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Video Introduction:
Henry is Ford is one of the greatest businessmen of the 20th Century and the most Astonishing thing about him is that way back in 1900s in spite of having just 28,000 dollars investment he turned the Ford motor company into billion-dollar within just 22 years.
And not just that, while every company was paying its workers 2.5 dollars a day, Henry Ford paid his workers 5 dollars. But, in spite of double pay, while other car companies sold their cars at 700 dollars, The Ford Model T was being sold just 360 dollars! Henry ford pay his workers 100% and yet he kept the costs of his car at 50% lesser than the competition.
And this Golden equation turned Ford motors into such a dominating force in the automobile industry, even today, the Ford model t is one of the highest sold vehicles in history with a sale of 16.5 million units!
The question is how did Henry ford manage to achieve something so incredible, what were his business strategies, and as future business leaders how can we apply these lessons to our company?
This is a story that dates back to 1903 America and during that time, Cars were extremely costly so only Rich people could afford them. It was almost like owning an Ashton Martin in today’s world.
This was a time when 500 dollars a year was considered to be a handsome income! And at the same time, the base price cost of a car was 850 Dollars! In fact, when Henry Ford introduced the Model T even that started with a base price of $825 and with such a small market, Ford had a lot of competition with Chalmer Cadillac and 10 other companies fighting to capture the market.
This is when Henry Ford realized that if he keeps selling cars to the rich, with the existing competition he will never be able to scale up! So he decided to sell cars to the common man and tap into the lower segments of the market! But the biggest challenge here was that it was practically impossible to generate profit if the cars were sold below the price point of $600 dollars!
and yet Henry ford was such a Genius that from 1910 onwards, suddenly, Year on year, the price of a Ford car started to drop drastically! and they started with $950 and within 3 years, they were able to generate massive profits even at $600 and not just that by 1917 the price of the Model T had fallen by 60% to just $360 dollars and the sales skyrocketed by 4100% making Ford, not just the biggest but also the most automobile manufacturer in the world! This video elaborates on the strategies that made this possible.
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Study Materials
Wealth of the Nations book
https://drive.google.com/file/d/13toiUgBpjSQSOOV3aFGirEw6Eo84HEN0/view?usp=sharing
Fredrick Taylor’s book on Scientific Management
https://drive.google.com/file/d/1qR3yt-EpAom_wPgS1L9vzYJePyKJW3Gj/view?usp=sharing
The Same Old Principles in the New Manufacturing
https://hbr.org/1988/11/the-same-old-principles-in-the-new-manufacturing
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