Subjects:
Case study: Ford Motor Company : Supply Chain Strategy
1. Consider the experiences that you had in buying a car, compare these to the experience of buying a computer online. What do you think explains the differences?
It is striking how dell makes a computer customisable to the buyers’ taste. Cars also are customisable; just think of all the possible options you can buy with a car. But at Dell you can buy your customised computer online, something I haven’t seen for car manufacturers. People normally buy their new car via the dealer channel. Dell bypasses totally the dealer channel. Computers and cars are consumer items. Cars however, for many families, aren’t “just another commodity”. For many people it’s quite a big investment that needs serious thinking. People like to test the car first, see it in reality and talk from person to person with the dealer. Safety is a major item for cars and not for computers, who are expected to fail now and then. A car also needs regular maintenance, something a computer needs less o
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Virtual integration allows Dell to bypass the dealer channel through which personal computers normally are being sold. Also the customising of a car won’t be as easy and fast as a computer. A car is built from generic and custom parts while a computer is entirely made from generic parts. If you were Teri Takai, what would you recommend to senior executives?
To what degree should Ford emulate Dell’s business model?
Ford should try Dell’s business model but adapted to her situation. Consequently, purchasing was involved closely in nearly every product decision. What advantages does Dell derive from virtual integration? How important are these advantages in the auto business?
Virtual integration means you basically stitch together a business with partners that are treated as if they’re inside the company.
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