Ford Motors: PESTEL and SWOT Analysis

This article provides a PESTEL and SWOT analysis of Ford Motors, discussing the external and internal environment of the company. It also explores the impact of digital leadership on organizational success.

Running head: FORD MOTORS
Ford Motors
Student’s name
Institution Affiliation(s)

FORD MOTORS
Table of Contents
List of Abbreviations.....................................................................................................2
Ford Motors....................................................................................................................3
PESTEL Analysis of Ford Company.............................................................................4
Political Factors..........................................................................................................4
Economic Factors.......................................................................................................4
Sociocultural Factors..................................................................................................5
Technological Factors................................................................................................5
Environmental Factors...............................................................................................5
Legal Factors..............................................................................................................6
SWOT Analysis of Ford Motors....................................................................................6
Strengths.....................................................................................................................6
Weaknesses................................................................................................................6
Opportunities..............................................................................................................7
Threats........................................................................................................................7
Digital Leadership at Ford Motors.................................................................................7
How Digital Leadership is impacting organizational success....................................7
What makes a successful digital leader and how digital leaders lead successful
organizational transformations.................................................................................11
Recommendations........................................................................................................14
Conclusions..................................................................................................................14
References....................................................................................................................16
Appendices...................................................................................................................19
Appendix (i): Graph of U.S Market Share by Company..........................................19
Appendix (ii): Graph of European Market Share by Company...............................19
1

FORD MOTORS
List of Abbreviations
PESTEL – Political, Economic, Sociocultural, Technological, Ecological and Legal
factors
SWOT – Strengths, Weaknesses, Opportunities, and Threats
2

FORD MOTORS
Ford Motors
Ford Motor Company is one of the biggest motor vehicle manufacturers in the
world with its headquarters in Dearborn, Michigan. Established by Henry Ford on
16th June 1903, the company has evolved into a powerhouse in the commercial and
motor vehicles sector. Nevertheless, it has continued to experience challenges, which
has hindered its growth, sales, and expansion plans. In the automobile manufacturing
industry, Ford Motor Company deals with the manufacture of a vast array of motor
vehicles ranging from luxury cars to huge commercial vehicles. The brands under
Ford Motor Company include Ford, which deals with commercial vehicles and
Lincoln that handles the market need for a wide distribution of sport utility vehicles
and luxury cars across the global establishment. The company complements its
business premises with Troller and FPV. The company is facing a problem in
sustaining its market share and competitiveness in the highly competitive automotive
industry. Through somewhat rigid diversification processes, Ford has seen itself lose
in the market share to other players such as Chrysler and General Motors. The
company’s marketing strategy has resulted in a reduced reputation, hence lower
product sales indices. The problem originated in the early 20th century when there was
no need to market vehicle as the demand was very high. That has changed, but the
company has had problems in establishing production and marketing tactics that
promote the needs of customers to establish positive perceptions of its products in the
market environment. This paper will critically analyze the Ford Motors case study
including its external and internal environment by using PESTEL and SWOT analysis
respectively. Also, digital leadership by Ford Motors will be discussed.
3

FORD MOTORS
PESTEL Analysis of Ford Company
The company has many opportunities and threats centered on external
conditions. PESTEL analysis focuses on political, economic, sociocultural,
technological, ecological, and legal factors. These factors play a fundamental role in
determining whether the Company meets its set targets. The PESTEL analysis is used
to discuss the external environment of Ford Motors.
Political Factors
Many political factors such as government support for innovation,
international trade agreements, and development of infrastructure in developing
countries, play an important in the success of a reputable firm (Confino, 2014a).
Governments play a key role in supporting technological innovations to improve the
economic environment. Such innovations provide Ford with the opportunity to take
advantage of incentives for novelties and create environmentally friendly products.
The Company also has a chance to improve and expand business through trade
agreements, which allow it to enter foreign markets. Furthermore, due to the
development of infrastructure in developing countries, the demand for cars has also
increased giving Ford the opportunity to expand its branches. This PESTEL element
is proof that political factors are vital for Ford's survival.
Economic Factors
The Company should be keen on the economic conditions in the world. The
key external economic factors affecting Ford are the growth of the economy, growth
rate of developing countries markets and the strength of the dollar in the market. The
United States is Ford's biggest market in the world, and the company can only expand
with favorable economic growth in the country. Besides, the Company has the
potential of developing in other countries that are growing economically (Confino,
2014b).
4

FORD MOTORS
Nonetheless, the United States dollar has the potential of reducing the
Company's profits since most materials used in production come from the United
States. Such conditions put pressure on the company to improve business competency
in foreign countries (Rahimi, Møller, & Hvam, 2016).
Sociocultural Factors
Ford's Command in the market is dependent on social conditions. The
sociocultural factors that affect Ford include, increase in demand for motor vehicles,
attitude on customer service and growth in the wealth gap. The company can only
grow by innovating products such as electric and hybrid cars that are in high demand.
The firm also has the chance to improve sales by providing excellent after sale
services. Nonetheless, the increasing wealth gap in the world is a growing threat to the
firm
Technological Factors
Technology has enabled the Company to come up with innovations and
compete in the market. The rise in mobile computing, services, and limited alternative
gas stations have affected it. An increase in the use of mobile calculations has created
numerous prospects for Ford to develop through mobile advertisement and service
sustenance. Vehicles parts can also be delivered through online arrangement services.
Conversely, the company's dream of creating cars that use alternative fuel may suffer
due to limited stations to power the cars (Mendling et al., 2017).
Environmental Factors
Ecological factors such as climate change, short-carbon trend, and reducing oil
reserves affect the company's operation. Climatic change in the world has provided
the company with an opportunity to grow through creating environmentally friendly
products. Besides, the company can build machines that use alternative energy to
compensate for the declining oil reserves in the world (Rushe, 2019).
5

FORD MOTORS
Legal Factors
For a company to operate, it must fulfill certain legal conditions. Legal factors
such as environmental protection rules, safety requirements, and intellectual property
laws affect Ford's operations. The company can meet its targets by adhering to
environmental protection laws, designing cars that are safe to drive, and paying
royalties as provided for by intellectual property laws (Davies, 2019).
SWOT Analysis of Ford Motors
The SWOT analysis is used to discuss the internal environment of Ford Motors.
Strengths
a) The strong presence in the American automotive market has made Ford the
second largest player regarding market share after General Motors. Ford had a
14.8% market share regarding light trucks and cars in 2015 (Dery et al., 2019).
b) The company indicated financial cash flows of $3.477 billion in 2015 which
shows the company has improved financial performance. That gives the company
the strength to venture into new advancements and keep up with the stiff
competition.
Weaknesses
a) The fact that American automotive brands have a poor reputation in comparison to
other brands from Japan and Europe. That has resulted in lower sales of brands
such as Lincoln that gets perceived as lower compared to other German or British
luxury vehicles.
b) The Ford Company relies largely on the American and European market as
opposed to emerging markets in China, India and the Middle East. That has
denied the company the opportunity to increase sales to higher levels hence lower
profit margins (Wang & Pyle, 2019).
6

FORD MOTORS
Opportunities
a) The presence and promise of new developments in automotive manufacturing
technologies such as autonomous vehicles and smart component integration in
vehicles. The developments would increase the demand for Ford automobiles and
contribute to growth through increased profit margins.
b) The increase in e-commerce activities across the globe would grow the demand
for light vans for light delivery services hence propel business for Ford (Tabesh,
Mousavidin, & Hasani, 2019).
Threats
a) Increased volumes of vehicles from other market players such as Toyota,
Volkswagen, Mercedes, and Nissan. That results in stiff competition that would
threaten the development prospects of Ford.
b) The progressive move towards electric vehicles would push for expensive
upgrades in Ford manufacturing plants to stay relevant in the market. That would
reduce profit margins and slow the company on its expansion tracks.
Digital Leadership at Ford Motors
How Digital Leadership is impacting organizational success
Ford Motor Company depends on employees for delivery of their vision by
building the best products to meet customers’ needs. The company is doing the best
by investing in the workforce, improve their technical skills, and recognize them for
the success of the company and strengthening their leadership skills. Part of the
strategies of the company is to encourage their workforce to invest in their careers.
Additionally, the company is also assisting the employees in improving their
leadership skills, attaining the current and future targets at the same time working on
the company’s assignments (Davies, 2018). In addition, Ford Motor Company is
developing the future workforce. The company requires more skilled personnel
7

FORD MOTORS
specialized in the technical field of study. Considering the challenges that the
company witnessed in its early performance until the beginning of 2006, the top
managerial group of Ford Motors decided to appoint Mr. Allan Mulally as their new
CEO. Mr. Alan Mulally was previously associated with the Boeing Company and was
quite well known in the corporate due to his effective turnaround strategies which
enabled the airline company to regain its growth. With the same focus, the new CEO
amended a few changes within the organization. However, he supported the
borrowing which according to his perception shall prove to be a cushion for the
company during the then most probable occurrence of a global recession (Jolly,
2019).
The leadership style which Mr. Alan Mulally introduced to the company was
largely similar to the framework of decentralized flow of information within the
managerial group. Certain initiations which were undertaken by him were:
a) Meetings between the top management group and the middle-level
management group to be held at frequent intervals (most likely to be every
month)
b) Integrating each and every department of the corporation as a single team
c) A fresh plan to stimulate almost every field of operation, i.e., manufacturing,
assembling, and manufacturing (Pitelis & Wagner, 2019).
d) A statement specifying the newly developed goals and the mission and vision
of the organization
After joining Ford Motors, Mr. Alan Mulally stated that the company was
facing certain significant challenges which he intended to overcome with an
advantageous strategic alliance. He initiated to simplify the organizational structure of
Ford by integrating all the diversified objectives to one goal and pertain single
8

FORD MOTORS
strategic planning to achieve it. Moreover, he intended to imply the thought of an
integrated team force within the organization.
These leadership traits signified by the current CEO of the company
showcased the charismatic style of leadership. According to González and Vazquez
(2017), charisma is referred to a personal quality possessed by an individual. Thereby,
certain identifiable traits of a charismatic leader embrace innovative thinking,
effective communicating, motivating and influencing.
All these characteristics can be apparently observed in the leadership style
followed within the organization. Mr. Alan Mulally introduced innovation to the
organization through the integration strategies. According to Press (2018), the CEO
further stimulated the communication process within the organization implying the
decentralized mode of communication and organizing frequent meetings among the
top management group. The level of social interaction reflected by the company
leader also reflects the attribute of a charismatic leader (Press, 2018)
According to Sy, Horton and Riggio (2018), charismatic leadership can be
categorized as entirely leader-produced or entirely follower-produced. In other words,
either the leader will enforce this kind of leadership style, or it will be the followers to
determine the kind of leadership trait within the organization. In the case of Ford
Motors, it can be stated to be as leader-produced. In the case of leader-produced
charismatic leadership style, the behaviour of the followers matters a lot. For instance,
a strong, charismatic leadership trait as can be witnessed in the case of Ford is most
likely to lower the level of expectation among the followers which in turn shall
hamper the working culture to an extent. Moreover, in a leader-driven charismatic
leadership process, the perceptions of the leader also acquire a great significance
which can affect the organizational operations at large (Grabo & Vugt, 2016).
9

FORD MOTORS
Grabo, Spisak and Vugt (2017), stated that charismatic leaders possess certain
serious drawbacks. Notably, it is assumed that the charismatic leaders have a strong
impact on their followers, which denotes that his actions shall not only generate
positive attitude among the fellow workers but shall also provide rise to certain
influential negative thoughts hampering the organizational culture at large. Moreover,
charismatic leaders intend to control their subordinates strongly which is accumulated
with the prospective lacuna of accountability. It is due to the reason that it is quite
difficult to account the fixed certainty of the charismatic leaders.
The internal problem that the company witnessed can be illustrated as the
power of leadership and communication which led the company to a rapid downfall
and then again pulling it back to its position in the global platform. For instance, the
strategies adopted by the company leader during 2000 focused on the marketing
strategies of the company raising multiple questions regarding the company’s welfare
in the international market. Consequently, this fueled the dissatisfaction level within
the organizational hierarchy. It was thus ineffective. The next leader decided to raise a
huge loan from putting most of its assets on a stake as a precaution to the most
probable emergence of a global recession. Prima facie it was remarked to be
unnecessary by most of the company officials and external analysts, the amount
adopted as a loan, fortunately, saved the company from coming across the major
obstacles of the incident similar to its competitors. In the words of Mr. Alan Mulally,
the amount was accepted “as a cushion to protect for a recession or other unexpected
event." (Vlasic, 2018).
This proved to be quite beneficial in supporting the company against the
external fluctuation emerging in the market during the period. Hence, it was again the
effective leadership and the communication process which assisted the company in
10

FORD MOTORS
regaining its growth. However, the company in its present operations is most likely to
witness certain major consequences of charismatic leadership which if appropriate
measures are not taken shall again effect the organizational operations.
What makes a successful digital leader and how digital leaders lead successful
organizational transformations.
Ford Motor Company has maintained its position as a car manufacturer giant
because of its handling of challenges raised by the SWOT analysis. Ford has a
number of strengths such as its strong image and brand name which enhances and
fosters its services and products attractiveness, competitive advantage and customer
loyalty in the market. The other strength of the company is its efficient and effective
supply chain.
Kaye (2012), notes that companies have constraints and inadequacies that
reduce performance, profitability, and viability of a business such as Ford’s products
being relatively high as compared to those of companies such as Toyota as well as its
slow innovation process that slow the company’s response to the fluctuating market
trends. However, the company has an expansion and growth opportunity through a
penetration into the existing and new global markets like China. Competition is a
threat that faces the company because of the high competition levels in the market the
company operates in. Also, the threat of new entries into the market is another threat
especially from companies that penetrate the market with solar powered and
driverless motor vehicles.
The global market was strongly affected by the occurrence of the global
recession around 2007 to 2009. This can be stated as one of the reasons for the
company’s downfall. However, in real terms, the influence of the leadership and the
communication process applied within the organizational environment was stronger
than the phenomenon of the global recession (Zulch, 2014). To sum up, it was the
11

FORD MOTORS
leadership communication which initiated the downfall during early 2000, and it was
the leadership communication again which rebound the company during 2006.
However, the leadership trait followed presently by Mr. Alan Mulally also has certain
flaws which can cause significant drawbacks to the organizational culture. For
instance, the leadership trait followed by the present CEO tends to be charismatic
leadership model while the communications process is largely parallel to that of a
decentralized flow of information.
Alan Mulally when he raised to power and became the CEO of the Ford Motor
Company as a leader, he engaged in establishing effective leadership styles and
managerial skills which led to the company to survive the slumping economy.
Through Mulally effective and ethical leadership skills enabled Ford Company to
become a success. As an effective leader, he ensured that there was openness in
communication which was exemplified in the company in every department. As a
leader, he engaged in disseminating information, informing the employees what they
are required to do and the company agenda in the company which enables the
employees to be productive leading to the success of Ford Company. Towards saving
the company, he initiated changes and always being aware that the steps that he takes
as the company moves forwards would either make or break the company. As the
CEO, Mulally also engaged in creating a system within the company that would
enable the company to accomplish the goals of the company (Chanias, Myers, &
Hess, 2019).
The case has enabled me to learn that many leadership and management skills
can I can play in the future is in a leadership position. It is essential for a leader to
manage the employees effectively together with ensuring that one research about the
company before taking the leadership position. The implication of the lessons to my
12

FORD MOTORS
career as a leader and as a manager is that I will be able to manage the employees
effectively together with strategies that I need to apply to the company moving
forward (Lohr, 2014). The lessons that can be learned from the case is that
communication is paramount in an organization as it helps in building effective team
working within an organization. The implication of the lesson on my current
organization is that it will ensure every employee can understand the vision and the
objectives that the company is looking forward to achieving.
With reference to the above discussions, it is well identified that the company
is most probably to witness the consequences raised by charismatic leadership traits.
For instance, the trait of a charismatic leader is to steer the followers strictly
according to their perceptions, which might lead to negative impacts on the followers.
Moreover, the current leader of the company belongs to a non-auto background.
Therefore, the company can suggestively assign another leader to be directing the
company’s operations together with the current leader. Significantly, the other leader
should be quite experienced in the automobile sector and should not be strictly
charismatic, which shall reduce the consequences of a charismatic leadership style.
It is worth mentioning that a chief strategy adopted by the company leader is
focused on integrating the diversified operations of the company with one single
objective and mission statement. In its realistic practices, Ford is quite well known for
its diversified operations and multidimensional strategies. Consequently, integrating
all the dimensions of the corporation shall lead to a complex organizational structure
which would be quite challenging. Therefore, the company leaders can enforce the
integration strategies to a few of its dimensions but avoid other major sectors in order
to overcome the obstacles laid by the complex organizational structure. Conclusively,
after several fluctuations, the company is gaining stability which should be
13

FORD MOTORS
significantly considered by the company leaders along with the fact that effective
leadership can accelerate organizational changes in an efficient manner and even raise
the risk of strategic failure according to the basic concept of organizational behavior
(Kalmanovich, Pearsall, & Christian, 2018).
Recommendations
From the above analysis, Ford has the potential for growth and development.
The Company can invest more in innovative practices and take advantage of the
market created by demand for environment-friendly products, electric, hybrid cars,
and correlated external aspects. Ford's global markets also provide prospects for
expansion, especially in fast developing nations. For this reason, Ford must roll out
policies to take advantage of the opportunities available. Lastly, Ford must exploit
customer satisfaction and address the external factors in their bargaining power.
Proper risk assessment, as well as benefit evaluation, should precede any
implementation to ensure that the company has higher prospects in the highly
competitive market in its bid to take a larger share of the automotive market. A blend
of newer techniques with some of the effective older ones would also go a long way
in enhancing the marketing strategy of Ford and would place the company at a
vantage point to compete favorably for the existent market space.
Conclusions
In conclusion, Ford Motor Company has prospects for success in the
competitive market environment, but that has to come with strategies to overcome
challenges and set the company among the leaders. Employing the managerial and
technical strategies would be a great challenge for the company, but the fruits would
see the company achieve great profits and expand to dominate markets across the
global scene. The progress of Ford would also get pegged in the vision and mission
14

FORD MOTORS
statements as the employees and the managerial team adopt the principles to establish
the company in the competitive environment. The market-dominating process would
also need the employment of conventional best practices in management and policy
establishment to drive the business enterprise forwards against all forces and risk
factors.
15

FORD MOTORS
References
Chanias, S., Myers, M. D., & Hess, T. (2019). Digital transformation strategy making
in pre-digital organizations: The case of a financial services provider. The Journal of
Strategic Information Systems, 28(1), 17–33.
https://doi.org/10.1016/j.jsis.2018.11.003
Confino, J. (2014a, April 30). Best practices in sustainability: Ford, Starbucks and
more. The Guardian. Retrieved from https://www.theguardian.com/sustainable-
business/blog/best-practices-sustainability-us-corporations-ceres
Confino, J. (2014b, September 23). Sustainable companies are more profitable,
report finds. The Guardian. Retrieved from https://www.theguardian.com/sustainable-
business/2014/sep/23/business-companies-profit-cdp-report-climate-change-
sustainability
Davies, R. (2018, October 15). Ford U-turn: no-deal Brexit could force carmaker to
reconsider UK plans. The Guardian. Retrieved from
https://www.theguardian.com/business/2018/oct/15/ford-u-turn-carmaker-says-no-
deal-brexit-could-force-it-to-leave-uk
Davies, R. (2019, January 11). Ford cost-cutting could lead to 1,000 job losses at
Bridgend plant. The Guardian. Retrieved from
https://www.theguardian.com/business/2019/jan/11/ford-cost-cutting-could-lead-to-
1000-job-losses-at-bridgend-plant
Dery, F. X., Idemudia, U., Gruber, J. S., & Kayira, J. (2019). Identifying and
Clarifying Environmental Policy Best Practices for the Mining Industry–A Systematic
Review. Journal of Cleaner Production. https://doi.org/10.1016/j.jclepro.2019.03.111
González, S., & Vazquez, J. M. (2017). Ford Motor Company in Cadiz 1929-1923.
Manufacturing Engineering Society International Conference 2017, MESIC 2017, 28-
30 June 2017, Vigo (Pontevedra), Spain, 13, 1397–1404.
https://doi.org/10.1016/j.promfg.2017.09.150
Grabo, A., Spisak, B. R., & Vugt, M. (2017). Charisma as signal: An evolutionary
perspective on charismatic leadership. Charisma: New Frontiers. A Special Issue
16

FORD MOTORS
Dedicated to the Memory of Boas Shamir, 28(4), 473–485.
https://doi.org/10.1016/j.leaqua.2017.05.001
Grabo, A., & Vugt, M. (2016). Charismatic leadership and the evolution of
cooperation. Evolution and Human Behavior, 37(5), 399–406.
https://doi.org/10.1016/j.evolhumbehav.2016.03.005
Jolly, J. (2019, January 24). Ford says no-deal Brexit would mean costs of $800m in
2019 alone. The Guardian. Retrieved from
https://www.theguardian.com/business/2019/jan/24/ford-says-no-deal-brexit-would-
mean-costs-of-800m-dollars--in-2019-alone
Kalmanovich-Cohen, H., Pearsall, M. J., & Christian, J. S. (2018). The effects of
leadership change on team escalation of commitment. The Leadership Quarterly,
29(5), 597–608. https://doi.org/10.1016/j.leaqua.2018.03.004
Kaye, L. (2012, July 19). Ford Motor takes impressive steps on water stewardship.
The Guardian. Retrieved from
https://www.theguardian.com/sustainable-business/ford-motor-company-water-
stewardship
Lohr, S. (2014, December 25). Management in a Digital Economy. Retrieved March
19, 2019, from https://bits.blogs.nytimes.com/2014/12/25/management-in-a-digital-
economy/
Mendling, J., Baesens, B., Bernstein, A., & Fellmann, M. (2017). Challenges of smart
business process management: An introduction to the special issue. Smart Business
Process Management, 100, 1–5. https://doi.org/10.1016/j.dss.2017.06.009
Pitelis, C. N., & Wagner, J. D. (2019). Strategic Shared Leadership and
Organizational Dynamic Capabilities. The Leadership Quarterly, 30(2), 233–242.
https://doi.org/10.1016/j.leaqua.2018.08.002
Press, A. (2018, September 9). Ford will not build new Focus cars in US, despite
Trump tariffs tweet. The Guardian. Retrieved from
https://www.theguardian.com/business/2018/sep/09/ford-focus-trump-tariffs
17

FORD MOTORS
Rahimi, F., Møller, C., & Hvam, L. (2016). Business process management and IT
management: The missing integration. International Journal of Information
Management, 36(1), 142–154. https://doi.org/10.1016/j.ijinfomgt.2015.10.004
Rushe, D. (2019, January 15). Ford and Volkswagen announce alliance to cut costs in
face of tech revolution. The Guardian. Retrieved from
https://www.theguardian.com/business/2019/jan/15/ford-volkswagen-alliance-detroit-
auto-show-technology
Schönborn, G., Berlin, C., Pinzone, M., Hanisch, C., Georgoulias, K., & Lanz, M.
(2019). Why social sustainability counts: The impact of corporate social sustainability
culture on financial success. Sustainable Production and Consumption, 17, 1–10.
https://doi.org/10.1016/j.spc.2018.08.008
Sy, T., Horton, C., & Riggio, R. (2018). Charismatic leadership: Eliciting and
channeling follower emotions. The Leadership Quarterly, 29(1), 58–69.
https://doi.org/10.1016/j.leaqua.2017.12.008
Tabesh, P., Mousavidin, E., & Hasani, S. (2019). Implementing big data strategies: A
managerial perspective. Business Horizons.
https://doi.org/10.1016/j.bushor.2019.02.001
Vlasic, B. (2018, January 19). The Head of Ford Retires, Having Rejuvenated the
Carmaker. The New York Times. Retrieved from
https://www.nytimes.com/2014/05/02/business/ford-motor-chief-to-retire.html
Wang, Z., & Pyle, T. (2019). Implementing a pavement management system: The
Caltrans experience. International Journal of Transportation Science and Technology.
https://doi.org/10.1016/j.ijtst.2019.02.002
Zulch, B. (2014). Leadership Communication in Project Management. Selected
Papers from the 27th IPMA (International Project Management Association), World
Congress, Dubrovnik, Croatia, 2013, 119, 172–181.
https://doi.org/10.1016/j.sbspro.2014.03.021
18

FORD MOTORS
Appendices
Appendix (i): Graph of U.S Market Share by Company
Source: (Schönborn et al., 2019)
Appendix (ii): Graph of European Market Share by Company
Source: (Schönborn et al., 2019)
19