strategic-management

Motorcraft
Ford purchased Electric Autolite Company in 1961 and later changed the name to
Motorcraft (www.motorcraft.com), which makes parts for Mercury, Lincoln, and Ford
vehicles. The division is a subsidiary business offering premium parts/services ranging
from motor oil to transmission assemblies. This business emerged for Ford as a result of
the lack of replacement vehicle parts available by the manufacturers.
Global Operations
Ford markets vehicles in over 200 markets across 6 continents. Ford’s recent One Ford
strategy focuses on standardizing the production of vehicles, technologically tracing production
throughout the life cycle, cross-shipping of components to ensure speedier time to
markets, and finding the Ford-ingredients to meet the automotive needs of the global market.
One such example is Ford’s Fiesta, which is available in Europe and expected in 2010
in the United States. Ford’s truck lines are still strong with the award-winning F-150.
The Euro (€), British pound (£), and the Japanese yen (¥) currencies have been
valued more than the U.S. dollar ($). Ford’s North America sales have dropped substantially;
however, South America and Europe achieved sales increases in 2008 for Ford, as
shown in Exhibit 4.
Ford’s income statements are provided in Exhibit 5. Note Ford’s massive losses
in both 2006 and 2008. Ford’s balance sheets are provided in Exhibit 6. Note that Ford is
EXHIBIT 5 Ford Motor Company Income Statement
CASE 18 • FORD MOTOR COMPANY — 2009 179
(all numbers in thousands)
Period Ending 31-Dec-08 31-Dec-07 31-Dec-06
Total Revenue 146,277,000 172,455,000 160,123,000
Cost of Revenue 127,103,000 142,587,000 148,869,000
Gross Profit 19,174,000 29,868,000 11,254,000
Operating Expense — — —
Research Development — — —
Selling Gen & Admin 21,430,000 21,169,000 19,180,000
Non Recurring — 2,400,000 —
Others 1,874,000 668,000 241,000
Total Operating Expenses
Operating Income or Loss (4,130,000) (5,631,000) (8,167,000)
Income from Continuing Oper — — —
Total Other Income/Exp. Net (755,000) (1,550,000) (1,899,000)
EBIT (4,722,000) (7,181,000) (6,268,000)
Interest Expense 9,682,000 10,927,000 8,783,000
Income Before Tax (14,404,000) (3,746,000) (15,051,000)
Income Tax Expense 63,000 (1,294,000) (2,646,000)
Minority Interest (214,000) (312,000) (210,000)
Net Income from Cont. Ops (14,681,000) (2,764,000) (12,615,000)
Non-recurring Events — — —
Discontinued Operations 9,000 41,000 2,000
Extraordinary Items — — —
Effect of Acct. Changes — — —
Other Items — — —
Net Income (14,672,000) (2,723,000) (12,613,000)
Source: www.ford.com.