Ford Motor Company struggles to implement a viable cash flow risk reduction plan, while other organizations have a proven method that allows the ability to take the highs and lows of the market. Currently, Lawrence Sports like the Ford Motor Company has limited its ability to increase its cash flow by focusing its products on one general market called Sporting Goods.
The expansion of Ford Motor Company into foreign markets has increased profits and reduced the risk of a cash shortfall, but even this innovation has failed to completely sustain the automobile conglomerate. Alan Mulally, President and Chief Executive Officer stated, "In the past, Ford's regional operations were run as largely autonomous business units." Many of the companies were highly successful operating this way, but in today's intensely competitive global market this system has too much inefficiency to create sustained success (Ford Motor, 2007).
Portrait of Henry Ford (ca. 1919)
English: Ford Motor Company Headquarters, Dearborn...
1961 Ford H-Series trucksThe diversification of Lawrence Sports must be incorporated into planning efforts or Lawrence Sports could face serious consequences, such as those faced by Ford Motor Company. The 2006 financial report made public by Ford Motor Company had the unfortunate comment by Mr. Mulally, Our most immediate concern is fixing our business in North America. By taking the painful but necessary steps to achieve a $5 billion reduction in our annual operating costs by 2008 compared to 2005 (Ford Motor, 2007). By reducing its cash flow risk, Lawrence Sports will position itself to take advantage for financial opportunities, it will be able to increase its investment income, and reduce it need to borrow. Lawrence Sports needs to model its success strategy for the future or continue down a path where it could find itself making the same hard decision as Ford Motor Company.
One of Lawrence Sports biggest dilemmas is the dependence on one...