As stated in extract 1, it tells us that the goods we import are not made in the UK and so makes it impossible to replace the imports, therefore meaning that we still have to import goods, despite the high prices due to the low exchange rate of sterling. This is partnered with the fact that some suppliers (shown in extract 1) have agreed long term supply contract with cheaper overseas suppliers before the depreciation of the sterling and so they are now paying high prices. This may mean that these suppliers may have to increase the prices of these goods, therefore leading to cost push inflation due to trying to maintain a decent profit margin in the hope the demand for the good does not drop dramatically. However, it is stated that there still may be a large price differential with countries such as China and India, even after sterling's depreciation. On the other hand however, as stated in extract 1, line 8, volume of good imported has also increased by 16% and inflation has continued well above target.
This increased openess allows countries to specialise in producing goods which they have a comparitve advantage in (this means they can produce goods at lower unit costs) A multinational Company is a corporation that has its facilities and other assets in at least one country other than its home country. There are many examples of MNC's such as Nike or Primark. MNC's play a massive part in the development of globalisation as they often invest heavily into the country they move into. They will build good quality factories to produce the goods and also introduce effective manufacturing methods. These manufacturing methods can be replicated by other businesses in the countries and improve their ability to manufacture goods.
Without the implementation of Eaton’s strategy Chrysler’s credit rating would be poor. And they would not have enough cash to run operations smoothly also they would probably be bankrupt or taken over. However due to other external factors not related to Eaton’s $7.6 Billion strategy Chrysler suffered. Even though the strategy looks negative it worked. The auto industry can suffer a lot from positive and negative changes in the economy and interest rates hence auto companies should set aside cash for bad times.
One of the problems is that it reduces the funds available for businesses to invest. People are attracted to high interest rates and the security of investing in the government which attracts them use their savings and profits to buy bonds. However, money spend on the government is one fewer dollar for investments. Crowding-out effect is caused because of loss of funds for private investment due to government borrowing. It hurts and slows down economic growth.
Therefore, understanding exactly how monetary policies will affect the economy is extremely important. Monetary policies generally will raise or lower interest rates, which will ultimately affect individuals and business demand for goods and services. Unfortunately, many individuals do not understand the entire concept surrounding the Federal Reserve real interest rate. For example, any magnitude of decreasing the real rates will lower the cost of borrowing; this will increase investment spending, and influence individuals to buy durable goods. These items may consist of automotive, recreational vehicle, homes, and higher educational opportunities.
Fords benefits from unionization because the union contracts can be negotiated and any work issues can be resolved, such as workplace safety, wages, and benefits. As a unionized company, the management at Ford will also benefit from UAW to keep its workers online to avoid low productivities. Another benefit of Ford Motors as unionized company is employees work satisfaction because of high wages, more fair practices, and guaranteed employments that leads to less company turnover. With the recent economic downturn many American businesses suffered losses, but with the help of the UAW Ford could overcome the economic barriers. In 2011 Ford and UAW agreed on a new contract approving profit sharing and signing bonuses in lieu of annual pay raises in setting the wages and benefits for 112,000 workers.
(Davis) Relevant Factual Information about the Problem or Decision the Organization Faced The collapse in industry profitability in 2007–2009 and the bankruptcies of General Motors and Chrysler were not simply consequences of the financial crisis. They also reflected the massive structural problems of the industry—most notably, too many firms with too much capacity chasing too little demand. The catastrophic decline in industry revenues and profits in 2008 promised a major industry restructuring. (Grant) Explanation of Relevant Concepts, Theories and Applications Derived from Course Materials A SWOT analysis can work to generate effective solution for Ford and the auto industry: Strengths Strong position in US market. Ford is the second largest automaker in US, the second largest vehicle market in the world.
Ford envisioned cars being an affordable item rather than a luxury in the near future by transforming the manufacturing process. The success of Ford Motor Company was because its’ strategy encompassed a new way of manufacturing called mass production, advancements in technology, the supply chain and most of all changes in lifestyle. Ford’s personal motto, “Help the Other Fellow”, affected his goals, work environment and the corporate strategy of the Ford Motor Company. Ford Today Today’s Ford embraces all of Henry Ford’s beliefs into its current corporate strategy. Ford is known for building the everyday man’s car focusing on reliability and quality.
• Accelerate development of new products our customers want and value. • Finance our plan and improve our balance sheet. • Work together effectively as one team. ONE GOAL: The goal of ONE Ford is to create an exciting and viable company with profitable growth for all. II.
Ford steadily lost market share to GM and Chrysler, as these and other domestic and foreign competitors began offering fresher automobiles with more innovative features and luxury options. GM had a range of models from relatively cheap to luxury, tapping all price points in the spectrum, while less wealthy people purchased used Model Ts. The competitors also opened up new markets by extending credit for purchases, so consumers could buy these expensive automobiles with monthly payments. Ford initially resisted this approach, insisting such debts would ultimately hurt the consumer and the general economy. Ford eventually relented and started offering the same terms in December 1927,when Ford unveiled the redesigned Model A, and retired the Model T after producing15 million units.