Competitor Analysis - Research Paper Example

They also provide financial services to customers. The revenue of the automotive sector comes from sales of the vehicles and associated parts and accessories. The company treats marketing and sales incentives as reduction tool for revenue. Majority of the vehicles are transported from the manufacturing plants to customers directly. The vehicles are also put into repurchase option. The revenue from financial services stems from the interests that are generated on the receivables. It also includes the deferred origination costs, which comprise reduction in financing revenue (“Annual Report 2012”).

In 2006, Ford had borrowed $23 billion for restructuring the company, according to the CEO standard. This had created concerns among the investors, even though the company did not file as bankrupt, like its fellow competitors. However, the company has shown effort in reducing total debt to $14.5 billion by the end of 2010 (“The Bull Case For Ford Stock”). The company has announced to liquefy the fund of a trust, established by them long back, in order to repay $ 5 billion. Chief Financial Officer of Ford has exclaimed that the company has concentrated on reducing the total debt, so that they can strengthen their business and gain trust of the investors.

The company has said that the payment made towards elimination of debt has reduced their interest payment to $190 million annually (“Ford Motor Company Stocks Rise as Debt Decreases”). The best news that was provided by the company at the end of third quarter of 2010 is that the cash generated from automotive operation was $ 2.6 billion and it retired $7 billion of debt which lowered their annual interest payment (“Ford Is Slowly Climbing Out Of Debt”) In 2008, the company had to encounter major issues regarding the sale of Ford Five Hundred.

They had anticipated the vehicle to be a success in the market. However, styling and