A Series of Make or Buy Decisions on a SUV Program Development
Managerial Economics
Course Assessment 1
Prepared by: 7307442(UID) Date: 24 Feb, 2014 Word Count: 1065
The University of Manchester
Manchester Business School
A Series of Make or Buy Decisions on a SUV Program Development
Program Background
JMC stands for the Jiangling Motors Company. Ford operated a commercial vehicle joint venture with JMC since 1997. At the beginning of 21st contrary, the explosion in the passenger car demands in China, specially, the SUV segmentation attracts the domestic vehicle OEMs to entry (economics of scope). The CEO in JMC was a LL3 (Leadership Level) marketing director in Ford APA (Asia-Pacific-Africa), who is extremely sensible on this potential marketing opportunity. The advanced planning and basic engineering team submitted the marketing and engineering proposal in 2005, and after the approval of senior management team members, the program kick-off officially. Here are several key product strategies stated in the program KO documents:
To position S350 as a premium indigenous brand to compete with a plethora of domestic brand entries
To self-develop a platform which is flexible enough for additional top hat opportunities and protect for right hand drive.
To deliver leadership in design, craftsmanship, and vehicle dynamics against domestic competitors
To cooperate with global styling and vehicle engineering companies to deliver flexible platform and best-in-class styling and vehicle dynamics
To use ford 2.0L Puma diesel engine to deliver "amongst the leader" in performance and fuel economy
The key parts tooling will use import equipment to deliver best in class craftsmanship
Approach 2008 CNCAP (Domestic Crash Test) 5star.
In later 2010, JMC released the S350 SUV that was over budget, 2 years delayed and slow moving on sales. Review the program development strategies and cases by Transaction Cost Economic approach, several reasons can be found out.
Course Assessment 1
Prepared by: 7307442(UID) Date: 24 Feb, 2014 Word Count: 1065
The University of Manchester
Manchester Business School
A Series of Make or Buy Decisions on a SUV Program Development
Program Background
JMC stands for the Jiangling Motors Company. Ford operated a commercial vehicle joint venture with JMC since 1997. At the beginning of 21st contrary, the explosion in the passenger car demands in China, specially, the SUV segmentation attracts the domestic vehicle OEMs to entry (economics of scope). The CEO in JMC was a LL3 (Leadership Level) marketing director in Ford APA (Asia-Pacific-Africa), who is extremely sensible on this potential marketing opportunity. The advanced planning and basic engineering team submitted the marketing and engineering proposal in 2005, and after the approval of senior management team members, the program kick-off officially. Here are several key product strategies stated in the program KO documents:
To position S350 as a premium indigenous brand to compete with a plethora of domestic brand entries
To self-develop a platform which is flexible enough for additional top hat opportunities and protect for right hand drive.
To deliver leadership in design, craftsmanship, and vehicle dynamics against domestic competitors
To cooperate with global styling and vehicle engineering companies to deliver flexible platform and best-in-class styling and vehicle dynamics
To use ford 2.0L Puma diesel engine to deliver "amongst the leader" in performance and fuel economy
The key parts tooling will use import equipment to deliver best in class craftsmanship
Approach 2008 CNCAP (Domestic Crash Test) 5star.
In later 2010, JMC released the S350 SUV that was over budget, 2 years delayed and slow moving on sales. Review the program development strategies and cases by Transaction Cost Economic approach, several reasons can be found out.
References: and bibliography David Besanko, et al. (2013). Economics of Strategy (6th edition). Hoboken: John Wiley & Sons, Inc. Patrick A. McNutt (2014). Decoding Strategy – Patterns and Predictions (2rd edition). Asia: McGraw-Hill Education.