World Vehicle Unit Sales in Percentages by Markets: Ford versus All Manufacturers, 1989

Figure 16.1

The figure shows that Ford is much more dependent on unit sales in the United States, Canada, Germany, and the United Kingdom than automobile producers as a whole.

One result of Ford's international commitment is that the dependence on multiple markets and facilities has minimized year-to-year sales and profit fluctuations. This has occurred because demand and price levels may move differently in various countries. From 1981 to 1982, for example, Ford's U.S. vehicle production fell by 91.6 thousand. This was largely made up by a 64.9 thousand increase in EC output. In 1980 Ford lost over $2 billion in the United States, earned $775 million in Britain, and lost $200 million elsewhere in the world. Between 1988 and 1989 Ford's North American net income fell by $1.4 billion; whereas its net income elsewhere in the world was almost steady. This points out not only the positive effect of geographic diversification on the smoothing of earnings, but also the importance of shifting resources in order to exploit areas of greatest profit potential.

With huge amounts of fixed assets already in place, Ford cannot easily abandon countries and then pick them up again. It can, however, compare the attractiveness of each country with actual and potential Ford operations and move toward greater emphasis on those countries with the most promising outlooks. Ford does this separately for each of its major product groups because different market conditions may affect each product group differently.

One of the tools that Ford uses to aid decision makers in choosing where to emphasize their marketing efforts is a country-comparison matrix. Ford staff members rank countries on one axis in terms of how attractive the country appears for sales of a specific type of product being considered, for example, tractors, trucks, or automobiles. On the other axis the same staff members rank the countries in terms of Ford's competitive capabilities for the specific markets. The resultant plotting helps the decision makers to narrow their major focus primarily to the areas of the world that both look attractive and seem to offer the best fit with Ford's unique capabilities. This is by no means the end of the evaluation process. The exercise does, however, enable the decision makers to concentrate on more detailed analyses of a manageable list of alternatives. It also allows them to progress to interrelated decisions, such as where to locate production facilities for the chosen markets.

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