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Assess the likely consequences for Ford of its joint venture with Mahindra. - Edexcel - A-Level Business - Question 2 - 2022 - Paper 1
Question 2
Assess the likely consequences for Ford of its joint venture with Mahindra.
Worked Solution & Example Answer:Assess the likely consequences for Ford of its joint venture with Mahindra. - Edexcel - A-Level Business - Question 2 - 2022 - Paper 1
Step 1
A joint venture may be a one-off or temporary arrangement, or a lasting collaboration in a specific market.
Answer
In this case, the Ford-Mahindra deal is for three years, during which neither company will change ownership. Instead, the businesses will operate under legal agreements that define their collaboration.
Ford is likely to gain increased sales from this joint venture with Mahindra, as Mahindra has established connections in the Indian market and access to a workforce that is well-versed in local preferences.
Furthermore, Ford may benefit from economies of scale and reduced costs by leveraging Mahindra's existing manufacturing capabilities. This could facilitate the introduction of new Sports Utility Vehicles, tapping into Mahindra's engineering knowledge and expertise.
Step 2
Potential counterbalance.
Answer
Despite the potential benefits, Ford and Mahindra's joint venture might face challenges due to differing visions for the partnership. Disagreements could arise regarding pricing and marketing strategies, possibly leading to a disjointed approach in the Indian market.
Moreover, Indian consumers might be confused by the collaboration, as Mahindra is a well-established brand in India. This confusion could dilute brand recognition for both companies.
As the partnership evolves, Mahindra may want to focus on budget-friendly vehicles, while Ford might aim higher up the socio-economic ladder. Such differing targets could lead to conflicts in strategic direction.
Step 3
Potential judgement.
Answer
Overall, the joint venture is poised to benefit Ford by reducing manufacturing costs, as Mahindra will provide the chassis for the new SUV. This arrangement makes strategic sense, especially in a market like India where consumer sales volume can be enhanced by shared expertise.
However, the ultimate success of the venture will significantly depend on how well Mahindra and Ford can align their goals and strategies over the three-year term. Achieving cohesion in their approaches will be crucial for the joint venture's sustained impact in the highly competitive Indian automotive market.