The Ford Model T Reflection on Blue Ocean Strategy

Ford’s Model T, introduced in 1908, is a classic example of a market-creating blue ocean strategic move
that challenged the conventions of the automotive industry in the US. The industry was small and
unattractive with cars unreliable and expensive, costing around $1,500, twice the average annual family
income. Ford changed all of that with the Model T. He called it the car ‘for the great multitude,
constructed of the best materials.’ And it was priced so that most Americans could afford one.

Ford reconstructed the industry boundaries of cars and horse-drawn carriages to create a blue ocean.

Ford added the most important 2 values from carriages over the existed expensive cars to his T Model;

 Easily negotiating the bumps and mud of the dirty and snowy roads.

 The ease and flexibility of maintenance.

Ford’s revolutionary assembly line replaced skilled craftsmen with ordinary unskilled laborers who
worked one small task faster and more efficiently, cutting the labor hours by 60%.

Ford managed to combine between the core engines of blue ocean strategy which are differentiation
and low cost.

Ford’s understanding of these advantages helped him unlock enormous untapped demand and
succeeded to make the competition irrelevant.

Sales of the Model T exploded. Ford’s market share surged from 9% in 1908 to 61% in 1921.

Balance Score Card Part

Ford Business Model Canvas
Balance Score Card, Internal Process Perspective:
To satisfy our customers and shareholders, what business processes do we need to achieve
excellence in?

NO. OBJECTIVE PROCESS MEASURABLE KPIS

1 Process & Capacity This area of operations management 1. Capacity Utilization Index
Design supports production goals. 2. Overall Operating
Efficiency Index
3. Number of Produced Cars
on Time
2 Quality Standard quality assurance practices & 1. Customers’ Quality
Management random batch tests on products to Satisfaction Index
ensure quality. 2. Sales % Increase or
Decrease
3. Number of Defected Units
3 Supply Chain & Streamlining and cost-effectiveness in 1. Delivery Time & Accuracy
Inventory the supply chain & adopting just-in- 2. Inventory Turnover
Management time manufacturing methods. 3. Supply Chain Cost VS
Sales Volume

4 Maintenance The goal in this strategic decision area 1. Machine Set-up Time
of operations management is to 2. Scheduled &
maintain adequate business processes Unscheduled Downtime
to satisfy demand. 3. Overall Equipment
Effectiveness

5 Marketing Digital Channel Contribution in Online Revenue

Revenues Contribution %
Ford Success
Many leading companies unquestionably began to adopt the Balanced Scorecard (BSC) when they
verified that it enabled them to improve their performance by linking their subunits and members in
a concerted effort to increase the organization´s goals and global objectives. In fact, during this
literature review, we found numerous work that refers to a set of advantages, strengths and
contributions of the BSC for organizations.
The BSC is an adequate tool to select a balanced set of indicators and objectives that reflect the
strategic vision of the organization, helping organizations to meet their stakeholders’ expectations,
to articulate and communicate strategic objectives and to evaluate their implementation, i.e., it
transforms the mission and strategic objectives into actions, allows members to communicate with
each other and perceive their contribution in the scope of the organizational mission,  enables
improvements in the quality of the services provided and continuous feedback and learning. Thus, it
represents a balance between external measures related to shareholders and customers and internal
measures related to critical processes, such as innovation, learning and growth (Kaplan & Norton,
2000). However, some studies have highlighted the fact that despite the large amount of advantages
associated with the implementation of the BSC, its use has not been generalized in many
organizations, mainly motivated by a set of barriers that can prevent or limit its chances of success.
Financial
• Ford Motor revenue for the twelve months ending June 30, 2021 was $136.433B,
a 4.63% increase year-over-year.
• Ford Motor annual revenue for 2020 was $127.144B, a 18.45% decline from 2019.
• Ford Motor annual revenue for 2019 was $155.9B, a 2.77% decline from 2018.
• Ford Motor annual revenue for 2018 was $160.338B, a 2.27% increase from 2017
Customer Satisfaction
1. 84 % percent of customers who
purchased 2010 model year Ford,
Lincoln and Mercury cars &
trucks are satisfied with the
quality of their vehicles.
2. “automaker has the fewest
number of vehicle malfunctions
among all volume car makers in
the first 90 days of ownership.
The company’s vehicles
registered 1,107 “things gone
wrong” per 1,000 units, an 8
percent improvement compared
to last year.
3. quality improvements is the fact
that Ford vehicles with an age of
one to five years have seen their
resale values increase by 23
percent year on year.

Employee Satisfaction
Employees at Ford Motor Company report engaging in community outreach activities
infrequently. Additionally, Ford Motor Company employees typically meet outside of work
never. Community engaged employees create an environment of social responsibility both inside
and outside the workplace.