Introduction
Most corporations purchase their charters from the state of Delaware and its law is very clear about corporate purpose. The chief justice of the Delaware Supreme Court, Leo Strine said, “Directors must make stockholder welfare their sole end.” The purpose of this paper is to identify ways Ford is upholding this law and maximizing its wealth of its shareholders.
Seven Identifiable Ways Ford is Maximizing its Wealth
1. Ford invests in projects. It is currently focused on investing in emerging opportunities and striving for leadership in electric and autonomous vehicles. It has invested $4.5 billion in electrified solutions and plans to introduce thirteen new electric vehicles by 2020. It is focusing its electric vehicles on
…show more content…
Ford follows a stable dividend policy. Although it cut its dividends four times since 1980 due to the cyclical nature of the automotive industry, intense foreign competition, high gas prices, and unproductive manufacturing facilities. The biggest reason, however, was due to management’s poor operational and financial decisions. As mentioned in a previous writing, Ford’s stock is not suitable for a capital gains investor, but rather more suitable for an income investor.
3. Ford maintains the growth rate of earnings in an upward direction. Industry analysts expect Ford to grow its earnings at an average annual rate of 12.27% over the next five years. Through its aggressive implementation of its One Ford plan the company expects its annual global sales will increase between 45%-55% by 2020. The company intends to grow faster than its competitors in both volume and revenue to generate positive automotive operating-related cash flow through 2020.
4. Ford maintains good relations and meets the needs of its stakeholders. Ford rates high in corporate social responsibility performance. Through its One Ford plan, it has much improved its performance since 2008. It has been emphasizing more product development (electric and autonomous vehicles) and minimizes cost in its corporate social responsibility efforts, all the while adding to its bottom