Ford Fsa

Topics: Cash flow, Balance sheet, Ford Motor Company Pages: 17 (4254 words) Published: June 22, 2013
1 Context of the company

1.1 History & General

Ford Motor Company is one of the oldest and well-known automakers in the world. Its precursor can go back to last century. The automotive pioneer, Henry Ford established Ford Motor Company in 1903, and firstly adopting large-scale manufacturing and assembly line guaranteed Ford owned the higher efficiency and more competitive advantages than its competitors. Later, the invention of FORD Model T was another milestone. All these innovation stimulated rapid growth of the infant company and became leading player in the industry. Ford Motor today is a truly multinational company, headquartered in Detroit, U.S.A, with a presence in about 260 countries and more than 150,000 employees. It has four automotive operations, Ford North Americas, Ford South America, Ford Europe, and Ford Asia Pacific & Africa. Furthermore, Ford Motor went public on New York Exchange in 1956. Till now, Ford family still controls the company, although they just own minority of the shares.

1.2 Products &Services

Ford Motor has two internationally well-known brands. One is Ford itself which sells automobiles and commercial vehicles under the brand, and the other is Lincoln which sells luxury cars. Ford produces various kinds and sizes of cars, utilities and trucks to meet diversified customers’ needs. Ford also owned a financial services company, Ford Motor Credit Company, and provides automotive finance to customers.

1.3 Industry characteristics

The market structure for the whole industry is oligopoly, namely, a small number of sells dominate the whole market. The concentration ratio is quite high. Therefore, international expansion to occupy the market is an irreversible trend, and the demands in emerging market, like China and India is booming. In the current state, due to the stricter environmental regulation, and declining oil reserves, the whole industry is susceptible to oil price, and expected to restructure and technology innovate, such as, hybrid vehicle.

1.4Competition

Rivalry in the vehicle industry worldwide is intense. The chief competitors of Ford Motor are other big five auto companies, including two U.S. producers, General Motors (GM) and Chrysler, and three Japanese companies, Toyota, Honda and Nissan. The U.S. Market is not a playground for the three traditionally indigenous motor companies any more. Multinational enterprises compete in the U.S. market, and the American producers have to implement the geographic diversification. For example, in midsize car market, Toyota Camry and Honda Accord occupied the area last decade. In addition, GM redesigned Chevrolet Malibu and Hyundai Sonata. It brought great pressure on Ford’s Fusion series. In addition, Ford’s F-series, which was the best-selling truck for consecutive 35 years in U.S. is fading, as GM’s Chevy Silverado and Chrysler’s Dodge Ram trucks sold fast as well.

1.5Company Strategy & Culture

In 2006, Alan Mulally was assigned to be the CEO of Ford. Its international presence implement a strategy called One Ford, namely one team, one plan, one goal. This strategy aims at creating a strong business that builds great products through single global product development and contributes to a better world. During the period 2005-2011, Ford Auto sold Hertz Corporation, the largest rental organization, and several auto brands, including Aston-Martin, Jaguar, Volvo and Landrover, and discontinued Mercury.

1.6Company Life Cycle

Ford Motor is in maturity life cycle. Sales and profits tend to be stable, however competition remains fierce. Eventually sales start to fall off and a decision is needed whether to expand or exit the company. The company needs to search for new opportunities and business ventures. Cutting costs and finding ways to sustain cash flow are vital for the mature stage.

2. Balance Sheet Analysis

2.1 Asset Structure

Automotive industry requires a medium level...
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