TABLE OF CONTENTS 1. Introduction..................................................................................................................................1 2. Corporate Social Responsibility (CSR) & Sustainable development..........................................1 3. Triple bottom line (TBL).............................................................................................................2 4. CSR of Ford Motors....................................................................................................................3 5. Financial performance and future expectations...........................................................................3 6. Conclusion...................................................................................................................................8 7. References....................................................................................................................................9 8. Appendix....................................................................................................................................11
1. Introduction Thefollowingreportwillbecriticallyevaluatingperformanceofcompanywith consideration of triple bottom line and responsible decision making for sustainability of Ford Motor. The report will also included the financial performance and future expectations of Ford Motors in respect to CSR policies. The current report highlights sustainability and CSR with financial performance of Ford Motor which is a leading international automotive company. For this CSR is that policy which is followed by company in way of controlling and directing the 4 pillars of firm which is leadership, accountability, stakeholder management, assurance and transparency. It is very much important for firm to have sustainable development so that both its customer and society into which it is working could be satisfied (Clark, Feiner and Viehs, 2015). Corporate social responsibility of business is their responsibility towards regulating company according to environmental issues faced by company 2. Corporate Social Responsibility (CSR) & Sustainable development Corporate Governance is that system of rules, practice and process within which firm will bedirectedandcontrolledtowardsbetterment.Thisisthebalancingofinterestofthe stakeholders of company like that of customer, supplier, government and community as whole. The role of corporate governance will be that of directing and controlling the working and functioning of company and be able to provide leadership. There are primarily 4 pillars of corporategovernancewhichFordMotorshouldbefollowinglikethatofleadership, accountability, stakeholder management, assurance and transparency as well. Ford Motors Company is one of the largest automotive manufacturer and selling company which is based on Dearborn, Mich. The company is selling automotive to about 6 continents of world with 159000 employees and 70 plants all over world. The company is very much indulge into regular communication with their stakeholders so that their demands and interest could be included. All of the stakeholder of Ford will be impacting business of company with their activities. As per the view ofEpstein, (2018)Ford Motor is having loss the conservative periods which means that they are not performing well into market. But in year 2017 it was having more revenues than that of 2016 that is 145.7 and 141.5 respectively for 2017 and 2016. The operating margin for company was 5% in 2017 and 6.7% in 2016 while operating cash flow was $3.9 in 2017 and $6.4 in 2016. According toGrewatsch and Kleindienst, (2017)it is included that if the 1
current liabilities of company are higher than its current assets then it could create problem in way of creating short term obligation. Ford Motor is also having decreased number of debts and obligation which could be due within the coming one year and is into the normal operating cycleFord Motor as per view of Martínez‐Ferrero and Frías‐Aceituno, (2015)is not incurring loss within all its cars segment including that of city, medium, large and luxury as well. Ford was the bestselling brand in US for consecutive 8thyear and their F-series franchise was marked to its 41styear as America’s bestselling pickup. The company is also having very good history of operating under sound and healthy corporate governance practices. As it is having dedicated team of professionals working as per need and demand of all their stakeholders so that long term value could be created. One the other hand they are also having positive impact on world in terms of sustainability with remaining successful in terms of business (Epstein, 2018). Ford’s dedication to sustainability has never been stronger as further strengthen their automotive business and accelerate a strategic shift to capitalize on emerging opportunities. 3. Triple bottom line (TBL) From all books of accounts of Ford Motor like that of cash flow, Profit and loss and Balance sheet it could be concluded that company is incurring huge amount of loss. It is very much important and essential that Ford Motor is using corporate governance, sustainability report and CSR. All these will be very much helpful for Ford Motor which would allow them to look forward for the coming year’s loss turning on to profits. It is said byGrewatsch and Kleindienst, (2017)that company should be having specified rules and regulations which will be helpful for them in future increment of profits. Figure1: Triple bottom line 2
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[Source:Triple bottom line, 2018] The company need to adopt TBL framework so that they could be able to evaluate the performance of company as perClark, Feiner and Viehs, (2015). Ford Motor Company will be able to use this TBL within their framework in way of creating perspective of creating greater business value. 4. CSR of Ford Motors Ford Motor is also incurring higher amount of manufacturing cost which is making them increase within their loss and lower down in profits. As per the CSR policy of company there are many number of policies which would require by Ford Motor to be followed and look forward. As per the view ofEpstein, (2018)manufacturing cost of car production could be lower or decreased down. ThusMartínez‐Ferrero and Frías‐Aceituno, (2015)included that if Ford Motor is having any sort of idea related to strike of their workers then they could be preparing their senior level managers for protection against strike. Ford Motor will be helping with the daily communication with removing the uncertainty at time of labour if there is increased number of strike days then company will be incurring huge loss.Ford was named to as world’s most ethical companies for 8thstraight year with strong ethics and corporate citizenship are foundation of our business philosophy which is demonstrating customers what we stand for as a company. So as per their strategy it will be balancing between customisation and standardisation within global market which help in treating domestic markets as unique entity from world market. 5. Financial performance and future expectations According to view ofQiu, Shaukat and Tharyan, (2016)revenue is the main source of income for firm after the amount is been deducted from any form of expenses or normal business activities. Warranty claims are the main source of loss for Ford Motor as they are paying huge sum of amount to their customers during or after the time of accidents in year 2014. 3
Figure2: FINANCIAL HIGHLIGHTS [Source:Qiu, Shaukat and Tharyan, 2016] It is worth noticing that Ford Motor is incurring loss from paying the sum of warranty claim to its customers. The financial performance of Ford Motor is not so good in respect to their assets and strategies which is been formulated by company. This shows lack of decision making consideration of organisation Ford Motor is not having appropriate body who is responsible for executing and planning purpose. 4
As included with the above image the net income for 2017 was higher than 2016 which shows that company was recovering from 2016-2017. Depreciation for the year ended 2017 decreased from last year of 2016 from 8717000 to 8453000. The net operating income for year 2016 was 1985000 and then in 2017 it was 1809600. While the account receivable for the year was decreasing which shows that the debt for Ford Motors is lowering down and they are recovering their debts as in 2016 it was 2855000 and in 2017 it decreased to 2297000. The gross 5
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margin for 2017 of Ford Motors was 10% which was lower than 2016 of 11%, while the Profit after tax was 5% in 2017 while 3% in 2016. As perSaeidi, Saeidi and Saaeidi, (2015)Ford Motor Company would be able to perform better if they are eliminating fraudulent claim policy with use of predictive technology. The quality of product should also be improved by Ford Motor so that there is less number of accidents are taking place and decreasing their warranty claim as well. Figure3: 17 sustainability goals [Source:Singal, 2014] While for reducing employee turnover within company will also be decreasing their wages per employee. As included bySingal, (2014)employees are one of the major role player with company that means that they are executing corporate governance policies. There are 17 sustainability goals as included within UN Sustainable Development Goals so Ford Motor should be following them as well. Among these 17 goals Ford Motor should be measuring and following major one which is gender equality, industry innovation, reducing inequalities and responsible production within their company. With the help of sustainable environmental goals of firm it will be easy for them to overcome challenge of CO2emission as which was faced by Ford Motors. 6
Figure4: Ford Annual Income statement [Source: Ford annual statement. 2017] 7
Figure5: Ford Annual Income statement [Source: Ford annual statement. 2017] 6. Conclusion It could be conclude from the above part that company need to follow the 17 sustainable goals so that they could be able to survive into market and looking forward for development. It is working on international level for this it is very much important that they are following the rules and regulation of all the markets on global level. 8
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7. References Books and Journals Clark, G.L., Feiner, A. & Viehs, M., (2015). From the stockholder to the stakeholder: How sustainability can drive financial outperformance. Epstein, M.J., (2018).Making sustainability work: Best practices in managing and measuring corporate social, environmental and economic impacts. Routledge. Grewatsch, S. & Kleindienst, I., (2017). When does it pay to be good? Moderators and mediators in the corporate sustainability–corporate financial performance relationship: A critical review.Journal of Business Ethics.145(2). pp.383-416. Martínez‐Ferrero,J.&Frías‐Aceituno,J.V.,(2015).Relationshipbetweensustainable development and financial performance: international empirical research.Business Strategy and the Environment.24(1). pp.20-39. Qiu, Y., Shaukat, A. & Tharyan, R., (2016). Environmental and social disclosures: Link with corporate financial performance.The British Accounting Review.48(1). pp.102-116. Saeidi, S.P., Saeidi, S.P. & Saaeidi, S.A., (2015). How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction.Journal of business research.68(2). pp.341-350. Singal, M., (2014). The link between firm financial performance and investment in sustainability initiatives.Cornell Hospitality Quarterly.55(1). pp.19-30. Online Triplebottomline.(2018).[Online].Accessedthrough: <http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html>. 9