ACC501 - Accounting for Decision Making - Essay Example

It has expanded rapidly since its insinuation and now has a global presence across all continents - Europe, Asia Pacific, South America and Africa and Middle East markets. In the global market, Ford faces heavy competition. The key competitors of Ford include Aston Martin, Mercedes, General Motors, Chrysler, Toyota, Audi, Daewoo, Honda and Porsche. In addition, it faces strong competition in the local markets as well. For instance, in Asia Pacific, Ford faces strong competition from different companies like Fiat, Tata, Hyundai, Maruti Udyog etc.

Ford, unlike its competitors, has ventured into the production of a number of different classes of vehicles. It is evident from the diversity of cars ranging from Jaguar, Volvo, Mercury, Lincoln, Land Rover and Mazda (Davies, 2008). Ford also owns a rental business, Hertz Rent a Car with the aim of getting a wider customer base and collecting profile information. If ford Corporation plans to expand a new plant in China, where it expects a huge demand for its products, than it will be a relevant cost to be considered since this activity will result in incremental benefits that the firm will enjoy.

If Ford Company accepts the Labor unions demand for increase in 25% of its wages, it will also be a relevant cost since if the decision is incurred they will face an increase in 25% of the direct labor costs therefore it is relevant. Any cost which does not affect the decision is considered as a non-relevant cost. For instance if Ford company is spending an huge amount of money on the research and development for getting the product for sale than it will be regarded as a sunk and non-relevant cost since they do not increase or decrease the sales neither they change the real costs of the organization.

Due to advancement of technology, most of the organizations are efficient as is Ford since it is operating on the state of the art technology. As a result of this Ford is underutilized, and