Finance and Accounting Assignment Research Paper

Finance and Accounting Assignment - Research Paper Example Irrespective of such disruptions, in the year 2011, Ford completed its consecutive three years of earning profit in relation to its operating costs and, therefore, announced the payment of dividends to its valued shareholders in five years, which, in turn, has significantly motivated the company to preserve its financial efficiencies in the long run (Ford Motor Company). Thesis Statement The report will analyze various divisions and departments of Ford where costs are allocated currently. Furthermore, it will provide recommendations based on the importance of divisions and departments about effective allocation of costs. Allocation of Costs The automobile industry is facing continuous challenges due to the increasing fuel prices, uncertain economic conditions prevailing in the international arena, rising commodity prices and the growing need to reduce CO2 emissions in order to protect the environment. Thus, Ford has been allocating huge amount of revenues to the Research and Developm ent (R&D) department in order to develop best-in-class vehicles that will provide superior quality, efficient fuel economy, safety, value for money and attractive design which best satisfies the consumer preferences. Furthermore, the company has been doubling its investment in innovating advanced technologies in order to maintain a high degree of competitive edge over its global competitors (Ford Motor Company). Although the automobile industry is facing fierce competition due to the presence of large number of competitors, Ford can utilize its brand recognition and strong financial resources to expand its global presence and increase the volume of sales. Sudden shifts in demand have also been identified, from hybrid cars to small cars due to the non-availability of parking spaces and traffic congestions. Thus, the sudden increase in demands disrupted the process of production as the company had to make major changes in order to shift its manufacturing concentration solely to small cars segment. Furthermore, the introduction of advanced technologies has emerged as a growing trend among the car manufacturing companies across the globe. Thus, Ford should emphasize more on its technology development department in order to introduce unique technologies integrated with modern vehicles: parking assistance, car tracking device and GPRS among others (Ford Motor Company). Moreover, the company can invest its capital for expanding its production facilities in countries where Ford’s market share is considerably lower than that of other car companies even though the markets are promising. Hence, the establishment of manufacturing units will lower the logistics costs and enable the company to have greater profit margins. Furthermore, the company may allocate additional funds to the marketing segment in order to promote the uniqueness of its technologies. Notably, the recovery of the global economy from the financial downturn has provided consumers around the world w ith an increasing purchase power, which has been reflected through the increased demand across the globe. People are comfortable in spending money for luxurious products, especially those with integrated technologies which have not been introduced earlier (Humphrey and Memedovic). Benefits of