Ford Motor Company Strategic Audit
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The purpose of this paper is to give a brief detail of the strategic audit of Ford Motor Company. The method of research used was Internet research by topic. In addition to the class textbook audit example used, other written references in the area of Ford Motor Company were used, in order to develop the subject more in detail. This topic was selected among a series of topics of general interest in the area of strategic audit for a corporation, as a class requisite. The different aspects of development and research studies findings are discussed in detail or briefly. The subject of “Strategic Audit of a Corporation” is what this paper is about. Some of these topics are briefly discussed.
Ford Motor Company
The current situation of the Ford Motor Company, revenue of $44 billion, 6 percent above second quarter 2006. The company net income of $750 million, or 31 cents per share, for the second quarter of 2007. Profit of $258 million, or 13 cents per share, from continuing operations excluding special items. There was a significant year-over-year improvement for all automotive operations. Ford Motor Credit pre-tax profit of $112 million. Cost reductions of $600 million; $1.1 billion through the first half of 2007. There was automotive gross cash at June 30, 2007 of $37.4 billion.
Ford Motor Company sales and revenue over the last three years has fluctuated tremendously, 2005 was 176.8 billion, 160.1 billion and for the year of 2006 and 172.5 billion for 2007. The current return on investment is -10.4 as of 2007.
Ford Motor Company current mission statement is “committed to provide personal mobility for people around the world”. With that in mind their vision is to become the world’s leading Consumer Company for automotive products and services. By improving everything they do, the company provide superior returns to their shareholders (Vision, Mission, Values).
"Ford Motor Company's objective is to deliver a total return to shareholders in the top quartile of the S&P 500 over time”. The company will meet this goal by the transformation into the world's leading consumer company for automotive products and services which make attractive dividend yield and growth in their share price (Ford Motor Company increases fourth-quarter dividend by nine percent).
Over time, Ford business strategy has responded to the challenges of the motor industry. The corporate culture of Ford management is establishing strategic business units that complement the company's global scale and structure.
They have being able to meet the challenges in the motor industry through the implementation of different strategies that trace the critical path throughout the complexity of the business.
These strategies include the fallowing areas;
• Information Technology – This technology is a critical and competitive differentiator for Ford (Career Programs).
• Climate Change – Ford is pursuing a three-pronged strategy as they see potential for innovative business opportunities in solving them (Ford Issues Climate Change Report).
• Consumer-Focused Organization – Ford is establishing strategic business units to more closely target consumers’ need and react quickly to changing in market conditions (Consumer-Focused Organization).
For Ford their main strategy is to “aggressively restructuring to operate profitably at the current demand and changing mix, accelerating development of new products customers want and value, financing its plan and improving its balance sheet, and working together effectively as a global team” (About the Company), by accomplishing this, they are able to meet the challenges of their competitors.
The policies in the Standard of Business Conduct are the basis for Ford Motor Company. These policy letters “establish a framework of broad, basic principles within which the Company conducts its business globally” (Policy Letters and Directives). In addition to policy letters and Directives, numerous descriptions of business practices, handbooks and statements of business standards govern the conduct of employees globally (Policy Letters and Directives).
Ford Motor Company’s governance establishes accountability for performance to include integrating actions to support the ethical conduct of business. The Board of Director’s consists of fifteen members that are dedicated to serving the interests of their shareholders. The members are William Clay Ford Jr., Allan R. Mulally, Lewis Booth, Stephen G. Butler, Kimberly A. Casiano, Edsel B. Ford II, Irvine O. Hockaday Jr., Richard A. Manoogian, Ellen R. Marram, Homer A. Neal, Michael Bannister, Gerald L. Shaheen, John L. Thornton, Robert Graziano, and William Clay Ford Sr. The board members are mainly external except for William Clay Ford Jr. which serves as the Executive Chairman, Allan R. Mulally which serves as Ford’s President and Chief Executive Officer, Edsel B. Ford II, Robert Graziano, and Lewis Booth. William Clay Ford Sr. retired from the Board of Directors effective May 12, 2005 after 57 years of service and now serves as Director Emeritus. Nearly 40% of Ford’s board members are made up of insiders. Second only to Hyundai whose 42% of its board members are insiders.¹ The Board of Directors has five committees which are Audit, Compensation, Nominating and Governance, Environmental and Public Policy, and Finance. (http://investing.businessweek.com/businessweek/research/stocks/people/committees.asp)
Solid principles of corporate governance are key to maintaining the trust of investors. The Board of Directors of Ford Motor Company has adopted these corporate governance practices to promote the effective functioning of the Board, its committees, and the Company.
The Board of Directors (the "Board") of Ford Motor Company (the "Company") has adopted the following Code of Business Conduct and Ethics (the "Code") for directors of the Company. This Code is intended to focus the Board and each director on areas of ethical risk, provide guidance to directors to help them recognize and deal with ethical issues, provide mechanisms to report unethical conduct, and help foster a culture of honesty and accountability. Each director must comply with the letter and spirit of this Code.
Members of the board as of early 2007 are: Chief Sir John Bond, Richard Manoogian, , Stephen Butler, Ellen Marram, Kimberly Casiano, Alan Mulally (President and CEO),Edsel Ford II, Homer Neal, William Clay Ford Jr., Jorma Ollila, Irvine Hockaday Jr.,John L. Thornton and Williiam Clay Ford (Director Emeritus).
The main corporate officers are: Lewis Booth (Executive Vice President,Chiarman (PAG) and Ford of Europe), Mark Fields (Executive Vice President, President of The Americas),Donat Leclair (Executive Vice President and CFO), Mark A. Schulz (Executive Vice President, President of International Operations) and Michael E. Bannister (Group Vice President; Chairman & CEO Ford Motor Credit). Paul Mascarenas (Vice President of Engineering, The Americas Product Development)(Ford Motor Co., 2008).
The Ford Motor Company board members and corporate officers realize the intricate role they play in representing the interests of their shareholders.
“About The Company.” Ford Motor Company 2007 Annual Report. 19 October 2008
“Board of Directors Code of Ethics.” Ford Motor Company. 20 October 2008. Retrieved from
“Career Programs.” Ford Motor Company. 19 October 2008
“Company Information.” Ford Motor Company. 20 October 2008. Retrieved from
“Consumer-Focused Organization For the 21st Century.”
Ford Motor Company. 15 October 1999
“Ford Issues Climate Change Report.” Ford Motor Company. 20 October 2008
“Ford Motor Company increases fourth-quarter dividend by nine percent”. Ford Motor Company. 14 October 14, 1999
“Policy Letters and Directives.” Ford. 21 October 2008
“Vision, Mission, Values”. Ford Motor Company. 19 October 2008
For information only