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Protecting this proprietary pricing process is critical for the future of Ford's ability to win sales into the future. Ford Motor Company must focus on how to alleviate the many potential areas of pricing itself and pricing processes being compromised. What's needed is a risk management plan aimed at the dealer channel to alleviate the many financial risks to Ford Motor Company from trimmings its dealer ranks throughout the United States.
Ford's Need for a Risk Management Plan
The risks specific to the Risk Management Plan will include the following key sections, highlighting the need to manage risks by the probabilities of their occurrence, according to Risk Management completed by the Department of Energy as it relates to best practices in risk mitigation and disaster recovery al;so apply to Ford Motor Company's dealer channel Department of Energy (2005). While specific to another industry the applicability of these key concepts are well applicable to the Ford Motor Company dealer channel.
The focus first on isolating risks and defining potential losses from both business events and natural disasters needs to be defined using Net Present Value Analysis according to Carnegie-Mellon (1996). The focus on providing discounted cash flows from operations to accurately assess the financial impact of these resources, regardless of how they are lost. The following table illustrates the Net Present Value of key information assets Ford Motor Company has exposed as they downsize...
Systems 2M
1.2B
Pricing Exception Processes
1.1B
Fleet Sales
100M in dealer profit
3B in corporate profit
Sales Pipelines
Varies by dealer but typically $20M
6B
Through either natural disaster or the attrition and the trimming of the dealer ranks, Ford Motor Company is in a highly risky situation right now as it relates to these core assets. Managing risk by focusing on the value of these assets and the need to protect these core intellectual properties is a core requirement for Ford going forward.
References
Carnegie-Mellon (1996) - Definition of Software Risk Assessment Concepts and Directions: -Retrieved from the Internet on October 15, 2006 at http://www.sei.cmu.edu/pub/documents/96.reports/pdf/tr012.96.pdf
Department of Energy (2006) - From the CIO's website for the U.S. Department of Energy, Retrieved from the Internet on October 15, 2006 at http://cio.doe.gov/ITReform/sqse/index.html
Risk Management (2005) - Acquisition and Program Risk Management Guidance - Volume 2: Chapter 4 -Retrieved from the Internet on October 15, 2006 at http://nasdocs.faa.gov/nasiHTML/risk-mgmt/vol2/04_ch_v2_01.html
Ford Motor Company Business and corporate governance plan for Ford Motor Company Key components for corporate governance plans Ethics Business Goals Strategic Management Organization Reporting Current issues for Ford Motor Company in corporate governance plan Shortage of Parts from OEM Suppliers Company Structure Corporate Responsibility Committee Marketing Committee Define the current need for a governance plan Ethical business Approach Business Objectives Role of Stake Holders Structured Decision making Process Share Holder's Concerns Accountability and Transparency Development of corporate governance plan Corporate Code of Conduct Audit and Risk Committee Remuneration Committee Nomination Committee Performance evaluation Risk Management Shareholder's
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