International
Marketing
BBA-04
Stefan Sippel
Kristian Ojanperä
Sune Virta
Case study: DaimlerChrysler AG
1. What problems would Mercedes-Benz have faced if it had remained a niche
player selling ‘world cars’ to the luxury market worldwide?
Concentrating on serving one market segment limited the size of a company, and thus
limited the potential benefits from economies of scale in research, product design and
development, production and marketing. Larger profits seemed to require a ‘world car
company’ or a ‘global car company’ that could compete successfully in a number of
market segments in two or three of the world’s major markets.
2. What are the key characteristics of Ford’s approach to
internationalization/globalization?
The company, started in 1903, introduced the assembly line with interchangeability of
parts to automobile manufacturing. With its advantages in low cost, high volume, and
availability of parts for service, it was able to rapidly expand its market. It quickly moved
from a domestic to an international and then to a multinational firm. The company set up
a sales branch in France in 1908, built its first European factory in Britain in 1911,
established Ford-Werke AG in Germany in 1925, and began production in Japan in the
same year. Ford has factories in North America, Latin America, Europe and Asia. Where
government policies, limited market sizes, or other factors have kept the company from
developing wholly owned factories, they have used exports and/or joint venture
production facilities to meet local demand.
In 1979 Ford purchased a 25% equity share in Mazda primarily in order to gain
knowledge related to small car development and production. The relationship with Mazda
assisted Ford in moving toward global design, manufacturing, and marketing.
3. What are the key characteristics of Toyota’s approach to
internationalization/globalization?
After the destruction of World War II, and a crippling labor dispute in 1949, it sold only
about 300 vehicles per day. Then orders for thousands of trucks came in from the US
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International
Marketing
BBA-04
Stefan Sippel
Kristian Ojanperä
Sune Virta
Defense Department. Profits from this sale gave the company money to finance the
production of passenger cars. Toyota had already developed a prototype small car, and
had studied Ford’s production lines. The company invested in modern manufacturing
equipment and introduced the ‘just-in-time’ inventory system. Formal and informal trade
barriers provided Toyota, and other Japanese manufacturers, with a protected domestic
market while they developed an increasingly efficient production system. As the scale of
production rose and costs declined, Toyota tried to export to the US market. The first try
in 1958 failed in road tests because of poor styling. A second entry with redesigned
automobiles and improved quality was a success and they subsequently began exporting
to Europe. The oil crises in 1973 and 1978-9 made Toyota’s small, fuel-efficient
automobiles very attractive in the US, and their market share grew rapidly.
Toyota eventually felt compelled to begin production abroad because trade barriers
limited their ability to increase market shares overseas. Toyota opened its first factory
abroad in 1984 when it joined General Motors in a joint venture, to produce cars in
California. Toyota used the joint venture as much for a learning experience as for the cars
produced. Their primary objectives included learning to work efficiently with US labor
and suppliers.
4. Which of the three companies approached internationalization the best?
Explain.
5. Are there other approaches to internationalization/globalization that
Mercedes-Benz could have taken rather than relying on large acquisitions?
What problems might they have caused?
6. Should the potential problems at Chrysler and Mitsubishi have been foreseen
by German management?
2
International
Marketing
BBA-04
Stefan Sippel
Kristian Ojanperä
Sune Virta
7. If Ford was so successful in working with Mazda, why should
DaimlerChrysler have any concerns about working with Mitsubishi?
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