The Red Flag Act was a law enacted in the United Kingdom in1865 to limit the speed of automobiles to 2 miles an hour in the cities; it also demanded that they should have three people on board: the driver, the stoker and one man who will precede the car waving a red flag. The English Parliament passed the law to protect the rail road and the stagecoach from being rendered irrelevant by the automobile. The law had the impact of slowing down the development of the car industry in the United Kingdom while countries like Germany and France were advancing in the field.
Today, life without cars is unthinkable but at the turn of the 20th century the success of the automobile industry was questionable, many thought that it was just like the bicycle, a fad for the rich. If the car was meant for the masses then how will they use it and for what purpose? There was also the question of the sufficiency of gasoline to propel the cars and the availability of service stations.
Henry Ford is credited for developing a car that was affordable to any one who earned a tidy income. He paid great concern to the materials used and the design of the car. Earlier versions were heavy but Ford deviated from this by building lighter automobiles. He made use of the idea of the mass market in that he made the same automobile just like the other.
According to Ford, a universal car should be made of high quality material. He preferred vanadium steel due to his durability, toughness and strength. It should also be simple enough to be operated by ordinary people. Since the car will be used for many purposes, it should be reliable and have enough power to propel it. To be able to function in all conditions, the car was designed in a manner that its weight was reduced drastically. This also makes the car least expensive to maintain in that it will consume less fuel and lubricants.
Ford realized early that, the best way to make a good car was through experimentation. He made use of young and talented people and reaped good gains from them as many of them took work as pleasure thereby being attracted by work rather than being forced to work. To achieve mass production, Ford arranged the manner in which workers moved from one station to another. By 1913 a series of conveyors, rollways, and gravity lines made the assembly of magnetos on moving lines. By the end of 1913, the chassis was also placed on moving lines.
Marketing at Ford did not receive much attention as the automobile was new and there was sufficient demand. They preferred to trade with the customer directly. A sales facility was established in Detroit Michigan to handle visiting buyers in March of 1904. Far from town, the company sold through independent dealers who were required to pay a deposit on a few cars. By 1905, dealers were chosen carefully and awarded territories which were respected.
The failure of the Ford motor company was brought by the agents who were neglecting their duty. Many were involved in other businesses or handled other cars. Opportunities were missed partly due to minimal advertising, lack of aggressiveness and poor management. Roadmen who were supposed to be information gatherers of the company were not doing their best therefore the information reaching the top management about the ground in most cases was not valid. The pricing of the T-model was not an incentive for greater sales as client tastes were changing. The average car lasted long and Ford lasted even longer hence many people did not require a new car.
William Durant perfected the art of acquisition rather than building a brand for General Motors. He paid little attention to research and innovation therefore it was not well equipped about the needs and preferences of customers. The price of the acquisitions also took a toll on the company’s finances leading to the ouster of Durant.
In contrast with Durant, Alfred Sloan was an engineer by profession and was flexible in that he knew the benefits of changing with the times. He was a keen believer in reality and did not put limitations on himself. He also valued excellence knowing that it was the key to success in the automobile industry.
Richard Tedlow contrasts the management strategies of Ford and Alfred Sloan. Ford relied on pricing as the ultimate competition tool. Sloan on the other outsmarted ford in that he understood that the market trends were changing and new tools were required for success in a world of oligopolistic competition.