Globalization: myths, speculations & what you need to think about

Automotive Design & Production,  Oct, 2005  by Kim Korth

• E-mail
• Print
• Link

Ford and General Motors Will Never Get Their Acts Together

While I am tempted to say that, based on history, this is the closest thing to a fact we have, that would be both a cheap shot and overly simplistic. While the continued struggles of General Motors and Ford are not a globalization issue per se, I would argue that the speed of their decline is a direct result of their dependence on vehicles designed for developed markets. The vibrancy of the North American market over the last 20 years allowed both companies to avoid the pain of transitioning to becoming global players and developing credible product in segments that appealed to non-North American markets. The result? A "bet-the-farm" product strategy most clearly demonstrated by the coming GMT 900 launch for General Motors. While we remain cautiously optimistic about the outlook for the GMT 900, no OEM should have such a heavy dependence on one platform. The abdication by Ford and General Motors of numerous vehicle segments has been a major contributor to institutionalizing their high cost structure and accelerating their market share decline. The ability to turn around these negative trends is in question and the scale of improvement required in the short term is daunting. While management should shoulder a lot of the blame for not addressing these key issues when all of their truck products were still highly profitable, it is also important to recognize that these are both still significant players in this industry and they are likely to remain major players over the next 10 years. The key will be to deal with the likely short-term volatility as both companies are forced to address their systemic problems.

How Do You Plan If You Cannot Predict the Future?

Another of our favorite concepts from Michael Porter is that strategic planning is a compass direction and operational planning is a road map. Many companies' strategic planning is futile because it is designed as a road-map exercise. Projections on what the future global world will look like are helpful in setting compass direction as you determine which of the current theories you support and which ones are relevant to your business. But they should never be used as the basis for making major business decisions. The only current absolute is that the speed of change has accelerated dramatically and that current theories have a shorter shelf life than in the past. The key to future success for any organization is to "hedge your bets" and put your company in a position that they will be successful regardless of what theory turns out to be true.

By Kim Korth, President, IRN, Inc. kimk@irn-auto.com

COPYRIGHT 2005 Gardner Publications, Inc.
COPYRIGHT 2005 Gale Group