Les Actes du GERPISA no18

Foot Notes - Article 3

[1] The idea of the 'world-wide' ('mondiale') company used in this paper must not be confused with that of the global company.

[2] For example, a transition from an export-based strategy to internationalization of production.

[3] The identification of these two categories springs directly from the distinction suggested by Christopher Bartlett (1986) between multi-national and trans-national companies.

[4] Localization, or 'glocalization' (Ruigrock, van Tulder, 1993).

[5] If we include its partner Mazda, the division of production by continent stands at 46,6% in North America, 29,8% in Europe, and 16,7% in Japan.

[6] In 1994, GM's rate of production outside North America was 40,3%.

[7] By the end of the 1960s, Chrysler was forced to cede its subsidiaries to Peugeot, and moved to restrict its operations to North America. The early 1980s saw the company recover, and this enabled it to consolidate its positions in North America, particularly following the take-over of AMC. Since the early 1990s, Chrysler has sought to re-enter the European market by focusing on niche markets and by collaborating with the Austrian assembler Steyr. Projects such as Chrysler's 'Asian Car' bare witness to its return to a world-wide vision.

[8] Wilkins and Hill (1964) have recreated a detailed history of Ford's internationalization, dating from the company's beginnings to the early 1960s (also: Lung, 1992b). A description of Ford's trajectory in Europe up to the end of the 1980s can be found in Bordenave (1992).

[9] A rare exception to Ford's internal growth policy is its association with Mathis in France in the context of a joint venture in the 1930s.

[10] At the same time Ford withdrew from Spain and France, only retaining minor industrial operations outside, in the United Kingdom and in West Germany.

[11] Cooperation with Mazda gives Ford access to production in Japan as well as its own distribution network in this country (Autorama). It also includes a link to the Korean producer Kia in which Ford and Mazda hold minority shares. However, it has not impeded separate, limited links to VW (in Europe and in South America during the short existence of Autolatina) and Nissan (in North America, Europe and Australia).

[12] Ultimately, Europe was not associated with the replacement of small mass market cars in North America under Mazda's authority in 1990. It was Europe, by contrast, that was principally responsible for the development of the C/D class world car launched as Ford 'Mondeo' in Europe and Ford `Contour' and Mercury `Mystique' in North America. The car is assembled on two continents but some of its components have only one source. The company planned to export the car to the Asia-Pacific region and Japan. The development programme was said to have cost $6bn, a level considered rather high by many industry observers.

[13] The European centre focused on small and medium private cars with front-wheel drive. The American centres consisted of: large private cars with front-wheel drive, large private cars with rear-wheel drive, recreational vehicles and commercial vehicles. Mazda was supposed to work with the Europeans on the basis of its recognized competencies. Jaguar (purchased by Ford in 1989 for its position within the luxury car market) was to share platforms developed by the large rear-wheel drive vehicle centre.

[14] This evaluation refers to passenger cars. In terms of commercial vehicles cooperation between the two companies is very fruitful.

15 These phrases, which refer to a single indicator: capture 10%, and then 12%, of the market world-wide, were treated by the company as mobilizing images and slogans.

[16] In 1994, more than one third of world-wide production of passenger cars and 50% of sales were achieved in North America (see Appendix).

[17] The recognition of local constraints has always contributed to its international strategy, even when it manufactured products other than automobiles. This tendency towards local adaptation, which has been confirmed in the automobile industry, will be continued throughout the 1990s, due to the dip in Honda's domestic sales compared to sales and production overseas. The localization of Honda is based on the following factors: overseas production with a strong local content, specific sales networks targeting overseas markets, decentralized marketing, research and development for particular models.

[18] Honda's management thus attempted to push the idea that the transfer of headquarters to the United States was likely, even probable, in the midst of heated debate about the local content levels of Honda's products in the United States (late 1991, early 1992).

[19] In fact, regional integration has advanced far in the United States, notably in terms of progress in the local adaptation of design, development and production of the station-wagon version of the `Accord' model and its export to Japan. However, the scope of this move must be tempered by the fact that it is based on the same platform as the `Accord' model, and was therefore aided by product development work executed upstream in Japan. In Europe, integration was first based on the special relationship allying the Japanese producer with the British car maker Rover (Mair, 1994). The rupture of this relationship (the purchase of Rover by BMW) led Honda to accelerate its own investment.

[20] The United States is said to have contributed more than 50% of the work to develop the `Civic' in 1992, and 30% to the `Accord' in 1993 (Sachwald, 1994). Even if the data cannot be verified, and are therefore subject to caution, the growth of human and material resources, and the expanded delegation of the design of certain components to North American suppliers, confirms the direction of change: see also Shimokawa (1994).

[21] Asanuma (1991) emphasized that their internationalization of production was still tightly bound to their export strategy; moreover, it had only just begun and therefore for the majority of companies was less flexible than Japanese production for export. For Asanuma, spatial flexibilization and rationalization linked to globalization could barely be conceived of. The learning which enables the development of organizational capabilities was still too limited, although the aptitude of Japanese producers for learning (learning to learn) ought to accelerate the changes under way.

[22] Toyota remained characterized by a very high rate of national production at 72.2%, similar to the European producers (see below).

[23] Renault sold its shares in AMC to Chrysler, while Volkswagen closed the factory it had opened in the late 1970s. Volkswagen retains its assembly activities in Mexico, which should become further integrated into North America under the NAFTA free trade agreement. By contrast, Renault no longer assembles vehicles there, only making engines.

[24] The internationalization of production by the Korean producers, recent but ambitious, is also in the initial phase of the world-wide configuration (Chung, 1996).

[25] Mercedes is located in Alabama, and BMW in South Carolina, with annual production capacities of between 60-90,000 vehicles per annum. Mercedes also has a design studio in Japan. The specialist German producers have had such centres in the United States for many years. However, the reinforcement of design resources in North America may permit the decentralization of significant responsibilities (a centre with 100-200 engineers is planned by BMW over the long term).

[26] A disappearance which has occurred in Europe either through absorption by a generalist producer (Jaguar by Ford, Saab by GM) or by the expansion of the range of activities of the specialists through the penetration of new segments (small cars, minivan) or even through mergers and acquisitions (as with the purchase of Rover by BMW). With globalization, barriers to mobility are falling within the automobile industry both in terms of horizontal segmentation of the market (over space) and in terms of vertical segmentation (differentiation).

[27] The best selling Volkswagen models in Latin America are different from the European range. They include models which have disappeared in Europe, such as the Beetle, which is made in Mexico and Brazil, as well as models partly designed locally such as the 'Gol', and the 'Santana' in Brazil. Volkswagen therefore possesses certain traits characteristic of a multi- domestic configuration (see Figure 3).

[28] In the future, VW do Brazil could assume the world-wide responsibility for the light-trucks activities of Volkswagen (Marx et alii, 1996). Here Renault is an other interesting case. The company's reorganization on a project basis is being accompanied by the restructuring of its heavy goods vehicle sector; a world-wide integration places the European activities of RVI under the authority of the American subsidiary Mack Trucks.

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