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International Business of Ford- Mazda

Added on - 17 Jun 2021

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RUNNING HEAD: International BusinessInternational Business
International Business1ContentsIntroduction......................................................................................................................................2Identification of Problems...............................................................................................................2History and Overview of Ford- Mazda Partnership.....................................................................2Identification of Major Shareholders and their Relevance..............................................................3Struggles Faced by Mazda...........................................................................................................4SKYACTIV Technology for fulfilling demand of Customers....................................................4Need for meeting the demands of global customers....................................................................5Analysis of Alternative Solutions....................................................................................................5By Operating Independently........................................................................................................5By entering into partnership with Toyota....................................................................................7Recommended Solution...................................................................................................................8Managerial implications..................................................................................................................8Conclusion.......................................................................................................................................8References......................................................................................................................................10
International Business2IntroductionMazda Motor Corporation is a Japanese multinational automaker based in Fuchu, Japan. Thecore belief of the company is reflected in its taglines “Zoom- Zoom” and “Driving Matters” as itcontinued to compete in the global automotive industry. Mazda Motor Corporation entered intopartnership by devoting best resources and personnel. Being a small scale company, they areenabled to clearly focus on the identification of their brand. This essay reviews, critiques andsummarizes the case study on Mazda Motor Corporation which provides how it survived by wayof partnering with giants.The review of the case study provided that the company aimed at becoming the first choice ofthe customer. For achieving this aim, Mazda Motor Corporation entered into partnership withFord Motor Company in the year 1979 by helping Ford in lean manufacturing and small- carengineering, in exchange for marketing know- how and finance (Rothacher, 2015). In the year2010, the termination of this 30 year alliance took place as a result of the global financial crisis.In the year 2015, a long- term partnership was entered into by Mazda with Toyota MotorCorporation for sharing technologies and coping with the cost pressures.Identification of ProblemsThe problem with Mazda Motor Corporation was that it was a small company which experienceddifficulty in competing with the competitors in the automotive industry. After the globalfinancial crises, it suffered from net profit loses for four consecutive years while operatingindependently. However, it was still not making adequate investment in the R&D sector forintroducing the trending technology in the vehicles.History and Overview of Ford- Mazda PartnershipThe history of the company highlights that after slowing down of the demand for cork, theartificial- cork manufacturing company shifted to vehicle production. The shift also resulted inrenaming of the company from Toyo Cork Kogyo Co. Ltd. to Mazda Motor Corporation in theyear 1984. The first two- door passenger car was launched by the company, Mazda R360 in 1960followed by a four- door passenger car, Mazda Carol, in 1962. In 1967 and 1970, it startedexporting vehicles to Europe and United States which made it a significant competitor of therival who had already established global presence. However, the company experienced heavy
International Business3financial turmoil in 1970s due to swaying of customers from vehicles having inefficient rotaryengines (Cranswick, 2016). Ford showed trust in the potential of Mazda and bailed out itsstruggles by acquiring 7% shares of Mazda in 1979 (Niminet, 2014_. This marked the beginningof the financial relationship that lasted for 30 years (Harvard Business Review, 2017).Both the company lacked financial resources but converted this situation in their favor bycreative an incentive to share technology. Mazda used the brand name of Ford for selling thetrucks internationally in 1976. The cumulative production of Mazda reached 10 million units by1979 with the constant efforts of both the companies for generating synergies. Platforms andparts were shared by the companies for reducing costs and improving efficiency. Mazdaprovided Ford with operational efficiencies and small parts for boosting production (Guo, Jiang& Yang, 2014). The operational and financial benefits arising out of the partnership led to theincreased stake of Ford in Mazda by 20% throughout 1980s. With the further worsening of thefinancial struggles in Mazda, Ford increased its share to 33.4% in the year 1996 (Cavazos,Rutherford & Patterson, 2016). This was the time when new CEO, Henry Wallace, wasappointed in Mazda who made every effort for the implementation of innovation program forfostering the development of new products and establishing market leadership which resulted inhealthy profits and sales volume throughout 1990s. By 2000, the sales volume of Mazda reached2,55,526 units in North America, 3,07,000 units in Japan and 2,10,677 units in Europe (Nawrot,2014). However, the automotive industry was under the pressure of looming economic crisiswhich in turn threatened the success of Mazda. According to the review, the partnership withFord was correct decision by Mazda as during the term of partnership, the sales were high andMazda did not face many difficulties in its operations.Identification of Major Shareholders and their RelevanceTherefore, the major stakeholder identified in the case study is the customers. The customer isthe most important stakeholder on which the sales of cars depend. The fall in buying capacity ofthe customers resulted in the global financial crisis. It resulted in the dissolution of Ford- Mazdapartnership after 30 years in 2008. All across the globe, the crises led to a significant fall in theautomobile sales due to increasing prices for raw materials and automotive fuels. The dissolutionof partnership was not an instant decision but took place over a period of time. The fall indemand during recession led to reduction in size and selling of inefficient assets by the
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