Case $7\mathrm{.}0$

It was reported in the Wall Street Journal that Ford Motor Co$.$ was reorganizing to place its functions such as product development, sales, and engine$/$transmissions under their own executives with global authority. Alexander Trotman, chairman and CEO, wanted to create a structure that would avoid costly duplication in different parts of the world and that would foster Ford$$s development of models such as its Mondeo $($Europe$)$ and Contour $($U$.$S$.),$ which could sell worldwide with few modifications. Trotman wanted a company that was strong internationally in product development, manufacturing, and purchasing and that could take advantage of Ford$$s geographical strengths throughout the world.

The company had been organized geographically into three relatively independent divisions$$Ford North America, Ford of Europe, and Ford Asia$/$Pacific$.$ The new products cited above, Mondeo and Contour, sapped $$6$ billion in development costs because of expensive coordination time between the sometimes$-$conflicting European and North American divisions. Elimination of duplication was a goal of the new structure.

Simultaneously a new $$program team facility$$ was being constructed so that all of Ford$$s new product development would be by teams. The new coupe Mustang was born from an experimental cross$-$functional team that designed the product in less than three years compared to Ford$$s normal four$-$to$-$five$-$year development cycle. Trotman emphasized that he wanted to change the process, not just the structure, by which new products were developed. Ford apparently found the team process convincing because the Mustang was developed on a budget about $30\%$ lower than budgets for comparable projects.

SOURCE: Summarized from $$Ford to Realign with a System of Global Chiefs,$$ The Wall Street Journal, March $31,1994,$ pp$.$ A$3$A$4.$

Refer to Case $7\mathrm{.}0.$ Identify the strategy in the textbook that Ford appears to be adopting. Describe advantages and disadvantages of that strategy for Ford. Why do you think CEO Trotman moved to that strategy?