International Business: Competing in the Global Marketplace
Fourth Edition
Cases
FORD 2000
SYNOPSIS
In 1994 Ford announced a massive restructuring that transformed it from an area division structure into a
worldwide matrix. With this restructuring the worldwide responsibility for developing a particular class of
vehicles was given to a particular vehicle program center (VPC). In the case of small and medium cars, this
VPC was to be headquartered in Europe, while the other four were in the US. While different areas of the
world could make minor alterations in cars in order to fit local tastes, there was a strong desire to minimize
the amount of duplicitous design activities that had been occurring around the world.
With the matrix structure many employees will report to two or more managers, one within a vehicle center
team and one within a functional discipline. Given the well-known problems with matrix organizations,
Ford has tried to minimize these by taking the following steps:
 Making doubly sure that objectives are agreed upon precisely between the vehicle centers and the
functional side of the organization.
 Specifying clearly the respective roles and responsibilities of individuals towards each side of the
matrix.
 Changing appraisal and reward systems accordingly.
 Only appointing senior executives who have shown they can work collaboratively.
 Training everyone involved in the art of developing a cooperative matrix perspective which largely
replaces the need for policing.
 Introducing much more intensive and open communications.
Ford made these changes quickly, and when Ford was extremely profitable. This is in sharp contrast to a
more common “go slow” approach, and only undertaking major changes when times are difficult and dictate
the need for change. Ford believes that it is best to make changes when things are going well, so that things
can be done for the right reason rather than for simple expediency. The potential gains from this
restructuring are great, but it won’t be easy to pull off.
TEACHING OBJECTIVES
The main teaching objectives of the case are:
1.
2.
Show how one firm is attempting to change organizational structure.
Suggest the amount and type of benefits that may be possible from restructuring and re-setting
priorities.
This case fits very well after chapter 13, The Organization of International Business.
STRATEGIC ISSUES AND DISCUSSION QUESTIONS
1.
What other possible obstacles might Ford encounter as it becomes a global organization?
One potentially big obstacle is resistance to the change from individuals and organizations worldwide that
feel their autonomy is being threatened. Another is that the increase in coordination costs, and the need for
coordination, will be greater than existing systems and personnel can handle, and the firm will be unable to
make decisions efficiently. It is also unclear whether it will make sense to have one group of individuals
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International Business: Competing in the Global Marketplace
Fourth Edition
Cases
responsible for the design and production of a particular model worldwide, and whether they will be able to
adequately understand and respond to the differing demands in different areas. Finally the matrix type
organization has some well-known problems as suggested in the book, and while Ford is trying to address
these problems, others have tried and not done well.
2.
How important will the new matrix system be in the success or failure of Ford 2000?
The new matrix structure is an integral part of the Ford 2000 program. In order to fulfill all the objectives
of Ford 2000 as listed in the case, it is unlikely that any other type of organization could meet the competing
demands. Thus the success or failure of the matrix system will be instrumental in the success or failure of
the Ford 2000 program.
3.
What is Trotman forgetting in restructuring?
While it is unlikely that he is forgetting anything, he is counting on a great ability and willingness to change
the modus opperandi of organizations, systems, and individuals. To that degree the building of a consensus
through information sharing and training could have been helpful.
4.
What other efficiencies might also be a byproduct of Ford 2000?
While the specific directives of cheaper, faster, and worldwide are pretty inclusive, by creating new
connections among people and organizations Ford my foster some new creativity and problem solving that
could result in new products or solutions to problems that can create a competitive advantage for Ford.
5.
How successful do you think this program will be in preparing Ford to enter emerging markets?
What will be the key factors for success in entering these markets?
In many emerging markets cost considerations and the ability to adapt to unexpected demands are critical.
To the extent the program brings Ford’s cost to be among the lowest in the industry, Ford will be able to
effectively compete on cost. It is less clear whether Ford 2000 can make Ford more flexible and adaptable.
While the ability to reduce development and manufacturing time can help, decision-making could be
hindered in the matrix structure.
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