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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. There is no change of ownership and the collaboration will be controlled by legal agreement.
Ford is likely to gain increased sales from its joint venture with Mahindra, as they are likely to know the specifics of the Indian market and have access to workers familiar with this environment.
Furthermore, Ford may benefit from economies of scale and a lower cost structure from Mahindra's existing manufacturing plants. This arrangement can enable Ford to enhance its production capabilities while taking advantage of Mahindra's expertise in developing Sports Utility Vehicles.
Because Ford is an American brand, it could appear more desirable for certain Indian consumers, especially given the perception of Western lifestyles.
Step 2
Potential counterbalance.
Answer
However, Ford and Mahindra may have different visions for how the joint venture should operate, which could lead to disagreements over business strategies such as pricing and marketing. Indian consumers might also be confused by two brands working together, which could limit sales. Additionally, Mahindra is an established brand in India, and its strong identity might dilute under the joint venture.
As the partnership evolves, Mahindra could prioritize budget sales, which might differ from the more premium image that Ford seeks to maintain.
Mahindra could also gain from transferring new technology and techniques, potentially allowing it to compete with Ford in its own right.
Step 3
Potential judgement.
Answer
Overall, the joint venture is likely to benefit Ford, particularly in reducing manufacturing costs since Mahindra will provide the chassis for the new Sports Utility Vehicle. This could support Ford's ability to target Indian markets where the income levels are relatively lower, thereby making their products more accessible.
The ultimate success of this collaboration will depend on the ability of both companies to align their strategies effectively, ultimately influencing the business outcomes for the duration of the three-year agreement.