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Concept of Production Cost and Profitability

Added on - 23 Mar 2020

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Table of ContentsIntroduction................................................................................................................................1Project Title................................................................................................................................1Background and Research problem...........................................................................................1Background.............................................................................................................................1Research problem...................................................................................................................1Rationale of the study.............................................................................................................2Project Aim and Objectives.......................................................................................................2Literature Review.......................................................................................................................2Understanding the concept of production cost and profitability............................................2Evaluating the factors affect the profitability of automotive industry...................................3Analyzing the impact of production cost and profitability of Ford........................................4Research Methodology...............................................................................................................4Type of investigation..............................................................................................................4Research approach..................................................................................................................5Research philosophy...............................................................................................................5Research design......................................................................................................................5Data collection........................................................................................................................6Data analysis...........................................................................................................................6Findings from the secondary data analysis................................................................................6Discussion................................................................................................................................12Discussion of findings..........................................................................................................12Recommendation..................................................................................................................12Future scope of the research.................................................................................................12Limitations............................................................................................................................12Conclusion................................................................................................................................13References................................................................................................................................14
List of tablesTable 1: Cost and profit..............................................................................................................7Table 2: Descriptive of profitability and cost of production......................................................7Table 3: Correlation between cost of production and profitability............................................8Table 4: Regression output.........................................................................................................8Table 5: Anova...........................................................................................................................8Table 6: Cost and sales...............................................................................................................9Table 8: Descriptive of cost of production and sales...............................................................10Table 9: Correlation between cost of production and sales.....................................................10Table 10: Regression between cost of production and sales....................................................11List of figuresFigure 1: Cost and profitability..................................................................................................7Figure 2: Cost and sales...........................................................................................................10
INTRODUCTIONThe automotive industry covers a wide range of organizations and companies whichinvolve designing, development, manufacturing, marketing and selling of motor vehicles. It isconsidered as one of the world’s most important sector of the economy by revenue (Friedrich& Schumann, 2001). However, it does not include automobile repair, filling stations anddelivery of products to end-users. It basically deals with the designing and developmentphase of the motor vehicles.PROJECT TITLEAn investigation on assessing the impact of the production cost on the profitability of carmanufacturing companies-A case study of Ford.BACKGROUND AND RESEARCH PROBLEMBackgroundThe present study is based on the Ford Motor Company which is an Americanmultinational automaker which offers several kinds of commercial vehicles and automobiles.The organization is operating across the world with joint venture strategies and servingmillions of customers. Ford is listed on New York Stock Exchange. Jaguar and Land Roverwere the UK subsidiaries of the Ford which were sold in 2008 to Tata Motor. In the currentfinancial year's company adopted a strategy to cut its global workforce for the purpose ofaddressing the issue related to declining share price. However, the higher production cost isthe major issue which affects the overall rate of return of the business and other relatedactivities (Sturgeon, Van Biesebroeck & Gereffi, 2008). The profitability of business relieson the cost associated with the production procedure. This indicates the lower profitability isthe major issue which is being faced in the Ford.Research problemThe major problem associated with the research project is the lower profitability ofthe business which has a direct impact on the growth and development. Every businessgenerally suffers from lower profitability due to the increased cost of production. This tendsto threaten the competitive edge of the business and accordingly, all related stakeholderscannot get the benefit out of the same (Cavalieri, Maccarrone and Pinto, 2004). For thispurpose, present research aims to assess the impact of production cost on the profitability ofthe business. This would be effective to carry out the in-depth analysis and work upon the1
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