Ford Motor company in Myanmar

Martha Fernandez Global Management Perspective Professor Bobby Barrett August 4, 2013 Ford Motor Company, is in the process of opening its first dealership in The Republic of the Union of Myanmar also known as Burma. Ford Motors is a global automotive leader that owns Lincoln, Mercury, and has interest in Mazda in Japan and Aston Martin in England. Myanmar is a country that has long history of unrest and many years of military ruling. This regime has been accused of many violations including human rights violations.

This is one of the reasons many countries imposed sanctions on Myanmar, but recently the sanctions were lifted to a certain degree and immediately major corporations from all over the world began to move in. Ford motors will be the first US automaker to sell new vehicles in Myanmar. It is not Ford’s foreign venture but there will be many challenges due to the type that has lead this country for so many years. Will Ford succeed or will it be too much for the automobile giant. Ford Motors, “A global automotive industry leader based in Dearborn, Michigan, manufactures or distributes automobiles across six continents.

With about 175,000 employees and 65 plants worldwide, the company’s automotive brands include Ford and Lincoln. The company provides financial services through Ford Motor Credit Company. ” (www. corprate. ford. com 2013). Ford’s mission statement is used globally not only in the U. S. Ford Motors Mission Statement: One Ford Mission: One Team People working together as a lean, global enterprise for automotive leadership as measured by: Customer, Employee, Dealer, Investor, Supplier, Union/Council, and Community Satisfaction One Plan

Aggressively restructure to operate profitably at the current demand and change model mix. Accelerate development of new products our customers want and value. Finance our plan and improve our balance sheets. Work together effectively as one team. One Goal An exciting viable Ford delivering profitable growth for all (corporate. ford. com 2012). The positives and negatives of doing business in Myanmar and other reasons for the sanctions. The country borders with Thailand, Laos, China, India, and Bangladesh and the bordering waters are the Indian Ocean and the Andman Sea.

At the present time Ford Motors does business in Thailand, China, and India. The capital is Rangoon (Yangon). The country has a very diverse culture and many different religions. For many decades Myanmar run by the military. The regime has been involved in everything from genocide to human trafficking. Myanmar is not a rich country by any means and is people have struggled for years, it is considered the poorest country in Southeast Asia. In 1993 the US imposed an arms embargo on Burma and four years later added sanctions on investments. The EU also imposed embargos in 1996 and extended them in 2007.

BBC News reported in (2009), “US President Barack Obama renewed existing sanctions against Burma in May 2009. ” In 2012 many countries from the free world that had imposed sanction on Myanmar began lifting them due to government reform. According to (Martin, 2012, p. 2), “The current U. S. sanctions on Burma were enacted, for the most part, due to what the U. S. government saw as a general disregard by Burma’s ruling military junta, the State Peace and Development Council (SPDC), for human rights and civil liberties of the people of Burma.

The actions of the new quasi-civilian government in Burma have led the Obama Administration to waive some of the existing sanctions in an effort to promote further reforms and to support perceived pro-reform Burmese government officials. The easing of U. S. has been generally timed to correspond with a significant political development in Burma-U. S. relations. ” Due to these sanctions foreign companies have been unable to do business in Myanmar, but with the sanctions lifted in 2012 the U. S.

and other countries, have been able to start doing business in Myanmar. Due to the transfer of power in Burma the sanctions have been eased and here is how Martin (2012) summarized it in his research, “On March 30, 2011, SPDC (the State Peace and Development Council) formally dissolved itself and transferred power to the new Union Government, headed by President Thein Sein, ex-general and prime minister for the SPDC. On six separate occasions since his appointment, President Thein Sein has ordered the release of political prisoners.

The Union Government has also initiated ceasefire talks with various ethnic-base militias, and altered laws that allowed opposition parties to participate in parliamentary by-elections held April 1, 2012. However, the continuation of serious human rights abuses has raised questions about the extent to which there has been significant political change in Burma. ” Still today there are clashes between religious groups and many people are getting killed, there have also been reports of land mines still buried in the area. These clashes usually occur between the Buddhist and the Muslims.

In an article in Physicians for Human Rights the project director warns companies wanting to do business in Myanmar, (Burma Project Director Bill Davis 2012), “Investing in Burma is still extremely risky despite some reforms in the country. And more important than the risk to companies and their shareholders is the devastating impact investment will have on ethnic communities that have borne the brunt of the military’s abusive tactics for decades. The US should not swing the door open to companies without firm measures to make sure that they will be held accountable for human rights violations.

” Sanctions are infringed on countries to hurt local government but in reality the real sufferers are the citizens of the country, the garment industry alone lost 80 thousand jobs in 10 years. Here is what one factory owner had to say about the sanctions in an interview by (Pitman 2012), posted on The Cristian Monitor web site, “The sanctions targeted the government, but it didn’t affect them. It was the people, the workers, who really got hurt. ” It is a very different culture and different way life from that of the Western world, these corporations moving in have to be very sympathetic to the locals.

According to the Australian Network News (2012), the first two companies doing business in Myanmar under the embargo were Chevron and Caterpillar. The first to go in after the embargo was lifted was General Electric, the companies to follow are Coca-Cola Company, PepsiCo Inc. and Ford Motors Company. “Wary of being left behind by Asian companies, 70 people from 37 U. S. firms were on hand to scope opportunities in the once secretive state. ” (Australian Network News 2012). Till now the roads in Myanmar are dominated by Japanese made car/trucks. Ford Motor will be the first U. S.

automobile company to have a full service dealership in Myanmar with showroom and service center facility. This will be the first complete service center in Myanmar. Myanmar does not have a full service center due to all the cars and trucks on the road are old. With this move, “Ford anticipates global sales to expand by 50% to 8 million vehicles by 2015 given the potential growth in Asia, mainly China and India; and rising demands for small cars. The automaker anticipates small cars to account for 55% of the total sales by 2020 compared with 48% presently. One third of the small car sales are expected to come from Asia.

” (Zacks 2013). In August 2013, Ford Motors will open its first dealership in Yangon. Ford partnered with Capital Automotive Ltd. , a subsidiary of leading Myanmar conglomerate, Capital Diamond Group, and may have to work a bit quick due to the competition. Capital Diamond Group is a 50 year old conglomerate in Myanmar. Capital Group is an import/export firm that trades different types of products and deals with companies from around the world, they will also start distributing Pepsi Products. Ford feels that being exclusive with Capital Automotive they are well positioned for the future and for the potential of the markets growth.

“Ford entry into Myanmar will help support its overall growth strategy for the ASEAN region, which represents a combined population of 600 million. Our entry into Myanmar is the latest step in Ford’s aggressive expansion in Asia Pacific, and will help us to more fully realize the opportunities within the ASEAN region, (Matt Bradley, president, Ford ASEAN 2012). Ford has strategically situated itself between India, China, and Thailand. These three countries are the hub of operations for Ford’s ASEAN region, it will give Ford an array of choices in supplies and also logistically.

Ford will also be able to import directly from the United States. Ford will start the line-up with the F-150 and the Ford Ranger. Ford has kept information about training and marketing very quiet, but it is understandable due to all the competition coming in to Myanmar almost at once, but here is what Ford posted via (noodls 2013), “Ford is committed to an enduring presence and ongoing investment in the market. This will include providing opportunities for extensive, hands-on, skilled labor training to employees. Through this venture, Ford already is

bringing in world-class training resources and technical experts to help educate the technicians, sales and service personnel that the company employed. ” Aside from producing an excellent product, Ford also puts in interest into the people and countries where they do business. In reference to the work force in foreign countries, Westerman to (rmagroup. net 2012), It’s both an honor and our responsibility to train and developed a skilled workforce, and quite literally, to help shape the future of Myanmar’s automotive market.

” Here is Ford’s core value, “Part of Ford’s core values as a company is to invest in the places where we do business-to invest in people, in their careers and in the local communities. ” (Automotive News 2013). Myanmar has infringed certain investment laws for foreign companies to follow. Here is what the laws says in reference to owning a business, land, employment, and taxes. Some of the laws are explained in (Mizzima News, 2012), “The amended Foreign Investment Law will no longer require foreigners to establish businesses with Burmese citizens and will grant them a five-year tax holiday.

Foreigners would be allowed to own companies 100 per cent or to set up joint ventures with local citizens or government departments with involvement of at least 35 per cent foreign capital. Foreign investors would be permitted to lease land from both the state and private citizens with an initial lease of up to 30 years, with additional 15 –year extension. Foreign companies would not be allowed to recruit unskilled foreign workers and local citizen must make up at least 25 per cent of the skilled workforce after 5 years.

The percentage of Burmese workers’ must be at least 50 per cent after 10 years and 75 per cent after 15 years. ” In April Ford Motors launched the ceremony in Yangon and in the background they had banners with Ford trucks, the show room will open in August. Right now Ford has to figure out the customers, and Ford is considered a top of the line product. Ford also has to consider the employees and have them trained for sales and service and establish a good rapport with the local government to establish new regulations for new cars, since all vehicles are old.

Ford has already started the hiring process, (CTVnews by Kintetz, The Associated Press, 2013), “Ford has hired 50 people for its Yangon operations and plans to expand across the country. Ford has no immediate plans to open assembly or manufacturing plants. ” Ford is also an environmental company and treats all countries of business with very high standards. Here is Fords response to conservation and environmental grants in Myanmar, “Ford also announced that it will bring its internationally-recognized Conservative and Environmental Grants program to Myanmar in 2013.

This effort has become an annual event in select markets around the world. Through the program, Ford plays a pivotal role in advancing hundreds of environmental initiatives in the regions, from protecting wildlife and preventing forest fires, to funding cultural heritage projects and replenishing resources in rural communities. ” (Noodls 2013). With this program natives in rural areas will be able to receive clean water and once the program is started and funding is available other groups and communities with projects in the area will be able to apply for funding also. The competition that is ahead of Ford Motors Tata Motors and Suzuki.

In a report by Automotive News (2013), “Tata Motors established its first dealership in Yangon on April 7 to sell and service its trucks and buses. The Mumbai based company is setting up a heavy-truck assembly plant in Magwe, central Myanmar, with a capacity to produce 1,000 vehicles a year initially. ” The competition will start to get tough for Ford Motors, even though Ford Motors is presently rank at number 10 on the Forbes list and Ford should be ahead because it will be offering NEW trucks. Tata Motors is the eighteenth largest truck manufacture and fourth for vehicles in the world.

The other automaker company going is Suzuki and they hope to eventually open a manufacturing facility. Ford Motor does see a bright future, (CNNMoney 2013), interviewed David Westerman, a regional manager for Ford in Asia Pacific, “We see tremendous potential and opportunity for Ford in Myanmar, and we’re looking forward to serving customers in this exciting market. ” Ford has a huge task on their hands. This country has had years of oppressive ruling and isolation from the world, it is a different mentality and the way of life is very different from the free world and to change it will be very hard.

No country that has been under an inhumane regime as the one in Myanmar for so many years will not be easy to deal with or change and even more difficult is to do business in. Ford Motors has to work very hard and very fast, aside from competing against Tata Motors and Suzuki now General Motors is bringing in Chevrolet. GM is not saying much right now except that they plan to open by the end of the year. Ford has not elaborated on its marketing tactics in Myanmar, but in 2002 Ford Motors took a new direction in global manufacturing strategy for a competitive edge.

This is when the F-150 got its new engine due to the changing market. In an article by (Media. Ford. Com 2002), “Ford Motor Company is the only automotive manufacturer executing a truly global powertrain strategy. Beginning with the launch of the new Ford F-150, we are building a network of flexible engines and transmission plants that can respond quickly to changing market needs, while improving quality and manufacturing efficiency. ” The F-150 will be the first new American truck on the Myanmar roads. But Ford is planning to have a showroom representing a full line of Ford vehicles by the end of the year.

Ford Motor’s uses the differentiation strategy. The dictionary meaning of differentiation strategy from the (BusinessDictionary. com) is “Approach under which a firm aims to develop and market unique products for different customer segments. It is one of three generic marketing strategies that can be adopted by any firm. ” In the past few years Ford has begun to upgrade their product, their vehicles are more fuel efficient, has added or upgraded the original technology, they have changed the body style of the whole fleet. They also offer electric and hybrid cars.

Also new safety upgrades have been implemented on all the Ford brands. As mentioned before, there is not much said about Ford’s marketing strategy in Myanmar, but the company has always conducted marketing research on the internet and in person. Today Ford is being more attentive to consumer feedback. Ford has learned that today more than ever, consumers are paying more attention to other consumers and what they buy. Market research is so important that Ford is now more open minded. Ford relies on consumer feedback to see how far they can push new design and how unique they can be.

Myanmar is considered part of the Asian market and this is what Ford learned from the region, “Consumer testing in the Asian Pacific region revealed that Ford has excellent name recognition (better than 90%), but only 6 or 7 percent of those consumers said they would consider a Ford purchase. Researchers have found that this is influenced by a variety of factors including vehicle lineup, completion and marketing messages. ” (Spencer 2013). Quotes do not always translate, “For example, the Ford SUV slogan “No Boundaries” didn’t translate well in some Asian Pacific cultures.

Unless you’re in an SUV “No Boundaries” doesn’t mean much, and it can have a negative connotation about being a rebel or against family and tradition. ” (Spencer 2013). Ford has since changed the slogan to “Make Every Day Exciting. ” This slogan has gotten a much more positive reaction. Ford’s Sustainability in the Asia Pacific and Africa region (APA). The APA is made up of 11 markets and now in August a 12th (Myanmar) will join the group. The original 11 markets are located on three continents, they are Australia, New Zealand, Japan, China, Taiwan, India, Thailand, Indonesia, the Philippines, Vietnam, and South Africa.

In 2011 the expected growth for the next ten years is 60 to 70 percent. In 2011 Ford started building several state of the art facility in China and India, with an expected production capacity of 3 million. Ford will succeed in Myanmar, it will take work. The country is still having problems, but the government is trying to turn this country around and even getting tourism back on the right track. Ford is very strong in the Asian region and getting better. The one thing Ford is doing right is listening to the customer in every way possible, questioners, blogs, internet, and even going into the customer’s home.

Listen to what the customer wants and you will have a successful business, because they will come back. So yes with the right team they will win and not have to worry about GM bring in Chevrolet. References Ford Motor Company (2013). http://corporate. ford. com/our-company-news-detail/one- Ford? view=print Martin, M. F. (2012, October 19). U. S. Sanctions on Burma. Congressional Research Services. http://www. cato. org/pubs/trade/tpa-001. html Davis, B. (2012, July 11). Physicians for Human Rights: US Allows American Companies into Burma Despite Ongoing Human Rights Concerns.

http://physiciansforhumanrights. org/press/press-release/us-allows- American-companies-into-Burma-despite-ongoing-human-rights-concerns. Pittman, T. (2012, April 23). The Christian Science Monitor: Lifted sanctions may Mean opportunities for Myanmar. htpp://www. csmonitor. com/World/ 2012/0423/Lifted-sanctions0-may-mean-opportunities-for-myanmar Australian Network News (2012, July 15). US firms rush back to Burma as sanctions lift. http//:www. abc. net. au/news/2012-7-15/an-us-company-first-to-restart -business-in-burma/as-sanctions-lift.

Zacks Equity Research (2013, March 7). Ford to Sell Vehicles in Myanmar. http://finance. yahoo. com/news/ford-sell-vehicles-myanmar-172835727. html Noodls. com (2013, April 30). Ford Motor Company: Ford Motor Company Launches Operation in Myanmar. http://www. noodls. com/view/639418A15BB5C024 EFB146900F26668A3A8EFD9C RMAGroup. net, (2013). Ford Motors Officially Launches Operations in Myanmar. htpp://www. rmagroup. net/ford-motor-company-officially-launches- operations-in-myanmar/ Mizzima News from Myanmar, (2012, June 19). Foreign companies wait on

Burma’s new investment law. http://www. mizzima. com/business/7561 -foreign-company-wait-on-burmas-new-investment-law Automotive News. com, (2013, April 30) Automotive News: Ford enters Myanmar With Yangon dealers as U. S. relations improve. http://www. automotivenews. com/apps. dll/article? AID= /20130430/GLOBAL/13 Kinetz, E. (2013, April 30). CTV News Auto: Ford enter Myanmar market; plans to enter showrooms by August. http://www. ctvnews. ca/autos/ford-to-enter- -myanmar-market-plans-to-open-showroom-by-august Media Ford. com (2013, April 30).

Ford Motor Company Officially Launches Operations in Myanmar. http://www. media. Ford. com/article_print. cfm? article_id=37989 Automotive World, (2013, April 30). Ford Motor Company Officially Launches Operations in Myanmar. http://www. automotiveworld. com/news-release /ford-motor-company-officially-launches-operations-in-myanmar BBC NEWS (2009, December 18). Overview of Burma sanctions. http://news. bbc. co. uk/2/hi/asia-pacific/8195956. stm BusinessDictionary. com (2013). Differentiation Strategy. http//:m. businessdictionary. com/definition/differentiation-strategy. html