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

By Isabel Studer-Noguez | Go to book overview

5

The 1970s

An era of structural constraints and narrowed strategic options

The climate of uncertainty that prevailed in the North American automobile industry after the 1973 oil shock exacerbated the traditional structural and institutional obstacles that Ford had to face in order to set its competitive strategies. This uncertainty was rooted in a macroeconomic context characterized by rampant inflation, unstable rates of growth, balance of payments problems and an erratic North American demand for vehicles, which combined with stricter safety and emissions regulations in the United States limited Ford's strategic choices.

The bargaining dynamics with other auto makers and with the US government also explain Ford's problematical position and the industry outcomes during the decade. The collective strategic choices of the US auto makers and a series of actions undertaken by the US government reduced Ford's margin for action and paved the way for the structural changes that permeated the industry throughout the 1980s. As the Canadian and the Mexican cases discussed in this chapter show, US government policies, the industry's competitive environment, and the difficult North American context of the 1970s also affected Ford's capability to respond to demands to increase investments in those countries. Government intervention, by means of subsidies, was required in both Mexico and Canada to entice US vehicle assemblers to invest in the host country, not only because of the minimum-risk strategies pursued by those companies but also because of the use of those subsidies in the United States. This again confirms the validity of the triangular diplomacy dynamics.

Ford exploited the competitive advantages built into its foreign operations, particularly those in Europe and Canada, to compensate for its difficult situation in the North American market, but it was only partly successful. The restrictions faced by Ford were particularly felt in its Mexican subsidiary.


A changing North American context

A number of analysts have argued that the US Big Three's failure to compete effectively with the Japanese auto makers in the late 1970s stemmed from their complacent attitude toward the competitive challenges posed a decade earlier by European auto makers. Since the late 1950s, European auto makers, which having mastered mass production and offering products that were different from

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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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