Ford and the Global Strategies of Multinationals: The North American Auto Industry

By Isabel Studer-Noguez | Go to book overview

2

Ford motor company's multidomestic strategy

As explained in the introduction, it is commonly assumed that the strategy of firms is derived from their key objective of profit maximization. But there are many strategies that a firm can pursue in order to achieve such an objective. Being complex actors, MNEs determine their strategies based on a variety of factors that are not only related to the firm's specific assets but also to structural, institutional, and group dynamics elements. Without a complete understanding of how these elements shape an individual firm strategy, in this case Ford, the bargaining dynamics of MNEs with host country governments could not be fully appreciated. One example is how the structural elements, or the who-gets-what rules of an industry, limit the capacity of firms to make concessions to host country governments for the simple reason that, if they did, they could incur inefficiency costs or would simply not survive.

For instance, GM's moves were one constant in Ford's strategies that confirms the relevance of the firm-to-firm negotiation in the triangular bargaining dynamic. The chapter shows how Ford's international operations became a key source of the company's competitive strategy vis-à-vis GM, and sets the basis for understanding the interaction between Ford strategies and the governments of Canada and Mexico that is explored in the following two chapters.


Structural rules under the system of mass production

In order to survive and maximize profits, auto makers must comply with structural rules or the “who-gets-what” rules in the automobile industry. Structural rules are derived from production technologies (hard and soft technologies) that are successful in producing cars efficiently. An automobile is a complex product, which consists of over 10,000 parts and requires multiple and complex processes for its manufacture. Mass production proved successful in efficiently producing automobiles, which explains that for almost seven decades, it determined the structural rules for the automobile industry. But it is a complex system that needs to be understood in order to comprehend Ford's strategies.

Mass production emerged in the early 1900s as a revolutionary production system that sought to maximize profits through the production of a standardized vehicle at a low price. In order to achieve this goal, Henry Ford designed a

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Ford and the Global Strategies of Multinationals: The North American Auto Industry
Table of contents

Table of contents

  • Title Page v
  • Contents ix
  • Figures xi
  • Tables xiv
  • Acknowledgments xvii
  • Abbreviations xix
  • 1 - Introduction 1
  • 2 - Ford Motor Company's Multidomestic Strategy 14
  • 3 - Ford of Canada 30
  • 4 - Ford of Mexico 51
  • 5 - The 1970s 73
  • 6 - Ford's Survival Strategy 98
  • 7 - Ford's Global Strategy 118
  • 8 - Successful Bargaining in a Situation of Increasing Interdependence 142
  • 9 - Export Dynamism 161
  • 10 - A North American System of Production 187
  • 11 - Conclusion 218
  • Notes 235
  • Bibliography 254
  • Periodicals (Newspapers, Newsletters, and Magazines) 275
  • Appendix 1 276
  • Appendix 2 302
  • Appendix 3 326
  • Index 351
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