Ikea and Ford

---

In order to illustrate these inhibitors, two brief case studies will be presented. Both are well-known examples of internationalization, but they have never been used to examine the effects of IT on global sourcing. One concerns Swedish furniture firm Ikea (see also D'Cruz & Rugman, 1993). The other deals with Ford's 40-year-old world car project (which received a lot of public attention around 1994). In both cases the emphasis is on increases in global sourcing, IT usage and the types of management problems these firms face.

Ford Motor Company has engaged in multiple efforts to produce a 'world car'. A world car is a single platform that can be sold in different markets all over the globe without major modifications. Earlier attempts in 1960 and 1981 stranded because the two development teams operated independently on both sides of the Atlantic and there was no integration of the sourcing function across the two regions. The third attempt to build a world car (the Ford Mondeo), code name CDW27, was initiated in 1986 ^[1]. Suppliers were involved from 1989 onwards and both the European and North American organizations contributed. Ford's world car sourcing network involved mainly suppliers in North America and Europe, although some of these suppliers originate from Japan. Of the total yearly supply volume of $2.5 billion, 140 million involves exports from Europe to North America and 260 million exports from North America to Europe. The North American share in the components of the European version of the Ford Mondeo was somewhere around 15%. This figure used to be in the range of 1-2% for older models.

Ikea has developed single source relations with suppliers in more than 50 nations. In 1991 45% of its supplies came from Scandinavia, 30% from Western Europe, 5% from Eastern Europe and the remaining 10% from the rest of the world. Over the 1990s Ikea's sourcing policy grew more international. In 1999 Ikea sourced 25% from Scandinavia, 50% from the rest of Europe, 20% from East Asia and the remaining 5% from the rest of the world (including North America). The scale of this international supply network has allowed Ikea to achieve lower costs and high quality products. Ikea's competitors are mostly local firms. Ikea operates trading companies in some of the countries that it sources from. For both cases we will illustrate the important role that IT has played to support the internationalization of sourcing activities leading to a number of propositions.

^[1]It is important to note that the case discussed here concerns the development of a car between 1986 and 1993/1994. Reports in the business press in late 2000 scrutinized Ford for the failure of its Ford 2000 program. This was an organizational change program started in 1995, which led to an overly centralized organization that failed to pay attention to local demands. While Ford Mondeo was a forerunner to Ford 2000, it is not a part of that program. Thus this article is not concerned with Ford 2000, but with the period preceding it. In fact Ford 2000 appears to be an illustration of a wrong balance between global and local, in particular the lack of functional integration across borders.

---