Magna International a Global Leader in Automotive Essay

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Magna International a global leader in automotive supplies "designs, develops and manufactures technologically advanced automotive systems" (Magna.com. About Us. 2011). Fiscal year 2010 saw "Magna sales of $24.1 billion, an increase of 39% compared with fiscal year 2009" (Magna International Annual Report 2010. P.10). This revenue growth was predicated on a return of global growth in the automotive space however, equally crucial was an executive management team which built a solid financial foundation "with net cash of $2 billion and little debt" (Magna International Annual Report 2010. P.10). The 2010 financial results including strong operating and net income gains stand in contrast to 2009 results which saw Magna International with net operating income and net income losses. The task at hand is to analyze the 2009 and 2010 Annual Reports to discern changes in management strategy which can explicate these financial changes.

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Were fixed assets added because of the need to expand capacity or to maintain the existing capacity?

Magna's 2009 operating and net income loss was the first for the company since 1990, and was predominantly due to a global recession which saw Magna "year-over-year sales declining 27% to $17.4 billion" (Magna International Annual Report. 2009. P.12). Yet, despite the deleterious economic environment, Magna was able to capture market share through timely and strategic acquisitions, and expansion into key competitive advantage platforms involving cap-ex spending on plant and equipment. In 2009 the company "invested $629 million in fixed assets with a large portion of the investment in 2009 for manufacturing equipment for programs that will be launching subsequent to 2009" (Magna International Annual Report. 2009. P.27). Succinctly, the preponderance of the cap-ex spending on fixed assets.....

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