Henry Ford didn’t invent the gas-powered car, nor did he invent the assembly line, but he changed the way we live our lives by introducing the inexpensive, mass-market car — the Model T.
This is a companion discussion topic for the original entry at https://commoncog.com/c/cases/ford-a-car-for-everyone
This was a good case. Could you argue this was the first instance of scale economies shared, the model that Costco is famous for?
They did all they could to reduce price: reducing transport cost by assembling closer to the consumer; were ruthless with waste and tried to repurpose; tried to insource any production they could; invested the assembly line to reduce production time; and did not overbuy / hedge.
Ooh yes, absolutely. It’s a little wild, but Sleep and Zakaria actually do call out Ford as an example of scale economies shared in the Nomad letters!
I’ve tried to summarize this case - very helpful. One aspect worth pondering: as Ford lost its edge, it was because the market evolved aware from them - a demand for different colors, features, etc. So, the cost edge was replaced. Nothing is stationary!
In addition, a lot of the automotive cost structure is variable today. Finally, and I am trying to find the quote, but the competitive battle is so fierce and there so many areas for differentiation, brands, features, financing, that it is a noisy competitive battle to begin with.