Creating Tomorrow, Together: profit strategies of the Ford Motor Company from the perspective of comparative capitalism

Type de publication:

Conference Paper


Gerpisa colloquium, Detroit (2022)


Comparative capitalism; Automotive corporations; Development; Ford Motor Company; Institutions.


On March 15, 2019, the Ford Motor Company published its Annual Report to Shareholders for 2018, entitled “Creating Tomorrow, Together”, containing a letter from the company’s executive chairman, William Clay Ford, Jr., announcing the intention to invest some US$ 11 billion to renew its portfolio of vehicles, with priority given to electric cars. The company’s expectation is to be in the vanguard of mobility services and development of new technologies and artificial intelligence platforms, in a strategic alliance with the Indian firm Mahindra. In this and other reports, Ford has explained some of its strategies for emerging markets such as Brazil and its South American neighbors along with China, indicating the trends of its behavior in face of variables such as investment, development of products/innovation and regulation by national institutions.
Starting from the evaluation of Ford, this discussion is an exercise to understand how firms choose their strategies when faced with situations of distinct industrial policies, cognitive models and social processes (Davis, 2005). The main premise is that the configuration of these strategies results, on the one hand, from movement of these actors to stabilize their competitive environment and diminish uncertainty (Fligstein, 1990), and on the other hand, from a reactive and adaptive process of their organizational structures to the external demands of governments, labor unions etc., that is, the agents that integrate and determine the national political and economic policies (Davis, 2005). Therefore, the strategies adopted by companies in terms of processes such as internationalization, multinationalization, industrial diversification and product lineups can be understood based on this type of configuration. In this respect, relying on the case of Ford, the important question posed here is to what measure institutions and the destination of investments are considered by a firm in its strategies.
Two countries were chosen for this analysis: Brazil, the country of greatest concern, and China, that is a privileged locus of expansion, with a captive consumer market due to the joint venture format required of foreign investors and the government’s participation in sales of local output. China thus serves as an antithesis to the archetypical case of a competitive market, besides being the main focus of Ford’s activities in the Asian market.
The discussion undertaken here follows the recent debate in the literature on comparative capitalism (Jackson and Aguilera; Nölke et al., 2014; Morgan and Kristensen, 2006), aimed at refining the classic model formulated by Hall and Soskice (2001) about the “varieties of capitalism” (VoC). The framework elaborated by Nölke et al. (2014) underpins the main variables applied in this analysis. Their model was conceived to categorize, on the one hand, the economies of Central-Eastern Europe, namely “dependent market economies” (DMEs), and on the other, the large emerging countries, especially Brazil and China, dubbed the “state-permeated market economies” (SMEs).
With regard to procedures, we analyzed all the annual reports of the company from 2011 to date. The time frame provides a reasonable historic series for analysis and also includes very distinct moments in the Brazilian and global economies. In this respect, 2011 is the first year available for study and was a year when the global economy finally emerged from the crisis of 2008-2009. We systematically analyzed the texts and financial figures and synthesized them guided by the literature to formulate the following indicators: Expansion and Investment Targets (EITs); Products and Innovation (P&I); Sales and Post-Sales (SPS); Tax Questions (TAX); Profits and Dividends (PROF); Operational Decisions (OPE); Labor Relations (LAB); and Regulation (REG).
The hypothesis raised here is that Ford is aiming to become a premium brand, competing in more lucrative market niches, notably the SUV segment, completely abandoning the low-cost field, a strategy that Fiat (of the Stellantis Group) still hews to, which (not by accident) assures it of third place among vehicles sold in the country. This change of strategy is in line with the transformation that has marked the automotive industry in recent years, with emphasis on SUVs, autonomous and electric vehicles and the idea of the car as a service, also called servitization. In this sense, the product development process, i.e., the social process at the root of defining what to produce and for whom, is intimately involved in the option for internationalization of a determined automotive corporation.
The results of this study demonstrate that the decision to close the plants in Brazil is part of a process of strategic reversal of Ford, moving toward separation between productive nodes, such as China, and consumption nodes, such as Brazil, with achievement of a multiple configuration that allows it to maintain an essentially productive dimension focused on extraction of value from labor in certain contexts and assuming a typical configuration of service provider in other institutional settings. In the Brazilian case, by moving forward with its divestment strategy, the company is seeking to consolidate an innovative profile through distribution of imported vehicles and provision of automotive services.




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