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Word Count: 1,920
The problems of Massey-Ferguson Ltd arose from the wrong debt policy of the company In order to understand financial problems of MF it is necessary to investigate product-market strategy of the company and its financial policy analyzing the financial statements of MF Ltd over some period of time and comparing them with other companies in the industry The product-market strategy of MF had the following features that had negative impact on financial health of the company 61623 Lack of alignment between production sites and markets which involved on a regular basis problems of currency fluctuations For example MFs Perkins which is located in UK exported 86 of its products and over 50 of them were exported to MFs subsidiaries and affiliates which means that if the British pound rises the cost of goods sold for MF will increase 61623 Marketing and product development efforts mainly were concentrated overseas So trying to improve the situation in the North American market the company in 1975 and 78 introduced new range of tractors having heavily spent on RD and marketing The expenditures occurred and sales failed MF had to borrow again to run its activities as a result the financial position worsened Massey-Ferguson as a multinational company operating on the farm and industrial machinery market faced such risks as 61623 Political risk mainly in the countries of the third world During 1970s several governments with whom MF had dealings were overthrown because as a result of coups or civil unrest 61623 Business risk seasonality of sales poor weather 61623 Economic risk currency fluctuations decline in prices and incomes in North American farm market monetary restrictions in some Latin American countries 61623 Financial risk The company is highly leveraged 80 of the capital structure are debts in 1980 It is going to bankruptcy because of inability to pay debts and to continue the business Analysis of statements of three companies shows that the product-market strategy of Massey-Ferguson Ltd and
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