Globalisation and Ford Motor Company. The golden age of the company - Essay Example

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The International Monetary Fund defines globalisation as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services…
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Globalisation and Ford Motor Company. The golden age of the company
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Download file to see previous pages Globalisation is chosen as topic for this assignment since the significance of this concept is being widely questioned these days. Referring to the adverse impacts of 2009 global financial crisis, it is argued that the globalisation has not led to a rapid growth or economic convergence in the world. On the other hand, many economists hold that this process greatly slowed down economic growth, diverged income levels, and widened the gap between industrialised and developing countries. Therefore, it is reasonable to analyse the effects of globalisation in the context of a specific international company to identify the degree of its effectiveness and flaws. I have selected Ford Motor Company for this assignment as it is the US’ second largest and world’s fifth largest automaker in terms of annual vehicle sales. The company has subsidiaries across the globe and its UK subsidiary is operated under the name Ford of Britain. While analysing the history of the Ford Motor Company, it is evident that the mid to late 1990s was the golden age of the company. During this period, the company sold large number of vehicles by taking maximum advantages of a booming American economy with quickly developing stock market and relatively low fuel prices. The situation extremely changed with the dawn of the 21st century. As a result of mounting fuel prices, legacy healthcare costs, and an unstable economy, the company experienced a considerable fall in its sales volume, market shares, and ultimately in profit margins in the beginning of the new century. By 2005, the company’s bonds were downgraded by corporate bond rating agencies, citing to the threatening market condition of the firm. Ford reduced its profit margins even on luxury models since the company was forced to spend higher costs to offset declining demand. The company substantially increased its borrowing capacity to $25 million in order to meet its mounting financial requirements. The skyrocketing labour costs also hurt the profitability of the company to a great extent. The company’s 2006 annual financial statements reported the biggest loss ($12.7 billion) in the history of Ford and the company management team identified that the firm might take long time to return to its profitability track. The company remained unprofitable in the next two consecutive years. The 2008 global financial crisis worsened the growth rate of the organisation as its all policy responses went in vain due to the negative impacts of this crisis. Although the company returned to profitability in the fiscal year 2009, it is still striving to improve or even stabilise its profit margins. The Ford is also affected by environmental issues as its production processes alleged to have threatened the sustainability of the environment. To illustrate, as Miller (2008) reports, the company was fined for violating state air pollution polices in Brook Park. ` Theoretical framework Conceptually, Globalisation refers to a process through which national economies and cultures are integrated into an international economy so as to enhance international trade, direct foreign investment, migration, and technology sharing. According to the concept, globalisation greatly contributes to effective and rapid circulation of ideas, languages, and cultural ideologies. Obviously, globalisation divided the history into two; age of manual labour and age of technical labour. This concept influences nations to liberalise cross border trade regulations by pointing to the significance of foreign investment and cross-border trade for international business expansion. The theoretical framework of globalisation envisages that this process would contribute to the ...Download file to see next pagesRead More
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