EC100 Understanding Business

- Henry Ford as an entrepreneur -

Student: Ahmed Obralic

Class instructor: Vjekoslav Domljan

Sarajevo, 2024/2025

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Henry Ford is regarded as perhaps one of the most influential entrepreneurs in modern
history. In my opinion, he is an inventor and a revolutionary. His creative practices impacted
both the automobile sector as well as manufacturing, mass production, and labour
management as a whole. Henry Ford is the founder of Ford Motor Company. He introduced
many groundbreaking changes and innovations that drastically improved efficiency, mass
production of goods, worker welfare, and morale of workers and also affordability in mass
production. Beyond focusing on his company, Ford also created a model that influenced
global companies practices and left a lasting impact. He created a model that would influence
business practices globally and leave a lasting impact on companies and corporations. This
essay will talk about Ford’s entrepreneurial legacy through four main points. Those four main
points are: 1. His development of the assembly line 2. The T model 3. His revolutionary
approach to employee management and 4. The broader influence of his practices on global
manufacturing, organizations, and firms. This essay will show us how Ford’s entrepreneurial
innovations reshaped industries, challenged traditional norms, and left a lasting legacy.

The Assembly Line Production

Probably one of Ford’s most important contributions to entrepreneurship and industrial

efficiency was the introduction of the moving assembly line. His concept revolutionised mass
production in the early 20th century because it saved a lot of time and increased efficiency
tremendously. Before Ford invented his moving assembly line, car manufacturing was a very
time-consuming and labour-intensive task. It required very skilled craftsmen to assemble
each vehicle and vehicle part by hand. Because of this approach, automobiles were
expensive, and naturally, only the rich could afford it. In 1913, Ford introduced the moving
assembly line at his factory in Highland Park, located in Michigan. This invention changed
forever the way cars were manufactured. The assembly line divided the production process
into simple, repetitive tasks, where each worker stood on a specific spot near the assembly
line and was responsible for a specific task. This system allowed workers to produce cars at a
much faster pace, significantly reducing assembly time and costs (Nevins, 1954, p. 90).
Ford’s assembly line was

inspired by practices that he observed in other domains, such as the meatpacking industry and
the milling sector. Before the introduction of the assembly line, it usually took around twelve
hours to build a Model T. Ford’s innovation shortened the time down to only ninety-three
minutes, which was a huge time saver. This allowed him to streamline his production, and
therefore he was able to increase productivity and lower the cost of each vehicle. Because of
that he managed to make cars affordable for the average American and not just for the rich.
This affordability democratized car ownership and therefore transformed American society
by boosting efficiency and saving time. By 1925, the price of a Model T had dropped from

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$850 in 1908 to less than $300. This is a reduction that clearly illustrates the cost-
effectiveness of Ford’s production methods (Jones, 2018, p. 67).

The impact of Ford’s assembly line extended far beyond the automobile field. His methods
and innovations became a standard for mass production in many other different fields, like,
for example, consumer electronics, food processing and packaging, and also household
goods, among others. For instance, Henry Ford’s production implementation impacted the
manufacturing processes in the canned food sector, where efficiency and speed became very
important in order to meet the growing demand, especially in urban areas (Watts, 2005, p.
145). By increasing the availability of products through faster production, Ford’s assembly
line massively contributed to the growth of urban economies and the modernization of daily
life.

In addition to reducing costs and increasing productivity, his assembly line introduced a new
way of managing the workforce. Ford’s approach to production divided more complicated
production processes into smaller ones that are more manageable, allowing for
standardization and easier production in the long run. His method emphasized efficiency,
time-saving, and specialization over craftsmanship. The assembly line approach influenced
later developments in manufacturing, including the Six Sigma and Total Quality Management
(TQM) frameworks, which also emphasize efficiency, waste reduction, and continuous
improvement. (Raff, 1991, p. 378).

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Ford’s model T

Ford’s Model T was introduced in 1908. It is regarded as one of the most important vehicles
in the history of the automobile industry because of its groundbreaking production methods
that made it accessible to the American public. Henry Ford viewed the Model T as a "car for
the great multitude," because it was affordable, easy to mass produce, and reliable for the
average American rather than just a luxury for the wealthy class (Ford, 1922, p. 73). Before
the invention of the T Model, automobiles were very expensive to produce and limited only
to wealthier buyers. However, Henry Ford changed that because of his creative approach to
manufacturing. It allowed him to produce a durable, reliable, low-cost, and easy to repair
vehicle that became popular among Americans. It was also great for rough terrains.
(Brinkley, 2004, p. 245). One of the most important elements that made the Model T
revolutionary was its simple design. It allowed for mass production and easy maintenance.
Ford used lightweight but durable vanadium steel for the Model T, which contributed to its
durability and ability to handle rough roads (Watts, 2005, p. 134). He also kept the car’s
design consistent over many years, avoiding frequent model changes to keep costs low and
production as efficient as possible. The cars simplicity and reliability made it very interesting
to farmers and rural workers who required a practical, easy-to-maintain vehicle for both work
and transportation (Clymer, 1950, p. 192). The widespread availability of the Model T had a
social and economic impact on the United States of America. The car enabled rural and urban
mobility, supported the growth of suburbs, and also boosted industries that were connected to
automobiles, such as for example, oil, rubber, and road construction. As more people owned
cars, the construction of highways, gas stations, and repair shops increased, which further
integrated the automobile into American life (Watts, 2005, p. 137). Besides that, the Model T
influenced American culture by creating new social norms around travel because people
could now travel much farther distances. The Model T’s success also marked Ford's
commitment to making products that were not only affordable but also very durable and
adaptable to different uses and rougher roads. For example, some Model T owners modified
their cars for farming tasks (Brinkley, 2004, p. 258). By 1927, Ford had produced over 15
million Model Ts (Clymer, 1950, p. 202). The Model T was more than just a simple car. It
had a huge economic and cultural impact that played a vital role in shaping American society.
Overall, his T Model is an achievement in both automobile design and mass production.
Through the Model T, Henry Ford showed us that industrial innovation could create products
that are available to the masses. He set the stage for consumer culture and modern
manufacturing. The legacy of the Model T extends far beyond its time; its influence can be
seen in today’s emphasis on efficiency, affordability, and accessibility in the mass production
of consumer goods (Jones, 2018, p. 120).

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Employee Management and Fair Wages

In 1914, Ford introduced the "$5 workday," a new wage for factory workers. Ford’s decision
was not only a sign of generosity, but it was also a strategic and clever move to improve
productivity and morale and reduce employee turnover, which had been a problem in his
assembly lines because of the repetitiveness and exhausting nature of the work (Brown, 2020,
p. 78). By offering higher wages, Ford reduced the costs associated with hiring and training
new employees. This marked Ford’s understanding that employee satisfaction was important
for good productivity. The $5 workday had multiple good effects. It not only stabilized
Ford’s workforce, but it also created a consumer base for his products. Many of his
employees could now afford to buy the cars that they produced and therefore create new
customers for his car. This concept of a “living wage” was innovative at the time and
demonstrated Ford’s belief in shared prosperity (Batchelor, 2016, p. 213). Ford’s wage
increase was a rather radical but effective approach to solving labour problems. In addition to
the wage increase, Ford also shortened the workday from nine hours to eight hours. This
move influenced labour laws across the country. This reduction in working hours not only
improved the quality of life for Ford’s workers but also contributed to increased productivity.
Ford’s approach to employee welfare was radical in its time because it challenged the
traditional way of thinking that workers should be maximized for output with minimal
consideration for their well-being. His policies also helped to inspire the rise of the American
middle class, as increased wages gave workers more income and greater purchasing power
(Curcio, 2019, p. 89). Ford’s influence on labour relations was of tremendous importance
because it impacted both private industries and labour policies. His progressive policies
inspired other companies to adopt similar practices to his. The Fair Labor Standards Act of
1938, which established minimum wage and maximum hour regulations in the United States,
was made on the principles Ford had brought decades earlier. Ford’s legacy in labour
management shows us that ethical labour practices and industrial efficiency are very
important and go together (Brinkley, 2004, p. 310).

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Broader Influence on Global Manufacturing Practices

The revolution in efficiency that Ford created regarding manufacturing changed not only the
United States of America industrial practices but it affected manufacturing everywhere else
around the globe. Ford’s assembly line and his approach to the workforce were soon copied
by other manufacturing companies in other countries. For example, in Europe, Ford’s
principles had basically replaced all domains, from textiles to heavy machinery and others.
For example, in the period between the first world war and the second world war, a
significant change occurred among French and German automakers. They started to follow
Ford’s methods in order to increase productivity, reduce unit costs, and also reduce the time it
took to produce goods. This change helped restore Europe’s economy after the first world
war (Clymer 1950, p. 184). Japan also directly copied Ford’s assembly techniques and
practices into their Toyota Production System (TPS), which focused on efficiency, waste
reduction, time saving, and continuous improvement. As TPS developed into lean
manufacturing, the method spread throughout the industrial world. The Toyota approach to
manufacturing, which made use of Ford’s ideas, demonstrated the universality of his
principles. Its origins can be traced back to Ford’s work, for instance, when Toyota borrowed
heavily on Fordist principles in order to create its own unique production system. (Womack
et al. 1990, p. 47) This innovative system played a major part by making high-quality,
economic products leaders and very quickly so thrust Japan into the economic fast lane. In
Soviet Russia, Ford’s production techniques were studied and copied as a component of the
Soviet industrialization efforts during the 1930s. The Soviet Union wanted to duplicate
Ford’s success in their own factory so as to regain independence and establish a competitive
industry. Even Stalin referred to Ford in his writings as being “an example of capitalist
efficiency” that could be used for socialist purposes (Hosking 1990, p. 230). Ford’s influence
on a global scale demonstrated that one of the hallmarks of his entrepreneurial methods–
adaptability was also profitable. Ford reshaped business standards with his innovations. Not
only has the mass production of consumer electronics and other products been affected by his
line approach to manufacturing, but also has labour management practices from generation to
generation. In today’s industries, sustainable practices that serve both employer and
employee owe something to the principles of Ford. Now around the world, enterprises
continue to conduct themselves as Ford taught: efficiently, cheaply, and hygienically.

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Conclusion

Henry Ford’s brilliant innovations regarding the automobile industry made him one of
America’s greatest entrepreneurs of all time. He revolutionized car production with his
genius inventions and implementations, like for example, the moving assembly line. Thanks
to that genius implementation, he managed to make vehicles affordable for the average
person and changed industrial efficiency worldwide. Ford always wanted to improve workers'
lives. Because of that he introduced shorter workdays and also improved the salary of his
workers. During World War II, Ford factories supported the war effort by producing goods
and materials. After the war had ended, production shifted back to peacetime manufacturing.
His methods of manufacturing influenced industries globally, and they shaped production in
Europe, Japan, and also in the Soviet Union for decades. Ford’s career shows us how one
person’s vision, determination, and thinking outside of the box can transform industries,
inspire future entrepreneurs, and influence society. His legacy of innovation, efficiency, and
employee care continues to inspire modern industry practices to this day. He showed the
world that combining progress with ethics can benefit both the economy and society.

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Sources and references:

1. Batchelor, P., 2016. The Impact of Living Wages on Industrial Growth. London:
Oxford University Press.

2. Brinkley, D., 2004. Wheels for the World: Henry Ford, His Company, and a Century
of Progress. New York: Viking.

3. Brown, R., 2020. Ford’s Workforce Revolution: The $5 Workday and Beyond.
Chicago: University of Chicago Press.

4. Clymer, F., 1950. Henry Ford: The Great American Innovator. New York: Dutton.

5. Curcio, V., 2019. Henry Ford and the Birth of the Middle Class. Boston: Harvard
Business Review Press.

6. Ford, H., 1922. My Life and Work. Garden City: Garden City Publishing.

7. Hosking, G., 1990. Soviet Industrialization and Western Influences. Cambridge:

Cambridge University Press.

8. Jones, L., 2018. Global Manufacturing and the Spread of Fordism. Cambridge:
Cambridge University Press.

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9. Nevins, A., 1954. Ford: The Man, the Times, and the Company. New York: Scribner.

10. Raff, D.M.G., 1991. Managing Innovation: Lessons from Ford and TQM.
Journal of Economic History, 51(2), pp.378-380.

11. Watts, S., 2005. The People's Tycoon: Henry Ford and the American Century. New
York: Vintage Books.

12. Womack, J.P., Jones, D.T. and Roos, D., 1990. The Machine That Changed the
World: The Story of Lean Production. New York: Free Press.