Term Paper on "Ford Motor Company Today Mass Production"

Term Paper 7 pages (2149 words) Sources: 6 Style: APA

[EXCERPT] . . . .

Ford Motor Company Today

Mass production has become virtually synonymous with Henry Ford, and rightfully so. Ford popularized the process in the early 1900s and mass production techniques have been applied to virtually every industry where standardized production capabilities could add value and a revolution in consumerism has been the result. In the years since its founding, though, the company has experienced some rocky times, particular during the latter half of the 20th century when the quality of its automotive products were far inferior to their Japanese-manufactured counterparts. Notwithstanding these troubled times, the company has emerged in the 21st century as a major player in the global automotive industry, and currently enjoys a respectable lead among its competitors. This paper provides an overview of Ford Motor Company and its history, overview of the industry, where the organization fits within the industry, and a review of a major economic issue that could possible impact Ford in the future. A discussion of a potential ethical issue facing the company and possible approaches to its resolution is followed by an analysis of how increased sales or revenue might impact the company's pricing strategy and market potential in the future. A summary of the research and salient findings are presented in the conclusion.

Review and Discussion

Description of the Company and Its History.

Ford Motor Company (hereinafter "Ford," or alternatively, "the company") was established in 1903 and has its headquarters in Dearborn, Michigan. The company currently designs, develops, manufactures, and services cars and trucks on a global basis (Ford Motor Company, 2008). Ford Motor Company employs approximately 40,000 salespeople throughout the United States (Turcotte, 2005). Today, Ford competes in two primary sectors: (a) Automotive and (b) Financial Services, described further below.

Automotive Sector. This business unit markets vehicles under the brand names Ford, Mercury, Lincoln, Volvo, Jaguar, and Land Rover; in addition, the Automotive Sector markets cars, trucks, and parts through various retail dealers in North America, as well as distributors and dealers outside of North America. The Automotive Sector also markets automobiles and trucks to dealers for sale to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies, and governments. Beyond the foregoing, the Automotive Sector also offers retail customers a range of after-the-sale vehicle services and products in areas, such as maintenance and light repair, heavy repair, collision, vehicle accessories, and extended service warranty under brand names, including Genuine Ford, Lincoln-Mercury Parts and Service, Ford Extended Service Plan, and Motorcraft (Ford).

Financial Services. This business unit provides various automotive financing products to and through automotive dealers and offers retail financing, which includes purchasing retail installment sale contracts and retail lease contracts from dealers, and offering financing to commercial customers to purchase or lease vehicle fleets; wholesale financing that comprises making loans to dealers to finance the purchase of vehicle inventory; and other financing, which consists of making loans to dealers for working capital, improvements to dealership facilities, and to purchase or finance dealership real estate (Ford). In addition, the Financial Services sector services the finance receivables and leases it originates and purchases, transacts loans to its affiliates, purchases receivables, and provides insurance services related to its financing programs (Ford).

On the international front, Ford has established a number of far-flung joint ventures, including Mazda; Getrag Deutsche Venture GmbH and Co. KG; Neumayer Tekfor GmbH; Song Cong Diesel; and Lio Ho Group (Ford).

Perhaps best known for his innovations in mass production, the company's founder, Henry Ford, embraced this process early on in the 1900s as a revolutionary production system that attempted to maximize profits through the production of a standardized vehicle at a low price. In this regard, Studer-Noguez reports, "In order to achieve this goal, Henry Ford designed a system that increased vehicle output from the same amount of inputs and reduced overall time of assembly. The system was based on the principle of the assembly line, which would operate on a continuous basis without disruptions from labor or from the supply of materials, parts, and components" (p. 15). In addition, during the early 1920s to the early 1940s, Henry Ford established nineteen "village industries" throughout southeastern Michigan situated within sixty miles of his company's headquarters in Dearborn; however, during a subsequent restructuring of the Ford Motor Company, his descendants closed many of them by 1950 (Meyer, 2007). According to this author, "Today they survive as public or private buildings, and a few are part of historic preservation efforts to encourage tourism in the area" (Meyer, p. 352).

The introduction of the highly popular Model T. By Ford is credited with fueling the American love affair with the automobile, a love affair that continues to this day (Ebony salutes Ford Motor Company, 2003). Ford's early approach to labor relations and an inordinately high turnover rate in his manufacturing plants also had long-term consequences. According to the editors of Ebony, "The Ford story moved into high gear with the $5-a-day miracle that made it possible for tens of thousands of Blacks to free themselves and other Americans. This had a ripple effect all over Black America, and today, 100 years after the founding of Ford, it is impossible to count the homes, graduates and dreams made real by the Ford idea" (Ebony salutes, p. 44).

Industry Overview.

According to Mcdonald (2005), "From a global standpoint, the United States is one of the most important markets for automobiles. The United States is the world's largest single-country producer and consumer of motor vehicles. In 2004, manufacturers sold 16.9 million passenger vehicles in the United States. Consumers spent $266 billion to purchase these vehicles. The United States is the most important country in the world for investment by and competition among global motor vehicle producers" (p. 743). In fact, two of the world's largest automakers, General Motors Corporation and Ford Motor Company, are headquartered in the United States today (Mcdonald). Clearly, the global automotive industry is enormously competitive, but Ford has managed to retain the third top spot in terms of sales, but dropped from its second-place position which it occupied in 2005 (Henneman, 2006).

The company's primary competitors are General Motors Corporation (ranked number one in sales), Toyota Motor Corp. (ranked number two in sales), Volkswagen AG (ranked number four in sales, and Honda Motor Co. Ltd. (ranked number five in sales) (Ford). The company's reputation for quality suffered during the latter half of the 20th century and it has struggled to overcome this lingering perception of inferior products compared to its Japanese-manufactured counterparts. In fact, the company's current marketing campaign emphasizes that Ford's quality is merely "equal to Toyota's," which is clearly laudable but lacks the competitive edge and "zing" needed by Ford to overcome this perception (pers. obs.). "Better than Toyota," of course, should be the company's ultimate goal, but it remains unclear whether this represents a long-term objective for the company today.

Major Concerns or Issues that Could Possibly Impact Ford.

The global automotive industry has reached saturation levels in places and may adversely affect the company's ability to remain competitive in its North American and European markets. According to Ford's latest Annual Report (February 27, 2008), "In 2007 the estimated automotive industry global production capacity for light vehicles (about 85.4 million units) exceeded global production by about 16.8 million units. In North America and Europe, the two regions where the majority of revenue and profits are earned in the industry, excess capacity was an estimated 17% and 11%, respectively" (p. 3). The production capacity data cited by Ford suggests that significant global excess capacity conditions could continue for several more years at an average of 18.4 million units per year during the 2008 to 2014 period (Form 10-K, 2008). Moreover, rising energy prices and increasing energy demands from China, India and Brazil will likely exacerbate this situation before alternative fuels become readily available, and it is reasonable to expect that demand for the company's existing product lines will decrease as these trends continue.

Potential Ethical Situation Faced Ford and Its Possible Resolution.

According to Mccarthy (2001), although Ford introduced a recycling program for its waste materials early on in its history, these efforts were intended as cost-saving initiatives rather than out of a concern for the environmental impact of its operations. For instance, Mccarthy advises, "Henry Ford, like nearly all utilitarian and industrial conservationists, explicitly rejected resource preservation as an alternative to conservation. Indeed, he viewed preservation as the worst form of waste. 'Conserving our natural resources by withdrawing them from use is not a service to the community since our natural resources are ample for all our present needs" (p. 53). Indeed, Ford did not comment on or anticipate future needs for his company or its environmental impact at the time and the company continued this corporate philosophy for many years (Mccarthy).

Nevertheless, the company has since embraced a more environmentally conscientious approach to its production approaches and is actively pursuing greener solutions to its global operations. According to the company's Web site, "We have strengthened… READ MORE

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