Ford’s Wholly Owned Subsidiary in Russia.docx

Ford’s Wholly Owned Subsidiary in Russia.docx - Fords...

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“Ford’s Wholly Owned Subsidiary in Russia” 4-30-2017 According to the Case Study Ford & General Motors in Russia “Ford was motivated in part by a desire to gain a foothold in the Russian car market. Although car ownership levels in Russia are very low by international standards—120 cars per 1,000 people compared to 580 per 1,000 in Western Europe— car sales have been rising by 7 to 8 percent a year. In 2002, about 1.5 million new and used cars were bought in Russia, about 1 million of which were Russian cars. New Russian models sell for $5,000 to $8,000. Ford intends to sell its locally produced Ford Focus for about $10,900, a price premium that Ford believes is justified given the poor reputation of Russian cars.” There are very few domestic automotive component manufacturers that can compete with western companies. Local firms suffer with ineffective management, outdated technologies and equipment and lack of financing for modernization. Their only competitive advantages are low prices and barter agreements with customers. The main reason they did not postpone investment until the market got bigger is because of the First mover advantage: as seen from above data there is a huge opportunity in the Russian market so whosoever enters first into the market have market share and can have advantage over the late entrants. After Political and economic crisis Russia is now consider as a stable market for
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  • Fall '16
  • Corporation, Subsidiary, Parent company

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