SWOT Analysis – Autolatina
Example of Two International Companies Joining for Business in a Third Market
• Combination of two well established strong brands
• Market Leaders in a protected market
o 60 percent in the Brazil
o 30 percent in Argentina
• Combine operations in order to overcome obstacles in the Brazilian market.
• Share the risk of operating in a volatile market
• Offer wide range of products to meet different customers’ requirements in an environment where noncompeting models exists
• Strong engineering capabilities
• Wide range of distributors and dealers
• Fast revenue growth
• High Brand Equity
• Big success in a market protected from foreign ...view middle of the document...
• Differences in the organizational cultures of the two partners
• The two companies had different history and origins and differing management styles.
• Suppliers continued to serve the two companies independently, as well as the dealerships.
• Autolatina was not fully integrated with suppliers or dealers, leading to inefficiencies in the supply chain.
• The two firms failed to consolidate their supply bases and dealerships.
• Outside the Autolatina collaboration, the partners even competed against each other by launching new cars in the same category.
• For decades, the country banned imported cars or did not allow expensive, foreign parts to be fitted to locally made cars.
• Brazil’s underdeveloped industry faced little foreign competition.
• Local manufacturers become complacent and failed to keep up with the latest car styles and technological innovations.
• MERCOSUR gave opportunity to local companies such as Autolatina began to target the greatly enlarged market.
• Brazil’s own car industry was coddled by years of high tariffs and other protectionism
• Brazil’s own car industry was moving quickly to modernize.
• Brazil reduced tariffs on car imports.
• In 1991, the MERCOSUR (free trade agreement) went into effect. Eventually MERCOSUR came to include Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay.
• MERCOSUR prepared Brazil to become the region’s car-making center.
• MERCOSUR coincided with a rise in domestic demand, industrial modernization, and the internationalization of numerous firms from the region.
• MERCOSUR opened new opportunities for foreign multinationals like GM, Fiat, Honda, Mercedes-Benz, Renault, and Toyota
• Gradually Brazil became the world’s 10th-largest producer of motor vehicles.
• Brazilian consumers began to show a preference for lower-cost small cars, and price competition intensified.
• Competitors launched popular cars which suites the customers and for less cost.
• Customers’ choices expanded beyond low cost, and started being product oriented. This has increased the pressure on manufacturers to improve quality and offerings.
Questions and Answers:
Question 1: A. What were Ford’s motives and objectives for entering its collaborative venture with Volkswagen? B. Evaluate the extent to which Ford accomplished these objectives.
Motives for Foreign Direct Investment:
1. Market-seeking motives
2. Resource or asset seeking motives
3. Efficiency seeking motives
1. To cover the resisted government demands to establish complete automotive operations, including assembly and full manufacturing, in Brazil which caused damage to Ford. One of the main motives was to control and minimize the damage caused.
2. They had an in-complete product line which VW had (Small Vehicles).
3. The demand to possess the small cars manufacturing technology. JV with VW will give them access to the technology they lack.
4. Serve the highly protected car markets of...