Financial Analysis
Financial analysis is essential in identifying the competitiveness and the going concern of an organization. Some of the key financial components used for analysis comprise the income and loss accounts, the balance sheet, cash flows, and financial ratios. Therefore, the financial analysis of Ford dealers involves identifying the trends in the cash flows, the profit gained by the company, and the comparison of financial ratios between different years and the entire industry.
The automobile industry is competitive in a way that the company must be financially stable for it to continue with its operations. Ford has been recording steady profits as per its statements of financial income. From the income statement, the company made a profit of 21,690,000 in 2021, an increase from the financial year of 2020, which was at 14,392,000 (Yahoo Finance, 2022). The net cash flows for the Ford dealers were 20,737,000 in 2021 and 25,935,000 (Yahoo Finance, 2022). This was a slight decrease contributed by the outbreak of COVID-19. When analyzing the company’s earnings, it is evident that the EPS of the company will increase from 2022 at 0.26 to an estimated value of 0.38 in 2023.
Strengths and Weaknesses
The strength and capabilities detected from the abovementioned financials are that the company is making high profits. The growth of the company and its competitiveness in the industry depend on the number of profits being generated. Therefore, the High profits generated by Ford dealers show that the company is financially stable to spearhead its growth. However, there is a weakness in the cash flows of the company. The decrease in the cash inflows, as presented by Ford company shows that the company is spending a lot of its cash on financing the loans. Therefore, the management has to focus on making investments in projects that will enhance steady cash inflows for the company.
Competencies and Distinctiveness. The huge profits generated by the Ford dealers despite having a tough financial crisis during the period of COVID-19 clearly show that the company has a strong brand (Grimm, Motta, Camargo, Priesnitz, & Neto, 2021). The unique and distinctive brand Ford brand has contributed to its increase in sales and penetration into new markets in international trade (Xu, 2022). Ford dealers also embrace innovativeness in the company hence the production of district cares in the industry.
Relation of the Competencies to the Success. The capabilities of the Ford company have greatly influenced its success of the company. For instance, the company has a unique brand that is associated with innovations. The company has unique designs that have helped it make more sales than its rivals in the industry. This has been presented in the financial statements, which show that the company is financially stable.
The success factors of Ford dealers comprise having a good brand image, an efficient distribution channel, and efficient production. The competencies of the company have established a good brand image which makes the company even to penetrate the global market (Grimm, Motta, Camargo, Priesnitz, & Neto, 2021b). Through this, Ford has been able to establish a steady distribution channel that gives opportunity to customers to get products from its subsidiaries.
The competitive advantage. The company strongly competes with its rivals in the industry by providing durable, excellent, and high-standard cars. The motor vehicles produced by the company are unique from its rivals, and through this, the company can gain a large market share (Wang, Li, Bian, & Yang, 2021). Another competitive advantage is that the automotive industry is associated with high entry costs hence giving the company monopoly powers. This makes the company decide the product price, which can generate better profits.
Competencies and competitiveness relationship. The competencies and uniqueness of the Ford dealers have greatly contributed to the competitive advantage. The unique brand image has helped in numerous sales to new customers from different parts of the world (Grimm, Motta, Camargo, Priesnitz, & Neto, 2021). The good brand image of the company also has enhanced the retention of customers. The unique brand also facilitates the company in gaining customer loyalty from its customers which is the ultimate goal of any firm to gain a competitive advantage.
References
Grimm, F. C., Motta, M. E. V. da, Camargo, M. E., Priesnitz, M. C., & Neto, A. T. M. (2021a). Strategies and Competitive Advantages through the Use of the Organization’s Internal Resources: A Case Study using the VRIO Tool. American Academic Scientific Research Journal for Engineering, Technology, and Sciences, 83(1), 155–175. Web.
Wang, Z., Li, W., Bian, K., & Yang, S. (2021). Analysis of Improving the Future Business Policy of Ford Motor Company. World Scientific Research Journal, 7(1). Web.
Xu, R. (2022). Analysis of General Motors Company between 2018 and 2020. Web.
Yahoo Finance. (2022). Ford Motor Company (F) Analyst Ratings, Estimates & Forecasts. Web.