In 1989, the ford Motor acquired Jaguar for $2. 6 billion hoping that Jaguar will fulfill its longtime strategy in entering luxury car market. The first problem in this acquisition was caused by the competition between GM and Ford to buy Jaguar. Because of this competition, Ford had to pay an unreasonable and high price for it. Problems did not stop after this acquisition. After Ford took over Jaguar in 1989, the sales continually declined. This is partly because the recession of global economy, the increase in luxury car tax in US by 10%, and the increase of oil prices.

Also the existence Japanese luxury cars in the U. S. like Lexus, Infinity and Acura made harder the Jaguars to be sold. This is because Jaguar was very expensive compared to those brands. The reasons of the Jaguars’ price being very high are the problem of low productivity in its plants and the decrease of the value of U. S. dollar compared to U. K. sterling. Ford, by injecting capital and management in Jaguar had to pay for this productivity problem cost. Another problem was the unreliability of Jaguars. Its quality was compared to Yugo’s, in 1992.

Gears wouldn’t sometimes shift, headlights wouldn’t light and the brakes sometimes caught fire. These types of problems were caused in the manufacturing process mostly. That’s why Ford also had to fix this problem by investing more on Jaguar plants. Ford spent a lot on the bet of Jaguar. Beside the acquisition cost, it was estimated that Ford’s total investment in Jaguar had reach $6 billion in 1998. Although the release of “baby Jaguar”, new XJ 6/8, KX 8, S-type has boost up the sales, the overall cost of Jaguar to Ford is very high.

That’s why, as a team we think that Ford’s risk been realized to be a liability instead of being beneficial. The brand would have died by now if Ford did not take over it. Ford as the second largest automobile company should have looked closely on Jaguar’s real situation rather than the image before betting on this large amount of money. 2. How has Ford positioned Jaguar in the U. S.? In Europe? To the rest of the world? Jaguar’s positioning in the consumers’ minds has weakened throughout the world, and Ford Motor Co. , the world’s second biggest carmaker, has failed in meeting its expectations of its Jaguar sales.

It has gone through a remarkable period of change, with X-Type, S-Type saloons and XK sports car range – reflecting on different customer needs and desires. Minimal gains have been visible in Europe. It has hold its “luxurious car” positioning in Europe, while trying to improve its “sports car” image. It has tried to put forward the Jaguar’s image as the combination of both luxurious and sports car, but its recent withdrawal from Formula 1 races, has resulted in damage to its “sports car” image, following the great losses in the races.

The withdrawal has had the biggest negative impact in European countries other than the United Kingdom, in which Formula 1 has represented the best marketing and promotion act of Jaguar cars. Therefore, nowadays, Jaguar’s “luxurious image” is much more focused. In Britain, Jaguar’s positioning is declining more and more, with respect to exchange rates and the large rivals in the car industry, as well as in the whole world. Jaguar has been trying to compete with BMW and Mercedes in Germany and Toyota’ Lexus in Japan – which are the leaders in those industries.

Jaguar’s targeted sales were not met both in Japan and Germany- in its 3rd and 4th biggest markets behind the United States and the United Kingdom, with respect to its declining image. In the US market, car manufacturers place a strong emphasis on roomy, durable cars, stressing such features as performance under rugged conditions or the spaciousness to accommodate a large family. For the US market, Jaguar plays on the culture’s affinity for sports cars, highlighting its appearances in James Bond films as well as the various races n which the car manufacturer has participated.

Jaguar continuously increases their sales in US. Fortunately, Jaguar recently ranked highest in SSI (Sales Satisfaction Index) by J. D Power released November 17, 2004. Jaguar significantly improved their SSI score by 24 points over 2003. In the Japanese market, emphasis is placed on superior performance in navigating narrow city streets and technological advances, such as navigational systems in cars. For the Japan market, Jaguar plays on more emphasis on the servicing.

They highlight the technological advances made by the company and playing to the value consumers place on technical superiority. Overall, Jaguar’s cars all convey a consistent global branding image emphasizing a luxurious and superior driving experience. 3. What (if any) worldwide strategic alternatives would you recommend to Ford? Ford has tried to fix errors such as dramatic changes in its UK plants while releasing new versions of Jaguar models. It should develop and focus on new strategies, after fixing its errors. It should make its image in consumers’ minds more exact.

It should make a choice in delivering Jaguar as a luxurious car or as sports car. It should develop its strategies in one- way. If it chooses to focus on “sports car” image, then it should definitely enter the Formula 1 again. As a recommendation, we offer Ford to stop Jaguar production for a while. (Insipired from the Sunday Business article: Each Jag plant: at least one additional non-production week) As a team we think that Ford shouldn’t rely only on the competition, when it will make an acquisition as it did in Jaguar case.

If instead of Ford, GM would buy it; Ford could increase its competitive advantage while GM would deal with the expenses on Jaguar. The rationality shouldn’t be lost in a competition and when an acquisition is needed, an intensive research should be made in order to prevent “expensive” mistakes. Ford also should be sure about its integration plans of the company that it acquires. This case shows us that a “famous” name isn’t always the best investment to make, for the companies.