owing significance of customers and their experiences, attitudes, and needs in determining an organization's profitability. Ford's efforts to move beyond the current limits of its Total Quality Management (TQM) and Continuous Quality Improvement (CQI) strategies will be the focus of this report, which will apply selected economic concepts and principles to identify potentially effective management strategies that can maximize customer satisfaction while also meeting and exceeding quality standards.
Ford functions in a product market that is highly (if imperfectly) competitive. Generally, this market can be characterized as an oligopoly because there are relatively few producers with some differentiation of products; individual organizations typically have some degree of control over price, and the market is impacted by advertising and quality rivalry (Samuelson, 1990). An economic theory of oligopoly has been developed to offer an account for the facts of administered prices - posted prices that change infrequently - and the prevalence of markup prices. In this market, the pattern of costs and returns is likely to be such that the optimal size of efficient production will be very large relative to the total market demand. This tends to inhibit entry of new or many producers. Samuelson (1990) identified several key facets of this market and of oligopoly:
. Oligopoly price tends to be relatively rigid due to
a "cornered" or "kinked" demand curve around an administered
. Oligopolists shift rivalry and competition away from
price into such dimensions as advertising real or fancied
brand/product merits, service, and customer satisfaction;
. Oligopolic markets do not exhibit an Invisible Hand
principle which sets up a presumption that the working out
of laissez faire is likely to be in the direction of
It is within this product market that Ford, along with other domestic and foreign automobile ...