Ford Motor Company started its operations in 1903 in Michigan State, led by Henry Ford and 11 of his partners. Their original capital was only $28,000, but this group of people would create one of the largest businesses in the world, one of the most popular American corporate icons, and one of the most popular brands of all time. In fact, 2008 is the year that the company’s famous Ford Model T—the car that made driving available to the masses—celebrated its 100th anniversary. Since then, the company has produced more than 330 million vehicles and has grown to rank third worldwide in the production of vehicles. These performance levels create annual sales figures that are easily comparable to many countries’ gross domestic product.
It is worth noting that at the time of the company’s birth, there were 15 other vehicle manufacturers in Michigan State and 88 in the United States. However, up until that point a vehicle was a premium product that addressed only a niche segment of the American market, i.e., affluent consumers. It was Henry Ford who first believed the opposite and clearly stated that the car should be addressed to the masses. The premise behind this innovative thinking was that this was the only way to develop further the stagnated market for car manufacturing. His vision was to produce and sell a car at such a price that everybody would have the financial capacity to buy one.
Ford managed to reduce production costs by inventing the production line. At that time, manufacturing a car took 12 hours. Through Ford’s new technique, manufacturing time was reduced to only 93 minutes. At the same time, he virtually doubled factory workers’ salaries and established an 8-hour-per-day workload. The outcome of these transformations was simple: The company’s employees could now afford to buy a car. In parallel with these changes, he strived to convince U.S. governmental authorities to develop a system of roads that would crisscross the states. As a result, the growth of car sales was phenomenal and by 1912, there were already 7,000 dealers of Ford vehicles in the United States. Therefore, among other achievements, Henry Ford can be also considered one of the pioneers of the franchising scheme.
Ford has been international almost since its inception, first expanding its activities to create Ford Motor Company of Canada in Ontario. Now it is represented in more than 200 countries on all continents selling vehicles of several types, employing almost 300,000 people, and having contracts with 60,000 suppliers. This globalized outlook of the firm is manifested in its expanded brand portfolio, too. After a wave of megamergers in the automobile industry, Ford Motor Company owns popular brands such as Lincoln, Mercury, Mazda, and Volvo.
Part of the explanation behind the success story of Ford Motor Company is its long-standing involvement in the electronics industry. In 1956 the company acquired Aeronutronic and thus entered the defense and aerospace industry. This strategic move would later play a major role in high-profile technological success. In the same vein, the company acquired a major producer of consumer electronics and home appliances in the early 1960s. Owning firms with resources and skills necessary for the creation of cutting-edge technologies was a great plus to Ford Motor’s activities. In a synergistic fashion, the mother firm took advantage of these resources and added value to its final products by offering modern, cutting-edge vehicles. A manifestation of this successful early involvement with the electronics industry is obvious now: The firm is able to offer affordable and available on-the-road connectivity for personal electronics to its consumers.
The major legacy of the firm, though, is its contribution to the evolution of mass production and overall to managing a production-based business. The assembly line of the first Ford factory became the reference point for all mass methods of production around the world. In a sense, a new form of industrial revolution was born and the management of businesses entered a challenging era, which is still taught as an exemplar of management in many business schools around the world.
- Russ Banham, The Ford Century: Ford Motor Company and the Innovations That Shaped the World (Artisan, 2002);
- Ford Motor Company, www.ford.com (cited March 2009);
- Henry Ford, My Life and Work: An Autobiography of Henry Ford (BN Publishing, 2008);
- William A. Levinson, Henry Ford’s Lean Vision: Enduring Principles from the First Ford Motor Plant (Productivity Press, 2002).
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