Photo AI
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
The Ford-Mahindra joint venture is a strategic collaboration intended to last for three years. During this period, Ford will not change its ownership structure, yet both companies will have their operations governed by legal agreements.
As a result, Ford is likely to benefit from increased sales in the Indian market, where Mahindra’s established presence can assist in reaching local consumers effectively.
Step 2
Ford is likely to gain increased sales from its joint venture with Mahindra.
Answer
By partnering with Mahindra, Ford can leverage the latter's understanding of the Indian automotive market. This partnership can provide Ford access to workers familiar with local consumer preferences, enhancing Ford's position in the market. Moreover, Mahindra’s established networks and consumer trust can significantly aid in promoting Ford's new models.
Step 3
Ford may gain economies of scale and a lower cost structure from Mahindra's existing manufacturing plants.
Answer
Through the joint venture, Ford will cooperate with Mahindra to benefit from its manufacturing capabilities. By sharing resources, both companies can reduce costs associated with producing the new Sports Utility Vehicle (SUV), which will be based on Mahindra’s chassis design.
Step 4
As an American brand, Ford may be seen as desirable for aspirational consumers in an emerging market such as India.
Answer
Ford, associated with the USA and 'Western lifestyles', may appeal to Indian consumers seeking to align with global brands. This aspirational factor can help become a distinctive advantage in capturing market share among consumers of higher socioeconomic status.
Step 5
Ford and Mahindra may have different visions for how the joint venture will work.
Answer
This can lead to disagreements over business strategies, such as pricing and marketing. If their objectives significantly diverge, it could result in operational inefficiencies, disrupting the potential success of the venture.
Step 6
Indian consumers may be confused by the two businesses working together.
Answer
Mahindra, being an established brand in India, might dilute Ford's brand strength in the market. If consumers perceive the joint venture as a merger, it could undermine Ford’s distinct identity and branding strategies.
Step 7
Potential consequences regarding resource allocation and strategy alignment.
Answer
If the joint venture does not meet Ford’s expectations, it may impact its overall strategy in India. Mahindra may prioritize its interests, potentially leading to tension as both companies strive to meet different consumer needs and market demands.
Step 8
Overall judgement.
Answer
While the joint venture with Mahindra has the potential to be beneficial by reducing manufacturing costs and increasing market access, its success will significantly depend on the alignment of strategies between the two companies and their ability to effectively manage challenges arising from their partnership.