Ford vs Detroit Electric Car - Case Study Example

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Ford vs, Detroit Electric car The dream of developing an electric car has been pursued by different companies for many years. The debate on development of an electric car can be traced back to the agreement between Thomas Edison, and Henry Ford to work together in making electric car the main mode of transportation in America…
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Ford vs Detroit Electric Car
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Download file to see previous pages While Detroit Electric Company capitalizes on its technological innovations as its core competitive advantage in the market, the development of an electric car by Ford still remains near, yet so far a realization. Since 1966, according to Flint the Forbes magazine editor, Ford has been stressing on the plan to develop a viable electric car in 5 to 10 years. By 2009, Ford believed that this dream could be realized by 2010, but it still remains a plan. The failure to meet these plans has been dampened by the advanced innovations and technology In Detroit Electric, who announced laid down plans to start large sale manufacturing and selling of electric cars in the first quarter of 2010, with these sales expected to hit 270,000 vehicles by 2012. The lithium battery technology is the latest development towards realization of this goal (Brown, 2012). Q1. The organization structure used in Detroit Electric cars is the decentralized organizational structure that leads to differentiation in products and specialization. Rather than produce their vehicles, Detroit Electronics outsource their vehicles from specialized manufactures; their work being to impart the finished vehicles with finishes that identify the company (LaMonica, 2009). Detroit has therefore assumed the structure of a virtual corporation where engines are manufactured and fitted by Proton in Malaysia, while the company just modifies the cars to distinguish the style and to offer an identity to these vehicles. Outsourcing to specialized manufactures, and settling on finishing and aesthetic work ensures specialization, and the company does not have to meet the cost required in producing these vehicles. Q2. The differing organization structure is to blame for Ford’s inability to produce an electric vehicle, when Detroit Electric has been able to make true its dream of an electric vehicle within four years of its founding. Contract manufacturing in Detroit ensures the company does not have to mind about the required technological facilities to meet this goal, as these costs are passed on to the contractor, Proton in this case (Lamonica, 2009). Instead of concentrating in designing and making the facilities to produce these vehicles, Detroit Electric has to concentrate on enhanced research and development strategies to improve its technological advancement in vehicle manufacturing. This is portrayed by the launching of lithium battery, and the rapid response to produce these electric cars. On the other hand, Ford has to set aside massive budgets to modify and advance their plants before launching any electric car manufacturing program. For example, Ford has set aside $ 450 million in Michigan as part of the company’s aggressive plan in advancing an electric vehicle program (Media Ford, 2011). Ford has been delaying these plans due to economic crisis and stiff competition, which has eaten into the company’s profitability. The company felt stinging effects as in the 2008 global economic meltdown. This has been well observed in the case of the SUV models that marked about 55% of total sales before the crisis. These sales declined sharply resulting to decreased profitability (Richard & Henry, 2003). Specialization has been the strength behind Detroit Electric success. Q. 3 Cooperation of international companies is largely affected by economic dynamics in the market. For example, the Euro crisis may ...Download file to see next pagesRead More
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