Ford cuts suppliers
In a recent news article by the Plain Dealer, it states that the Ford motor company has decided to use fewer suppliers in an attempt to be a more successful company in the future. Ford will give money up front for engineering and development, and will make the contracts longer, which allows suppliers not to worry as much that Ford will switch suppliers. Ford will probably cut their suppliers for their most expensive parts by at least 100 next year. The strategy could be bad for companies that are not large enough or do not have the latest technology. If I were to draw a supply and demand curve for this situation you would clearly be able to see that Ford is attempting to shift the supply curve to the right. This shift would make their product cheaper and the quantity demanded increase.
Do you believe that Ford is making the right decision?
2 comments:
Sure, Ford is doing the right thing. By using only a few suppliers they are making their variable costs cheaper. Also with fewer suppliers they can work on creating a car that consumes less gas but still is appealing to the eye, unlike most of the new hybrid
I also agree that Ford is doing the right thing by using less suppliers. Because gas prices are so high the demand for a car that consumes less gas is a very popular idea. The quicker this product becomes available the better we will be off with gas.
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