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Transition of Economic Systems: Fordism to Post-Fordism - Essay Example

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Henry Ford was the initiator of mass production in his plant in Detroit. The year was 1914 and the concept of mass production was something very novel. This was basically an experiment conducted by Ford company to determine whether the cost of automobiles can be reduced using this method of production…
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Transition of Economic Systems: Fordism to Post-Fordism
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Download file to see previous pages The results were satisfying and it was discovered that this production method certainly had merits. The costs were reduced tremendously and the efficiency of workers was greatly improved. It was the beginning of a new era. However, there were certain drawbacks of using mass product. Workers were not necessarily very open to this change as it implied high turnover rates in the production line and massive job cuts. Henry Ford was an intelligent man and in order to make this change acceptable he raised the wages of workers and was able to retain his unhappy employees. Ford also discovered that higher wages will have accelerator affect in the economy and would increase the demand for his own product i-e automobiles. Thus, he was looking at a broader picture of an economy that runs a full circle. (Lipsey and Chrystal, 2003) Fordism was an era of rapid technological advancement. Many companies started producing on a large scale citing great economic benefits. They discovered that large scale production reduces operational costs massively. As a result in order to benefit from mass production many companies started using this approach. It was later discovered that this system of production and distribution of goods has certain drawback as well. First of all, there was unemployment of skilled works. Secondly, the goods produced using this system were too standardized and there was no place for the workers own craftsmanship and innovation. And last but not the least it was found that in order to retain the unskilled workers higher wages need to be given to them that could be an additional expense. (Sloman, 2005) The drawbacks in the Fordism lead to economic transition and the need for an improved economic production and consumption system was felt. The latter era is known as Post-Fordism era. The main characteristics of this era small batch production, economies of scope, specialized jobs, search for new and improved technology and addition of female members of the society to the work force. Post-Fordism started when the business community realized that Fordism is not the way to be and they shifted to Flexible Specialization. This was an end of Fordism and beginning of a new era. Flexible specialization recognized that people do not demand identical goods anymore. People demand variety and it was impossible in Fordism. This was a great shift and was seen after the World War II. It started when people started recognizing the importance of modern marketing trends. They realized that markets need to be segmented and divided into different groups of consumers. It was this time that the development of computer made the transition to Post-Fordism era. Two important inventions, numerical controller and CNC, one after another, made this transition possible. (McConnell and Brue, 2005) People started looking at the models of production and consumption differently in Post-Fordism era. It was realized that there is no mass market that is needed to be served with mass production. Instead market is filled with people having different needs or in other words there are different groups in the market that have different needs. This change was not just economic. It evolved from change of ideologies under which the whole global political system was revamped and the new system was evolved. There was an increase in internal marketing, franchising and contracting. Similarly, mass unions were devolved into localized bodies representing the rights of one set of people. There was also a decline in the class-based politics and it was replaced by ethnic social movement and reforms. People started viewing themselves as ...Download file to see next pagesRead More
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