Regent University
Ford Motor Company
Timothy Matelski
Professor Bajah
Economics 230: Macroeconomics
March 27th 2022
Introduction
Ford Motor Company was founded in Detroit, Michigan, in 1903 by legendary automaker Henry Ford. The automobile company quickly developed an efficient process for manufacturing vehicles, thus becoming one of the fastest-selling automobile brands in history. Throughout the last one hundred or so years, Ford has created cars for the American and international markets. Ford From the Model T in the early 1900s to the F-150 Lightning today, Ford continues to innovate within its industry and develop new methods of production.
Ford’s Advantages
Ford Motor Company is a prominent brand operating out of the United States, which provides some benefits within its core market, the North American region. Ford has primarily dominated this market, which provides a precedent for its current market share. However, when looking at the comparative advantages of Ford, it is crucial to separate the company into separate eras, the first being early to late 1900s and the second being post-2000. In the early part of the 20th century, Ford was a powerhouse of innovation, be it in the realm of the automobiles themselves or the efficiency of the Ford factory. One of the main innovations of the early days that gave Ford an advantage was the assembly line. One article states, “The assembly line eliminated interim buffer stocks, simplified the identification of bottlenecks in materials flows, and provided opportunities both for management learning and to accelerate production by intervening to create dynamic imbalances (Wilson and McKinlay, 2010, pg. 5).” This development led to an advantage that produced the reputation that Ford carries today. The success in the early 1900s has given modern-day Ford a basis for success.
While Ford today is viewed less as an innovator than in previous eras, it is still working to develop new technologies and stay at the top of the market. One example is the introduction of the Mustang Mach E and the F-150 Lightning. These vehicles are not traditional internal combustion engines but are powered by a rechargeable battery. The reputation of innovation has given the introduction of these new vehicles an advantage over their contemporaries. The reintroduction of new technology has led some to view Ford in a light similar to the company’s early days. It has embraced change and a new way of manufacturing cars, and it is better for it.
Macroeconomic Factors
Ford’s primary market is the home market of the United States, where it enjoys a nationalistic advantage. However, with Ford being heavily American, the country’s GDP can significantly affect the company. That being said, the increase in the country’s GDP has encouraged US-based companies such as Ford. In 2021 the national GDP rose over two trillion dollars from the previous year, settling at around 23 trillion dollars (Statista, 2022). This growth is also a continued trend that has developed over the last twenty years. Over that time, the national GDP has nearly quadrupled from just under six trillion to the current data (Statista, 2022). While the positive shift has helped the company continue to grow, any adverse changes also impact the economy at large. For instance, in 2020, the Covid-19 pandemic hampered the global economy, which decreased profits for most businesses.
One way to counteract negative changes is to adapt to current situations. One such way Ford exemplified adaptability was the shift in manufacturing during the pandemic. One article states, “ Ford has repurposed its SC and production processes from car manufacturing to ventilator and face shields (Ivanov, 2021, pp. 7).” So, while economic changes negatively affected the company, its adaptability helped it rebound quickly and find a way to make a profit.
Supply and Demand
Ford has faced diminishing demand for some of its products over the last few years. This has led to them discontinuing several of their vehicles, such as the Fusion. However, as the company begins the switch to the electric-centric automobile industry, the demand for the product will increase once more. Some of the things previously affecting the market have been remedied by introducing electric vehicles to Ford’s line-up. For instance, Ford has begun to produce the all-electric F-150 Lightning. According to Ford itself, it is also increasing the supply of its electric vehicles, specifically the Lightning. They state, “ it is planning to nearly double production of the F-150 Lightning™ pickup at the Rouge Electric Vehicle Center in Dearborn to 150,000 trucks per year to meet high demand (Ford, 2022, pp. 1).” This demonstrates how supply and demand for Ford cars are increasing as the company switches over to electric vehicle production.
Conclusion
Ford has been an extremely successful company beginning in the early 20th century. It has continued to make innovations and be adaptable, two traits that have continued its success, even in the face of global wars and pandemics. Ford maintains a forward-thinking management group and a strong reputation that keeps its products valued highly. Overall, Ford utilizes a variety of factors to produce advantages over other automobile manufacturers and will continue to do so as long as the product lives up to its reputation.
References
Dmitry Ivanov (2021) Supply Chain Viability and the COVID-19 Pandemic: a Conceptual and Formal Generalisation of Four Major Adaptation Strategies, International Journal of Production Research, 59:12, 3535-3552, DOI: 10.1080/00207543.2021.1890852
Full Speed Ahead. Ford Media Center. (2022, January 4). Retrieved March 23, 2022, from https://media.ford.com/content/fordmedia/fna/us/en/news/2022/01/04/ford-planning-to-nearly-double-all-electric-f-150-lightning-production-150000-units.html
U.S GDP 1990-2019. Statista. (2022, February 3). Retrieved 2022, from https://www-statista-com.ezproxy.regent.edu/statistics/188105/annual-gdp-of-the-united-states-since-1990/
Wilson, J. M., & McKinlay, A. (2010). Rethinking the Assembly Line: Organisation, Performance and Productivity in Ford Motor Company, c. 1908-27. Business History, 52(5), 760–778. https://doi-org.ezproxy.regent.edu/http://www.tandfonline.com/loi/fbsh20
Timothy great post I enjoyed reading your post, ford has been around for quite some time know and the revolutionary production line that Henry ford had developed is still used until this day for main auto motive production. Me being personally apart of the auto industry it’s a constant growing field!