Positive and Negative Impacts of Macro Environment on Business Operations

This report discusses the positive and negative impacts of the macro environment on business operations, using the example of Ford. It covers the analysis of external factors such as political, economic, social, technological, environmental, and legal factors and their interrelation with the strengths and weaknesses of the organization.

Business & the
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 3............................................................................................................................................1
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples................................................................................1
TASK 4............................................................................................................................................4
P5 Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses............................................................................................................4
P6 Explain how strengths and weaknesses interrelate with external macro factors...................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business is regarded as the practices which are performed in order to develop money
through producing or purchasing or selling goods and services. Moreover, business environment
is define as sum total of overall internal and external factors that effects business functions.
Therefore, this is crucial for all entities to know about these factors that aids them to formulate
effective procedures of decision making. By this, organisation may able to obtain many benefits
like increase profitability, strategic plan development and others (AGBOLADE, 2014). As per
the project report one, the undertaken organisation for this report is FORD. It is a best-selling
auto mobile brand. It offers a line of electric and hybrid electric vehicles. They also invested
heavily into the self-driving car market. Its headquarters is in Dearborn, Michigan, U.S. This
report covers macro environment positive as well as negative impacts as well as internal and
external analysis by using SWOT. Apart from this, the interrelationship that strengths and
weakness have with external factors are also described in this report.
TASK 3
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.
This is significant for entities to analysis external macro aspects for conducting its
practices in profitable as well as efficacious way. Macro environment is a board and wider set of
economical situation. This includes an influences that impact the overall business economy as
well as this environment can not be controlled through organisation as this is very much large
and unpredictable to control. Moreover, it assists to monitor and analyse atmosphere through
using PESTEL model that may has affects on entities growth. PESTLE Analysis is a tools that is
applied for examining as well as monitoring external factors which may have a profound effects
upon firm's performance (Charter, 2017). There are other factor which makes the organisation
great are there value in service provided to the respective customers. But they fail to identify the
needs and wants of the customers which leads towards slow down of the sales in the company.
Here is the PESTLE analysis of Ford Motors explains these points further in the detail manner.
Political factor: Ford have strong sales in the Asian counties. In fact in the year 2016
they had made the profit which was more than other big brands present in the market. This
market continues to be both strong and stable for Ford Sales. One reason for this is because the
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political climate is change as per the nation. And that typically means the firm should have
proper analysis so that production activities can be done smoothly. The country like UK have
stable governance as the firm can operate in this region. Positive impact: This factor impact FORD positively as because of emerging market
facilitates several growth opportunities as well as success as there is requirement for
auto-mobiles within South America and Asia.
 Negative impact: After Brexit, they have pessimistic affects upon FORD performance as
they have to loose access in respect of free trade agreement with European countries that
drives towards reduction in market demand.
Economic factor: These are the factor which include the inflation rate, slow down and
per capita income of people. In the context of Ford the management must make sure about the
current economic condition of the company as this will help to grow and expand in the firm in a
well define manner (Couto, Lopes and Sousa, 2015). The current economic condition of UK is
good so the organisation can expand the business as people are willing to pay fort the services.
Due to BREXIT the market have been slow down which will effect the revenue and sales of the
company. Positive impact: This is possible for respective organisation to do trading of luxury cars
and commercial vehicles at international market in order to obtain more profit.
 Negative impact: As global trade reduces the sales and market share because of slump
with the sales of cars.
Social factor: This is consider one of the crucial factor for the organisation as this define
the needs and wants of the people. The social factor include norms. Believes and attributes
towards purchasing (Demil and et. al., 2015). Hence for the organisation like Ford motors this is
essential to indulge in market research to figure the social changes. Currently the demand of
hybrid cars has been increased so that company should offer those cars in order to capture large
market share in the limited time frame. Positive impact: It aids FORD to introduce various kinds of hybrid cars as well as
become leaders into the segment of hybrid cars.
 Negative impact: There are huge number of competitors in respect of FORD because of
which they can not able to attract huge consumers which minimises sales.
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Technological factor: These are the factor which include innovation and new ideas. The
company like Ford should always use new technological changes in the organisation as this will
aid the firm to provide betters services to the consumer. There have been rapid change in the
recent technology as the electric cars have taken place (Eurich, Weiblen and Breitenmoser,
2014). The major competitors for Ford motors are Tesla and General Motors. So in order to beat
the competition the firm have to implement new technology as this will help in capturing larger
guideline in the limited time frame. Positive impact: This assist FORD to produce various types of driverless cars, eco
friendly cars and other for increasing profitability and market shares.
 Negative impact: The respective organisation have invested above £ 1 billion in order to
perform research upon autonomous vehicles which have reduces profitability.
Legal factor: In this particular factor the international law as well as trade policy are
taken into account . These law prevent the fraud and illegal activities done by organisation. In the
context of Ford motors the management must make sure about the legal compliance and firm
should follow all the rules and regulation for the smooth functioning. This factor will aid the
organisation to minimize the taxes which will be beneficial for the nation economy. Positive impact: This assist respective organisation in designing goods as well as
facilitates safety atmospheres with legislation for protecting themselves from rivals.
 Negative impact: FORD have faulty vehicles parts like systems, airbags and many more.
Environmental factor: Now a days most of the organisation are paying attention
towards the nature. The environmental factor have become the common issue for people. So in
the case of Ford motors the employees are working to minimize the carbon emission from the
cars and they offering electric cars which is safe for the environment (Frösén and et. al., 2016).
This step have developed the brand image and goodwill in the market along with this it aid in
generating larger revenue for the firm. Positive impact: FORD concentrate upon producing electric cars for declining fuel
consumption as well as safeguard atmosphere from population. This drives towards
increasing brand value and image into the mind of audiences.
 Negative impact: If FORD are not producing eco- friendly goods as well as services, they
can not compete with rivals as well as can not able to accomplish the requirement and
wants of audiences (Ford Pestle Analysis, 2019).
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TASK 4
P5 Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses.
In order to find the entities strengths and weaknesses, it is essential for them to do SWOT
analysis. Internal analysis encompasses through organisational competency, competitive
viability and cost position which helps to run a business independently. To establish a business
and running there is a need to analysis the internal information which is important for business
industry and helps to make profits. This analysis is done by management by incorporating and
measuring the performance where improvement are also made by them in order to improve the
organisational performance (Georgescu and Popescul, 2015). The main aim of business industry
is to achieve goals by increasing value and opportunities that creates higher profits. Such as
management of Ford organisation are using internal analysis by different framework which helps
to get the strength, weakness, opportunities and threats during running a business. SWOT
analysis in context to Ford organisation is determined as below:
Strength: In auto mobile, Ford is consider as well popular brand which provide better
quality of cars that at national and international level which attracts customers and increase sale
of organisation. The brand value is $12.74 billion according to statical data which states it has
high value in greater market. It spend money on research and development which helps to
introduce from new products in cars by improving existing products. Management of such
company take care of customer's needs and wants which helps to works in diverse offering that is
advantages for organisation.
Weakness: FORD organisation is facing huge loss due to product recalling as it
produced produced product as per image of may 2016. It has weak foothold in which operation is
diversified in many geographical areas. There are many competitors in European and Japan
which can reduce the sale of business organisation. Lack of focus on production of luxury cars
that might be a reason of low performance (Gillanders and Whelan, 2014). Moreover, it is highly
dependant on U.S and European market that limits the profits of chosen company.
Opportunity: The main focus of organisation is on customer base where it is penetrating
the auto mobile market which helps to increase the productivity and profitability. Management is
using digital marketing in order to provide information to people which attracts them and make
buying decision about product and services. Proper utilisation of available resources which
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reduces the cost and increase higher profits within business firm. In 2017, such organisation has
invested on self driving cars which helped to grow customer and suppliers base and make higher
production.
Threats: FORD organisation is facing cut throat competition as it has many competitors
in market which can reduce the sale of business organisation. Competitors such as Tesla, Toyota
motors, Bentley motors etc. are manufacturing cars. Increase in cost of raw material which
increases cost of manufacturing cars and impacts negatively business organisation. Resulting
management set high cost of cars which limits on selling of cars (Kolk, 2016)(. Moreover,
organisation facing rules and regulation threat in auto mobile sector due to improving
environment that limits selling of cars and buying purchase of raw material (SWOT Analysis of
Ford. 2019).
From the SWOT analysis Ford company get their strength, weakness, opportunities and
threats which helps to understand how it can be controlled in order change threats and weakness
in to strength. Moreover, management are improving their performance by increasing the ability
and capacity of business organisation by increasing profits.
P6 Explain how strengths and weaknesses interrelate with external macro factors.
The external macro factors is define as aspects that impacts companies practices like
technological legal, environmental and others (Sharma and Hart, 2014). Macro and micro factors
essentially effects how firms operates and therefore, these has to be considered efficaciously
before developing any kinds of decisions as efficacious analysis will aids FORD to acquire
understanding related to environmental dynamic nature. So, the interrelation of strengths and
weaknesses with macro factors are discussed below:
External Macro Factors Interrelation
Political Factors Strengths: Because of UK stable condition, FORD may simply
do business expansion into another marketplace such as South
America, Asia and many others.
Weaknesses: The agreement of free trade have affected
profitability as well as sales after Brexit occurred into market area
within FORD.
Economic Factors Strengths: The UK market economic condition is stable so this
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aids FORD to sell its luxury vehicles easily as well as gaining
higher profitability margin and market share effectively and
efficiently.
Weaknesses: There is maximisation into international slump of
cars numbers that drives towards reduction into profit and sale of
FORD entities within market.
Social Factors Strengths: The audiences demands as well as requirements assists
FORD in launching various feature vehicles and cars through
them at competitive marketplace efficaciously (Virglerová, Dobeš
and Vojtovič, 2016).
Weaknesses: As there is frequent modification into customers
requirements and demands which affects FORD to produce as per
that.
Technological Factors Strengths: As there is enhancement into profitability margins as
well as sales of FORD, they initiated producing eco friendly
vehicles, driverless cars and another with the assistance of
advance technology.
Weaknesses: FORD do not large amount for the adaption of
updated technology which may impact organisational
performance.
Environmental Factors Strengths: With complying the legislation of environment FORD
drives to produce eco friendly as well as hybrid cars for audiences
for enhancing profitability margins and sales.
Weaknesses: There is higher demands of hybrid as well as electric
cars so this impact FORD operational activities which minimises
the sales.
Legal Factors Strengths: FORD follows whole legislation as well as laws
associated with environmental health and safety, designing at the
time of producing goods or services at market area.
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Weaknesses: Respective organisation have manufacture faulty
parts for its cars as well as vehicles which drives towards
minimisation into goodwill as well as brand value. Moreover, this
also declines their business profit and sales as well.
CONCLUSION
As per the above report, this has been concluded that for all entities it is vital to do
business environment analysis as it will assist them to formulate effective plan of action as well
as perform things consequently. Moreover, there are various macro environmental factors such
as political, economical, social, technology and others that impact the business operations
positively and negatively. In addition to this, the SWOT analysis is helpful to identify the
internal and external aspects that is strengths, weaknesses, opportunities and threats. Also, the
strengths as well as weaknesses is interrelated with external factors as this will assists entities to
develop efficacious decisions.
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REFERENCES
Books and journal
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Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
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agility?.
Demil, B. and et. al., 2015. Introduction to the SEJ special issue on business models: business
models within the domain of strategic entrepreneurship. Strategic Entrepreneurship
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Eurich, M., Weiblen, T. and Breitenmoser, P., 2014. A six-step approach to business model
innovation. International Journal of Entrepreneurship and Innovation
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Frösén, J. and et. al., 2016. Effective forms of market orientation across the business cycle: A
longitudinal analysis of business-to-business firms. Industrial Marketing
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Georgescu, M. and Popescul, D., 2015. Social Media–the new paradigm of collaboration and
communication for business environment. Procedia Economics and Finance. 20.
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Gillanders, R. and Whelan, K., 2014. Open for business? Institutions, business environment and
economic development. Kyklos. 67(4). pp.535-558.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
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Sharma, S. and Hart, S. L., 2014. Beyond “saddle bag” sustainability for business
education. Organization & Environment. 27(1). pp.10-15.
Virglerová, Z., Dobeš, K. and Vojtovič, S., 2016. The perception of the state’s influence on its
business environment in the SMEs from Czech Republic. Administratie si Management
Public.
Online
Ford Pestle Analysis. 2019. [Online]. Available through:<https://www.marketingtutor.net/ford-
pestle-analysis/>
SWOT Analysis of Ford. 2019, [Online]. Available through:
<https://bstrategyhub.com/swot-analysis-of-ford-2019-ford-swot-analysis/>
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