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Ford's e-Business Strategy

            
 
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Case Details:

Case Code : ITSY002
Case Length : 09 Pages
Period : 1999-2002
Pub Date : 2002
Teaching Note : Available
Organization : Ford
Industry : Automobiles
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"Henry Ford put wheels on the road, and now we are putting wheels on the Internet."

- Phil Spender, Managing Director, Ford India Ltd.

Introduction

In early 1999, Ford Motor Company (Ford), the leading automobile manufacturer in the world, announced its e-business strategy, through which it sought to transform itself from an 'old economy' to a 'new economy' company. Almost 90 years after Ford introduced the world to the concept of mass production, the company was all set to revolutionalize the auto industry, by using the Internet to introduce radically new ways of planning, manufacturing and selling cars.

Towards the end of 2000, Ford announced its 'Build to order' model for manufacturing cars. The model, similar to Dell Computer's model was expected to help Ford's customers to customize car features with just a click of the mouse.

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The model once implemented would enable customers to get what they ordered, delivered at their doorsteps. Initially, customers were allowed to send personalized information through Ford's website (Forddirect.com) which enabled them to configure, select, price, finance and schedule delivery of any Ford car or truck. Ford expected major improvements in supply chain management as well as rise in demand for its vehicles after the implementation of its e-business initiatives (Refer Exhibit I).

Above all, Ford hoped to increase customer satisfaction levels by providing speed, convenience and value-added information to them (Refer Exhibit II). This led some analysts to remark that none of the other automobile companies were pursuing their e-biz initiatives as boldly and broadly as Ford. However, critics felt that it was not necessary for Ford to rush with its e-business initiatives on such a large scale. They criticized Ford for announcing several grand plans but implementing few. Moreover, return on investment was one of the key issues for e-business ventures. Jurgen Hubbert, a member of DaimlerChrysler's management board, said, "Why jump into this sort of business when nobody makes money?"

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