Situation Analysis:

Ford Mustang

Prepared for:
Dr. Alan Wunsch, Vice President of Sales and Marketing
Ford Motors Corporation

Prepared by:

President and Owner of TDI Consulting

November 8, 1998


The automotive industry started in 1893 when Charles and Frank Duryea designed and built the first gasoline-engine-propelled motor vehicle. This invention opened the doors to the automotive industry. During the next 30 years, many people tried to enter the industry, but only a few were successful.

The Early Years

During the early years, every car was built entirely by hand. This process was not only very slow, but it was very expensive. This is the primary reason so many early innovators went out of business and the other ones were not profitable enough to expand their business. Henry Ford changed that when he introduced the assembly line. This both increased production speed and decreased cost. This idea of mass production revolutionized the automobile industry. Soon all of the top auto producers would have a assembly line of their own. The lower costs and faster delivery meant a lower price, and the average family could afford and get one. Ford's Model T soon became the most popular car of the time (Chandler 15).

The Great Depression

In October of 1929, America experienced a crash in the stock market that left the thriving country poor and desperate. With the decline in both disposable and discrete income, the demand for new automobiles almost stopped. This huge decrease in demand forced major cutbacks in spending, factories were closed, employees were laid off, and production was almost halted. Many of the smaller plants couldn't afford to stay in business. The United States time of prosperity had ended.


During the early 1940s, the United States as Hitler rose to power in Germany, and our relationship with Japan grew more and more tense. When Hitler invaded France and started the war, the United States was quick to respond. The United States started producing many different pieces of war equipment. The auto industry was the first to respond by reopening many of there shut down plants and producing troop transport vehicles, tanks, planes and just about anything else the government wanted. Under the direction of President Roosevelt, Ford Motor Company built a huge assembly plant in Michigan to produce B-29 bombers. The war pulled the United States out the great depression and jump-started its economy (Chandler 25).

The 1950s and 1960s

The war ended in 1945 and brought a fallen country back to its feet. With the economy in great shape and prosperity on the minds of many Americans, the auto industry thrived once again. The big three, as they would soon be known, slowly took form. They included General Motors, Chrysler, and the Ford Motor Company. In the late 1950s, the United States saw the beginning of foreign cars being imported. This posed very little threat to the market share held by the big three because the quality of the foreign cars was very poor.

The 1960s are best remembered as the muscle car era. This was a time of low gas prices and high horsepower. During this time, many new and exciting cars were built such as the Pontiac GTO, Chevrolet Camero, and the Ford Mustang. The Ford Mustang was, by far the most popular car of the decade (Ford Facts 1). It was during this time that the automotive industry became more sensitive to the demands of the consumer, and product lines changed almost every year. The cars kept getting bigger and faster. This was an era of good times and fast cars.

The 1970s and 1980s

In the early 1970s, the United States felt a huge increase in the price of gas. This marked the end of the muscle car era and the beginning of the compact and sub-compact car era. While the big three were hurrying to release a car with better gas mileage, Honda introduced the first compact car in the United States. In the early 1970s, Ford introduced the Pinto. In hurrying to get a compact car on the market, the quality people had come to expect had been jeopardized. The Pinto was one of the most unsafe cars ever built, and it took Ford a long time to live that mistake down.

It wasn't until the 1980s that the big three had changed almost