Case StudyFords European Organization Changes Strategy

Contents
Case Study Questions with Solutions

Origin-Shanghai Volkswagen
Ford Motor Company has a long history of operating in Europe. Starting with exports to the United Kingdom in 1903. Ford Viewed its European Operation as a common market with a regional organization named Ford Europe with two big manufacturing facilities in Germany and England. The aim was to achieve economies of scale and to reduce engineering costs. Models such as Fiesta, Capri and Escort were the results of this new organization structure. Products were largely designed in UK and Germany and manufactured in those countries as well as in Belgium and Spain. In 1995, Ford merged its Automotive Operating in North America with that of Europe. Again, an important reason was to be more competitive and cost reduction through the elimination of unnecessary car platform and engine duplication. The 21st Century brings new challenges for Ford, In the Past; European carmakers were protected by quotas on Japanese cars. But these restrictions are going to be reduced or eliminated in the new century. This means that Japanese and Korean car manufacturer will market their cars in Europe. The Global car industry is plagued with overcapacity that may result in fierce competition. Ford may have to review its Current strategy

What are the advantages and disadvantages of centralization and decentralization?

Advantages of Centralization
Reduced cost, Uniformity in action, Personal leadership, Flexibility, Improved quality of work

Disadvantages of Centralization
Delay in work, Remote control, No loyalty, No secrecy, No special attention Advantages of Decentralization Well Secrecy, Delay in work, Loyalty, Special attention in work Disadvantage of Decentralization Poor quality of work, No Uniformity, No Co-ordination.

What are the advantages and disadvantages of centralization and decentralization?

The rationale was to reduce costs, but the execution didnt work.

Why did Ford change from decentralization to centralization to recentralization?

The vision was to rely on technology to bring about a new way of making and selling cars, but the infrastructure was not in place to sustain that vision. Ford allowed its cost to get out of control by focusing on the Internet instead of building good cars and Trucks. Ford is re-centralize to improve quality and reduce the costs of new products.

Why did Ford establish a luxury car division?

The Premier Automotive Group was founded in part to help save Ford Motor by focusing on the cars with the highest margins. However, relocation cost to Irvine, California, and product problems contributed to significant losses and in 2008,

Do you think Ford will be in the competitive global market? Why or Why not?

Ford is competing well in Europe, with new Mondeo and Kuga models, but trails GM in China. By concentrating on the Ford marque and reducing capacity in US, Mulally is bringing new potential to company and hopes that its new compaign Ford.