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Macro Environment and PESTL Analysis of Ford Car Manufacturing ltd Its performan

ce over 5 years and its business Changes over 5 years.


Presented By Chandrakanth. Dhanekula.
Table of Contents
Industry definition Introduction to Industry Industry at current scenario Litera
ture review of PEST PEST analysis of Ford SWOT Analysis of Ford Porter five forc
e analysis of Ford Competitors Analysis of Ford Strategy of Ford Performance of
Ford Conclusion Recommendations References
Executive Summery
In Global markets among different Industries i found Automobile industry because
the scope of the automobile industry is high when compared to the other industr
ies. In today’s life automobiles became necessary. In that automobile industry i c
hoose the Ford motor company to analyze their Macro and Micro Environment. This
paper is focused on PEST Analysis of FORD, SWOT Analysis, Porter five force anal
ysis, competitor analysis, strategies, and its performance in share market and s
ales.
I focused more on the Political, Economical, Social and Technological Factors wh
ich are playing a major role business environment of Ford.
Industry DefinitionAutomobile can be defined as the vehicle which runs on two, t
hree, four or more tyres, the purpose may be to travel on the roads by people or
to carry the loads from one place to another place.
Introduction to Automobile IndustryFirst Automobile is a three wheeler which was
invented by Nicolas J. Cugnot. Initially invented automobile is made by steam e
ngine and later it was designed by fuels which are currently available in the ma
rket. At present few Automobiles are running based on the renewable energies lik
e Solar and Bio Fuels. Some cars are designed to run on Electricity. From the pa
st records we can identify that America is dominating in automobile Industry. Cu
rrently countries like India and Brazil are presenting their growth rate in the
global markets of automobile industry.
Present scenario of automobile industry –
Global rescission influencing most of automobile manufacturing companies to stop
their production due to lack of demand in the market. This can be detailed from
the fallowing statement. In the automobile industry by 2008 the sales are decli
ned by 8% and in 2009 sales are rapidly declined up to 20%.
Introduction to FordFord motor company is a global leader in automobile industry
, which is founded by Henry Ford. It is performing its business in 7 continents
and 90 plants are speared worldwide. It employed 201,000 people in their busines
s. Ford manufactures Cars &Commercial vehicles. Ford operating its business in f
allowing continents North America Europe Asia Pacific Latin America Middle East
Africa Caribbean
Ford is partnering with some of the companies to produce better optional vehicle
s. Ford is partnering with companies like, BP, Microsoft, Sony, Roush, Adventure
island & Water country USA.
PEST AnalysisPest analysis represents Political, Economical, Social and Technica
l factors of an organization. Political factors explain about taxation, employme
nt laws, internal trade regulations and competitor trade regulations. Economical
Factors explains about economic growth by industry, policy towards unemployment
, inflation and influence of exchange rates Social Factors explains about income
distribution, labour, life style changes, health & welfare, attitude to work an
d living conditions. Technical Factors explain about Technological efficiency, t
echnological transfers, rate of spending in R&D, Energy use cost and New Innvent
ions.
Source – The Business Environment By Adrian Palmer & Bob Hartley 5th edition
Ford pest AnalysisPolitical FactorsExchange rates, oil prices & free trade flows
which influence the consumer to invest on the vehicles. Foreign ownership regul
ations and technological cooperation’s between countries helping the ford in raisi
ng the funds and building the advanced models which can cope with the current sc
enario. Introduction of new business laws Impacts the ford to change its rules a
nd regulations which are necessary to producing a quality vehicle. Forced Groups
(Labour unions) who plays a major role in the production of a vehicle in a ford
manufacturing organization. The labour unions should work according to the rule
s and regulations amended by the business laws. Investor’s climate- In most of the
company’s investors had a premier role to play in the growth and development of t
he company.
Economical FactorsGrowth potential of target market - The growth potential of ta
rget market will determine the purchasing power of the buyer. That is the major
reason ford is operating in the countries like America, India and Brazil where t
he growth potential is high when compared to the other markets.
Adopted from Nieuwenhuis & Wells
Based on the above geography of demand for vehicles, we can state that ford is o
perating its business in the potential target markets.
Target Market Size – Again the sales of the ford was influenced by the Market size
where it is operating its business. When the target market GDP growth is high t
he consumers will show more interest to have a premium or luxury vehicle. Econom
ic Development – Economic development is the major part which will determines the
development of a particular economy as a whole and which will influence on indiv
idual GDP. Oil Price Fluctuations- The oil fluctuations influence the sales of t
he ford company. If the oil prices are more it will difficult to sell the premiu
m and luxury cars. Cost conscious customers may not show interest to buy the car
s which provides low mileage. Altogether the mentioned economical factors will d
etermines the growth of the potential markets, margin cost of the operations, re
turn rate on the investment, and strategy to provide the price of the vehicle.
Social Factors
Social factors plays a role in trend in demand based on the various factors like
attitudes, demographical, beliefs of the consumers in that particular market re
gion Some of social factors of Ford are given below
Geographical Changes - The consumers of ford had changed from one geographical r
egion to another geographical region Eg- The US for consumers will use the cars
or commercial vehicles which have large engines. But the Brittan consumers are h
abituated to use the cars or commercial vehicles which are designed by small eng
ines.
Adopted from Windecker
Consumer Attitude – Consumer attitude plays a role in selecting car model and desi
gn, If the consumers are favour about sport they will select the sports model ca
r for their usage. But if the consumers are cost and safety concerned them proba
bly will choose a normal car which will provide mileage and better safety.
Travel Habits – The ford company is designing the cars based on the travel habits
of the consumers. Ford is a medium cost car which can be affordable by the mediu
m class people. It is providing the facilities based on the travel habits of the
whole family.
Technological Factors
Technological factors of the ford motor company are very advanced when compared
with their competitors. The technological factors of the automobile company will
influence on most of the things like sales percentage of the cars, consumer sat
isfaction which leads to the automatic growth in the sales figure. Supply chain
collaboration – It is the Initial and too crucial factor in the ford motor company
, because the consumers of car are more concerned about the ordering and when th
e company is going to deliver the car. The Ford Company is having strong supply
chain collaboration which is in more than thirty countries. Operations Capabilit
y – Ford Operation are more capable to provide the better service to consumers. Fo
rd motor company is operating its manufacturing in more than 30 countries, so Fo
rd operations are very efficient so it is able to providing quality vehicles at
right time.
Technological Improvements in distribution – Ford motor company is one of the auto
mobile companies which is providing the car view and specification in online thr
ough its website named a www.ford.co.uk . One more advanced technological thing
is consumer can customize the materials what he requires inside as well as outsi
de of the car. The Customer will get the delivery after min 1 month and max 2 mo
nths. If the ford is having the booked car in the assess they will deliver withi
n one or two weeks.
Product Development – Ford Motor Company is providing the consumer to customize th
e car and its needs. So ford had gained a chance to innovate a new car based on
the most of the customer’s selection and preferences. The ford company cars manufa
cturing will be influenced based on the consumer customization needs.
Swot Analysis of Ford Motor Company
Strengths of Ford –
Brand Image- Ford brand is well-known in automobile industry. Its brand image is
well know in the global markets due to huge marketing & advertising. Online Mar
keting capability - Ford is one of the well-known automobile company which is pr
oviding the online consumer selection of cars through its website. In online the
consumer is allowed to customize the engine, colour, interiors and exteriors.
More consumer choices – Ford is one of the automobile company which is providing t
he consumer more variety of cars and commercial vehicles. Ford is manufacturing
fallowing kind of vehicles. Cars Commercial Vehicles (Jeeps, Vans, & Trucks) Hea
vy Vehicles. Operations and distribution efficiency - Ford is the rich in its op
erations and distribution because it is operating its business more than 30 coun
tries and it enhances its manufacturing process more than ninety plants. Relatio
ns with high profile companies - Ford Company is maintaining the relations with
high profiled companies like Suzuki and Isuzu Motors Company to develop qualitat
ive vehicles and in the part to technological aspect for motor company is mainta
ining relation with Toyota and Honda motor services.
Employee are assert - Ford motor car company recruits a qualified and skilled em
ployees in all its functions. Ford will maintain good relation with the employee
s by paying them better wages in automobile industry. Ford is more concerned abo
ut the working environment and safety aspects of the employees.
Weakness of Ford –
Sales Decline - The sales figure of the ford company was declined from the year
2008 to 2009 due to global recession in the world financial market. Recession is
one of the major factor for decline of sales and one more important factor is f
ord will manufacture the standard cars which are not able to cope up with curren
t market automobiles. Huge unfunded pensions and other obligations - Ford is one
of the automobile company which takes more responsibilities in the health and s
afety of the employee. Ford invests more money on maintaining a good working env
ironment. Low productivity - Ford expanded its business operations in diversifie
d geographical areas, so management is missing focus on some lines performance a
nd it influence the ford to cause the low productivity. Weakening operations in
North America – In the North America part ford operations has been declined due to
the huge competitors like GM, Toyota etc. The revenue of Ford was declined by 2
.4%.
Opportunities of Ford –
Production of the fuel efficient cars – At present ford is producing the cars with
low mileage and pick up. Ford is having a great opportunity to produce fuel eff
icient cars and commercial vehicles. The automobile industry is having one more
fuel efficient types like, cars which can run on renewable energies like solar p
ower and bio fuels. Production of Hybrid Vehicles - Ford had one more option in
designing the cars and commercial vehicles based on electric engines. If the car
s are designed based on electricity engines the consumers will show more interes
t to buy the cars, the reason is the car maintenance charge will low when the ca
r is run on electricity. Opportunities in India and China markets- Ford is havin
g the market opportunities in India and china countries because two countries ar
e having huge geographical market and population. The most of the people in thes
e two countries are more interested to own a four wheeler for their family. That
is the reason ford fiesta is a most successful car in these two markets.
Threats to fordPrice Rise in raw material prices – Raw material prices like hard s
teel and rolling steel cost will influence the margin price of the car. As a who
le it will influence the profit margin of the ford because of low margin price.
Rapid growth of competitors - Ford growth and development may effected by rapid
growth in no of competitors in the automobile industry. From the beginning Ameri
ca demanded automobile industry. Ford’s main competitors are General motors, Toyot
a, Honda, BMW, etc. Less Capital spending - Ford is spending low on its operatio
ns and research development activities, when compared to its competitors. The co
mpetitors are spending huge amount on R&D programmes.
Porters Five Force Analysis -
Source – The Business Environment by Worthington & Britton, Sixth edition Threat o
f new entrants – Threat of new entrants will be low for the ford because the ford
is one of automobile which is providing the best services with low cost of price
, ford provides customers to choose their vehicles. Ford is having cost advantag
e because it is providing the vehicles with low cost when compared to the other
competitors.
Bargaining power of suppliers – Ford motor company enhances the relations with six
teen new suppliers to gain the bargaining power of suppliers. Ford is having goo
d relations with suppliers for the output of quality cars. Bargaining Power of c
ustomers – Customers of Ford are comfortable with ford way of providing the vehicl
es customization and way of delivering the products within the specified time. T
he bargaining power of customer is low when compared to the other automobile. Th
reat of substitute – Substitutes for ford motor company are less but their are som
e substitutes which the cars are running on the electricity and other bio fuels.
eg – riva one small car which runs on electricity. Rivalry among existing compani
es - The important competitors of Ford motor company is Genral motors, Toyota, H
onda and BMW. All the above mentioned forces will lead to the rivalry among thes
e companies to provide the customer with competitive advantage and provide the c
ustomer with quality cars and commercial vehicles.
Competitor Analysis –
Source from - www.usnews.com The Core Competencies of Ford are it is very innova
tive in using the high technology in the manufacturing the cars & commercial veh
icles. Ford is more concerned about safety and more over ford is gave the opport
unity to its customers to customize their interiors and exteriors of Cars.
The important competitive advantage is ford is the first motor company to come w
ith active park assist, which can help the driver to park with a touch of a butt
on .
Source – www.ford.co.uk Comparing the sales of top automobile companies like Gener
al Motors and Toyota The sales of these companies are from the year 2004 -2009.
General Motors sales are high among these automobile companies. Ford is performi
ng good even in recession time because the ford motor vehicles are not too costl
y when compared with competitors. Overall ford sales are good when compared to g
eneral motors and Toyota.
Source – www.bbc.co.uk
Strategies of ford –
I am going to analyze the strategies of ford through Bowmen’s clock
Source – Marketing strategy by Mercer. D Ford Motor Company implements the Hybrid
strategy to perform well in the automobile industry and to provide the competito
r edge. As a part of Hybrid Strategy – ford motor company is providing the custome
rs with low prizes when compared to the others. Ford is providing the small engi
nes with high pickup and mileage. Ford manufactures vehicles under several names
under standardized procedures with a high quality. Ford is providing the custom
ers to choose their design of the car and their interiors through online sales.
Ford attracted eleven millions people per annum Ford manufactures cars with smal
l engines and mostly it is for focused group like a family. Ford manufactures th
e some models like CRV, SUG for the people who are interested in using premium a
nd luxury cars. Pure battery electric vehicles - In future ford is coming with c
ars which will run on bio fuels and electricity to attract the cost concerned cu
stomers. Overall we can conclude that Ford is concentrating on product approach
rather than customer approach. It focuses more on new technology and innovative
products.
Performance of Ford
Performance of Ford in Share Market
Source - http://www.ford.com/doc/2008_annual_report The performance of Ford is d
eclining in the share market due to recession in global market. But the ford per
formance in share market was not too declined when compared with the general mot
ors. The performance of ford in the year 2009 was increasing, the share value of
ford according to 2009 market it was increased by 12%. Now ford shares are incr
easing due to loyal customers and increased satisfied
Sales Performance of ford
Summary of vehicle unit sales
Source - http://www.ford.com. From the above chat we can interpret that sales of
ford from 2003-2007 went well some fluctuations but in the year of 2008 the sal
es of ford was declined due to various reasons like Recession in the global mark
ets, huge competitors who are providing better competitive edge.
Conclusion –
Ford automobile company is performing well in the aspects of political, economic
al, social, and environmental. But ford suddenly facing the problem in 2008 sale
s due to the economical problem. (decline of markets and GDP’s). Global economic c
onditions are improving but remain fragile. Recoveries in some markets are modes
t due to weak labor markets and tight credit
RecommendationsFord should concentrate more on revenue growth by manufacturing p
remium and luxury cars and should use the focus group strategy. Ford have the op
portunity to manufacture cars which can run of electricity, solar energy and bio
fuels. It will helps the organization to develop in environmental factor.
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