Introduction Ford was founded by Henry Ford in 1903 ford is present in more than 200 countries and had 245,000 staff worldwide manufacturing in about 100 factories around the world. Ford was the only manufacturer that did not borrowed money from government at 2009-09 financial crisis. This was because it had successfully negotiated on a favorable terms on a substantial loan just before the banking crisis become apparent. Substantially it sold the significant part of the stack it owned in Mazda, and later divested the Volvo brand further reinforcing its balance sheet.
Ford also owned a sound portfolio of models, many highly successful. S. W. O. T Strength of Joint Venture (JV): The main reason seeking alliance type such as JV is to maximize profits. Profits are strength allowing the companies to improve their operation by having more capital to invest in departments assets or having advanced employee training projects thus improving business. Team work becomes strength because both parties are operating as one in order to achieve the same goal.
When operating in JV it makes easy to penetrate the local market because now JV has strength of local knowledge that makes it easy to identify customer base, segments and so on by having a local team of analysts in the field. Two heads are better the one JV has increased problem solving ability due to creation of this alliance. Partners will share expenses and tax and technically reducing their effect that benefit JVs business operations. There are some weaknesses to JV. Managers will disagree between each other decisions making decision making slow and frustrating.
Management style is very different therefore some employees will experience lose in motivation and low performance at work place leading to failure. Culture difference is a barrier for example: An American manager will expect more individualism and less power distance from its employees where as Chinese employees cultured to inherit high power distance toward its superiors and incline to teamwork rather than individualistic performance. Initially disputes may arise because over all culture differences as two companies coming from completely different cultural back ground.
Having Joint Venture will open up new opportunities such as an opportunity to understand foreign culture and be part of it. This alone will improve relationship between companies. Managers have an opportunity to learn different methods of management style and understand working styles of other employees to come up with the best fit management leading. New market is a new opportunity for Ford because this will increase customer base, expand operation field. New product will benefit Changan Auto Co.
Ltd. Partner can learn new technology and get new ideas from each other benefiting them even after brake up of JV. Having JV is a great opportunity to view new training ways and learning different approaches, strategies and so on to improve and globalize business operations. There are many threats and simple act of creating JV will send a message to its competition and the competition will respond aggressively. Internally culture difference will lead to disputes misunderstanding and threat of JV brake up.
Managers may disagree with each other in terms of decision making and it may lead to arguments or in some cases some managers will have autocratic and hypocritical personality and will look down on other managers and question and dislike every decision. After JV brake up two companies threaten to become each other competition as the both learned each other tech. and operation in the same market. Recommendation Culture difference is can be a problem for both parties to collaborate together at least at the beginning of partnership.
Time and good management of cultural development, gradually common ground can be achieved for the companies to allow synergistic development or at very least reduction of conflicts and disagreements with constructive working arrangements. Partners should learn from each other because different views can generate new and effective ideas or suggestions, which have a good chance to improve managerial operations. Discovering American culture will benefit Chinese managers and they can uncover new way of performance, and likewise Americans can learn from Chinese in order to discover new ways of doing things.
American culture is individualistic one whereas Chinese prefer collectivism, this creates tension. US managers should educate Chinese workers saying that even though US managers work in isolation they are willing to help. In order to do that Chinese employees have to show initiative to ask for help when needed. US employees think that Chinese managers lack intuition and sense of individualism therefore they need to understand that Chinese managers are to collectivism and that is their way to show that they are to help who ever needs it. Joint Ventures need to reach balance (harmonious state).
Managers must recognize, accept and respect both cultures. Understanding characteristics of cultures is needed and managers should communicate with each other more often. Western managers know Chinese culture more than Chinese know western and even though western people can adapt to other cultures much faster, time is still important and needs to be spend in order for both partners to achieve a harmonious relationship. American managers prefer direct way of expressing their opinion whereas Chinese take tactful roundabout expression. These cultural aspects usually generate tensions.
Chinese believe in group decision making which can be very timely. US managers believe in individualistic actions and that makes decision making fast. There are times for quick decisions and both managers must take best from both cultures and sometimes let their ways go in order to achieve maximum results. Meetings should be orange in order for both managers come to agreeable conclusion. Chinese inherit high power distance with in working environment where as Americans inherit a very low power distance and can voice out criticism directly to their managers.
Chinese on the other hand will protect their faith and conflict may arise. Therefore American workers must understand that Chinese culture great importance is attached to respect for older ppl. In companies the workers respect the older people, because they have rich knowledge and experience at work. Therefore Chinese prefer seniority system at work. Whereas in America people pay respect and attention to a younger workers. And place emphasis on ‘ability first’. Other Recommendation – American car engineers should collaborate with their Chinese JV partners in order to achieve customer satisfaction.
This is because Chinese market has different preferences about exterior and interior of the vehicle. Ford is not being creative they brought the car brand Ikon that was selling well in India and thought that it will do the same in Chinese marked. Unfortunately it didn’t, Chinese customers were unhappy with a product when they realized it was made in India. Ford has to show initiative to actually research on Chinese market before engineering a car for Chinese market. Ford needs to let Chinese engineering team to be involved in the project closely because they have knowledge about Chinese market.
Currently ford has its own independent engineering facility in china where as its competitors started to invest in local engineering and improve their local design which will have a positive customer respond. If Ford will not initiate an investment into local engineering they will loose competitive advantage and loose market share. In conclusion Ford needs to let Chinese partners to be involved more in product design and research. It should also use Chinese local knowledge in order to have a competitive advantage over other competition.
Managers should find a common ground and reduce conflicts by working together and be culturally aware to avoid misunderstanding. For JV to be successful Management needs to understand that they are having common goals and to reach them they have to improve on team work. There should be some time allocation for friendly games to create a friendship bond between American and Chinese workers. This action will lead to understanding and improve on relationship with in the working environment. Miller, S. R. , & Eden, L. 2006. Local density and foreign subsidiary performance.
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