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    Ford Case Assingment-2: UR21043-Ritvik Kashyap

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    Priyam Mrig
    Ford Motor Company grew rapidly in its early years, producing 100 cars daily by 1908. Henry Ford wanted to increase production to 1,000 cars per day but faced lawsuits from stockholders concerned it would reduce their dividends. The Dodge brothers, who supplied Ford with chassis, also sued Ford for cutting prices which reduced stockholder dividends. During the trial, Ford explained his vision of maximizing profits for employees and customers rather than just stockholders. The court initially sided with the Dodge brothers. In response, Ford bought out all stockholders so he could have full control over the company's vision and strategy. He created a new corporation and pursued vertical integration by acquiring raw material suppliers and factories to gain more control over the production process

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    Ford Case Assingment-2: UR21043-Ritvik Kashyap

    Uploaded by

    Priyam Mrig
    33 views2 pages
    Ford Motor Company grew rapidly in its early years, producing 100 cars daily by 1908. Henry Ford wanted to increase production to 1,000 cars per day but faced lawsuits from stockholders concerned it would reduce their dividends. The Dodge brothers, who supplied Ford with chassis, also sued Ford for cutting prices which reduced stockholder dividends. During the trial, Ford explained his vision of maximizing profits for employees and customers rather than just stockholders. The court initially sided with the Dodge brothers. In response, Ford bought out all stockholders so he could have full control over the company's vision and strategy. He created a new corporation and pursued vertical integration by acquiring raw material suppliers and factories to gain more control over the production process

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    Ford Motor Company grew rapidly in its early years, producing 100 cars daily by 1908. Henry Ford wanted to increase production to 1,000 cars per day but faced lawsuits from stockholders concerned it would reduce their dividends. The Dodge brothers, who supplied Ford with chassis, also sued Ford for cutting prices which reduced stockholder dividends. During the trial, Ford explained his vision of maximizing profits for employees and customers rather than just stockholders. The court initially sided with the Dodge brothers. In response, Ford bought out all stockholders so he could have full control over the company's vision and strategy. He created a new corporation and pursued vertical integration by acquiring raw material suppliers and factories to gain more control over the production process

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    33 views2 pages

    Ford Case Assingment-2: UR21043-Ritvik Kashyap

    Uploaded by

    Priyam Mrig
    Ford Motor Company grew rapidly in its early years, producing 100 cars daily by 1908. Henry Ford wanted to increase production to 1,000 cars per day but faced lawsuits from stockholders concerned it would reduce their dividends. The Dodge brothers, who supplied Ford with chassis, also sued Ford for cutting prices which reduced stockholder dividends. During the trial, Ford explained his vision of maximizing profits for employees and customers rather than just stockholders. The court initially sided with the Dodge brothers. In response, Ford bought out all stockholders so he could have full control over the company's vision and strategy. He created a new corporation and pursued vertical integration by acquiring raw material suppliers and factories to gain more control over the production process

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    UR21043- Ritvik Kashyap

    ----------------------------------------------------------------------------------------------------------------

    Ford Case Assingment-2


    In its first five years, Ford Motor Company produced eight car models; by 1908, it produced
    100 cars daily. Ford considered raising output to 1,000 automobiles per day. Stockholders
    were ecstatic. Shareholders discussed suing him to stop him from utilising profits to grow his
    firm. In 1909, Ford, who owned 58% of the firm, announced he would only make the Model
    T. Horace and John Dodge sued him in 1916 to protect their dividends from his imagination.
    They had no choice.
    The Dodge brothers, who had previously provided Ford chassis but were now constructing
    their own automobile while still holding Ford shares, sued Ford for his reckless expansion
    and for cutting product pricing, which diverted money from owners' dividends. Dodge
    brothers owned Ford at the time. During judicial hearings, Ford discussed his business
    beliefs. In December 1917, the court sided with the Dodges; Ford appealed, but was
    unsuccessful. The court declared in 1919 that a company's principal job is to maximise profits
    for its stockholders, not its employees and consumers. Ford was so angry that a court and a
    few shareholders, whom he called parasites, might interfere with his company that he bought
    out all of the shareholders. After standing down as president in December 1918 to make room
    for his son Edsel, he declared in March 1919 his plan to found a new corporation to create
    cheaper cars than the Model T. When asked what would become of Ford Motor Company, he
    said, "I don't know; the part that doesn't belong to me can't be sold to me." (He can't buy the
    company's non-his part.) After bringing him to court for mismanagement, the Dodges vowed
    he'd never leave the family business. Ford said he'd start a new company if he couldn't
    control his current one. Ford took out all seven minority owners by July 1919. The seven
    received $106,000,000 for their stock, a court-ordered dividend of $19,275,385, and
    $1,536,749 in interest. In 1920, Ford reformed under a Delaware charter. Henry Ford and
    family owned all firm shares. Never before had one person ruled such a large commercial
    firm.
    Dodge sued because they were building a new plant in River Rouge, Michigan. Henry Ford
    wanted absolute self-sufficiency, not just increased capacity. World War I's shortages and
    price increases taught him the need of controlling his raw materials, and his suppliers'
    inefficiencies led him to decide he should make his own components. Wheels, tyres,
    upholstery, and other accoutrements came from Detroit-area manufacturers. As Ford's
    production increased, these smaller companies needed to develop assembly lines to raise their
    output. It became impossible to organise production and shipping so every product arrived on
    time and in the right place. Initially, he tried to avoid manufacturing delays by stockpiling,
    but he quickly realised this was a waste of money and abandoned it. Instead, he expanded
    mobility to cover production and inventory. He thought his production costs began when the
    raw material was removed and ended when the completed product was delivered. His River
    Rouge factory realised his idea of an integrated production, assembly, and transportation
    operation. To vertically integrate his enterprise, he bought a railroad, 16 coal mines, 700,000
    acres of timberland, a sawmill, a fleet of Great Lakes freighters, and a glassworks.
    From Highland Park to River Rouge, the factory moved in 1927. At 8 a.m., a Ford freighter
    brought ore from Michigan and Minnesota mines. Ore would be delivered by conveyor to
    blast furnaces, where it would be turned into steel using Kentucky coal. It went through
    foundry moulds and stamping mills before becoming a finished car 28 hours after arriving as
    ore. Similar processes handled flooring, tyres, etc. During its heyday, the company had iron
    mines in northern Michigan and rainforests in Brazil and did business in 33 countries.
    Surprisingly, none of it was paid with borrowed money. Model T sales funded everything.
    Rubber plantations in Brazil, Coal mines in Kentucky, Timber forests and iron-ore mines in
    Michigan and Minnesota a fleet of ships, a railroad, a glass works these all were vertical
    integration. These all gave the competitive advantage to the ford motors. Because the time
    taken in the supply chain would be less, hence low cost of travel and also the quality check of
    the parts can be done easily and can be modified according to the needs of the company.
    “In 1913, the company invented the world's first, which cut the amount of time needed to
    assemble the product in half, from 12.5 hours to 2.7 hours. The time needed to complete this
    task would be cut in half by subsequent advancements, taking only 1 hour and 33 minutes.
    This is the organic integration done by the ford motors.” Because the definition of organic
    integration is the need to integrate their passion with strategy, collaboration, and procedure
    through a creative process known as organic integration in order to achieve the best results in
    terms of achieving sustainable, quick growth with higher levels of fulfilment for everyone
    involved in the endeavour.

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