General Motors VS Ford Michael Elorreaga Organizational Analysis Introduction: Doing this organizational analysis, I wanted to further my knowledge

about the car industry. The first prospect that came to mind was General Motors. I picked GeneralMotors because of its popularity in the United States. I had some interesting generalk n o w l e d g e o f t h e c o m p a n y l i k e t h e d e p e n d a b i l i t y a n d q u a l i t y o f t h e i r c a r s . S o m e comments were, I rather have a Chevy Truck than a Ford and The general motors carsare more dependable than Ford. These comments made it clear that I liked the GeneralMotors auto line of cars.Then, I asked myself what would be a cooperate company just as enormous. Icame to a conclusion that Ford would be the other company. Though Ford has a nice lineof cars, I had some negative thoughts about the company. Acronyms were said such as,Found On Road Dead or Fix Or Repair Daily. Each of those sayings had put a dentin my thoughts that I would not buy a Ford, not solely on those sayings, but also becauseof the influence of my parents and other such adverse publicity.T h e s e c o m p a n i e s h a v e a l o n g - s t a n d i n g t r a d i t i o n i n t h e U.S as manufacturinggiants in the automobile industry, since they be gan h e r e . W i t h t h e s e t w o c o o p e r a t e giants, I can evaluate and compare both companies financially. My over all preference was to buy the General Motors line of cars; in doing this project I wanted to know if byresearching each company if I would change my mind. Also, this will enable me to drawa conclusion on which company would be a better investment and which company is doing better as a whole. General Motors History Founded in 1908, GM today sells its vehicles in about 200 c o u n t r i e s . T h e company has manufacturing operations in more than 30 c o u n t r i e s . G e n e r a l M o t o r s (NYSE: GM), the world's largest vehicle manufacturer, designs, builds and markets carsa n d t r u c k s w o r l d w i d e . I n 2 0 0 0 , G M e a r n e d $ 5 b i l l i o n o n s a l e s o f $ 1 8 3 . 3 b i l l i o n , excluding special items. It employs about 363,000 people globally. GM also operates oneof the largest and most successful financial services companies, GMAC, which offersa u t o m o t i v e , m o r t g a g e a n d b u s i n e s s f i n a n c i n g a n d i n s u r a n c e s e r v i c e s t o c u s t o m e r s worldwide.I n 2 0 0 0 , G M s o l d a b o u t 8 . 6 m i l l i o n c a r s a n d t r u c k s - m o r e t h a n a n y o t h e r automaker and 15.1 percent of the world vehicle market. GM's major markets are NorthAmerica, Europe, Asia-Pacific, Latin America, Africa and the Middle East. Its largest market is North America, where it is in its 74 th year as the market leader.G M i s e x p a n d i n g a n d c o o r d i n a t i n g t h e c o m p a n y ' s i n n o v a t i v e i n i t i a t i v e s i n t o electronic commerce with the goal of transforming its traditional automotive operationsinto a leading global e-business enterprise. GM is utilizing new technologies to enhancethe customer experience and improve efficiency.GM is the industry-leading in-vehicle communications and information service. It provides motorists with personalized assistance, emergency aid, and hands -free, voice-activated access to Internet -based information and content services including news and weather, e-mail and stock quotes. The new Personal Calling service provides hands-free,voice-activated, in-vehicle cellular phone access. GM's Hughes Electronics subsidiary is well on its way to becoming the world's premier provider of integrated digital entertainment and information s e r v i c e s a n d products. DirecTV achieved its strongest annual growth in history, grossing 3.4 millionn e w s u b s c r i b e r s i n 2 0 0 0 . T h i s y e a r ' s n e w t e l e v i s i o n / I n t e r n e t p r o d u c t a n d s e r v i c e introductions will further strengthen the growth of Hughes Electronics. FORDS History Ford Motor Company entered the business world without fanfare on June 17, 1 9 0 3 , when Henry Ford and 11 associates filed in corporation papers in the state of Michigan. With an abundance of faith but only $28,000 in cash, the p i o n e e r i n g industrialists gave birth to what was to become one of the world's largest corporations.Few companies are as closely identified with the history and development

of Americathroughout the 20th century as Ford Motor Company, and perhaps no other Americanfirm is as well known around the globe.From this small beginning grew a global network of manufacturing and assembly plants, sales operations, parts depots and dealers, with Ford Motor Company representedin more than 200 nations and territories spanning six continents.Today, Ford Motor Company is the world's largest producer of trucks and the second-largest producer of cars. The company has operations in more than 30 countries,and employs more than 340,000 men and women at its factories, laboratories and officesaround the world.As with most great enterprises, Ford Motor Company's beginnings were modest.The company had anxious moments in its infancy, balancing precariously on the brink of bankruptcy until cash inflows from sales began. The earliest record of a shipment is July 20, 1903, approximately one month after incorporation, to a Detroit physician. With thecompany's first sale came hope. A worried gr oup of stockholders, warily eyeing a bank balance that had dwindled to $223.65, breathed more easily, and a young Ford Motor Company had taken its first sure steps.In 1988, Ford Motor Company made a strategic decision to develop a new globalcar. Engineers in Europe, the United States, and other design and development centersw e r e a l r e a d y i n c r e a s i n g l y c o m b i n i n g t h e i r r e s o u r c e s o n e x i s t i n g p r o g r a m s w i t h significant results. The similarities between the various world markets also were growing,as legislation reached new levels of harmony and car buyers on different continents foundtheir product tastes and motoring needs were less different than they had been in the past.Ford Motor Company is ranked second on the Fortune 500 list of the largest U.S.industrial corporations, based on sales. In 1998, worldwide sales and revenues totaled$142.6 billion. Net income, excluding one -time items, was $6.5 billion. Although FordMotor Company is best known as a manufacturer of cars and trucks; it produces other products, including industrial engines, glass, plastics, and a wide range of automotivec o m p o n e n t s . F o r d a l s o i s e s t a b l i s h e d i n m a n y o t h e r b u s i n e s s e s i n c l u d i n g f i n a n c i a l services, automotive replacement parts, and electronics. In 1997, the company createdVisteon, a wholly owned enterprise of Ford Motor Company, to explore and expand themarket for components around the world.F o r d M o t o r C o m p a n y i s c o m m i t t e d t o f u l l y u t i l i z i n g t h e r i c h d i v e r s i t y o f i t s human resources. Company leadership believes that diversity will be the engi ne that powers the creative energy of corporations of the 21st century. Successful companies will be those that are able to draw on the diverse talents of their people to stay o n t h e innovative and competitive edges of their fieldsFord Motor Company started this century, with a single man envisioning productst h a t w o u l d m e e t t h e n e e d s o f p e o p l e i n a w o r l d o n t h e v e r g e o f h i g h - g e a r industrialization. The company is ending the century with a worldwide organization thatretains and expands Henry Ford's heritage by developing products that serve the varyingand ever-changing needs of people in the global community. Financial Reports General Motors: Looking at the Balance sheet o f G e n e r a l M o t o r s f r o m t h e i r 2 0 0 0 f i n a n c i a l statement in relation to 1999, the statistics are higher in 2000 than they are to 1999. In t h e B a l a n c e S h e e t , I l o o k e d a t t h e a s s e t s . T h e t o t a l a s s e t s i n 2 0 0 0 a r e 3 0 3 , 1 0 0 ( i n millions) when comparing to 1999, which are 274,730 (in millions), their assets went upin 2000 compared to 1999 by 28,370(in millions). This is a sufficient increase and a good increase for GM. There are some plus and minus in the balance sheet.S o m e o f t h e i r positives in their assets w e r e t h e o t h e r a s s e t s i n 2 0 0 0 h a d 32,243(in millions) compared to 1999, which had 25,358(in millions). This is an increaseof 6,885(in millions). Another significant increase is in financial receivable which in2000 they received 92,415(in millions) compared to 1999 which had 80,627(in millions).This was a big increase of 11,788(in millions). The negatives of their assets

of 2000compared to 1999 were the deferred income taxes and other current assets, which 2000 had 8,388(in millions) to 1999, which had 9,006(in millions). The difference of the twois $618(in millions) dollars. The other negative was the Int angible assets in 2000 theyhad 7,622(in millions) and 1999 had 8,527(in millions). This was a decrease of $905 dollars (in millions).L o o k i n g a t t h e positive and negatives of the Liabilities are also significant.Viewing the positives we can see that in the L iabilities one significant positive is theT o t a l F i n a n c i n g a n d I n s u r a n c e O p e r a t i o n s l i a b i l i t i e s . I n 2 0 0 0 t h e y h a d 1 5 5 , 3 7 5 ( i n millions) compared to 1999, which had 137,826(in millions). This was an increase of 7,549(in millions). The only negative aspect in the Liabilities is in their Automotive at el., which in 2000 they had 15,768 (in millions) compared to 1999, which had 17,426(inmillions). This is a decrease of 1,658(in millions).Viewing the positive and negatives of the Stockholders Equity arealsos i g n i f i c a n t . V i e w i n g t h e p o s i t i v e a s p e c t w e c a n s e e i n t h e i n c r e a s e i n t h e T o t a l Stockholders equity. In 2000 they had 30,175(in millions) compared to1999, which had20,644(in millions). This was an increase of 9,531(in millions). The negative aspect is inthe Accumulated foreign currency translation adjustments. In 2000 they had 2,502(inmillions) compared to 1999, which had 2,033(in millions). This is a decrease of 169(inmillions).Looking at all these aspects of the Balance Sheet, General Motors is doing better compared to 1999. This is a good aspect in deciding which company is better. Ford isalso has some positive aspects of their Balance Sheet. Ford Looking at the balance sheet of Ford Motor Company from their 2000 financialstatements in relation to 1999 , the statistics are higher in the assets phase. In 2000 thet o t a l a s s e t s w a s 2 8 4 , 2 4 1 m i l l i o n s c o m p a r e d t o 1 9 9 9 w h i c h w a s 2 7 0 , 2 4 9 . T h e m a j o r increase for 2000 was the finance receivables by 11,866 millions. I felt that this was a major impact concerning how the balance sheet was configured. A negative aspect of the balance sheet was the company loss major amounts of money in Marketable Securitiesand total Current Assets.Moving on to the Liabilities, the Total Financial Services Liabilities in 2000 were176,557, which was elevated from 1999 statistics. The 1999 Total Financial ServiceL i a b i l i t i e s w a s 1 5 9 , 6 2 6 . T h e d i f f e r e n c e b e t w e e n t h i s i s 1 6 , 9 3 1 m i l l i o n s . T h e m a j o r contributions to the 2000 Liabilities were the Accrued Liabilities, Debt and Total CurrentLiabilities.The stockholders Equity losses were 8,994 million in 2000. The reason the Stock H o l d e r s E q u i t y i s l o w i n 2 0 0 0 i s b e c a u s e o f t h e E a r n i n g s R e t a i n e d f o r t h e u s e i n businesses. The Total liabilities and stockholders equity had an amount of 284,421 million, which was higher than the 1999 amount of 270,249 million.On the total balance at the end of the year of 1999 was 27,604 million. Dividendsfor that year were 2,290 million. In comparing this to 2000 the end of the years total balance was 18,610 million and the dividends was 2,751 million. Reason being, that in 1999 they had a large amount of capital stock. The end of the years capital stock in 1999w a s 1 , 2 2 2 million. While achieving low standards in 2000, capital stock was 1 9 thousands. Which is Better GM or Ford??? Comparison While comparing which company would be a better investment and a better buyfor the consumer I see that General Motors is still my pick after evaluating the Balance Sheet. The Balance Sheet is a financial statement that summarizes the assets, liabilities,a n d o w n e r s e q u i t y a t a s p e c i f i c p o i n t i n t i m e . I n G e n e r a l M o t o r s t h e B a l a n c e S h e e t shows that the total Assets and total Stock Holders Equity was higher than Fords. Fordst o t a l A s s e t s a l l i n c r e a s e d a r o u n d f o u r t e e n m i l l i o n , w h i l e G M T o t a l a s s e t s i n c r e a s e d around 26 million. As far as looking at total Stockholder Equity between GM and Ford,F o r d d e c r e a s e d b y t e n m i l l i o n a n d G M i n c r e a s e d b y t e n m i l l i o n . O n e o f t h e p o s i t i v e aspects from GM balance sheet is, productivity increase every year. O n the other handFord is not having a significant increase in product.In discussing the comparison of General Motors and

Ford I found out the bestw a y t o c o m p a r e t h e m a l s o w a s b y r a t i o s . T h e r e a r e t h r e e w a y s t o c l a s s i f y t h e s e a r e (1)Liquidity analysis, (2)solvency analysis, and (3)profitability analysis. Liquidity is ar e l a t i v e m e a s u r e o f t h e n e a r n e s s t o c a s h o f t h e a s s e t s a n d l i a b i l i t i e s o f a c o m p a n y . Nearness to cash deals with the length of time before cash is realized. Various ratios areused to measure liquidity, and they basically concern the companys ability to pay itsd e b t s a s t h e y c o m e d u e ( P o r t e r , N o r t o n , Chapter13,p.626). Solvency refers to acompanys ability to remain in business over the long termsolvency concerns theability of the firm to stay financially healthy over the period of time that existingdebt(short and l o n g t e r m ) w i l l b e o u t s t a n d i n g ( P o r t e r , N o r t o n , C h a p t e r 1 3 , p . 6 3 1 ) . Profitability indicate how well management is using the resources at its disposal to earn a return on the funds inves ted by various groups. Two frequent used profitabilitym e a s u r e s , t h e g r o s s p r o f i t r a t i o a n d t h e p r o f i t m a r g i n r a t i o ( P o r t e r , N o r t o n , Chapter13,p.634).In the Liquidity Analysis of GM and Ford, Ford overall has better quality becauselooking at the number of days sales in inventory Ford has a 21.8 compared to GM 27.4.It takes Ford 22 days to sell their inventory compared to GM 27 days. In the Cash to CashOperating Cycle, which means, the length of time from the purchase of inventory to thecollection of any rec eivable from the sale. It takes Ford 34 days compared to GM 39days.In the Solvency Analysis, which is the ability of a company to remain in businessover the long term, in comparing Fords Solvency Analysis to GMs, we found thatFords debt to Equity Ratio, which was 2.33, was lower than GMs ,which was 5.15, by2.82. this means that the total Liabilities to total stockholders equity in Ford is lower than GM. For more information of GM and Fords.In the Profitability Analysis, which is how well management is using companyresources to earn a return on the funds invested by various groups, in comparing Fordsanalysis to GMs, we found that In conclusion I would chose General Motors over Ford, after evaluating this comparison Bibliography 1. 1. Porter, Norton, Financial Accounting, The Impact on Decision Makers,Harcourt College Publishers, 301 Commerce Street, Suite 3700, Fort Worth, TX76102, pp. 621-636. 2. 2. Internet Sites of Ford and General Motors.