PESTLE Analysis for Ford Motors

The assignment discusses the application of PESTLE Analysis to Ford Motors, an American multinational organization. The PESTLE framework is used to analyze the macro-environment factors that affect the organization's performance and productivity. The analysis covers political, economic, social, technological, environmental, and legal factors. It highlights the importance of understanding these factors in order to formulate strategies for the organization's success.

Introduction
This article is going to discuss one of the significant tools of scanning the business environment
called PESTLE Analysis. The discussion of PESTLE Analysis in this article has been done in
regard to Ford Motors an American multinational organziation. Thus, the main purpose of this
article is to analyze the macro-environment of Ford Motors with the help of PESTLE Analysis.
An organization operates in an environment which significantly affects the fucntions of the
organization. There are several factors in the business environment which control and affect the
functions of the organization. It significantly influence the performance and productivity of the
organization and hence it is important for the organization to analyze these factors to function
smoothly in the market. PESTLE Analysis is an important tool with the help of which these
factors can be easily analyzed. PESTLE analysis also helps in creating strategic strategies to
avoid or minimize the impact of environmental factors on the business.
Overview of the Organization
Ford Motor is one of the American based mutinational organizations which sells commercial
vehicles as well as automobiles. The organization sells the vehicles under the brand name of
Ford. Apart from this, the organization sells its most luxury cars under the brand name of
Lincoln. Ford Motors was founded on June 16, 1903. The founder of Ford Motors was Henry
Ford and its headquarters is situated in Dearborn, Michigan, United States of America. The
organization offers its services world-wide. The organization is the second largest in the United
States of America in terms of manufacturing vehicles while fifth largest in the world. There are
more than 199000 employees are working with Ford Motors currently.
PESTLE Analysis

The concept of PESTLE analysis can be better understand with the help of PESTLE definition.
PESTLE analysis can be defined as a tool or framework which is extensively used by the
organization in order to monitor as well as analyze the factors of macro-environment of the
organization which can impact the performance of the organization profoundly. This framework
is extensively as well as regularly used by the organization to ensure smooth functioning of the
organization by avoiding or minimizing the impact of macro-environmental factors. However,
this tool is very helpful for the new organization. It is also very useful for the organization which
is planning to enter into a new market (specially foreign market). PESTLE analysis is an
acronym which stand for;
 Political
 Economic
 Social
 Technological

 Environmental
 Legal
PESTLE Analysis of Ford Motors
Political Factors
Political factor is one of the significant factors which can determine the profitability of the
organization. Political factor can significantly affect the long-term profitability of Ford Motors.
The concerned organization has presence in several countries and hence it exposes itself to
several political system. Therefore, it can be said that the organization is dealing with several
types of political system risks as well as political environment. Any disturbance in the political
system of one country can have significant impact on the profitability of the organization.
However, the organization cannot exercise control over political factors. Hence, it is necessary to
monitor the political factors closely so that associated risks can be identified in advance and the
organization can develop strategies to deal with the identified risk. There are several political
factors which affect the functioning of the organization such as level of political stability, risk of
military invasion, level of corruption, etc. America is a politically stable country which will help
Ford Motors to enhance profitability. Apart from this level of corruption is also low. So, it can be
said that the political factors of America is favorable for Ford Motors.
Economic Factors
Economic factor plays a very crucial role in making the organization successful. There are
several economic factors which directly affect the performance of the organization such as the
rate of inflation, interest rate, saving rate, employment rate, economic growth rate, foreign
exchange rate, education level in the economy, etc. If the economy growth rate is high, it would

significantly help the organization to grow and develop in the economy. The economy of
America is growing at a rate of 2.1% which is not a good situation. The performance of the
economy is poor. Therefore, it will negatively affect the performance of Ford Motors. However,
the inflation rate is 1.8% which is favorable for Ford Motors. Apart from this, the unemployment
rate is as low as 3.7%. Lower unemployment rate is good indicator for the growth and
development of the country. It is also favorable for the concerned company. Thus, it can be said
that the economic factors of America is favorabel for Ford Motors except the economic growth
rate of the country.
Social Factors
Social factors also significantly affect the performance and productivity of the organization. The
culture and tradition of the society as well as the way of doing things influence the organizational
culture extensively in an environmental setting. There are several social factors such as
demographics, power structure and class structure in the society, level of education, level of skill
of the people of the society, attitude, etc. which affect the functioning of the organization on a
large scale. The people are highly qualified as well as skilled of the country. The people of the
country want to maintain their status in the society. There is no or negligible gender
discrimination in the country. So, it is easy for the organization to affect or influence the attitude
of the people to puchase car. Thus, it can be said that the social factors are also favorable for the
growth and development of Ford Motors.
Technological Factors
Technological factors are very significant from the organization point of view as the organization
needs to be updated with the advancement in technology to be competitive in the market against

the key competitors. Focusing on technological factors helps in gaining competitive edge and
hence the organization can outdo the key competitors to gain high margin of profit. Technology
is one of the factors which is being advanced very rapidly. Everyday changes in technology can
be seen. America is also one of the advanced countries in the world. It is beneficial for Ford
Motors to grow. The concerned organization needs to analyze the recenet technological
development by the key competitors. Apart from this, the organization also needs to understand
the impact of technology on product offering and the rate of technological diffusion. The
organization also needs to analyze the speed of technological disruption so that the organization
can cope with the technological changes and be profitable. The rate of technological disruption is
high in America and hence the concerned organization has very less time to cope with the
technological changes. Thus, it is very hard for the organization to be competitive in the market
through coping with the technological changes. Hence, it is necessary for the organization to
focus extensively on the disruption rate of technology.
Legal Factors
Legal factors also have direct impact on the functioning of the organization. It is the
responsibility of the organization to adhere with the rules and regulation as well as policies and
procedures of the country to do the things. There are several factors under legal factors which
have significant impact on the organization such as discrimination law, data protection,
employment law, anti-trust law, consumer protection and e-commerce, health and safety law,
copyright and intellectual property law, etc. Being involved in any illegal activity will negatively
affect the organization and the government can take strict action against the organization. It will
affect the reputation and public image of the organization. Therefore, the organization should
keep itself aware of the legal requirement to fucntion actively in the country in order to avoid

legal action from the government. However, there is no complex and tough rules and regulations
in the country which keep the company on the ease to do the business.
Environmental Factors
Environmental factors are being more important nowadays as the people and the government are
being more concerned for the environmental condition. The action and activities of the
organization significantly affect the environment. Considering the impact of business activities
on the environment, the government has create norms to protect the environment. The
organization is being asked to ensure sustainable business practices so that environment can be
protected. The government of America is very much concern for the environment and hence it is
important for Ford Motors to focus on making its business activities sustainable to sustain in the
market for long period of time.
Conclusion
It can be concluded that PESTLE analysis is one of the significant tools with the help of which
the organization can analyze its macro-environment effectively. With the help of PESTEL
analysis the organization can keep a close eye on different factors of macro-environment
effectively and efficiently. It helps in ensuring high-level of performance and productivity of the
organization. It helps in formulating strategies to enter into the market and hence the
organization can performance well in the market. Thus, with the help of PESTEL analysis the
organization can ensure high margin of profit.

References