The Ford Motor Company: New Capital Project
Progress is one thing that every business entity needs to have. According to Grundy & Johnson & Scholes (1998), it is important for all organizations to be making progress through investing in new projects. This is because such projects enable an organization to improve its efficiency in its operations.
Ford Motor Company has now being operating for a reasonable long time. This means that the company has been able to identify much of its needs. However, the business environment is dynamic and new needs keep cropping up. Currently, the Ford Motor Company needs to invest in one more manufacturing establishment in Africa. According to Miltenburg (2005), taking the manufacturing plants close to good markets helps in marketing and improving a company’s performance. This is because Africa has been one of the fastest growing markets for the automobile industries. The new manufacturing centre for Ford Motor Company should be located in central Africa. This should be able to feed all the African regions sufficiently.
Coming up with such a project is not a walk in the park. The Ford Motor Company will be able to face several challenges. One of the main challenges will be about estimating the cash flow needed to implement the project. This is because there are issues that are on the way of giving the process a smooth implementation. One of the issues is the risk involved in establishing such a project in Africa. Generally, many people in the African market are used to getting their automobile needs fed by the Japanese market. This means getting used to the African manufacturing centers may cause difficulty to the Ford Motor Company. This means that the Ford Company will have to come up with a strong marketing strategy to ensure that people embrace the cars manufactured within Africa as their own. Strategies are usually very useful in reducing business risk (Jones, & Hill, 2009). This will be able to reduce the risk associated with establishing such a project.
Secondly, the political landscape in Africa may affect the smooth implementation of such a project. Generally, the central African countries are known to be politically volatile. This may not be able to help in making the project kick start with ease. Additionally, the political policies of the country may give the Ford Motor Company a hard time. This means that the company needs to carry out a massive political analysis and lobbying to prepare for the project implementation. This will be able to make the environment friendly for a smooth implementation of the project.
Another issue that needs to be considered is the cost associated with setting such a project. A project of this kind will strain the financial muscle of the company. This means that the company’s accounts will be drawn in a big way to ensure that the project is well managed. According to Wetherly and Otter (2008), a project of big magnitude calls for a decision to seek funding from the financial institutions. The funding will be able to roll the company’s project properly to completion. The hardest part will be the process of looking for the right financial institution that can give ford Motor Company the much needed funding. However, given the well established good name of the company, financial institutions will give the company a chance to obtain funding. This will be given weight by the fact that the company’s prices have been very stable in the market, standing at an average of 11.76 for the past five years which is a 9.9 change. This will be able to give the company a good bargain for credit facilities to establish the new project.
Grundy, T & Johnson, G & Scholes, K. (1998). Exploring strategic financial management. London, Prentice Hall.
Jones, G.R. & Hill, C.W. (2009). Strategic Management Essentials. 2nd ed. Southwestern: Cengage Learning.
Miltenburg, J. (2005). Manufacturing strategy: How to formulate and implement a winning plan. New York: Productivity Press.
Wetherly, P. & Otter, D. (2008), The business environment. Oxford: Oxford University Press.