Business

The automotive industry has had many drastic changes over the years. There are many underlying causes for these changes however, for the current market, critical market adjustments have caused many auto dealers to change business-as-usual tactics into profitable solutions to ensure the future of their companies. Ford Motor Company is an American icon given its renowned history. However, given the current circumstances, many changes have to be made to secure a future for Ford while still keeping alive the legacy left by Henry Ford, the companys founder.

After much hard work and determination The Model T was unleashed into the world in October 1908. This car changed the way Americans traveled given its speed of 45 mph (Ford Motor Company, 2010).  In addition to the speed, The Model T could run 25 miles on a gallon of gasoline while also carrying a 20-horsepower, side-valve four-cylinder engine and two-speed planetary transmission on a 100-inch wheelbase (Ford Motor Company, 2010). The introduction of this vehicle was groundbreaking. Yet, there were many other revolutionary changes that Ford Motor Company introduced to the world, as well, which increased its profitability.  As with many forms of production in the United States, in October 1913, mass production of the Model T began at Fords Highland Park, Michigan, Assembly Plant (Ford Motor Company, 2010). The introduction of the moving assembly line quickly improved chassis assembly speed from 12 hours and eight minutes to one hour and 33 minutes which allowed Ford to produce 308,162 cars in 1914, more than all other automakers combined (Ford Motor Company, 2010). Ford was a leader in another area as well, in January 1914, Ford begins offering 5 per day for eight-hour work days a stark difference from the previous pay rate was 2.34 per day for nine hours (Ford Motor Company, 2010). Fords value always lied in the mission One Ford One Team, One Plan, One Goal (Ford Motor Company, 2010).

Despite its innovative nature, the Model Ts price soon dropped as other companies introduced competition and Ford made few changes to its design. Once introduced at 825 (for the Runabout), the Model Ts price dipped as low as 260 in October 1924 (Ford Motor Company, 2010). Ford had to make changes. Although some slight changes were made to the Model T, they proved not to be sufficient enough to be competitive, and in May 1927, the assembly line stopped (Ford Motor Company, 2010). Ford had to regroup and soon unveiled the Model A.

There are many reasons for the current decline in Fords market share which slid from 18.3 percent in 2004 to 17.4 percent in 2005 -- the smallest it has been since 1920 (Godoy, 2006). According to Chief Operating Officer, Jim Padilla, one of the major downfalls in the past was that Ford failed to recognize that the industry was experiencing not the normal ups and downs of the market but a fundamental shift in the very nature of the market (Godoy, 2006). With this assessment in tow, Ford set out to create a restructuring plan that would work instead of just downsizing as they have in the past. Also, Ford needs to recognize there is no longer a Big Three but a Big Six -- and Honda, Nissan and Toyota are battling it out for every tenth of a percent of market share Godoy, 2006). There are fundamental changes in the market now and stressing slogans like American innovation and the fact that Fords been around for 100 years wont cut it anymore (Godoy, 2006). Another concern that has plagued many American automotive companies is recognizing that Ford has to change every aspect of the company -- starting with the number of senior-level officers it has to the number of plants it operates (Godoy, 2006). The number of executives costs the company much money and  the products provided by the company, similarly to what happened with the Model T, have lacked innovation and excitement according to Mark Fields, currently in charge of Ford North America (Godoy, 2006). All of these circumstances have led to a major overhaul in the company.

Just as changes were made in the past due to market changes. Ford embarks on new initiatives to fight back against dismal economic realities over the past decade. In January 2006, Bill Ford, chairman and CEO, announced plans to eliminate 25,000-30,000 jobs in the United States (Speer, 2006). This is phase one of many steps being taken to try to get the company back in the global market. Ford introduced its new vision -- which the company has dubbed the Way Forward -- to turn around its operations (Godoy, 2006). With that, the company has created unprecedented new features and technologies in the European market to continue its bid in the global market as a part of their global market development strategy (Ford Motor Company, 2009).  This strategy is designed to keep Ford as a leader with developing technologies at an affordable rate to consumers. There plan is to aggressively restructure to operate profitably at the current demand and model mix, to accelerate the demand of new products our customers want and value, to finance our plan and improve our balance sheet, and to work together effectively as one team (Ford, 2010).

Just as in the past, Ford will keep forging ahead as they have identified key problems and created solutions to keep them profitable. Thus far, these initiatives have paid off since Ford has reported higher sales for every brand and in every product category which propelled Ford to a 24 percent sales increase in January versus a year ago (Ford, 2010).