other hand, the automobile consumers in the Asian markets, have
considerably little access to the privilege of replacement. So, they have to take resort
to repairing only when some major or minor defect occurs in their vehicles. The basic
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reason for this difference rests on the respective difference in the labour costs in these
two contexts of marketing. As we see, the replacement facility for target consumers
draws sustenance from much higher labour costs prevailing in the American as well
as European markets. On the other hand, labour costs are substantially low in
different Asian countries. That is why repairing is in vogue.
Here, I would like to illustrate this point by presenting a brief analysis of the financial
performance of Ford, the automobile giant vis-à-vis its marketing and sales situation
as affected by the labour’s share or participation in them and magnitude of the labour
cost factor in their accomplishment.
In economic analysis, productivity is measured by relating a physical measure of

output to a physical measure of labour or capital input, such as cars per employee. In
many manufacturing organizations, it is not possible to identify a single physical unit
of output which is produced by the firm, and in these cases output has to be measured
in financial terms, such as value added per employee.
In the case of Ford UK, increased productivity in physical units per employee is by
65% from 1982 to 1988. We can see that this productivity gain was made up of an
increase in output of 13% and a reduction in employees of 31%, with the reduction in
the workforce making the main contribution to productivity gain. Labour productivity
fell in the recession, however, to 13 vehicles per employee in 1991, mirroring the falls
in real sales (Table-1 in annexure) and real value added (see table-2 in annexure).
Although the physical productivity calculation in Table-3 (see in annexure) is useful

in assessing how Ford has performed over the last ten years, it has limited
applicability when we are comparing one firm with another. This is because no two
firms are the same, and in most cases there may be no single physical homogeneous
unit of output.
As we can see academic researchers have used a physical productivity measure – cars
per employee – to compare car manufacturers, suggesting that Toyota produces twice
as many cars per employee as Ford US. This calculation of physical units per
employee at first seems a sensible one.
To get around the problem of firms generally producing a variable output mix and
also having differing degrees of vertical integration, we can use instead a financial
measure of net output (value added) in relation to labour and capital input for
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SANDEEP SINGH
productivity calculations. The financial measure of value added per employee

automatically corrects for the degree of vertical integration and represents all physical
output in one financial variable – value added.
Table-4 (see annexure) illustrates this calculation for Ford UK, using the value added
figures from Table-2 (see annexure) and employment from Table-3. It shows that
value added generated per employee is flat from 1982 to 1984, because value added
falls at the same rate as employment drops. By 1986 real value added is still at the
1984 level, but employment loss has resulted in the productivity (value added per
employee) increasing. In the general economic upswing up to 1988, real value added
per employee was some 75% higher than that of 1982, but in the recession, value
added per employee collapsed.
In addition to using real value added generated per employee to indicate the
productivity of labour, we can also calculate value added generated per £ value of
fixed assets, to indicate the productivity of fixed assets. This calculation for Ford UK
is illustrated in Table-5 (see annexure).
It can be seen from Table-5 that fixed assets at Ford UK generated £1.36 of value
added in 1982, but that this fell by 18% between 1982 and 1986. Nineteen eighty-
eight was a peak year for Ford UK, and the value added generated by fixed assets
returned to 1982 levels, only to collapse again in the subsequent recession.
It is generally the case that the greatest share of the value added generated by the firm
is used to pay labour. If market sales fall, labour’s share in value added will rise. This
has the effect of squeezing profits, particularly as firms generally write off a constant
proportion of their fixed assets as depreciation each year.
The three cases in Table-6 (see annexure) represent different types of organization – a
retailer of food and drink, a conglomerate specializing in growth through acquisition,
and a manufacturing company. Labour’s share in value added was around 70% in
each company in 1983/4, but in each case this level fell as the economy recovered in
the mid-1980s.
Demand conditions in the UK were favourable for Ford UK after 1983, and vehicles
sold in the UK increased by 22% from 1983 to 1989, while employment fell by 31%.
This combination of growing sales and reduced employment served to reduce labour’s
share of value added to 45% in 1989. At this stage, as we shall see, Ford UK was
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SANDEEP SINGH
generating internally a record level of cash flow and profit. The recession hit car sales
hard, however, and labour’s share in value added at Ford rocketed upwards.
The Ford care illustrates a fundamental point : when sales volume falls, value added
generated will also fall, labour’s share of value added will increase, and profit will
decline. In this situation, if there is no prospect of an immediate sales recovery, job
losses are inevitable when the firm has to renormalize labour’s share of value added.
Porter’s Five Forces
To have a macro overview of Automobile, I will explain the five forces, which makes
up the Industry structure. In Porter’s view the performance of individual corporation
is determined by the extent to which they cope up with, and manipulate, the five
forces which are:
• The bargaining power of suppliers

• The bargaining power of buyer
• The threat of new entrants.
• The threat of substitute products; and
• Rivalry among existing firms.
In the automobile industry bargaining power of supplier is strong. It implies that in
the automobile market the suppliers to the different locations and manufacturing units
are the raw material, which is supplied to the automobile manufacturers in order to
provide services to the end customer. If I take the suppliers of automobiles that is all
the automobile manufacturing company like automobiles then it seems that suppliers
have the monopoly to sell their automobiles there is very less bargaining space left
with the automobiles itself.
Bargaining power of buyers in the industry is strong. As we know there are many
players in the market offering competitive packages to the customers, the competition
is very tight. This gives more choice to the customer and its difficult to guard the
customer loyalty as well. In this market scenario the bargaining power of the buyers is
more than it used to be less in the past days when there were limited number of
automobiles in the industry.
Threat to new entrants is very much. To enter into the airlines industry and to reap
profits is very difficult because it requires huge capital investment, strong
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infrastructure and R&D in some fields. It is quite risky for the new player as the
competition is existing firms is very high and the new entrant would be in much risky
position as to fight with the known brand and to make its position in the market it
would not be that easy. So, for new entrants it is very difficult to enter and to reach
breakeven level.
There is no substitute to the product. This is the best, most enduring and popular
mode of transportation and to substitute it with some other mode, which is as reliable
as this is, and then it is not possible. So, there is no substitute.
Last factor is rivalry among the existing firms, which is increasing in the automobile
industry. More and more automobiles are fighting for their share for the same routes
and destination. They are adopting different marketing tools. Not only these but other
automobile giants continuously improve its services and try to set an example of
excellence in the automobile industry to gain more and more market share. Rivalry is
increasing day by day which in turns give rise to strategic alliances, which is one way
to get rid of competition and to share the profits together. The effect of alliances/
mergers would be that it would in turn reduce competition, reduce the cost involved
by sharing resources and thus reaping more profit.
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COMPANY PROFILE (Analytical Report)
Ford Motor Company. The principal activities of the Group are within two principal
business segments. The Automotive segment consists of the design, manufacture, sale
and service of cars, trucks, automotive components and systems. The Financial
Services segment consists of vehicle-related financing, leasing and insurance, renting
and leasing of cars and trucks and renting industrial and construction equipment and
other activities. Visteon Corp spun-off during the second quarter of 2000. During the
year, the Company purchased the Land Rover business from the BMW Group. The
Company has operations in over 30 countries and sells vehicles in over 200 markets.
During the year, the company sold 7.4 million vehicles throughout the world.
Automotive accounted for 83% of 2000 revenues; ford credit services, 14% and rental
of vehicle and equipment, 3%.
Competitor Analysis
Ford Motor Company operates in the Motor vehicles and car bodies sector. This
analysis compares Ford with three other major automobile manufacturers : General
Motors Corporation (2000 sales of $182.91 billion of which 88% was Automotive,
communications services and ), DaimlerChrysler AG of Germany (2000 sales: 317.60
billion Deutsche Mark [US$144.23 billion] of which 42% was Chrysler Cars), and
Toyota Motor Corporation which is based in Japan (2001 sales of 13.42 trillion
Japanese Yen [US$108.07 billion] of which 89% was Automotive). Note: not all of
these companies have the same fiscal year: the most recent data for each company are
being used.
Sales Analysis
Sales levels dropped significantly in the second quarter of 2001 versus the
previous year's second quarter. During the second quarter of 2001, sales at Ford
totalled $42.31 billion. This is a drop of 42.0% from the $72.91 billion in sales at the
company during the second quarter in 2000. This was the biggest quarterly decline
in sales at Ford in the previous 33 quarters. During the first two quarters of 2001,
sales totalled $84.68 billion, which is 26.9% lower than through the first two quarters
of 2000.
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SANDEEP SINGH
Ford reported sales of $170.06 billion for the year ending December of 2000. This
represents an increase of 4.6% versus 1999, when the company's sales were $162.56
billion.
Recent Sales at Ford
(Source: www.corporateinformation.com)
See Table-6 in Appendix for complete 10 year Sales
Most of the company's 2000 sales were in its home market of the United States: in
2000, this region's sales were $118.37 billion, which is equivalent to 69.6% of total
sales. In 2000, sales in the United States were up 5.3% to $118.37 billion. Although
the company's overall sales increased, sales were not up in all regions of the world:
sales in Europe were down 3.2% (to $32.13 billion).
Ford currently has 345,991 employees. With sales of $170.06 billion, this equates to
sales of US$491,527 per employee.
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Sales Comparisons (Most Recent Fiscal Year)
Year Sales Sales Sales/

Company Ended (US$blns) Growth Emp (US$) Largest Region
the United States

Ford Dec 2000 170.064 4.6% 491,527
(69.6%)
General Motors the United States

Dec 2000 182.911 3.6% 473,863
Corporation (74.6%)
the United States

DaimlerChrysler AG Dec 2000 144.230 8.3% 346,289
(52.0%)
Toyota Motor
Mar 2001 108.067 4.2% 501,125 Japan (50.3%)
Corporation
Recent Stock Performance
In recent years, this stock has performed terribly. In 1999, the stock traded as high as
$67.88, versus $17.13 on 12/7/01.
For the 52 weeks ending 12/7/01, the stock of this company was down 29.0% to
$17.13. During the past 13 weeks, the stock has fallen 8.7%. During the past 52
weeks, the stock of Ford has performed worse than the three comparable companies,
which saw changes between -16.4% and 1.2%.
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During the 12 months ending 9/30/01, earnings per share totalled $0.50 per share.
Thus, the Price / Earnings ratio is 34.26. These 12 month earnings are substantially
lower than the earnings per share achieved during the calendar year ending last
December, when the company reported earnings of 3.80 per share. Earnings per share
fell 35.2% in 2000 from 1999. Note that the earnings number includes a $.84 charge
and excludes a $1.50 charge Disp in 2000 (includes a $.09 charge Dec, includes a
$.07 charge Sep and includes a $.68 charge and excludes a $1.50 charge Disp Jun).
This company is currently trading at 0.18 times sales. Ford is trading at 1.99 times
book value. The company's price to book ratio is higher than that of all three
comparable companies, which are trading between 0.97 and 1.63 times book value.
Summary of company valuations
Price/ Price/ 52 Wk
Company P/E Book Sales Pr Chg
Ford 34.3 1.99 0.18 -29.00%
General Motors Corporation 143.3 0.97 0.16 1.16%
DaimlerChrysler AG N/A 1.16 0.30 1.03%
Toyota Motor Corporation 19.1 1.63 0.84 -16.45%
The market capitalization of this company is $31.02 billion . The capitalization of the
floating stock (i.e., that which is not closely held) is $29.80 billion .
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SANDEEP SINGH
Dividend Analysis
During the 12 months ending 9/30/01, Ford paid dividends totaling $1.05 per share.
Since the stock is currently trading at $17.13, this implies a dividend yield of 6.1%.
This company's dividend yield is higher than the three comparable companies (which
are currently paying dividends between 0.8% and 4.8% of the stock price). During the
quarter ended 9/30/01, the company paid dividends of $0.15 per share. The company
has paid a dividend for 6 straight years.
During the same 12 month period ended 9/30/01, the Company reported earnings of
$0.50 per share. Thus, the company is paying out dividends that are higher than the
earnings.
Profitability Analysis
On the $170.06 billion in sales reported by the company in 2000, the cost of goods
sold totalled $110.81 billion, or 65.2% of sales (i.e., the gross profit was 34.8% of
sales). This gross profit margin is very slightly better than the company achieved in
1999, when cost of goods sold totalled 65.4% of sales.
Ford's 2000 gross profit margin of 34.8% was better than all three comparable
companies (which had gross profits in 2000 between 25.2% and 28.8% of sales).
The company's earnings before interest, taxes, depreciation and amorization

(EBITDA) were $35.63 billion, or 21.0% of sales. This EBITDA to sales ratio is
roughly on par with what the company achieved in 1999, when the EBITDA ratio was
20.6% of sales. The three comparable companies had EBITDA margins that were all
less (between 10.4% and 16.1%) than that achieved by Ford.
In 2000, earnings before extraordinary items at Ford were $5.72 billion, or 3.4% of
sales. This profit margin is lower than the level the company achieved in 1999, when
the profit margin was 4.5% of sales.
The company's return on equity in 2000 was 20.9%. This was significantly worse than
the already high 31.2% return the company achieved in 1999. (Extraordinary items
have been excluded).
Profitability Comparison
Company Year Gross EBITDA Earns
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SANDEEP SINGH
Profit bef.
Margin Margin extra
Ford 2000 34.8% 21.0% 3.4%
Ford 1999 34.6% 20.6% 4.5%
General Motors Corporation 2000 28.8% 16.1% 2.4%
DaimlerChrysler AG 2000 25.2% 10.4% 1.5%
Toyota Motor Corporation 2001 27.4% 12.1% 3.5%
During the second quarter of 2001, Ford reported a loss per share of $0.41. In
comparison, in the second quarter of 2000, the company reported positive earnings of
$1.12 per share.
Ford reports profits by product line. During 2000, the itemized operating profits at all
divisions were $8.23 billion, which is equal to 4.8% of total sales. Of all the product
lines, Ford Credit Services had the highest operating profits in 2000, with operating
profits equal to 10.6% of sales. (However, Ford Credit Services only accounts for
14% of total sales at Ford).
Automotive had the lowest operating profit margin in 2000, with the operating profit
equal to only 3.6% of sales. (This product line is the largest product line at Ford,
accounting for approximately 85% of sales in 2000).
Inventory Analysis
As of December 2000, the value of the company's inventory totaled $7.51 billion.
Since the cost of goods sold was $110.81 billion for the year, the company had 25
days of inventory on hand (another way to look at this is to say that the company
turned over its inventory 14.7 times per year). This is an increase in days in inventory
from December 1999, when the company had $6.44 billion, which was 22 days of
sales in inventory.
The 25 days in inventory is lower than the three comparable companies, which had
inventories between 31 and 56 days at the end of 2000.
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SANDEEP SINGH
Research and Development
Research and Development Expenses at Ford in 2000 were $6.80 billion, which is
equivalent to 4.0% of sales. In 2000, R&D expenditures dropped both as a percentage
of sales and in actual amounts: In 1999, Ford spent $7.10 billion on R&D, which was
4.4% of sales.
The company's expenditures on R&D in 2000 were higher than all three comparable
companies (as a percentage of sales): General Motors Corporation spent 3.6% of its
sales on R&D, DaimlerChrysler AG spent 3.9%, and Toyota Motor Corporation spent
3.6%.
Financial Position
As of December 2000, the company's long term debt was $98.89 billion and total
liabilities (i.e., all monies owed) were $261.79 billion. The long term debt to equity
ratio of the company is 5.13. This is significantly higher than where the long term
debt to equity ratio was in December 1999, when the long term debt to equity ratio
was only 2.75.
Ford does not appear to be very efficient in collecting payments: As of December

2000, the accounts receivable for the company were $83.82 billion, which is
equivalent to 180 days of sales. This is higher than at the end of 1999, when Ford had
168 days of sales in accounts receivable.
The 180 days of accounts receivable at Ford are higher than all three comparable
companies: General Motors Corporation had 116 days, DaimlerChrysler AG had 91
days, while Toyota Motor Corporation had 133 days outstanding at the end of the
fiscal year 2000.
Financial Positions
LT Debt/ Days Days R&D/

Company Year Equity AR Inv. Sales
Ford 2000 5.13 180 25 4.0%
General Motors Corporation 2000 2.18 116 31 3.6%
DaimlerChrysler AG 2000 1.15 91 56 3.9%
Toyota Motor Corporation 2001 0.43 133 34 3.6%
26
SANDEEP SINGH
GLOBAL STRATEGY
Ford Motor Co. has a legacy that still resounds through the industrial economy. In the
past, Massive scale yielded massive economies, which yielded competitive advantage.
But, as the organization grew larger, individual jobs became granular and focused.
Just as old Henry's assembly line parceled an intricate manufacturing operation into
discrete tasks, executives at Ford and other companies cleaved their businesses into
smaller product groups, then into functional units. Since the executives at the top were
the only ones who could see above the partitions, they made the decisions, nudging
increasingly immobile giants along their courses.
The Ford business model perpetuated stability, and, as long as the universe remained
in order, it worked reasonably well. But, as Ford steers into a technology-driven
global economy, its weaknesses are becoming evident. Of course, the company is still
making money: Profits in 1999 hit an all-time high. But those profits resulted mostly
from truck sales, and were made mostly in the United States and Canada. Elsewhere,
Ford is sagging. It faces dramatic industry overcapacity and near-flat worldwide
demand. As a result, its stock is now trading at less than 10 times its earnings -- just
one-third the multiple accorded the Standard & Poor's 500 as a whole.
As part of the automaker's cultural overhaul, Ford is embarking on a sweeping attempt

to mass-manufacture leaders. It wants to build an army of "warrior-entrepreneurs" --
people who have the courage and skills to topple old ideas, and who believe in change
passionately enough to make it happen.
This year, Ford will send about 2,500 managers to its Leadership Development Center
for one of its four programs -- Capstone, Experienced Leader Challenge, Ford
Business Associates, and New Business Leader -- instilling in them not just the mind-
set and vocabulary of a revolutionary but also the tools necessary to achieve a
revolution. At the same time, through the Business Leaders Initiative, all 100,000
salaried employees worldwide will participate in business-leadership "cascades,"
intense exercises that combine trickle-down communications with substantive team
projects.
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SANDEEP SINGH
Ford’s Promotional Leadership
The programs vary in their sophistication and intensity, but the urgency behind them
is consistent. "You are in the vanguard of a revolution," Friedman exhorts his New
Business Leader recruits. "You are the first wave of change, of how we will grow the
future leadership of this company."
And the programs share a few core canons. For one thing, they're all committed to
"action learning.” A month before their weeklong workshop, New Business Leader
trainees get an assignment. They must each identify and develop a "Quantum Idea
Project" ( QIP ) that will transform Ford into a more consumer-driven, shareholder
value-driven company. They must then present that idea to their peers and instructors
on the first day of the workshop. After that, they have three months to get the project
rolling.
Some projects will hit pay dirt, maturing into truly company-changing events. Bobbie
Gaunt, who entered the 1997 Capstone program just as she became president of Ford
of Canada, recalls her team's mandate to uncover new sources of top-line revenue
growth. One big breakthrough to lay out the value chain, and then look at its our core
competencies and where the customers are going. Ford is also imbarking on plans to
enter the parts-recycling business, start a for-profit driver-education program, and
develop a chain of branded maintenance and repair shops. The company has done all
three.
But most projects won't get nearly as far. The ideas that they encompass will simply
be merged into existing initiatives, or will expire without achieving any marked
results at all. "In reality, there's no way that a company-changing project should get
done by a frontline supervisor in three months. Even ideas that are never
implemented, though, help to reset the culture at Ford. The goal, ultimately, is a
company whose thousands of leaders, unencumbered by silos, engage continually in
quantum ideas that extend throughout the organization.
The Ford program has another core principle: leader as teacher. The program makes
one a better leader by charging him/her with the task of developing other leaders. It
teaches to learn. By doing so, leaders learn more about the company. What's more, we
believe that today's executives ought to take responsibility for the growth of
tomorrow's leaders."
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SANDEEP SINGH
"Total leadership" is another principle behind Ford's programs. "In order for leaders to
be effective in their work, we need to integrate the different roles that they play in the
world," he says. "Integration makes people more focused, more concerned with
results --and more creative, because they draw from different experiences."
Ford Motor Company to increase its Investment in South Africa
Ford Motor Company has entered into an agreement with Anglo American
Corporation of South Africa Limited that will enable Ford Motor Company to
significantly increase its investment in South Africa.
Ford, which currently has a 45 percent equity holding in South African Motor
Corporation (Pty) Ltd. (SAMCOR) will purchase Anglo American's 45 percent
interest in SAMCOR in two tranches - 35 percent with immediate effect and the
remaining 10 percent within the next two years. Ford will also purchase Anglo
American's 25 percent stake in Ford Credit (South Africa). During the two year
transitional period, Ford will continue to enjoy the support of Anglo American and
benefit from Anglo's broad based knowledge, experience and expertise within the
South African market.
Ford has also made an offer to purchase the shares held by the SAMCOR Employees'
Trust.
BRAND MANAGEMENT AT FORD
Brand management really is an operating system. It's a way to build equity in your
brands. In the past, within Marketing and Sales, we were organized by function. To
achieve this end, there used to be an advertising department, a separate activity
charged with merchandising, and still another activity pricing cars and trucks. And
each one of these activities was responsible for all brands. In contrast, today brand
management is flipped the organizational chart on its side. As a result, within
Marketing and Sales there is an individual that "owns" each brand in Ford Motor
Company and that's true throughout the world. And it has resulted in the integration
all activities around a common vision for the brand and here, integration implies ways
and means that can be successfully put into practice to benefit the customers. That's
what brand management is about - it's managing the brand in ways that benefit
customers.
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SANDEEP SINGH
There are several brands within Ford. It is helpful to think of the parent company as a
brand which serves as an umbrella for what we call "primary" brands - like Ford car
or Ford truck or Lincoln or Mercury, or Jaguar or Aston Martin. And then underneath
those you have each nameplate brand. For example, one can find a number of
different nameplates including Mustang, Explorer, or Mondeo in Europe. In addition,
there are also supporting brands, or ancillary brands. A good example is Ford Credit
or Red Carpet Lease or Motorcraft. So there are a lot of levels of brands. Brand
management focuses on improving the strength of all Ford's brands at all levels.
Applications of Brand Management in Ford’s Globalised Structure
It can’t be ignored here that a common worldwide process to manage the brands and
that certainly feeds globalization. It can do so by developing there is leverage in
globalization and brand management is an effective way to get at it. Whether a brand
is global depends on the product line and on the market. It can be argued that the
customers for an Escort in a sophisticated market like Germany have far different
needs, wants, desires and motivations than those of an emerging market. This is
something the company needs to work through. In other instances, it may be clear
Ford has a global brand.
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SANDEEP SINGH
INDUSTRY ANALYSIS: GLOBAL SCENARIO
Overview
The modern day passenger car is a modern economy's draught animal, driving the
growth of upstream industries like steel, iron, aluminum, rubber, plastics, glass, and
electronics and downstream industries like advertising and marketing, transport and
insurance. The car industry generates large amount of employment opportunities in
the economy. For example in the US, every sixth worker is involved in the making of
an automobile.
The world car production has increased from 44.66mn in 1996 to an estimated
48.3mn cars in 1999. Japan, Canada and USA brought about the major increase,
which contribute to 53% of the world's car production.
The USA and Japan are the leaders with around 42% of the total world market.
However, since the last two to three years, the international passenger car industry has
been witnessing an over capacity of more than 30%. The trend suggests that industry
volumes may grow by just 2% or around 10mn vehicles per year. If this situation
continues for the next few years the world car market may witness shakeout in the
near future. Already signs towards this are being observed as the phenomenon of
mergers catches on. As per industry experts the number of major players in the world
car market may come down from present level of 30 to 5 in next ten to fifteen years.
The recent mergers in the international car market are Ford-Volvo, Renault-Nissan,
Daimler-Chrysler. A few more players are expected to join the fray in the next few
years so as to strengthen their hold in the world market.
Among the top car manufacturing companies General Motors and Ford Motors group
of USA lead with a contribution of 15.8% and 11.6%, of world car production,
respectively. Volkswagen and Toyota stand third and fourth with more than 9%
contribution each to the world car production.
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THE LARGEST CAR PARKS IN THE WORLD

United States
The USA is the largest car market with a strength of around 150mn cars.
Traditionally, the market has been dominated by GM and Ford. However, their
dominance has recently been challenged by well-known Japanese brands like Toyota,
Nissan and Honda whose combined market share is around 20.7% in January 2000.
Most other brands have a nominal presence. Volkswagen, for eg, accounts for a minor
2% of the US market while others like Mercedes Benz and BMW constitute a
combined share of around 2.1%.
In CY99, sales of passenger cars grew by a healthy 6.9%yoy to 8,749,986 units

reflecting the buoyant mood of the American economy. In fact, sales were the highest
since the 8.99mn figure recorded in CY94. The market rose by some 566,701 units
and, for some of the contenders in the field, there were some noteworthy gains. A
number of importers recorded best-ever sales results, and the likes of Volkswagen and
Audi were reporting sales which were at a twenty-year high. Some of the Japanese
firms saw sales fall in what might seem a bull market, particularly Honda, Nissan,
Toyota and Suzuki. But it was the performance of the likes of General Motors, Ford
and Chrysler that brought the most cause for concern.
Despite efforts of the 'Big 3' to give customer incentives in order to keep their
showrooms busy, they recorded lackluster sales growth. In fact GM's market share
dipped to 29.2% from 29.6% last year. Ford and Chrysler posted sales growth of only
2.9%yoy and 0.8%yoy. Therefore, some analysts have pointed out that the picture is
not rosy as it seems for the industry. According to them, customers have preponed
purchases to 1999 and in all likelihood sales may fall in 2000 and 2001. They are
predicting that sales may touch 8.25mn in CY2000 and 7.84mn in CY01. Another
important factor affecting car sales is the steady trend towards big, macho light trucks.
In CY86, its last peak sales year, the US market bought 6.8mn more passenger cars
than light trucks. In CY99, that gap dwindled to 450,000 units -- in spite of the fact
that yoy car sales surged by 6.8%.
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SANDEEP SINGH
Table-7: Passenger car registrations in the USA
Manufacturer Dec-99 Dec-98 % yoy CY99 % share CY98 % share % yoy

General Motors 195,438 210,106 (7.0) 2,551,879 29.2 2,425,262 29.6 5.2
Ford 123,734 117,293 5.5 1,581,377 18.1 1,536,687 18.8 2.9
Honda 65,235 69,756 (6.5) 854,670 9.8 860,471 10.5 (0.7)
Toyota 64,841 82,922 (21.8) 792,311 9.1 764,749 9.3 3.6
Chrysler 53,430 51,732 3.3 745,275 8.5 739,217 9.0 0.8
Nissan 26,672 29,437 (9.4) 350,033 4.0 367,781 4.5 (4.8)
Volkswagen 23,434 17,816 31.5 312,168 3.6 217,937 2.7 43.2
Mitsubishi 17,786 10,361 71.7 197,132 2.3 147,956 1.8 33.2
Mazda 11,633 12,021 (3.2) 188,927 2.2 186,502 2.3 1.3
Hyundai 13,338 6,862 94.4 164,190 1.9 90,217 1.1 82.0
Subaru 13,044 14,638 (10.9) 156,806 1.8 147,833 1.8 6.1
BMW 11,783 12,161 (3.1) 153,658 1.8 131,559 1.6 16.8
Mercedes 14,317 12,010 19.2 144,231 1.6 127,111 1.6 13.5
Volvo 12,162 8,546 42.3 116,692 1.3 101,172 1.2 15.3
Lexus 7,339 9,695 (24.3) 96,658 1.1 103,065 1.3 (6.2)
Kia 5,115 1,785 186.6 82,211 0.9 54,311 0.7 51.4
Audi 6,479 6,284 3.1 65,959 0.8 47,517 0.6 38.8
Infiniti 4,572 3,935 16.2 53,438 0.6 43,594 0.5 22.6
Saab 2,920 3,542 (17.6) 39,541 0.5 30,757 0.4 28.6
Jaguar 4,946 2,472 100.1 35,039 0.4 22,503 0.3 55.7
Daewoo 2,136 597 257.8 30,787 0.4 2,242 0.0 1273.2
Porsche 2,004 1,287 55.7 20,875 0.2 17,243 0.2 21.1
Suzuki 1,089 810 34.4 14,610 0.2 16,169 0.2 (9.6)
Ferrari 66 77 (14.3) 792 0.0 854 0.0 (7.3)
Rolls Royce 40 35 14.3 593 0.0 410 0.0 44.6
Lotus 9 11 (18.2) 110 0.0 130 0.0 (15.4)
Lamborghini 2 3 (33.3) 24 0.0 36 0.0 (33.3)
Total 683,564 686,194 (0.4) 8,749,986 100.0 8,183,285 100.0 6.9
Source: just-auto.com
The search for something different has, perhaps, led to a situation where three of the
top four models/brands are Japanese in origin. The best selling car in the USA is the
Toyota 'Camry'. Camry sold 448,162 in CY99, a rise of 4.2%yoy from last year and
has been able to maintain its position at the top. The Honda 'Accord' was in second
place once again with 404,192 sold, just 0.8% more than the 401,071 of CY98. The
top selling US model was third placed Ford 'Taurus', sales edging down by 0.7% to
368,327 from 371,074.
Year 2000 started with sales of light vehicles continuing with the pace which was
established in 1999. During the month, sales are up a healthy 10.1%yoy. The most
surprising gain was in imported cars, up a stunning 34.7%, due largely to the success
of products from Volkswagen, Toyota and Hyundai. The strong US economy has
continued to benefit nearly every manufacturer and only Chrysler, Kia and Saab have
reported lower sales over the same period a year ago.
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SANDEEP SINGH
Table-8: Auto sales in the USA
Category January 2000 January 1999 % yoy

Domestic Car 465,895 431,916 7.9
Domestic Truck 528,146 493,678 7.0
Import Car 151,741 112,630 34.7
Import Truck 56,352 53,249 5.8
Total Domestic 994, 041 925, 594 7.4
Total Import 208,093 165, 879 25.4
Total Industry 1,202,124 1,091,473 10.1
Source: about.com
WESTERN EUROPE
In CY99, car sales crossed the 15mn mark for the first time as depicted in the table
below. The figures are estimated, in the sense that for several countries actual sales
are taken into consideration for the first twenty days while for the rest of the 10 days,
it is estimated. It can be so that the final tally is different from what is shown in the
table. However, a clear indication has emerged that sales have started to peter down in
the last two months of the year with it rising by only 0.3%yoy in December 1999. In
December itself – as in November – there were nine countries which posted lower yoy
sales.
Germany clocked sales of 3,787,679 units, some 1.4% up on the 3,735,987 figure
posted in CY98. However, sales were clearly tailing off towards the end of the year.
The market was stimulated a little by the need for Mercedes-Benz to put a good face
on the sales of the Smart small car, and by the race to the wire between the
Volkswagen Golf and the GM Opel Astra. Italy is the second biggest market in
Europe, and still remains the most important market for the Fiat Group, despite efforts
to alter the position. The Italian car market dipped by 1.2% in CY99, to 2,349,200
units from 2,378,592 units, despite a mild surge in December. Analysts expect that
unless the Italian Government chooses to reinstate scrappage incentives (as they have
been encouraged to do by Fiat), the market will continue to slide during the next two
years, although not to a great extent. The UK car market is expected to fall as the
market has kept well ahead of the true demand in the last two years and a correction is
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SANDEEP SINGH
expected in the next two years. The French market is also expected to settle down
after a good showing in CY99 mainly brought about by higher sales from PSA and
Renault.
Table-9: Countrywide estimated sales in Western Europe
Country Dec-99 Dec-98 %yoy CY99 % share CY98 % share %yoy

Germany 270,000 290,648 (7.1) 3,787,679 25.1 3,735,987 26.0 1.4
Italy 128,500 114,647 12.1 2,349,200 15.6 2,378,592 16.6 (1.2)
United Kingdom 84,582 96,346 (12.2) 2,197,615 14.6 2,247,403 15.6 (2.2)
France 186,476 169,836 9.8 2,148,423 14.3 1,943,553 13.5 10.5
Spain 123,755 119,688 3.4 1,408,070 9.3 1,192,530 8.3 18.1
Netherlands 9,899 12,921 (23.4) 611,767 4.1 543,057 3.8 12.7
Belgium 22,732 20,839 9.1 489,621 3.3 452,129 3.1 8.3
Switzerland 21,681 20,181 7.4 317,909 2.1 296,945 2.1 7.1
Austria 13,344 13,067 2.1 315,112 2.1 295,865 2.1 6.5
Sweden 33,632 23,451 43.4 295,151 2.0 253,430 1.8 16.5
Portugal 16,117 22,678 (28.9) 273,224 1.8 248,398 1.7 10.0
Greece 16,827 17,975 (6.4) 261,711 1.7 180,145 1.3 45.3
Eire 2,002 2,355 (15.0) 174,198 1.2 145,702 1.0 19.6
Denmark 10,944 11,612 (5.8) 142,343 0.9 162,495 1.1 (12.4)
Finland 5,930 8,124 (27.0) 136,324 0.9 125,751 0.9 8.4
Norway 6,860 5,981 14.7 101,114 0.7 117,977 0.8 (14.3)
Luxembourg 2,096 2,104 (0.4) 40,412 0.3 35,928 0.3 12.5
Iceland 705 700 0.7 15,323 0.1 13,593 0.1 12.7
Total 956,062 953,153 0.3 15,065,196 100.0 14,369,480 100.0 4.8
Source: just-auto.com
The market of Western Europe is spread out more or less evenly among four big
players who account for more than 40% of the market. The largest player is
Volkswagen, which has market share of around 11.5%. GM and Renault come in next
with a market share of around 11% each. They are followed by Ford, Peugeot, Fiat,
and Mercedes Benz (all with market share of more than 5%). Toyota is the highest
selling Japanese brand with a market share of 3.2%.
Japan
The profile of the Japanese market is very different than those of the USA and
Western Europe. What marks out the market is the tight import restrictions and a strict
vehicle-testing regime followed there. This means that the scrappage rate of cars is
very fast and cars are replaced after a five-year period. In 1999, the car market (in
terms of registrations) grew by a modest 1.5%yoy as the industry reeled under
recessionary conditions in the economy. Production grew by a marginal 0.5% largely
due to lower production in Honda and Nissan's plants. Exports grew by 2%yoy largely
due to Toyota's performance. In terms of market share, Toyota and Honda dominate
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SANDEEP SINGH
the market with around 42% of the pie. Nissan and Suzuki come in next with a
combined share of about 24%. Other major players include Daihatsu and Mitsubishi.
Table –10: Production, sales and exports of Japanese auto companies
Production Registrations/sales Exports

Company CY99 CY98 %yoy CY99 CY98 %yoy CY99 CY98 %yoy
Daihatsu 478,598 406,180 17.8 341,574 292,336 16.8 92,560 86,764 6.7
Fuji 395,042 353,161 11.9 219,953 192,921 14.0 175,235 166,625 5.2
Honda 1,143,459 1,147,337(0.3) 611,063 588,949 3.8 531,445 530,297 0.2
Isuzu 37,630 46,443 (19.0) 1,886 2,607 (27.7) 47,427 43,270 9.6
Mazda 705,134 706,562 (0.2) 251,805 239,902 5.0 481,960 480,205 0.4
Mitsubishi 752,940 747,937 0.7 324,603 323,810 0.2 348,627 381,289 (8.6)
Nissan 1,209,072 1,353,057(10.6) 568,170 687,321 (17.3) 550,745 593,228 (7.2)
Suzuki 679,143 625,084 8.6 410,226 359,869 14.0 217,948 228,536 (4.6)
Toyota 2,698,503 2,669,9751.1 1,153,368 1,139,585 1.2 1,311,503 1,173,936 11.7
Others 18 27 (33.3) 271,436* 265,848* 2.1 - - -
Total 8,099,539 8,055,7630.5 4,154,084 4,093,148 1.5 3,757,450 3,684,150 2.0
* Imports / Source: japanauto.com
Imports of cars to Japan rose by 3%yoy till September 1999 as larger number of
European built cars from DaimlerChrysler, BMW and Renault entered the country.
Imports from the U.S. rose by 17.2% due to continuing increased shipments of
U.S.built Hondas and Isuzus, while that of U.S.-built cars by DaimlerChrysler, Ford
and GM declined. Small/mini car models (below 2000cc) still dominate the Japanese
car market as is evident from the table below.
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Table –11: Imported and overall car sales in Japan
Imports Jan-Sep-99 Jan-Sep-98

Small/mini cars 37,596 65,850
Large cars 168,028 133,744
Total 205,624 199,594
% of small/mini cars 18.3 33.0
Overall car market
Small/mini cars 2,649,349 2,498,978
Large cars 527,650 577,483
Total 3,176,999 3,076,461
% of small/mini cars 83.4 81.2
Source: japanauto.com
India
India – Ford began is operation in India in 1907 when the country received its first
Model A. In 1926, Ford India was established, but operations were discontinued in
1954. Ford re-entered the market in 1969, producing tractors in a joint venture with
Escorts Ltd., until 1991.
In 1995, Ford received government approval to establish Mahindra Ford India

Limited (MFIL), a 50:50 joint venture with Mahindra & Mahindra Limited (M&M).
Just 10 months after government approval, Mahindra Ford launched the best-selling
European Escort. The Escort has been modified specially for Indian road and
environmental conditions as well as consumer preferences. In 1997, the Ford Escort
was chosen best quality car in JD Power’s India Initial Quality Survey and MFIL
ranked number one in JD Power’s Customer Satisfaction Index – a rare
accomplishment for any auto company around the world. In 1998, MFIL won the CSI
award once again.
In November 1998, Ford received approval to increase its stake in the joint venture to
92.18%. Ford brought in fresh equity into the company to bring the equity to 78%
and became a subsidiary of Ford Motor Company. The company name was then
changed to Ford India Ltd.
Ford India Ltd. has set up a modern, integrated manufacturing facility in Maraimalai
Nagar near Chennai. It is a brand new plant equipped with a modern facility
comparable with automobile plants equipped with a modern facility comparable with
automobile plants around the world. The plant has a capacity for manufacturing
100,000 vehicles per annum. Currently it produces the new Ford model – the Ford
IKON, designed and engineered especially for India.
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Rest of Asia
Toyota, Nissan, Honda and Mitsubishi have dominated the ASEAN market for the
past ten years. In India, however, the story is different with Maruti in collaboration
with Suzuki occupying 80% of the market till recently. These markets are diverse
from the Japanese market in the sense that cars have much longer useful lives in the
former (say about 20 years). In China, surprisingly, commercial vehicles and not cars
are the people’s choice. The market has been very small at 3.5mn vehicles, which is
dominated by Volkswagen and Daihatsu. The South Korean market is about 7.5mn
vehicles strong. Due to policy restraints, almost every car on Korean roads has been
designed and built locally. This scenario seems set to continue as local carmakers are
opposing the entry of foreign vehicles despite an opening of the world auto trade.
Future trends and outlook
Firstly, the international car market is growing by around 2% pa and this set to
continue for the next few years. This slow down is due to the increasing level of
saturation in the largest car markets of the world. Analysts from EIU state that this
saturation level may even translate into negative growth, given the recent trend of
carmakers to opt for quality components which will increase the vehicle’s useful life.
Secondly, the South-East Asian crisis has been a dampener to the collective fortunes
of various carmakers worldwide. According to EIU estimates, some countries in the
region have witnessed cumulative falls of 70% this year. In Indonesia record sales
reported in 1997 are not expected to be matched until 2005. In Malaysia it is expected
to be 2003 before peak sales and production volumes are repeated and in the
Philippines the market will take seven years to recover. In Thailand, the market for
cars and commercial vehicles is expected to fall from almost 600,000 units per year to
125,000 this year.
Thirdly, the global domination by the large automotive players has slowly abated with
local manufacturers getting hold over the market. Japan, western Europe and the
North American Free-Trade Agreement area comprising USA, Mexico and Canada
are expected to account for 71% of the global park by 2005, down from almost 77%
at the start of the 1990s. This has come about, as the concept of "regio-centric" cars is
becoming popular.
Porter’s Model
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After taking a loot at the global scenario of Ford’s business operations, we can
analyse its position in the light of Porter’s model. It can be used to identify different
elements of industrial structure. In 1979 and 1980 Michael Porter constructed a
synthetic model to interpret the strategy formulation process (Porter, 1979, 1980 and
1985). This was made up of two overlapping concepts: industry structure and ‘generic
strategy’.
The first of these concepts, ‘industry structure’, describes what Porter considered to
be the ‘underlying economics’ of the business. Traditional economic analysis is used
to classify the relation of the business to its competitors, suppliers, distribution
network, and substitute products. This classification can be presented as a check-list,
against we can position Ford’s business within the automobile / industry.
Understanding industry structure means understanding the competitive forces Ford is /
up against. According to Porter, The strategy, wanting to position his company to
cope best with its industry environment and to influence that environment in the
company’s favour, must learn what makes the environment tick’.
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Entry Barriers Rivalry determinants

Economies of scale Brand Industry growth Product
identity capital requirements differences Concentration Exit
Absolute cost advantages barriers Corporate stakes
Access to distribution
New Entrants
Industry Competition
Suppliers Buyers
Intensity of Rivalry
Supplier concentration Buyer concentration

Differentiation of inputs Cost Buyer volume
relative to total industry Buyer Information
purchases Substitute Products
Substitutes
Relative price
Buyer propensity to substitute
Source: Colin Hasla
Using this model one can position Ford’s business operations is a large organization
producing car components Ford/. Suppliers of materials might be tied into you
because they supply 80% of their sales to its alone, while it might depend on a single
major car assembler for 45% of its sales. The substitute product range might not be
able to complete with its on cost, but new entry might be possible from overseas
suppliers.
It is clear that different organizations and different product will have different
industrial structure, and that embedded in these structures are power relations which
can promote or hinder the organization’s objective.
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Once a firm has established its position in relation to competitors, other products,
suppliers, buyers and new entrants, it must sustain competitive advantage in the long
run, by means of its ‘generic strategy’
Porter’s generic strategy
Porter’s generic strategy is presented as a 2 × 2 matrix, characterized according to

competitive scope and competitive advantage.
Competitive Advantage
Lower Cost Differentiation
Broad Target Cost Leadership Differentiation
Competitive Scop
Narrow Target Cost Focus Differentiation Focus
Source: Colin Hasla
Each generic strategy represents a particular route towards competitive advantage cost
leadership, for example, requires the firm to seek out the lowest cost and price within
the industry, by obtaining economics of scale. A differentiation strategy in contrast,
such as design, quality, after-sales service, etc., these enable the firm to charge a
premium price.
Finally we have those generic strategies which focus on a particular product or market
segment, and might be termed ‘niche marketing’. Focusing strategy deliver positive
returns from a particular product segment rather than competitive advantage across
the overall product market. Ford can focus on cost or differentiation by concentrating
on particular price or non-price factors.
Porter argues that ‘generic strategies’ cannot be combined, so that the firm which is
‘stuck in middle will possesses no competitive advantage. Positively choosing the
‘generic strategy’ which best fits the organization’s position relative to the ‘industry
structure’ will, Porter claims, lead to an increased probability of superior
performance. As far as the position of Ford in light of Porter’s model is concerned, it
can be said to be in a firm place.
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LITERATURE REVIEW
INTRODUCTION TO STRATEGIC ALLIANCES
Summary
In this first section, we examine the concept of business networks, why they makes
sense today, details on the organization established to promote them and highlights of
an ambitions of an ambitious national demonstration project the CBNC has
undertaken. We’ll look at the international story where many countries are much more
advanced than Canada. The trends, however, are turning in your favour as interesting
statistics from a survey by the Canadian Chamber of Commerce will prove.
What is a business network?
A business network is a group of three or more small and medium-sized enterprises

(SMEs that decide to cooperate as a group in order to undertake projects, regionally,
nationally or globally, that no member of the group could really do successfully by
themselves.
Networks are not a new concept in the world of business. Indeed, a long as there have
been businesses trying to make a profit, there have been cooperative efforts among
firms to develop joint products, share the expertise, provide valuable support and
services to each other.
What is new, however, are some tools for you to use to design and implement a
business network it need not be a haphazard event. It can be carefully designed at the
outset using a proven and established process with the aid of trained business network
advisors. And you can also get the support and financial help of the Canadian
Business Networks Coalition if your group qualifies.
Why network?
There are many reasons why companies join forces in a business network:
• to achieve advantage of scale, scope and speed
• to enhance their competitiveness in both domestic and international markets
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• to stimulate new business opportunities to innovate and commercialize new

products and services to increase exports
• to form new capital bases and create new business
• to reduce costs.
Characteristics of a business network

Even though no two networks are identical, business networks have a characteristics
in common.
Networks form because the members require solution to shared business challenges
and opportunities. Once formed, the growth of a network will depend on how well it
meets the business needs of its members, and upon their long-terms commitment to
the alliance.
Networks are collaborative, bottom-up organizations. Unlike many other formal

relationships among businesses, networks are flexible and non-hierarchical with
members sharing in decision making and the design and implementation of strategies.
Networks can vary in size, objective and structure. Members can range from fever
than five members to more than one hundred. Objectives vary widely according to the
needs of the members. And the organizational structure may be very formal, or so
informal as to be almost nonexistent, or anywhere in between.
What do networks do?

The possibilities for inter-firm collaboration are as endless as the imagination. Here
are some of projects commonly undertaken by, business networks, falling into three
broad categories:
1. Input projects including:

 Joint purchasing
 Staff training
 Joint financing
 Research and development
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 Sharing resources, skills and information identifying market opportunities

subcontractor and supplier linkages.
1. Operations projects including: joint processing
 Joint manufacturing
 Technology transfer and diffusion global quality (TQM/ISO 9000) cost

reduction projects
 Productivity improvement
 World class bench marking.
1. Output projects including:
 Innovation and design
 Commercialization of new product or services
 Import substitution
 Marketing
 Exporting
 Problem solving.
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Why network now?
Small and medium–sized enterprises (SMES) are emerging as a significant force in

the global marketplace. New international trading agreements and the building of
regional and world trading blocks mean that small business must enhance their
competitiveness if then, are to survive in both the global and domestic markets.
Canadian SMES, in order to remain competitive , need to re-orient their methods and
operations and utilize new approaches, based on international best practices. This is
why cooperation and collaboration will be vital tools for survival in the marketplace
of the nest century.
MODES OF ENTRY INTO FOREIGN MARKET
One of the fastest growing trends in business today is the increasing numbers of
strategic alliances. According to Booz and Allen and Hamilton the numbers of
alliances are growing by 20% a year with 10000 new alliances being reported in 1998
alone. When kpmg an accounting firm produced its report of corporate coupling last
year it concluded that 83% of mergers were unsuccessful in producing any business
benefit even then mergers are on the upswing because mergers are seen as the fastest
way to grow. For entrepreneur, strategic alliance are a way to work with others
towards a common goal. Businesses are forging partnerships in record numbers to
 Develop products
 Share resources
 Pool expertise
 Enter new markets
 Share financial risk
 Get products and services to the markets faster.
 Achieve advantages of scale, scope and speed.
 Increase market penetration.
 Diversify
 Create new business.
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 Reduce costs.
 Develop new business opportunities through new products and services.
 Increase exports
 Increase competitiveness in domestic and global markets.
These benefits are particularly useful in an age rocked by technological innovations,

global competition and downsizing.
Companies participating in alliances report that as much as 18% of their revenues

comes from their alliances, that number is projected to climb to 35% by 2004. In
Europe according to Booz-Allen survey, many companies report as much as 45% of
their revenue coming from their alliances with return on investment from their
alliances to over 23%. It is not just profit that is driving this trend a fast pace industry,
shrinking product life cycles, changing technology, growing need to operate on a
global scale, increasing intensity of competition as mentioned earlier are motivating
the alliances. Especially in a time when growing international marketing is becoming
the norm, these partnerships can leverage growth through alliances with international
partners, rather than take on the risk and expense that international expansion can
demand.
Different forms of strategic alliances
• Joint venture-a type of ownership sharing very popular among

international companies is the joint venture, in which a company is owned
by more than one organisation. Although a joint venture is formed for the
achievement of a limited objective, it may continue to operate indefinitely
as the objective is redefined. Joint ventures are sometimes thought of as
50/50 companies, but often more than two organisations participated in the
ownership. The type of legal organisation may be a partnership,
corporation, or some other form permitted in the country of operation.
When more than two organisation a participate, the resultant joint venture
is sometimes called a consortium
Almost every conceivable combination of partners may exist in a joint venture

including the following:
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• Two companies from the same country joining together in a foreign

market, as Exxon and Mobil in Russia.
• A foreign company joining with a local company, as sears roebuck and

Simpsons in Canada.
• Companies from two or more countries establishing a joint venture in a

third country, as diamond shamrock (U.S.) and Sol Petroleo (Argentina) in
Bolivia.
• A private company and a local government forming a joint venture, as that

of Philips (Dutch) with the Indonesian government.
Companies are more prone to have collaborative arrangements in countries where

cultural characteristics of trust is high, have fewer barriers and have an open
arrangement with the companies.
• Licensing-under a licensing arrangement, a company (the licensor)

grants rights to intangible to another company (the licensee) for a
specific period, and in exchange, the licensee ordinarily pays a
royalty to the licensor. The rights may be exclusive or non
exclusive. Intangible property includes five categories
• Patents, invention, formulas, processes, design, patterns
• Copyrights for literary, musical or artistic compositions
• Trademarks, trade names, brand names
• Franchises, licenses, contracts
• Methods, programs, procedures, systems, and so forth
Licensing often has an economic motive, such as the desire for faster start-up, lower
costs, or access to additional resources.
• Franchising-franchising is a specialized form of licensing in

which the franchisor not only sells an independent franchisee the
use of a trademark that is an essential asset for the franchisee’s
business, but also more than nominally assists on a continuing
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basis in the operation of the business in many cases the franchisor

also provides supplies.
From an organisational point of view, a franchisor most often penetrates a foreign

country by setting up a master franchise and giving that organisation the rights for the
country or the region. The master franchise may then open outlets on its own or
develop subfranchisees. For eg. Macdonald’s very successful operations in Japan are
handled this way.
• Contract manufacturing- an arrangement in which one firm

contracts with another to produce products to its specifications but
assumes responsibility for marketing.
• Management contract-management contracts are a means by

which a company may use part of its managerial personnel to
assist a foreign company for a specified period for a fee.
Management contracts may be formed when a foreign company is
perceived to be able to manage an existing or new operation more
efficiently than can the home country owners. For e.g. The British
airport authority won contracts to manage the airports in
Pittsburgh and Indianpolis.
• Cooperative agreements- any sort of cooperative agreement to

share information, codes, marketing etc.
CHOOSING STRATEGIC PARTNER
A successful strategic alliance is a partnership with a long term orientation. H.

Bukshbaum, the president of boxtree communications says begin choosing a strategic
partner by conducting a strategic analysis of the market sectors and target audiences
that make the most sense for your organistion. Answering questions like what are the
most profitable areas? Where is the greatest growth? Helps understand clearly where
you are so that you can find the partners that best compliment you. Then try and find
meaningful answers to questions like what’s your gut feeling about the partner you
are considering? Is there synergy? Is there a natural fit in terms of values, integerity
and personality? Do they have a solid understanding of your objectives and goals and
are they genuinely excited about joining forces for an alliance?
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When you are looking for a partner consider checking with professional and industry
organisations, professional service providers and parallel businesses in your industry.
There is so many partners a can do to extend their reach and adapt. For e.g. Enron
Corp. and integrated Huston based natural gas and electricity company, depends on
partnerships to adapt to dramatic changes in its business.
As the strategic alliances are getting hotter and hotter day by day, the failure rate is
becoming hard to ignore. Last year the value of corporate partnerships was a
stupendous $3 trillion, yet a depressing array of statistic exists to prove that
partnerships often fail. In 1998, mitsubihi and Dailmer-Benz launched their strategic
alliance. The capabilities of both these giants seemed well-matched and global
competition drove them into each other’s arms. The leaders of the companies signed a
deal in principle to collaborate in various areas. But no concrete projects were
launched then, and no major ones were forth coming later. The alliance slowly faded
away.
Analysts and managers argue eternally over what caused each link up to fail. Some
blame ego and clashing cultures, others cited business conflicts and ruthless
competition.
Before we take a detailed look on what makes alliances fail there is an aspect to be
analysed, the aspect of alliances and risk.
Alliances and Risk
Large companies once embraced joint ventures to share the risk of large projects, but
their motives today are more diverse. risk sharing will feature among the motivation
for alliances but it may not be as important as gaining access to contemplary
resources, influencing industry standards or beating competition in the market. Today
alliances help companies to hedge risk, mitigate the costs of responding to
unpredictable trends and most importantly buy and shape options to exploit future
opportunities. Alliances can help companies hedge between competing technology
standards and reduce the cost of major strategic change by bringing new skill to a
participating company. an alliance might be regarded as an option on future
developments-a company either takes it up or discards it according to the changing
conditions. Some alliances indeed enable business risks to be managed directly.
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Despite these attractions, relationships between companies in a joint venture are often
risky in and of themselves.
Alliances enable companies to but protection from business risk only by taking on
additional relationship risks.
MANAGING STRATEGIC RISK
Following are a few ways to manage strategic risk
• Lower exposure to risk
• Hedge your bets
• Reduce your transition costs
• Buy options on the future
• Manage risk directly
RELATIONSHIP RISK IN ALLIANCES
We need not emphasize that a poor structure or partner choice can doom an alliance
from the start nor that insufficient attention to post deal alliance management can ruin
a promising relationship.
How companies can manage relationship risk

• Avoid competition the risk of conflict is high in alliances between rivals.
• Define the scope carefully-remember good fence makes good neighbours.
• Define not ignore governance-careful structuring of the alliance in advance of

the deal and continual adjustment their after is the key to building a
constructive relationship.
• Build multiple bridges-enable relationships among partners to grow at many

levels of their organisation.
• Do not trust trust-personal chemistry is good and needed but it is no substitute

for monitoring mechanisms, cooperation incentives and organisational
alignment.
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• Build a support system-without a support system within your own organisation

your external alliances are doomed to fail.
A decade ago, IBM and Apple launched a much-touted strategic alliance, including
investments in join ventures and research. Together, they would take on Intel and
Microsoft. It didn’t happen. Eight years later the alliance faded away, leaving
unfulfilled hopes, frayed relationships and wasted effort.
Other alliances formed at high levels, often blessed with the designation “strategic”,
have also failed to deliver. Analysts argue over what cause each link-;up to fail. Some
blame egos and calling cultures, other cite business conflicts and ruthless competition.
Yet these cases often share one factor: amid the hype, the alliance came to be seen as
an end in itself, rather than as a means toward a broader goal. The failures teach one
clear lesson: what matters is the strategy behind the deal, not the deal itself.
For the same reason, many of today’s digital alliances will fail. In many quarters, the
new economy race to “get big fast” has been reinterpreted as “get hitched fast” has
been reinterpreted as “get hitched fast”. If companies cannot gain market share and
strategic dominance rapidly, the argument goes, they must find partners. For dotcom
business development managers, this means: sign as many deals as you can, as soon
as you can. In doing so, they forget the saying “Marry in haste, repent at leisure.”
Companies that succeed with alliances put strategy first and deal-making second. For
example, Sun Microsystems has leveraged its capabilities impressively through a
multitude of alliances survived for a long time, others were short-lived; some were
narrowly focused and a few broader. Sun’s partners included Fujitsu, Toshiba, Oracle,
Netscape/AOL and IBM. But none of these partners or individual alliances accounts
for Sun’s success. Rather, the way Sun integrated alliances into a coherent strategy
and managed tem over time allowed it to get the most from partnerships.
A coherent alliance strategy also lay behind Intel’s rise. Intel made its breakthrough in
the alliance with IBM to develop the PC in 1980. Plus, Intel used astute licensing to
build its dominance. Its first generation of microprocessors was licensed to fewer
companies; today Intel is the sole producer of its high-end processors. Intel’s
alliances were steps on a ladder. The real goal was creating and dominating processor
standards.
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Alliance strategy
So while companies announce “strategic alliances” daily, many lack “alliance

strategies”. The difference is more than semantic: an alliance lacking strategy is
doomed. A coherent alliance strategy has four elements:
• a business strategy to shape the logic and design of alliances;
• a dynamic view to guide the management of each alliance;
• a portfolio approach to enable coordination among alliances;
• an internal infrastructure to maximise the value of collaboration.
At the right time and when managed well, alliances create tremendous value; at the
wrong time and when managed poorly, they can be costly.
A dynamic approach
The example of Fuji Xerox also shows the value of a dynamic approach to managing
alliances. Just as the broader strategy is more important than the initial deal this
tendency of alliances to change over time is often misinterpreted as weakness.
Managers complain about the high “divorce rate” in alliances and academics conduct
statistical studies of their “instability”. This misses the point: the goal of an alliance is
not its survival, but the success of the alliance strategy. Sometimes, strategy will call
for using alliances as transitory mechanisms. At other times, the strategy may involve
launching several alliances at once to see which ones are worthy of further investment
and which should be terminated. Such a strategy is no different from companies
holding their bets or pursuing parallel projects to develop products. The flexibility of
alliances is often a strength, not a weakness.
Alliance portfolios
The PDA strategies also show the values of careful design and management of a
portfolio of alliances. The PDAs were produced using components form several
companies and selling through many channels, so alliances could reinforces and other.
Again, the effectiveness of an alliances strategy depends on a strategy that transcends
the individual deal.
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Some types of companies recognize the importance of a portfolio of allies. Business

units that use multiple components will depend on many supply alliances and business
units that sell in multiple markets will use several allies to reach different customers.
Alliances a among national airlines are examples of this. Similarly, a portfolio of
alliances is useful when a critical mass of “sponsors” is key to market acceptance,
such as in establishing software standers.
But being involved in multiple alliances is not sufficient; the company must manage
the portfolio as a whole also. Two alliances of a company, with two different partners,
may conflict. The same is true, in spades, of a portfolio of many alliances. A poorly
designed and managed network can entangle the company and waste managers’ time.
Good co-ordination, on the other hand, can save resources and diversify options for
growth. How are companies facing the challenges? Pharmaceutical company Eli Lilly
has an office of alliance management which helps identify alliance candidates,
eventuate deals and train managers new to the field. This should lead to the company
having a higher proportion of successful alliances, compared with companies
adopting a more informal approach.
Build capability
An alliance strategy is thus more than a strategic alliance. Managers need to construct
processes that root alliances in strategy and recognize that alliances will work for
some things but not others. Next, they need a way to manage change. The history of
alliances shows you will not get everything you wanted; but you may well get much
you didn’t expect. The key is to grasp change, not ignore it.
With these elements in place, the number of deals will grow and need managing. The
requires prioritising among alliances and creating an organisaiton to optimize the
portfolio. And the importance of a supportive internal infrastructure will also become
evident. Suddenly, alliances will being to place substantial demands on resources, not
least the attention of senior manager.
Companies will not survive if try to do everything themselves. But they will not be
served well by a headlong rush into multiple deals. Only a real alliance strategy will
give them a fighting chance.
Research into over 200 companies has shown that 75% of companies surveyed felt
that alliance failure was caused by incompatibility of corporate culture or personality;
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63% reported that the failure was a result of incompatible managerial personalities;
58% attributed failure to project personality or priority differentials.
Through may research, I have also found that the business justification –business
reasons, value proposition, strategic business fit- for an alliance is inversely
proportional to compatibility of corporate and managerial personality. In order words,
as the business justification decreases in importance over time, the cultural
incompatibilities increase in importance. These considerations intersect at about the
three year time frame --- exactly when 55 percent of all alliances fall apart.
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CRITICAL ANALYSIS
Ford is considered one of the most thorough and successful alliance practitioners
around the fortune 500. Harvard Business School Professor Michael Yoshino and
Babson and Professor Srinivasa Rangan argue that, along with Motorola, Ford is the
premiere large company example of how to gain from collaborations. Global
pressures led ford to collaborate with Mazda and Nissan to produce low cost
automatic transmissions. Fords alliance strategy has now evolved into a primary
source of company–wide competitive strength.
This evolutionary approach is more evident in ford’s steady and ever tightening bonds
with Mazda. From an arm’s length subcontracting relationship in the early 1970’s, the
relationship is now so interwined that reportedly one of every four ford models sold in
the United States in 1991 had some Mazda input, and two of every five Mazda cars
sold had some ford influence. Yet the collaboration is more than joint designs and
parts. In 1999 Ford sold 17,694 vehicles in Japan. Ford now has 81 exclusive dealers
in Japan with 178 sales outlets at the end of March 2000.
ALLIANCE HISTORY
Ford’s alliance-based strategy evolved with management’s realization that the

company needed partners to be a global player. Partners would enable Ford to
• Share its resource burden.
• Exit areas in which it lacked technical expertise by handling them off to a

specialist firm.
• Afford opportunities for learning.
A BRIEF OVERVIEW OF ALLIANCE
Ford and Mazda
In late 1960’s, with Japanese market growing rapidly and Japanese automakers fast
becoming a power with their low cost production factors like fewer wages and more
working hours, ford looked to Japan
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• For low cost production base from which the us market might be served.
• To become familiar with the Japanese management and operational practices.
Ford wanted to collaborate with Mazda to learn Japanese management style of total
quality and to be able to get the benefits of innovations through R&D, which has been
Mazda’s priority over the years. Mazda came out with an innovation called ‘Mazda
digital innovation’. This system helps to shorten overall development time in
manufacturing, provides cost efficiency, improves product quality and gives ability to
cope with changes by viewing and modify before manufacturing. On the other hand
Mazda was looking for economies of scale, lower cost production process and greater
financial capabilities. So ford and Mazda seemed right for each other.
Taking note of the rapid growth in the domestic market, Ford sought to
expand its presence in Japan. Limited equity participation in an
existing firm was the only possibility due to government restrictions
Deeming Toyota and Nissan too strong and independent to be viable
candidates ford focused on Mazda.
This shows that Ford entered the Japanese joint venture with a long term plan in
mind and hence ford was careful in choosing Mazda as its partner because
Mazda seemed to match the capabilities of ford and also would satisfy the goals
which ford had in mind. The fact that Mazda was not too independent like Toyota
and Nissan made ford attracted towards Mazda.
Ford expanded its relationship by sourcing from Mazda small cars, to be sold in
Australia, to meet rising Japanese competition in the market. Ford relationship with
Mazda matured over a period of four years into a strong alliance. Even as it worked to
tighten its links with Mazda, ford began to explore other prospects. It had already
begun preliminary talks with Nissan and Toyota about possible cooperative deals and
with Germany’s BMW about joint production of Diesel engines. For Ford these
preliminary explorations were helpful in future. This way ford never stopped to find
new partners for further expansion and improvement. Ford believed in never close
your options.
Ford and Nissan: A Brief Alliance Overview
In 1988 Ford and Nissan formed a joint venture to work together on manufacturing
and selling of a new minivan in the United States. They agreed that Nissan would do
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most of the design and engineering and ford would expand its production sites to
accommodate both firms production needs. Ford has a strategy of using such working
alliances to improve on component quality and hence the product quality.
Technology frontier
As technology stated to hold immense potential for the automobile industry, the top
management realized that it was important that the firm’s researchers, engineers and
product designers become familiar with the capabilities of new technology and learn
to adapt to them efficiently. For this purpose ford again turned to alliances. According
to then ford chairman Donald Petersen, ‘alliances are a way to ensure balance
between stability and the autonomy needed to foster innovation. In the area of frontier
technologies ford often held a minority of stakes in partner firms, to avoid huge risks.
Critical analysis of Ford’s alliances
In ford’s alliance with Mazda it is difficult to say whether the alliance is

noncompetitive or not. On one hand Mazda being a niche player, the alliance is
thought to be noncompetitive while on the other hand Mazda and ford do compete in
certain segments. Ford and Mazda’s Alliance may have started as a noncompetitive
alliance but now is seen as a competitive alliance. This suggests that alliances evolve
and move from being one type to other.
Ford always looked for having a substantial share of equity, so as to be able to better
manage and structure the alliances as they evolve.
• Resource leverage
Ford wanted it’s alliances to provide leverage to its resources, both human and
physical. When ford and Nissan agreed to work together on the minivan, ford did not
have sufficient numbers of engineers and technical personnel to develop the product
so Nissan provided the design and engineering. This not only saved huge costs for
ford but also freed up resources that could be used elsewhere.
• Efficient risk management
Ford motor company efficiently used alliances to reduce risks involved, by involving
Mazda and Nissan into product development alliances and taking only minority stakes
57
SANDEEP SINGH
in high-tech companies, ford was able to minimize its risk of losing heavily if a
particular technology or product does not succeed.
Ford has over the years used strategic alliances to be able to access a lot of different
philosophies and technologies and manufacturing capacity without having to own
them, hence further reducing the risk.
• The alliances should fit into a prevailing strategy
Initially ford’s alliance with Mazda and Nissan was to source the global operations at
an arm’s length and later as ford decided to elaborate its global presence and beat
competition, the alliance became much more. Ford modified its alliances with Nissan
and Mazda to suit it’s company strategy as a whole. Ford’s strategy was to remain
global, so Ford senior management began to plot a global competitive strategy that
would supplement the company’s internal network of subsidiaries with a network of
external alliances. The role of alliances in ford’s overall strategy was to move beyond
arm’s-length sourcing arrangements to more involved and risky alliances to gain the
maximum benefits.
• Effective involvement of top management
As Ford decided to have global operations, the top management was ready to rethink
the firm’s core strategy and the role of alliances in it. With top management in
agreement on expanding the scope and role of alliances ford was able to make the link
with Mazda a true alliance by acquiring 25% stake and also secured the right to name
up to three members to the company’s board of directors and place a senior ford
manager at the senior executive level in the Mazda organisation.
• Maintaining a balance between cooperation and competition.
Alliances are formed with companies that can provide some incentives to each other.
As the companies grow alliances can take different forms. Firms in alliance with each
other may have rivalries in the market place, but firm should find a way to collaborate
and learn from each other.
Ford and Mazda found ways to collaborate in areas form product design to production
facility. The firms worked jointly on products such as Ford Escort, Festiva and Probe.
Mazda on-site engineers helped ford’s plant designers implement Mazda’s production
58
SANDEEP SINGH
lay-out approaches in turn ford shared its highly developed and sophisticated research
techniques with Mazda researchers.
Competition between Ford and Mazda remains alive. For example ford refused to
help Mazda develop a four door vehicle Navajo and Mazda on the other hand refused
to share its sport model Miata with Ford. But the companies have managed to strike a
balance between cooperation and competition.
• Creating and managing a network of alliances
If an alliance works well the company gains confidence to manage and create new
alliances with other companies in order to gain access or other benefits in different
markets. The success of its strategic alliance with Mazda had a second-round of
feedback effects on ford’s strategic policy evolution. The ability to manage a strategy
alliance with a competitor like Mazda convinced ford senior managers to forge a new
set of strategic alliances with other automobile companies to solve a host of strategic
problems.
Ford entered into alliances with Volkswagen of Germany that rationalised the
production facility of the two firms in two south American countries. Ford entered
into yet another alliance with Nissan motors for joint production facility in united
states and Europe in which the firms would together develop two new products. After
the success of its alliance with Volkswagen ford enter into an alliance with another
German automaker in 1990, at the same time ford began to explore additional product
development with Nissan and expanded its collaboration with Mazda to include
marketing of ford cars in Japan by Mazda and Mazda cars in Europe by ford.
Ford’s competitiveness is enhanced by the firms ability to conceive and implement an

intricate alliance strategy. Ford motor company has efficiently used alliances with
different companies to gain maximum – access to product and manufacturing
technology, new markets, increasing product development capability, securing low
cost sources and enhancing quality.
Hence alliances should be moulded and managed in order to survive and gain the
most in the world market.
59
SANDEEP SINGH
LIMITATIONS
In order to complete the present study and mobilize source materials to achieve this
end, I had to come to terms with certain difficulties. As I could not overcome them to
the extent to which it was required, they may figure here as limitations of this study.
These limitations can be summed up as follows:
 Some of the data given here may be found to be lacking precision or even, to
some degree, authenticity due to the fact that they were misquoted in those
sources from which they were compiled.
 Some of the management personnel whom I approached as sources of crucial of

relevant information for the purpose of my present study, were not keen on
disclosing things which they identified as components of some hidden agenda.
So, at certain points of the present study, there may be possibilities of inadequate
or inaccurate analysis.
 Though great precaution has been taken in verifying the figures and data that
appear here, there may be some elements of aberration and flippancy in putting
them here.
 Strategic and Critical analytical framework that has been evolved here, may at
times, show deviation from popular speculations as far as the future prospects of
the company in question are concerned. So, there may be possibilities that some
of the opinions expressed here, may not match the reality and may exude some
sort of incoherence or imbalance.
 The analysis may not draw popular support from all sections of consumers.
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SANDEEP SINGH
RECOMMENDATIONS
Though the strategy of corporate alliance has already been recognized and imbibed by
a large number of global giants as the essential source of strength and durability of
their business operations, it has not proved a smooth, problem-free trial for many of
them. According to a study on this subject conducted recently, it has been observed
that more than fifty percent of such alliances turn out to be failures just three years
after their conception. Some of the most significant reasons that lead to the failure of
global business alliances are as follows:
• Incompatibility of corporate culture or personality;

• Clash of managerial personality;
• Differing project personalities – the project is of varying levels of priority
to each alliance partner.
In this regard, I would like to present a set of recommendations suggested for alliance
leaders by experts of this field as measures to arrest and overcome the drawbacks of
global alliances as well as the possibilities of alliance failure:
1. To adopt the Mindshift Approach – a methodology that prompts are to look at

critical areas and help him anticipate the behaviors that may cause alliance
communication and trust to break down – can help enhance the likelihood of
alliance success. The Mindshift approach enables managers to anticipate and
manage different corporate and managerial personalities by recognizing the life-
cycle stages of an organization, group, division or product. The Approach is also
fundamental to resolving inter-divisional warfare.
2. It examines alliance partners, both internal and external and deduces cultural
incompatibility. It will enable one to be more effective internally as manages and
derives strength from disparate personalities and life-cycle stages. It will also
increase one’s chances for the creation and management of intelligent and
effective external business alliances.
3. To recognize the personality differences in his or her managers as well as the

demands required by the life-cycle stage of the organization and create
opportunities for success regardless of these pressures.
61
SANDEEP SINGH
4. To bring about changes in expectations and communication styles to fit different

corporate and managerial personalities and to improve internal and external
alliance effectiveness.
5. To understand the corporate and managerial personalities so that when

compatibility of alliance partners and teams is considered.
6. To take into account the different behavioral and cultural preferences in order to
communicate in the language of the receiver of information and align expectations
accordingly.
7. To emphasize the vision, self-confidence and overall attitude of risk-taking

managers who are usually identified as Adventurer managers; it involves taking
into consideration both the positive enthusiasm and unrealistic impatience or
overbearing rashness of these managers by the authors of global alliance. It
precisely implies that the leaders of business alliances should maintain a critical
equilibrium in their assessment of the adventure managers who work under them.
8. To emerge and act as charismatic leaders endowed with strength and ability to
direct, control and motivate those who work as a closely knitted and organized
team striving for the fruits of global alliances; here, the leaders of alliance are
always required to show their courage, commitment and dashing spirit.
9. To adopt a more systematic, collaborative and proactive approaches, to make an

alliance successful in this regard, the leaders of alliance are expected to show both
foresight and commitment to their pivotal position and responsibilities.
10. To verify different decisions taken with the internal circle before executing them
at the highest level.
11. To be able to go for sound business opportunities and capitalize on them through a
strategy of time-sensitive tactics, here, an alliance leader is supposed to act with
the insight and calculative power of a hawk-eyed, extremely sharp-witted, astute
politician.
12. To evolve a result-oriented, agenda for business operations in alliance exuding a

sense of hop, assertion for all those who work for the success of a global business
alliance; on this count, global leaders of alliance will have to emerge as
visionaries with profound understanding of every stage of business alliance.
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SANDEEP SINGH
13. The purpose of applying the Mindshift Method is to understand how rapidly your
company will respond to changes in the environment, a business downturn, or
competitive forces. It also helps you get a better understanding of how the culture
and relationship fit will work with your company, your mangers, and the project
in contrast to theirs. To gather the necessary information, look at the following
areas in question to learn more about your partner’s life-cycle stage, its corporate
personality, and the Project Personality Type of the alliance.
1. Discover the stage of the life cycle that your unit, division, group, or
organizations is in. This is accomplished by relating revenues or units of
growth to time.
2. Determine the organization’s corporate personality. Identify the personality

characteristics that best fit your group, unit, division, or company. If they
belong to various stages of the life cycles, try to determine which personality
type accommodates most of your company’s characteristics.
3. Look at your personal managerial characteristics to see how you fit within the
stages of corporate cycles of change. Again, you may find that a blend of
qualities from more than one personality type best describes you. Try to
identify the single managerial type most fully descriptive of you.
4. Examine the project personality characteristics. Determine the level of

importance to each partner of the existing or proposed alliance.
5. Use the diagnostic tools to analyze your actual or prospective partner as you
have analyzed your own company and managers.
6. Finally, develop strategies based on observed personality differences that will

allow you and your partner to communicate. This may mean adjusting or
creating new management structures by changing the form of the alliance to
realign goals, modifying project priorities, or realistically reformulating the
project’s expectations.
The Mindshift approach is a powerful means to examine corporate compatibility

and to estimate the potential of success for high risk investment.
63
SANDEEP SINGH
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SANDEEP SINGH
CONCLUSION
In the context of global business operations in general and automobile business in

particular, history has certainly changed is course to a considerable degree over the
last few years. As a consequence to the paradigms shifts in the tenets of global
automobile business, we have been introduced into an era of radical innovations and
initiatives of which Ford presents a most striking illustration. The present study has
tried to expatiate upon the alliance strategy of Ford in different contexts of global
automobile market with a view to exploring the implications of change that the
overall business policy of this company has undergone. The study has also paid
considerable attention to salient shifts in the attitude approach and outlook of Ford’s
present management as the company is absolutely poised to get away from its
traditional morals and, is willing to adjust itself to the turbulent tides of contemporary
global business operations.
In an era characterized by the end of monopoly and emergence of oligopolistic

situation in various sectors of business and industry, the automobile industry is
veritably exposed to the hard realities of fierce, cut-throat competition. The future of
even the most established players may be bleak or shaky on this count unless they
handle the situation with keen insight, acumen and foresight. It amounts to going for
and internalizing the essence of popular, prospective bandwagons and clarion calls of
global business. As this study elicits, Ford is not trailing behind others is this regard.
And alliances on a worldwide scale occupy a crucial place in the terrain of global
strategy. But the successes of these alliances eventually depend on how far the
management of Ford addresses their concerns and issues at stake.
65
SANDEEP SINGH
REFERENCES
Books
• Kotler, P., (2000), Marketing Management, Millennium Edition, Prentice-Hall
of India Pvt. Ltd., New Delhi p.82.
• Lasserre, P. and Schutte, H., (1999), Strategy and Management in Asia
Pacific, McGraw-Hill Publishing Co.
• Calingu, Luis Ma R., (1997), Strategic Management in the Asian Context,
John Wiley & Sons, New York.
• Julie Cohen Mason, (1993), Strategic Alliances : Partnering for Success,
Management Review, May, pp. 10-15, Stratford Sherman, ‘Are Strategic
Alliances Working?’ Fortune, September 21, 1992, pp. 77-78, Edwin
Whenmouth, ‘Rivals Become Patners: Japan Seeks Links with U.S. and
European Firms,’ Industry Week February, 1993 pp. 11-12, 14, John Naisbitt,
The Global Paradox (New York William Morrow, 1994), pp. 18-21; Rosabeth
Moss Kantner, ‘The Power of Partnering Sales & Marketing Management,
June 1997, pp. 26-28, Jim Kelly, “All Together” Now, Chief Executive
November 1997. Pp. 60-63; Roberta Maynard, “Striking the Right Match,”
Nations Business May 1996, p. 18.
• Hasla, Colin and Newle Alan, Economics in a Business Context, p.139-140.
Articles
• Hammonds, Keith H., (2000), Grassroot Leadership – Ford Motor Company,
FC, issue 33, p.138.
• Gomes-Cassees, Benjamin, (2000), Strategy must lie at the heart of alliances,
Financial Times, Mastering Management, pp.14-15.
• Gomes-Cassees, Benjamin, (1998), Do you really have an alliance strategy,
www.alliancestrategy.com
• Marc, L. Songini, (2001), Weak link : Small suppliers loath to spend on
business partner connectivity, Computerworld, Framingham, vol. 35, issue 7,
p.8-9.
• Baily, Donna, (2001), A nasty turn for Ford ?, Time, New York, Jan 15,
vo.157, issue 2, p.45.
• Wallace, B., (1999), Ford will use net to sell used parts, Computerworld,
Framingham, May 3, vol.33, issue 18, p.6.
• Alexander, G., (2001), Ford heir puts his foot down, Sunday Times, London,
Feb 11, p.8.
• www.allianceanalyst.com, 1995, Ford evolutionary alliance strategy.
Bibliography
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SANDEEP SINGH
• www.allianceanalyst.com
• www.strategic.ic.gc.ca
• www.allianceanalyst.com
• www.corporateinformation.com
• www.google.com
• www.indiainfoline.com
• www.cartoday.com
• www.entreworld.org
• www.smartalliances.com
• www.wikipedia.org
• www.media.ford.com
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SANDEEP SINGH
APPENDIX
Table-1: Vehicles per employee at Ford UK
Year Vehicles sold Employees Vehicles sold

(000s) (000s) Per employee
1982 687 70 9.81
1984 653 59 11.07
1986 656 49 13.39
1988 779 48 16.23
1991 677 52 13.02
Table-2: Real sales growth at Ford UK
Year Sales nominal in Retail Price Real sales Real sales

(£m) index as a (£m) (Col. 2 revenue index
decimal divided by (1982=100)
Col.3)
1982 3287 1.21 2717 100.0
1983 3585 1.27 2823 103.90
1984 3752 1.33 2821 103.83
1985 4045 1.42 28.49 104.86
1986 4374 1.46 2996 110.27
1987 5211 1.52 3428 126.17
1988 5936 1.60 3710 136.55
1989 6732 1.72 3914 144.06
1990 7509 1.89 3973 146.23
1991 6191 2.00 3096 113.95
Table-3: Ford UK Value added
Year Labour costs Profit Depreciat Nominal Real Index of

pre-tax ion (£m) value value real value
(£m) added added added
(£m) (1982=100)
1982 710 194 192 1096 906 100
1983 743 178 231 1152 907 100
1984 785 60 165 1010 759 84
1985 756 160 164 1080 766 85
1986 791 109 182 1082 741 82
1987 828 317 192 1337 880 97
1988 872 673 201 1746 1091 120
1989 1000 483 25 1508 877 97
1990 1295 -274 301 1322 701 77
1991 1290 -935 437 792 396 44
Table-4: Real value added per employee at Ford UK, 1982-91
Year Value added Employees Real value added
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SANDEEP SINGH
In real terms (£m) (000s) Per employee (£)

1982 906 70 12943
1984 759 59 12864
1986 741 49 15122
1988 1091 48 22729
1991 396 52 7615
Table-5: Real value added per £ of fixed assets at Ford UK, 1982-91
Year Value added Fixed assets Value added

In real terms (£m) (£m) Generated per (£)
of fixed assets
1982 1096 806 1.36
1984 1010 839 1.20
1986 1082 964 1.12
1988 1746 1207 1.45
1991 792 2198 0.36
Table-6: Figures expressed in billions of US Dollars
Year Sales Sales EBITDA % of Inc. bef % of Emps Sales/

Growth Sales Extra Sales Empl
1991 88.286 -9.6% 11.762 13.3% -2.258 -2.6% n/a n/a
1992 100.132 13.4% 13.877 13.9% -0.502 -0.5% n/a n/a
1993 108.521 8.4% 18.070 16.7% 2.529 2.3% n/a n/a
1994 128.439 18.4% 25.408 19.8% 5.308 4.1% n/a n/a
1995 137.137 6.8% 27.824 20.3% 4.139 3.0% n/a n/a
1996 146.991 7.2% 29.055 19.8% 4.446 3.0% n/a n/a
1997 153.627 4.5% 33.997 22.1% 6.920 4.5% n/a n/a
1998 144.416 -6.0% 32.291 22.4% 22.071 15.3% n/a n/a
1999 162.558 12.6% 33.530 20.6% 7.237 4.5% n/a n/a
2000 170.064 4.6% 35.634 21.0% 5.719 3.4% 345,991 491,527
1: Vehicles per employee at Ford UK
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SANDEEP SINGH
2: Real sales growth at Ford UK
3: Ford UK Value added
4: Real value added per employee at Ford UK, 1982-91
5: Real value added per £ of fixed assets at Ford UK, 1982-91
6: Figures expressed in billions of US Dollars

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Analysis of Strategic Alliance with Ford

MINOR PROJECT REPORT ON

STRATEGIC ALLIANCES – FORD MOTOR

BUILT FOR THE ROAD AHEAD.

Submitted for fulfillment of the requirement

Bachelor of Business Administration

Under the guidance of:

Roll No.: 05910601709

ANSAL INSTITUTE OF TECHNOLOGY

TO WHOMSOEVER IT MAY CONCERN

I thank my teacher, Mrs. Nidhi Prasad under whose guidance

I thank all of my friends and fellow classmates for their

COMPANY PROFILE …………………………………………………………..

ORGANIZATION STRUCTURE ………………………………………………

ORGANIZATION HISTORY …………………………………………………...

COMPANY PRODUCTS ……………………………………………………….

EXECUTIVE SUMMARY ………………………………………………………

COMPANY PROFILE (Analytical Report)

Ford’s Promotional Leadership ……………………………………………..

INDUSTRY ANALYSIS: GLOBAL SCENARIO

LITERATURE REVIEW ………………………………………………………...

CRITICAL ANALYSIS …………………………………………………………...

Ford and Nissan: A Brief Alliance Overview ……………………....

FOUNDER : Henry Ford

SECTOR : Consumer Goods

INDUSTRY : Auto Manufacturers – Major

HEAD OFFICE : Ford Motor Co.

CHAIRMAN : Mr. William Clay Ford Jr.

CEO : Mr. Alan Mulally

engineering, the company used an old-fashioned personalized management system,

neglected consumer demand for improved vehicles.

President. Then later became Board Chairman in 1955.

➢ FORD SUPER DUTY22380

➢ Ford Mustang Convertible

Alliances are the hallmark of contemporary corporate business. Different companies

The Strategic Alliance Boom

 Fill gaps in current market and technology

 Turn excess manufacturing capacity into profits

 Reduce risk and entry costs into new markets

 Accelerate product introductions

 Achieve economies of scale

 Overcome legal and trade barriers

 Extend the scope of existing operations

 Cut exit costs when divesting operations

1. Strategic fit: Before even considering an alliance, companies need to assess

and even defines itself as a ‘network of organizations.” That network includes

3. Flexibility: Alliances can last only if they’re flexible. One example of a

Contemporary world of business is characterized by the emergence of numerous

Scope of the Study

In economic analysis, productivity is measured by relating a physical measure of

Although the physical productivity calculation in Table-3 (see in annexure) is useful

productivity calculations. The financial measure of value added per employee

Porter’s Five Forces

• The bargaining power of suppliers

COMPANY PROFILE (Analytical Report)

Recent Sales at Ford

Sales Comparisons (Most Recent Fiscal Year)

Year Sales Sales Sales/

the United States

General Motors the United States

the United States

Recent Stock Performance

Summary of company valuations