Automotive Industry Financial Analysis

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Financial Analysis of General Motors and Ford Motor Company


Advanced Finance (FN)


Due date: June 01, 2009

Table of Contents

Executive Summary 3 Introduction 4 Porter Five Forces Analysis Model 5 Competitive rivalry within the industry 5 Barriers to Entry 6 Threats of Substitutes and Complements 6 Bargaining Power of Customers 6 Bargaining Power of Suppliers 7 SWOT Analysis 7 GM SWOT Analysis 7 Strengths 7 Weaknesses 8 Opportunities 9 Threats 10 Ford SWOT Analysis 10 Strengths 11 Weaknesses 11 Opportunities 11 Threats 11 Ratio Analysis 12 Recommendations 13 Conclusion 13 Appendix “A” Financial Ratio’s 14 Appendix
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I choose this topic as it indirectly affects the company that I work for, as we are in the aftermarket truck accessories business. This report will concentrate on two of the three major auto makers in North America. The third company has already filed chapter 11 in the bankruptcy court in New York, Chrysler LLC. At the onset of 2009 all three of the auto makers were in very poor financial positions; that is when the stimulus packages were introduced by the U.S. president Mr. Barrack Obama. Chrysler LLC was the first to accept the stimulus package with General Motors not far behind. Ford Motor Company still has not accepted any stimulus money from the U.S. Government. What is so different between General Motors and Ford that one had to get help from the government and the other did not? The differences in product and financial strategies along with listening to what the customers want could be some of the major differences between the two surviving companies.

Porter’s Five Forces Analysis
Michael Porter identified five forces that influence an industry. These forces are:
1. Degree of rivalry,
2. Threat of substitutes,
3. Barriers to entry,
4. Bargaining power of customers, and
5. Bargaining power of suppliers.
Like other industries operating under free market, capitalistic systems, viewing the automotive industry through the lens of Porter’s five
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