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Ford Motors Case

In: Business and Management

Submitted By nfilicet
Words 1858
Pages 8
Background
Ford Motor Company was founded by Henry Ford and 11 investors in 1903. The company is based out of Dearborn, Michigan. Ford Motors is a worldwide company, with 335,000 employees, operating in 25 countries and on six continents. Ford changed the way cars were made with their innovative assembly production methods. Having gone public in 1956, the company grew to become the world’s largest truck manufacturer and the second largest total automotive manufacturer. In addition to manufacturing cars and trucks, they are involved in producing components/systems and are engaged in financing and rentals.

Ford experienced significant growth derived from company acquisitions. The acquisitions leading up to 2000 consisted of Hertz Co., Jaguar, Volvo, and Land Rover. Auto industry sales are sensitive to the economic cycle. Echoing this notion, Ford’s sales tend to experience volatility during times of economic recessions and booms. In these turbulent times, the company has a high variability of cash on hand and equity market value. In 1999, Ford had a net income of $7.2 billion (approximate 4.5% profit margin), and revenues of $162.6 billion. Ford’s automotive segment accounts for 85% of total revenue. Their US car and truck sales are responsible for 24.1% of the total market share.

As of 2000, Ford had 1.15 billion common shares of stock and 70.9 million shares of Class B stock. Among these two shares, the Ford family held all Class B shares, which gave them special voting rights and a greater influence involving company decisions. As long as a minimum number of 60.7 million Class B shares were owned, the family would retain 40% of the voting power. Class B shares that are sold outside of the family are converted to shares of common stock, thus preserving the family’s special voting rights. If ownership control were to fall below 33.7 million, all special…...

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