Enterprise Risk Management at Ford
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Case Details:
Case Code : ERMT-003
Case Length : 12 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : -
Industry : -
Countries : USA
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Ford Automotive - Product Development
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Product development was a critical success factor in the automobile industry.
Car makers needed to have the capability to come up regularly with new models of
good quality that appealed to customers in a cost effective way. Serious quality
problems within the Ford product line had arguably been the most critical factor
in Ford's rapid fall from grace. Ford possessed a line of vehicles that were
synonymous with recalls and poor quality such as the Ford Explorer, Ford Focus
and the Ford Escort...
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Legal Risks
Ford's reputation had suffered because of the highly publicized Firestone Tire
debacle, class action lawsuits by Ford employees and the many other quality
problems that had made the headlines in the last two years...
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Financial Risks
Foreign Currency Risks
Ford's Automotive sector undertook various transactions denominated
in foreign currencies. These included purchases and sales of
finished vehicles and production parts, debt and other payables,
subsidiary dividends, and investments in affiliates. These
expenditures and receipts created exposures to changes in exchange
rates.
Ford used derivative instruments to hedge assets, liabilities and
firm commitments denominated in foreign currencies. Ford's hedging
policy aimed at reducing income volatility... |
Ford Credit
Ford Credit was exposed to various risks in the normal course
of its business activities.
• Operational risks - the possibility of errors relating to transaction
processing and systems, actions that could result in non-compliance with
regulatory standards or fraud by own employees or outside persons.
• Credit risk - the possibility of loss arising from a customer's failure to
make payments according to contract terms.
• Market risk - the possibility that changes in future market interest and
currency exchange rates or prices would make Ford Credit's positions less
valuable.
• Liquidity risk - the possibility of being unable to meet all current and
future obligations in a timely manner...
Exhibits
Exhibit I: Ford Motors A Global Overview of Core Brands
Exhibit II: Ford Motors A Global Overview of Financial Services
Exhibit III: Ford Risk Management Purpose, Statement and Vision
Exhibit IV: Ford Motors Financial Highlights
Exhibit IV: Ford Motors A Global Overview of Customer Services
Exhibit V: Automotive Sector Geographic Earnings
Exhibit VI: Financial Services Sector
Exhibit VII: Ford Credit's Worldwide
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