Strategic Management: Ford Motors CSR and Financial Analysis

This report provides a critical evaluation of Ford Motor's performance, considering the triple bottom line and responsible decision-making for sustainability. It examines Ford's Corporate Social Responsibility (CSR) policies, including leadership, accountability, stakeholder management, assurance, and transparency, and their impact on the company's financial performance. The report analyzes Ford's CSR initiatives, financial highlights, and future expectations, including the impact of warranty claims and sustainability goals. It also explores the company's dedication to sustainability and the importance of corporate governance. The report uses the triple bottom line framework to evaluate the company’s performance and highlights the importance of sustainable development for both the customers and the society. The report concludes that Ford should follow the 17 sustainable goals to survive and develop in the market. The report is intended to help students understand strategic management and business development concepts.

Strategic Management for Competitive
Advantage: Part C

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
The following report will be critically evaluating performance of company with
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
be directed and controlled towards betterment. This is the balancing of interest of the
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
corporate governance which Ford Motor should be following like that of leadership,
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 of Epstein, (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 to Grewatsch and Kleindienst, (2017) it is included that if the
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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 8th year and their F-series franchise was marked to its 41st year 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 by Grewatsch and
Kleindienst, (2017) that company should be having specified rules and regulations which will be
helpful for them in future increment of profits.
Figure 1: Triple bottom line
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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 per Clark, 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 of Epstein, (2018) manufacturing cost of car production could be lower or
decreased down.
Thus Martínez‐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
8th straight 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 of Qiu, 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.
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Figure 2: 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.
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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
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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 per Saeidi, 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.
Figure 3: 17 sustainability goals
[Source: Singal, 2014]
While for reducing employee turnover within company will also be decreasing their
wages per employee. As included by Singal, (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 CO2 emission as which was faced by
Ford Motors.
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Figure 4: Ford Annual Income statement
[Source: Ford annual statement. 2017]
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Figure 5: 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.
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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). Relationship between sustainable
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
Triple bottom line. (2018). [Online]. Accessed through:
<http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html>.
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Ford annual statement. (2017). [Online]. Accessed through:
<https://s22.q4cdn.com/857684434/files/doc_financials/2017/annual/Final-Annual-Report-
2017.pdf>.
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