This website uses cookies to ensure you have the best experience. Learn more

Ford Case Analysis

555 words - 3 pages

1. Does Ford have too much cash?
• Liquidity Analysis: Quick Ratio and Current Ratio. Find the industry standard and compare!
• Opportunity Cost of holding cash versus Capital Gain for spending that idle cash!
• Solvency to understand the risks incurred by the firm and verifies it against an optimal capital structure.
• Ford has made past acquisitions and has exhausted that list by purchasing Jaguar Cars, Volvo Cars, and Land Rover. Investment in expansion without a solid reason would prove to be futile.
• The availability of cash incentivizes the management to shirk their work and thereby leading to downfall in profits.
• Find operating leverage: Debt to Capital ratio!
2. How does VEP work?
VEP is one of the powerful strategies applied by the company to make itself intrinsically valuable,
...view middle of the document...

• Shareholders choosing to re-invest in stocks can be incentivized by having more voting power and control over the management.
• Since firms incur the re-purchase option by offering $20 cash for each stock bought back, the number of outstanding shares will be reduced. The Earnings per share will increase leading to an increased stock price.
• Benefit out of opportunity Cost for the shareholders to invest the $20 in a different firm
• Ford family benefited by retaining their voting control since they did not have to surrender their Class B shares.
3. What are the alternatives for distributing cash?
• Fixed Price Tender Offers
• Auctions
But shareholders feel that it could have been a simple re-purchase of stock and they were not happy with the common stocks being provided to Ford’s family. They endorsed other options to avoid the dilutive effect of VEP. – Straight Stock re-purchase or Declaration of Dividend.
4. What problems is the VEP plan designed to solve?
• Ford perceives itself as being undervalued by the market in the year 2000

• Analysts urging the company to distribute cash to stockholders.

• Clan Strategy:

• VEP can change market perceptions about growth or cash flows and thus act as signals to financial markets. – Signal Hypothesis!

• Value, flex, liquidity and alignment for stockholders

• Linking managers pay to the price of stock may improve efficiency and thus increase cash flows, growth and value.

• Use its cash for acquisitions!

• Highlight its cash flow reserve capacity

• Re-shuffle ownerships interest in the company

• At the hindsight, Ford anticipated the company to be more risky… so, VEP was one strategy for them to re-purchase their investment from a safeguarding motive.
As a shareholder, how would you approve the VEP?

Approve or Reject Recap?

Depends on forecasting stock prices!

6. Would you elect cash or shares?
Cash! Unless I see multiple incentives for the stock price to shoot up!

Other Essays Like Ford Case Analysis

Ford Pinto Case Essay

868 words - 4 pages Ford Pinto Case Team D MGT/216 April 4, 2011 Dan Stark Ford Pinto Case In 1968 Ford Motor Company decided to design a small vehicle that would be comparable and competitive to the automobiles its major competitors, the Germans and Japanese, were currently marketing and producing. The decision began a two- year battle between then President Semon Knudsen, Lee Iacocca, and Chief Executive Officer Henry Ford II. Semon wanted to

Ford-Firestone Case Study

1833 words - 8 pages . NHTSA and other Government Agencies - Failed to act immediately following the initial complaint of Sam Boyden in 1999. - Failed to detect quality defects on products that were granted the ‘DOT’ stamp. Summary: Fishbone Diagram Here is a cause and effect diagram summarizing the issues on the Ford-Firestone case: C. Decision Criteria and Weights VI. Alternative Courses of Action and Risk Analysis VII. Evaluation of ACA IX

Ford Motor Case Study

1813 words - 8 pages Ford Motor Case Study Table of Contents Executive Summary 3 Introduction 4 Issue Identification 5 Environmental and Root Cause Analysis 6 Alternatives and Options 8 Recommendations 10 Implementation 11 Monitor and Control 12 Exhibits 13 Executive Summary After reviewing Ford Motor supply chain, we became aware of its very complex nature. Due to this

Ford Pinto Case

2125 words - 9 pages Ethical Perspectives Paper Part I: Please provide answers to the following: 1. Identify the relevant facts of the Ford Pinto case: In 1970 Ford introduced the Pinto, a small car that was intended to compete with the then current challenge from European cars and the ominous presence on the horizon of Japanese manufacturers. The Pinto was brought from inception to production in the record time of approximately 25 months, where a normal car

Ford Pinto Case Study And Executive Summary

1175 words - 5 pages Running head: CASE STUDY PAGE \* MERGEFORMAT 1 CASE STUDY AND EXECUTIVE SUMMARY PAGE \* MERGEFORMAT 2 Ford Pinto Case Study and Executive SummaryMgmt 216April 4, 2011Case Study and Executive SummaryThe creation of Sarbans Oxley in 2002 was reactionary legislation passed after thousands of investors lost unimaginable amounts of money ( After a long class action court case, The Americans with Disabilities Act was created in 1990

The Ford Motor Company

2303 words - 10 pages and make new and attractive products for the ultimate user, mainly, middle-class groups. Ford also needs expansion in Europe and Mexico. Keywords: Ford motors, cost analysis, microeconomics, demand, recommendation Introduction Purpose Microeconomics is that the branch of economic science that analyzes the behavior of individual shoppers and corporations to do and perceive the decision-making method of each business

Ford Pinto- Marketing Ethics

1936 words - 8 pages , even this nominal cost seemed large. In addition, Ford had earlier based an advertising campaign on safety, which failed miserably. Therefore, there was a corporate belief, attributed to Lee Iacocca himself, of “safety doesn’t sell”. (2) Taking an ethical approach to the Ford Pinto case makes accepting the risk/benefit analysis performed by the Ford Motor Company difficult. In making what seems to be the correct decision based on numbers

Supply Chain Initiative at Ford

2001 words - 9 pages base * Huge production network and social responsibility * Large retail network of private dealerships * Large finished good inventory * Independent purchasing body within Ford Environmental and root cause analysis * Long Lead time: Traditionally, Ford took 45-60 days from customer’s order to deliver the finished product. This is a considerable long time in today’s auto industry. Prospective customers might not want to

Alan Mulally, Ceo, Ford Motor Company

2182 words - 9 pages Alan Mulally, CEO, Ford Motor Company Alan Mulally, CEO, Ford Motor Company Curtis Godette Strayer University Dr. Yamil Guevara- Professor 15 May 2011 Abstract The Ford Motor Company has been an American icon for over a century. Ford Motor Company has concluded that in

Case: Ford Motor Company

3144 words - 13 pages and network hardware requirements by 60 percent. Or, in the case, its business managers were looking for a way to economically digitize thousands of broadcast videos into a format that could be retrieved more readily and licensed to other video producers to create new revenue streams.6.2 Virtual integration-customer oriented.To address this problem Ford must think about its relationships not only with suppliers but also with dealers and customers

Mms Ford Case

2588 words - 11 pages FORD MOTOR COMPANY: SUPPLY CHAIN STRATEGY Teri Takai, the director of supply chain systems, had set aside this time on her calendar to contemplate recommendations to senior executives. The question they’d asked was widely agreed to be extremely important to Ford’s future: How should the company use emerging information technologies (i.e. Internet technologies) and ideas from new high-tech industries to change the way it interacted with

Related Papers

Ford Motor Company Case Analysis

5581 words - 23 pages Ford Motor Company (Case Analysis) Group #6- TGAA TTH 1:00 Member 1- Taylor O’Neill Member 2- Knyra Ratcliff Member 3- Alex Perkins Member 4- Xu Han Member 5- Kevin Carter Member 6- Alex Dundon/ Nick Tran Presentation Date: 11/17/15 Introduction Our group has chosen Ford Motor Company as our case analysis subject. Ford is an American multinational automaker and was founded by Henry Ford in 1903. Ford Motor Company is the second

Ethical Analysis: Ford Pinto Case

1549 words - 7 pages Ethical Analysis: Ford Pinto Case MGT / 216 Ethical Analysis: Ford Pinto Case In this analysis, two opposing viewpoints are given; Mark Dowie, of the magazine Mother Jones and James Neal, chief attorney for the Ford Motor Company. The case involves the ethical implications of the horrific accident that occurred on August 10, 1978. Three girls died in an auto accident when the automobile they were driving, a 1973 Ford Pinto, was slammed

Case Analysis Ford And Firestone

3643 words - 15 pages Case Analysis Report In August 2000, Ford Motor Company and Firestone Tire Company recalled 6.5 Million ATX and AT tires that had been installed on Ford’s Explorer model SUV. At the time, it appeared as though Ford and Firestone were doing the right thing. They had found out that the tread separated on Ford Explorers in states with intense heat, such as Florida and Texas. However, it later came to light that both Ford and Firestone had known

Case Analysis Of Ford Motor Company

1313 words - 6 pages performance. First, goal setting helps any organization improve its performance if effectively developed, implemented and monitored. A lot of companies repeatedly set unrealistic goals with no action plans. As a result, the business fails. However, in the case of the Ford Motor Company, aggressive goals were vital to the success of the company. The company was losing billions of dollars in such a short period of time. Mulally