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Ford Growth in Southeast Asia

Source: http://online.wsj.com/article/SB10001424052748704132204576190003595864520.html

Case scenario: Ford would like to expand their market share in the fast growing Southeast Asia Auto market. They are looking to establish a long term growth strategy in the region, what would you advise them to do?

We will analyze the case from four perspectives:

Customer/Market

Southeast Asian market is one of the fastest growing market in the world. Major countries in the include Thailand, Philippine, Indonesia and Vietnam. We will focus on Thailand and Indonesia in this case.

Thailand has 65 million people, per capita income ~ $5000. Indonesia has population 245 million, per capita income $3000, but will grow to $5000 in 10 years.

Product

Most of Fords sales comes from a Ranger truck, which is used in regional distribution in Thailand. Ford recently boosted sales with Fiesta (a model of compact car) in Thailand from 600 cars/month to 2000 cars/month, and enjoys an 8% market share in small compact car market in Thailand.

Distribution Channels

Ford recently started to construct a 450 million passenger-car plant in Thailand.

Competition

Ford currently has only 2% market share in the region. Toyota currently leads the market. Ford has 3% across Asia and Pacific. Both much smaller than Ford’s US market share.

Proposed solution:

1, Since indonesia is a much bigger potential market than Thailand, we will have to invest more in Indonesia for a long term growth strategy. We will either market existing successful models in Thailand (Fiesta), or introduce new models for Indonesian market. If we are successful in Indonesia, we may consider establishing distribution center or manufacturing plant in Indonesia to save distribution costs/tax. Creating local jobs will also help our brand marketing efforts (synergy).

2, Introduce more products in both Thailand and Indonesia. Currently we only have a two models selling. We will focus on compact cars where we have enjoyed sizable success and brand recognition, also compact cars will likely be the major growth sector in a region with a growing population of middle class. We will introduce new models every year, updating existing models and probably bring successful models (Focus, etc) in North America to the region. We will also try to provide models for fuel efficient cars/Hybrids.

3, In terms of Customer, We do not have much information about customer segmentation. It would be helpful to analyze customer segmentations and identify which segments are we most successful in selling to, and invest more in marketing efforts on that to boost market share.

4, Competition. We don’t have much information regarding competition. But with Japanese currency rising and US dollar declining, we might be able to beat them in cost with local factories and labor.

Potential risks:

Large capital investments in plants, currency fluctuation, political stability/terrorism, inflation, interest rate/tight credit, high oil price.

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