Launch of the Ford Fiesta Diesel

The World's Most Efficient Car
Authors: Spital, Francis; Wesley, David T.A.
Source: Richard Ivey School of Business
Year: 2010
Number of pages: 20

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Abstract:

The case describes the challenges faced by Ford and other automobile manufacturers in an era of declining oil reserves and volatile fuel prices. The Ford diesel decision seems to reflect classic thinking constrained by mental models that were developed in a different world. Diesels constitute over 50 per cent of automobile sales in Europe, because fuel is extremely expensive there. If fuel gets extremely expensive in the United States, one would expect diesels to become more attractive. Yet Ford seems to be stuck in the old mental model that says Americans don't like diesels. Ford can't prove in a PowerPoint presentation that there is a big market for small diesels – mostly because there are few small diesels available to U.S. consumers. But that traps them into a position where they will never lead the industry or innovate outside of current market and technology conditions.