GLOBAL BUSINESS STRATEGY

FORD MOTOR COMPANY

CASE STUDY

GROUP 8 SEC B
HRISHIKESH KULKARNI
SIDHARTH JAIN
SAHARSH BARERIA
LOKESH YADAV
MUKTESH SINGH
Porter’s Five Forces Analysis: Ford Motor
Company in 1900

Threat of New Entrants

High as a lot of manufacturers were mushrooming at that time, even mere cycle
makers were venturing into car making.

Bargaining power of Suppliers

As even on supplier side constantly innovative materials were being created and
there were a lot of players hence supplier’s bargaining power was high.

Bargaining power of Buyers

Though there were a lot of players but a car was still out of a common man’s reach,
auto manufactures catered to the upper strata only hence for the majority bargaining
power was quite low, though the elite had a lot of manufacturers to choose from.

Rivalry
Companies were popping up in every nook and cranny hence the rivalry was intense.
Porter’s Five Forces Analysis: Ford Motor
Company in 1900

Threat of Substitutes
Major competitors were horse drawn carriages for intra city transport & railroad for
inter city transportation.
At the crack of 20th Century railroad was the second biggest employer after the
farming sector.
Railroad covered a total length of 193000 miles and was well developed in the
Midwest & Northeast, generated a revenue of $ 1 billion in 1900.
Hence, we can say that threat of substitutes was medium as even though was
railroad was the bigger player but it still was quite expensive and was used
primarily for freight movement

•.
American Automobile Industry in 1900

The American automobile industry in 1900 was still in its infancy with innovations happening
at a rapid pace, a lot of players were entering and exiting with no actual market leader;
initially the focus was on catering to a select few only, there was an unmet need of mass
market affordable cars and it was Henry Ford who catered to it.
Porter’s Five Forces Analysis: Ford Motor
Company in 1920s

Threat of New Entrants

Model T was a big hit which helped Ford in consolidating market share, hence there
was no significant threat from any new entrant.

Bargaining power of Suppliers

Suppliers had low bargaining power by now as the three big players Ford Motor
Company, General Motors, and Chrysler had captured the entire market by now;
also Ford had heavily focused on vertical integration to stop reliance on external
suppliers.

Bargaining power of Buyers

Ford had near monopoly in the segment being catered by Model T hence buyers in
this car segment had low buying power.
Porter’s Five Forces Analysis: Ford Motor
Company in 1920s

Rivalry
Three big players had emerged by this time and eventual collapse of the American
economy led to many players exiting and for a very long period of time, rivalry
primarily existed between these three big players.

Threat of Substitutes
Golden era of Railroads had ended and the government had pumped in nearly $75
million into highway construction which led to development of nearly 31000 miles of
paved motor able roads.
Civil Aviation was not going to become a credible threat till post world war 2,in 1920
it was majorly limited to carrying mails.
Ford’s Model T

As per Michael Porter Henry Ford focused on implementing Cost Leadership with Model T

Henry Ford managed to implement Cost Leadership by:

Streamlining manufacturing
Vertical Integration
Mass marketing
Economies of Scale
Persistence led to Success

He always aspired to make a car.

After failing a few times managed to taste success in 1903 and realized his dream of making
a car for the masses with Model T launched in 1908 .

We can say that from the day he started dreaming till 1903 was the time frame he needed to
succeed.

The reasons for his persistence were:

Considering failure as an opportunity to bounce back.
Learning from his failure.( Feedback from Model A’s customers)
His undying desire to create the perfect vehicle.
THANK YOU!