Ford Case Analysis 3p1n2y

Ford Motor Company Case Analysis July 14, 2003

By: Cindy Branon Zach Evans Melissa Holder Kendall Joseph Brandon McLain Shane Morgan

Group 3

Ford Case Analysis

Group 3

Situation Analysis Ford Motor Company has always been considered one of the “Big 3” US auto manufacturers. Throughout the 1980s and continuing even today, foreign companies— especially Japanese companies—began aggressively competing in the US with highquality, lower-cost automobiles. Ford felt that in order to continue to compete on a global scale, they must, as a company, increase the economies scale available to them via standardized global design and production. This standardization would allow Ford to drastically reduce the development and production cycles for new automobiles. To combat these pressures, Ford began planning for its future. These plans were comprised of the three-pronged approach: the implementation of common manufacturing systems; the globalization, with centralized processing, of the Engineering Release system; and the worldwide product standardization of production with the ‘World Car’. A portion of Ford’s IT strategy was Polycentric, due to the lack of application integration between facilities. Another portion of it was Ethnocentric, as with the shared communications network created to link together the company’s CAD systems and tools. Ford’s future plans cemented their move to a more Regiocentric IT strategy. Problems and Opportunities Ford was presented with several problems and opportunities during this stage of their corporate history. One of the main problems was the IT staff’s unwillingness to take the initiative in regards to a new project without first having the public of top management. How many potential good ideas never saw the light of day because an IT manager was unwilling to champion its cause? This wait-and-see approach does have a positive side, however: Ford was almost guaranteed of having an IT strategy that closely ed the business strategy because the IT department never attempted to initiate a project on its own.

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Ford Case Analysis

Group 3

One very large opportunity that Ford was attempting to take advantage of was the idea of having an integrated, worldwide supplier database. This concept, which is standard practice today, would allow Ford to standardize mainstream parts and, with increased vendor participation, negotiate more favorable pricing, which would allow them to save a tremendous amount of money on a global scale. This global database would be rolled-out in two distinct phases: first, suppliers that impacted manufacturing directly would be integrated and then, second, non-production-related suppliers would be folded into the over-arching database. Ford had no plans, however to centralize the automobile ordering and dealer systems choosing, instead, to leave them as regionally adapted systems. Alternatives Ford really only had two alternatives. First of all, the company could choose not to attempt to standardize many of their global systems and forfeit the project’s potential cost savings. The increased competitive pressures from foreign automobile manufacturers do not make this a very reasonable choice. Ford’s other alternative would be to continue with the standardization of car parts and the manufacturing process as well as centralizing the supplier database. Recommendation Our recommendation would be to continue the trend of centralizing the IT systems as much as possible. We recognize that the state of global telecom networks in the early 1990s was not as good as it is today and that this would cause the necessity of having at least a few regionally distributed databases. We would further recommend the continuation of the plans for a globally centralized supplier database. Although the advent of the commercial Internet in the mid 1990s would make this goal easier to attain, Ford had the necessary IT infrastructure and capacity to make this a reality earlier. Actual Implementation

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Ford Case Analysis

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Ford Motor Company still view IT systems as a very integral part of the business strategy. Ford went on to build their database of global suppliers and took this concept one step further when, in an almost unprecedented move, the company partnered with DaimlerChrysler, General Motors and Renault-Nissan to form the Internet-enabled trading and supplier management system known as Covisint (www.covisint.com ). Today, Covisint provides services in the U.S., Europe, Asia-Pacific, and Latin America and has offices in Southfield, Michigan, Amsterdam, Tokyo, Frankfurt, Paris, and Brazil.

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