Business Environment

Business Environment

Ford Motor Company is known for the development of mass producing assembly lines. It continues to be one the with world's largest automakers. The brands that it carries is just Ford and Lincoln as it has stopped production of the Mercury in 2010. Ford has a large successful environment of product lines. Some of them include the Ford Mustang, The F-Series pickup, Ford Focus, and will soon offer the C-Max electric car in 2013. Ford has some investments in Mazda. Currently Ford has in operation 75 plants worldwide. One half of the sales that the company receives is from North America. Ford Motor Company is a manufacturer of automobiles and light duty trucks. The manufacturing plants use UAW for the labor contracts. Ford also has 166,000 employees and 70 plants worldwide.

Review

In reviewing the income statements of Ford Motor Company, there is much information to absorb. The review needs to consists of several years to look at trends. The analysis also needs to be compared to similar companies to ensure that investments are comparable and that benchmarking can be reviewed. The companies Toyota and Honda were used in the benchmarking and financial review. Even though several years were reviewed, the 2008 and 2009 statements were looked the closest as the market was in turmoil at that time.

In reviewing the companies statements, the items learned are the following. Each company has operation revenue which is gained each year. The costs of sales is different under each company because each is marketed differently. Toyota almost doubled Ford in costs of sales and did manage to double its profits in 2009, but it has a negative net income in the annual summary (IBISWorld Inc., 2011). Toyota's cash flow was about the same as Ford, but the assets were lower than Ford. Looking at Honda, they have a good operational revenue, but have reduced the amount spent getting the sales by one-third that of Ford and maintained a profit that was about half in 2009 (IBISWorld Inc., 2011). The cash that Honda has is much less than Ford and Toyota and their assets are about half as much.

The financial health of Ford in this comparison is very good. Ford has a good cash flow and has a good foundation on assets. They are not as aggressive as Toyota in getting the sales, but that means that their name also stands out as working more stable, and they do not have to be so aggressive to get the sales. Loyalty pays a big part in this.

The area of concern is looking at how a recall can affect a business in this environment. Toyota has shown that they have strong numbers through 2009, but the net income shows more than four billion in loss. The other thing that the analysis shows is that acquiring cash does not change the net income, it just provides more stability and allows investment into technology to be easier.

The thing that these statements concern me is that when employees look at the statements, and they see the large net income, they naturally assume that it should affect their pocket book. What needs to be added to the statements is the employment volume. If the business is growing, so is the labor force. This labor force contributes to more opportunity. To take a look and compare one year over the next, one needs to look at the employment growth as well. When a company becomes large, they must have some capital opportunities to invest in. This will keep prices down instead of putting the money back into operation expense and driving cost up.

Management can use this information moving forward by explaining to the employees how it works to their advantage. Stability of a company is reassuring to an employee. The employee can develop a career and make the job something that lasts a long time. When a person looks at the financial records of a company and does a comparison or benchmarking to another company, the line items that are the most comparable are those that the company must educate the employees with. Without this education, these financial statements can be blown out of proportion and used against the company, especially in a case which UAW contracts are being made.

Technology Comparisons

Ford has taken many strides to advance in the use of alternative energy to power their vehicles. Toyota has had a struggle because of some major recalls that it had. They continue to invest in technology, but have focused more on ways of making the manufacturing more lean. Honda focuses on the niche of making small compact cars and does not invest too much in the larger vehicles. Even though profits are bigger in larger vehicles, there is something to be said about doing what one can do best at (Rowley, 2009). Ford also takes strides to invest in hybrid technology. Along with this comes the concept of the common platform. This allows a sustainable method to keep costs down and customer options available with keeping the costs down (Hughes-Cromwick, 2011).

Each company has technology that they use to advance into the market. Each company needs to look at how the economic trends affect the way one does business and what the regulations are requiring. Using lean manufacturing and just in time manufacturing skills are modern technology applications applied to the creating of the product. When the investigation on future advancements was evaluated, each company had its on specialties. Because Ford has a strong financial history, it can be shown that Ford is trying to excel in new technologies to advance forward in the market. This stability also shows that things are not just rushed and proper testing and evaluation are done up front. They do not want to have results like Toyota had in 2009.

Globalization

Ford is unique because it is using the global platform strategy to offer a wide range of choice. This allows the customization aspect to happen without affecting the assembly line as much (Hughes-Cromwick, E.(2011). Ford is using its many factories around the world to take advantage of the needs of people. Companies which are growing to countries affected by disasters, like Japan, have helped Ford with growing the market and providing technology to those