Ford and the World Automobile Industry in 2009 Case Analysis

Ford and the World Automobile Industry in 2009 Case Analysis

The Ford Motor Company, founded by Henry Ford, began production in 1903 and has remained under family ownership since this time (Dornbach-Bender, Slade, & Thorpe, 2009, p. 4). The company has since remained highly competitive in the automobile industry despite multiple economic recessions and the increased availability of substitute products. In light of these threats, Ford Motor Company decided to restructure the organization to focus on long-term profitability rather than short-term survival (Grant, 2010a, p. 47). The future success of Ford would be determined by the company's ability to further restructure operations and realign production to areas where consumer demand and product differentiation were highest.

Synopsis of the Case

Ford Motor Company originally set the tone of the automobile industry with the Ford Motor T. The vehicle's technology and design features "set the standard for other manufacturers to imitate" (Grant, 2010a, p. 50). As new manufacturers entered the market, Ford continued to adapt its vehicles to remain the industry leader. Technologies and designs evolved, manufacturing equipment was upgraded, and lean production was implemented. These efforts allowed Ford to appeal to the consumer while keeping production and overhead costs low.

To decrease product development time, Ford implemented a team-based approach to development. To decrease product development costs, they then formed alliances with other major automobile manufacturers. The collaborative relationships built between these firms allowed Ford to outsource production segments across the world and consequently lower production costs. With the ability to outsource, Ford recognized that it has expanded too much in previous years and created excess capacity. Consequently, Ford decided to close several manufacturing locations and focus production at locations where production costs were lowest and demand was highest.

Relevant Factual Information about the Problem or Decision the Organization Faced

The major problems that Ford Motor Company faced included product differentiation, rising production costs, and excess operating costs (Grant, 2010a, p. 47). As new entrants forged their way into the market and existing competitors continued to evolve their products, the ability to acquire new resources and maintain a product that was hard to imitate grew. Production costs forced acquisitions and mergers between smaller manufacturers and industry leaders which added to existing structures within the company. As a result, Ford acquired excess operating costs.

Explanation of Relevant Concepts, Theories and Applications Derived from Course Materials

Though acquisitions extend a company's resources and capabilities, they are expensive. Ford took major risks in acquiring Volvo, Land Rover, Mazda, Jaguar, and Aston Martin;