Application of Management Accounting Assignment

Application of Management Accounting
in a Manufacturing Company

Table of Contents
a)Introduction of the selected manufacturing company:.................................................................3
b) Value Chain of Ford Motor Corporation.....................................................................................5
C) Planning process of ford Motor Corporation:.............................................................................6
d) Application of control in the chosen organization:.....................................................................7
e) Example of decision making in the chosen company:................................................................8
f) Summary of findings:...................................................................................................................9
Reference:......................................................................................................................................11

a)Introduction of the selected manufacturing company:
1. Name of the chosen organization:
The chosen manufacturing company is the Ford Motor Company that is an American
multinational organization and the head quarter of the company is in Dearborn, Michigan which
is a suburban area of the city of Detroit(Ford Corporate, 2018).
2. Year of establishment:
The organization was being established by Henry Ford in 1903.The organization sells
automobiles and commercial vehicles under the brand name “Ford” and the Luxury segment of
cars of the organization are sold under the brand name of “Lincoln”
3. Mission & Vision:
The Mission statement of the organization is based on the idea of One Team. One Plan and One
Goal which has been revealed under the leadership of CEO Alan Morally in 2008.The
underlying meaning of the mission statement is that all the employees should work as a team to
implement the lean global model of the organization for ensuring generation of profitability
through aggressive restructuring and the workers have to attain the goal of profitable growth in
all operations of the organization.
The global Vision statement of the organization Ford is that the people are working as a group to
form a lean global organization so that FORD can attain the leadership position in the global
automobile industry (Thompson, 2018). According t to the organization the satisfaction gained in
the automotive leadership is measured by the degree of satisfaction achieved by the customers,
employees, investors, dealers, suppliers of the organization including the global community.
Thus the three major points of the Vision statement of the organization are
Attaining Global leadership

Giving importance to the stakeholders
Attaining lean business model
4. Managerial highlights:
A traditional corporate hierarchy exits in the organization. The Executive Vice Presidents reports
to the CEO .The Middle Managers reports to the Executive Vice Presidents. So the managerial
structure of ford follows the model of traditional business management that is based on the
effective top down approach.
The operation of the Global Functional Groups of the organization is as follows:
There exists a functional group in the organizational structure of Ford Motor Company Each of
these groups represents a specific business function. The head of the functional groups is Vice
President. The major functional groups in organizational structure of Ford motor company are as
follows:
 Global Manufacturing and Labor Affairs
 Global Marketing, Sales and Service
 Human Resources and Corporate Services
 Quality and New Model Launch
 Global Product Development
 Government and Community Relations
 Global Purchasing
 Communications
 Finance
 Legal
 Accounting

The hierarchical structure in the ford motor corporation ensures that the organization gets proper
global direction and control. The hierarchical structure is maintained with in the global
functional groups by making functional support(Smithson, 2018).
5. Products focus:
The organization is currently focused towards the production of Automobiles, Luxury Vehicles,
Commercial Vehicles, Automotive parts .In 2017 the organization has produced 6.6 million
vehicles. The luxury vehicles are sold under the brand name Lincoln and this luxury segment of
brands is only available in United States
6. Line function and staff Function:
There exits large regional geographic divisions within the functioning process of the
organization. The presences of these large regional divisions help in the process of
implementation of the policies and strategies across the different divisions and segments of the
organization in a synchronized manner. The organization strategically maintains these large
regional geographic divisions in order to simplify the approach of the organization towards the
market.
However the organisational structure of the organization is deficient in recognizing and
supporting the unique requirements of the different car markets of the different nations of the
world.
Under the special advisory and support function the business hires people for designing vehicles
and also needs a quality expert for purchasing the components that will be used in manufacturing
the cars. It is essential that the advisory and support staffs can promote the development of the
workforce. The One Ford approach largely use the expertise of the advisory and support staffs
for the attainment of the business goals
b) Value Chain of Ford Motor Corporation
Summary of Value Chain in a step manner that follows one after another:
Stage-1: Designing of Product:

Issue of Material
Creation of Value
Stage-2: Raw material acquisition:
Stage-3: Managing the transport and logistics
Stage-4: Manufacturing the parts of the supply chain
Stage-5: Manufacturing the cars
Stage-6: Marketing and placing the cars in the customers through distribution channel
Stage-7:Waste material recycling(Corporate.ford.com, 2018)
C) Planning process of ford Motor Corporation:
Business Strategy:
The Business Strategy of the organization has been developed to fulfil the rapidly growing
demand of the consumers ever surfacing requirements consumer by making major innovation
and changes within the business along with the changing needs of the customers. The
organization also restructures the application of technologies and the production capacities from
time to time for exploiting the Core and New business opportunities. Thus the business strategy
formulation of the organization is based on Strategic Planning, development of the Mobility
Strategy and the development of the strategies for business development on the basis of Financial
Analysis(Ford.co.uk, 2018).
Positioning Strategy among the existing rivals:
The organization is having the Intellectual properties in the form approximately 38000 active
patents which are helping the business to carry out its business as a market leader in several
countries (like UK, Japan )and this technological advantage is helping the company to stay
ahead of rivals in terms of technological up gradation.

The strong hold of the company in the developed countries of the world (like UK, Japan) where
the organization is holding strong product portfolio is helping the company to derive in-depth
knowledge and information regarding the latest trend of the global car industry (Bhasin, 2018).
The wide base of the manufacturing units of the organization (68 plants of the organization is
based in different countries of the world) help the organization to manufacture quality cars at a
low cost which in turn help the business to keep the price of their cars highly competitive.
Crucial information required for decision making with respect to selling manufacturing
and budgeting
The crucial information that are needed for developing effective strategies with respect to selling
manufacturing and budgeting are the latest technological demand of the customers, the price that
the consumers are ready to pay for that technology , what are the present and possible future
offerings of the rival organization with respect to the demanded technology , the cost of
producing such technologically upgraded car and the unique selling proposition that should be
highlighted by the organization at the time of the marketing of the products for attracting the
maximum attention from the target segment of customers
d) Application of control in the chosen organization:
Monitoring the manufacturing & selling Plan:
In order to monitor the manufacturing and selling plan, the business first of all compare the
quantitative estimates with the past trend to judge the feasibility of the estimates made in the
manufacturing and selling plan. Then the actual performance that has been made by the business
organization on the basis of the plan is being compared with the budgeted figures along with the
consideration of the different external and internal constraints that were present at the time of
making the actual performance. If the actual performance remains close to the budgeted
performance then it is perceived that the budget has well estimated the future operational
situations. However in case if there exists huge gap between the actual and budgeted
performance then the business monitors the magnitude of the gap and launch investigation

accordingly for the identification of the underlying reasons that are responsible for the generation
of such huge gap.
Implementation of balance scorecard in performance management with respect to the
perspective of financial, customers, process, learning and growth:
The balanced scorecard is an enterprise performance measurement tool that has been applied to
measure the aspects that drive performance. The aspect of financial performance definitely
represents how the company is performing. Therefore as a part of application of the balance
score card technique on financial aspects the share holders of the company measures the increase
in the profitability of the organization with the growth of the revenue generation by using the
major financial statements of the company.
As a part of application of the balance score card technique on customer aspects the organization
hold the customer satisfaction survey in order to measure the superiority of the ford company
cars in comparison to that of the rivals.
As a part of application of the balance score card technique on Internal process aspects the
organization hold quantitative analysis of the after sales service report and the consumer care
service report in order to measure the excellence achieved in quality control and innovation with
respect to the manufacturing of cars.
As a part of application of the balance score card technique on learning and growth the
organization measures the number of hours spent on employee training and how the employees
are adopting with required changes in technology.
e) Example of decision making in the chosen company:
Ford Motor Company has taken a crucial decision by stopping the sales of its most car models in
USA except the models of iconic and ever-popular Mustang. This decision has been taken by the
organization as a response to the market demand as shown by the car buyers of USA.As per the

earnings report of the first quarter of 2018 by 2020 the 90% of the car portfolio that will be
produced and sold in North America will be mainly the trucks, utilities and commercial vehicles
as the organization is facing a very low demand for the passenger cars for the last few years and
there was no other option for the organization other than changing the car portfolio of the
organization with respect to North America. The decision was based on the low market response
of the customers of that geographical region for the passenger cars that pushed down the
profitability of the organization at a very low level.
The Land Rover segment of the carts were facing high criticism from the customers as the car
need lot of fuel to run and the rise in the gas prices during the last few years were making the
consumption and use of cars a costly affairs for the owners of the model sold by Ford. In such a
situation the organization was facing a very low demand for the model and lot of exiting
customers who are mowing the car was looking for an exchange of that model with other models
offered by Ford. As a response to the situation the Ford Motor corporation has taken the decision
of adding hybrid-electric power trains to costly vehicles that are falling in the high price range
(Examples of such models are :F-150, Mustang, Explorer, Escape and Bronco) Thus the decision
of inserting a hybrid fuel options in the cars as response to the consumer demands is an example
of intelligent decision making by the organization(Inc.com, 2018).
f) Summary of findings:
Thus from the above discussion it can be seen that the ford motor organization which is one of
the leading car manufacturers of the world works with strong mission ad vision and the presence
of the hierarchical order in the organizational structure helps the organization to manage the
operational work flow o the organization in a systematic manner(Corporate.ford.com, 2017).
The organization produces several models of car that cover the luxury segment, passenger car
segments as well as the utility vehicles.
As a response to the low market demand the organization has taken the decision not to sell any
kind of passenger or luxury car in the geographical region of North America and only the utility
cars will be sold in this region. The organization has taken the decision of adding the technology

of hybrid fuel option in its costly car models so that the consumers can bear the fuel cost after
purchasing them

Reference:
Bhasin, H. (2018). Marketing Strategy of Ford - Ford Marketing Strategy. [online] Marketing91.
Available at: https://www.marketing91.com/marketing-strategy-ford/ [Accessed 26 May 2018].
Corporate.ford.com. (2017). [online] Available at:
https://corporate.ford.com/content/dam/corporate/en/company/community/ford-fund/Final
%20FordFund2017.pdf [Accessed 26 May 2018].
Corporate.ford.com. (2018). Our Value Chain and Impacts - Sustainability Report 2016/17:
Ford Motor Company. [online] Available at: https://corporate.ford.com/microsites/sustainability-
report-2016-17/strategy-governance/value-chain.html [Accessed 26 May 2018].
Ford Corporate. (2018). Company. [online] Available at:
https://corporate.ford.com/company.html [Accessed 26 May 2018].
Ford.co.uk. (2018). Business Strategy. [online] Available at: https://www.ford.co.uk/experience-
ford/careers/business-functions/business-strategy [Accessed 26 May 2018].
Inc.com. (2018). Ford's Decision to Sell Only 2 Car Models in the U.S. Is Brilliant. Here's Why.
[online] Available at: https://www.inc.com/minda-zetlin/ford-phasing-out-sedans-betting-on-
crossover-suvs-electric-vehicles.html [Accessed 26 May 2018].
Smithson, N. (2018). Ford Motor Company’s Organizational Structure Analysis - Panmore
Institute. [online] Panmore Institute. Available at: http://panmore.com/ford-motor-company-
organizational-structure-analysis [Accessed 26 May 2018].
Thompson, A. (2018). Ford Motor Company’s Vision Statement, Mission Statement - Panmore
Institute. [online] Panmore Institute. Available at: http://panmore.com/ford-motor-company-
vision-statement-mission-statement [Accessed 26 May 2018].