Ford's Expansion into Canada: A Feasibility Study

This assignment examines the feasibility of Ford expanding its operations into Canada. It conducts a PESTLE analysis to assess the Canadian market environment, considering factors like political stability, economic conditions, legal framework, technological advancements, environmental regulations, and social trends. The assignment also evaluates Ford's financial performance and analyzes potential threats and opportunities in the Canadian market. Ultimately, it aims to determine if expanding into Canada is a viable and profitable decision for Ford.

TOP7522 Business
Organizations and
Environments in Global
Context

Contents
INTRODUCTION...........................................................................................................................3
.........................................................................................................................................................6
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
This study is based on business organisation and environment in global context. Business
environment impact on the growth of company, internal and external factors get affect the
organisation occupations such as customers, workers, all the management department of firm and
also for the demand of supply in business. In this unit it explains the current operations of Ford
company in Canada. Ford discovered the huge range of new cars and supply in all over the
world, it is an American international organisation which has founded by Henry Ford in 1903.
Them headquarter is located in Dearborn, Michigan. This brand gives their services by selling
automobiles and commercial vehicles. Now they want to expand these business in Canada and
opening a new store. They faced some issues in the process of opening which highly described
by PESTEL and Porters 5 forces. It describes the problems through Politically, economically,
social, technology etc. also describe how the 5 forces of porter effect the business environment
of Ford.
MAIN BODY
Background of Ford: Ford established in Dearborn, founded by henry ford on 16 June
1903. It was the world largest automobile company in world. Ford is an American firm; their
motive is to supply their best services through making new cars within some new techniques.
Now, they want to established business in Canada to expand their work by supply cars and
commercial vehicles. Their function is to manufactures trucks, tractors and cars for passengers.
They make innovation on the bases of customer’s demand. Ford Motor credit company, Jangling
motors, Lincoln motors company etc. all these organisation own ford. There net worth is
approximate $199 billion. They made so many new models car. Company business is based on
their financial performance and activities such as shareholders. They played an important role in
financing activity. Balance sheets and cash flow reflect the statement of business growth. They
increase their business growth according to services, financial performance is based on the profit
through year by year. Shareholder and stockholder ratio gain the business success. Annual
Revenue of ford company shows the profit in years of 2008 to 2017. The total revenue of ford is
156.8 billion in U.S. dollars.

Figure 1 Ford Financial performance
The net profit margin of company is over last 10 years. It defines the revenue percentage of ford
on the bases of their incomes. Net profit of company is 3.88 % in September, 2018. Ford
financial position statement provide investors or creditors and identify the details of organisation
assets and sources as liabilities and equality. This process describes the whole information about
earning in present or future. Assets (resources) of ford company is:
Assets Month/ years Amount
Financial services finance
receivables, net
December 30, 2017 18,493
Trade and other receivable,
less allowances
December 23, 2016 11,108
Other assets December 29, 2015 2,813
There total current assets ratio in December 31, 2017 is 257,808 and non-current resources is
151,908. Ford sale 18.9 million trucks and cars in 2016. Sales decreasing only 3.9% in October
compared to expectations of 5%. Ford company saw the weaker sales the entire industry. The
sales mix is driving higher margin sales where revenue increased 3% year over year and
company face the reduction in net income and higher commodity cost. They believe the
management committed to pay the current dividend. Launch the short terms plan during the

restructuring will changes in organization. Other company continue advise ford as buy value of
products and hold the investor.
Analysis of porters 5 forces: Ford established their new business store in Canada. They face
some issues in opening their new business. Porters 5 forces help to define and resolve the issues.
1. Competitive rivalry: Analyse the competitors in market place is the way to know threats
of business. Ford established their work in Canada, under these process they face some
problems which is their competitive rivalry. They get afraid to other organisation
strategies and planning; it may be effect their business. Toyota also sell automobile
product in Canada, they give tough competition to Ford company. For resolving the
issues of competitive rivalry they make new strategies which is highly difference to
others. Through marketing research, it might be possible.
2. Bargaining power of suppliers: ford company another threats is the bargaining power of
Toyota. Through research they know that the other organisation raise their products price
more than the Ford, it will impact their business growth. For raising the productivity of
products, ford make changes in their structure. They can get better position in market by
offering reasonable price of their services to people. Low prices attract customers toward
the products of company. Bargaining power of other suppliers effect the price, product
and production of business.
3. Bargaining power of customers: Ford offer the best price products such as cars and
trucks. They also give some discount offers to customers. This process of bargaining
effect the quality and pricing of products. People buy product to the company which
provide good quality service than the others. If company doesn’t provide this service
people easily changed their purchasing business services to other company.
4. Threat of new entrants: Ford is new entrants company in Canada. They have many threats
in marketplace of this country. Threats of competitive rivalry, bargaining of suppliers and
customers etc. new entrants of another organisation is the issue of business. Ford can join
their competitors for great advantage of making profits, increasing productivity and
growth.
5. Threats of substitute products or services: through the study of forces it explains the
behaviour of switching business by customers. Ford can have focused on their
competitors’ prices and quality. This threat of substitute inform company about switching
price, as how long terms.

PESTLE Analysis
Political (P)-
The political environment has major influence on the company as it operates in nearly all
geographical locations. Canada is a founding member of United Nations and has good relations
with France, UK and other nations. Canada has good political scenario and stability can be seen.
It can be said that Ford may be able to expand in Canada as it has stable political system and
government support technological innovation which provide opportunity to Ford to effectively
achieve goals of expansion in the nation and enjoy economies of scale with ease (Razin, 2017).
This shows that political stability of Canada which will provide ample of benefits to company in
getting desired revenue and profits.
Economical (E)-
Economic factors are also an important part of the nation which is to be evaluated by
company so as to expand in effective manner by taking judicious decisions. Economic factors
such as inflation, interest rate, unemployment rate are crucial to be assessed by firm in effectual
way. The inflation rate of Canada in 2018 second quarter was 2.2 % which was 2.8 in first
quarter which was decreased due to reduction in price of non-durable goods and gasoline
products. On the other hand, interest rate in Canada in the month of September 1.5 %. The
unemployment rate also lowered down in 2017 and reached 6.33 % which was 6.9 % as more
people participated in labor market. Moreover, GDP is also more and will hit more in the future.
Overall, it can be said that inflation, interest rate and unemployment rate are reduced and
favorable for Ford to initiate its operations.
Social (S)-
The social and cultural factors are beliefs, values and societal norms of people of Canada
which are too assessed by Ford in effective manner. Ford has the opportunity to achieve
satisfaction of customers as they demand for electric and hybrid cars (Arthur, 2018). Moreover,
after sales services can also be improved in a better manner by which they may become loyal in
initial stage of operations in Canada. It is required that Ford need to analyze and make strategies
as increasing wealth gap is a threat which can be disadvantageous to company’s vehicles as they
are luxurious automobiles. It is required that intensive growth strategy will be beneficial for firm
in attaining customer base by making innovative products (Hohmeier, McDonough and Wang,
2017). Canada encourages skilled labor force and provides flexible immigration system and this
is an opportunity to company to hire immigrants and achieve desired goals.

Technological (T)-
Technological advancement is fairly adopted by Canada as it is good manufacturing hub
which is suitable for company in effectual manner. Ford has to analyze the requirements of the
technology so that it may be able to satisfy customers in the best way possible. It can be assessed
that rising utilization of mobile computing is beneficial for Ford as it will be able to make mobile
marketing to people of Canada which will be cost-effective for it. Moreover, Canadian people
mostly youth purchase products online showing that internet marketing is quite option for firm.
Thus, online fulfillment services can be provided to them (Warren, 2017). Fuel-efficient vehicles
are demanded by Canadian citizens who are of superior quality as well. Hence, company can
effectively enhance technological changes in country and attain appropriate operations in new
nation.
Legal (L)-
The legal factors and laws are important for company in effectual manner as it shapes the
future operations as well. Legal laws such as certain rights of employees are to be protected by
company so that it may initiate uninterrupted operations in country. In relation to this, Canadian
Human Rights Act is a law which prohibits any type of discrimination in granting services of
employment to people which needs to be taken into account by Ford so that no discrimination is
made. Moreover, Right to refuse unsafe work, Right to participate in workplace health and safety
and related rights are being granted by government to people who need to be followed by firm.
Intellectual property rights and properties, environmental laws are strict. Since, it is engaged in
automaker, environmental pollution is to be reduced up to a high extent.
Environmental (E)-
The environmental factors are required to be assessed by firm in order to smoothen its
operations in effective manner. Low carbon trend should be applied to manufacturing so that
pollution may be controlled with ease and laws of Canada may be followed. Moreover, Ford can
offer new items which can be used as an alternative of oil as oil reserves are declining at a rapid
rate which will be worse for auto firms (Drewniak and Dalaklis, 2018). On the other hand,
climatic conditions may be effectively analyzed as Canada has more of winter season and
climate remains cool. Moreover, Canadian government has taken initiatives for controlling the
air pollution, reduction in greenhouse gases like carbon dioxide which is a leading indicator for
climate change.
GDP of Canada

Figure 2 GDP Canada
Source: Canada GDP-Gross Domestic Product
Canada is one of the largest economies as per the automobile manufacturing taking place
at a faster pace in the country. GDP has significantly increased in recent period which shows
nation has progressive economic growth. In the second quarter of 2018, economy made healthy
growth by reaching to hike of 0.7 in comparison to previous quarter. The rate is 3/10th of 1%
higher than the figure of 0.4% registered in first quarter 2018. The figure of GDP was $303,616
million in 2018 second quarter which was $287,210 million in first quarter of 2018. The annual
GDP as per the chart reached to 1464610 million in 2017 which was just 1388571 million in
2016, thus, increment of 3% can be found which shows clearly potential growth of country.
FDI

Figure 3 FDI in Industry
Source: FDI in Canada in 2017
The FDI in Canada can be seen in the chart that major amount of investment is made in
manufacturing sector amounting 176,200 million Canadian dollars in 2017. While, second major
investment is made in management of companies and enterprises of 170,855 in same year. For
mining and oil and gas extraction reached 162,230 while for finance and insurance, 136,974 has
been made in 2017. For wholesale and retail trade amounting 74670 and 35790 respectively.
Thus, it can be said that Ford which is second-largest automaker based in US will be able to
expand its operations in Canada as huge investments are made in manufacturing sector which
may prove to be beneficial for the company.

Figure 4 Canada FDI position
Source: Canada Foreign Direct Investment Position. 2018
It can be analyzed from above graph that foreign direct investment is being widened in
the country. The Canadian direct investment abroad was 1044 (billion dollars) in 2015 which
reached to 1084 in next year and finally climbed to 1121 in 2017. On the other hand, FDI in
Canada has also grown over the years. This is evident from the fact that it was 783 in 2015,
increased to 809 in 2016 which further maximized to 824 in 2017. Collectively, net direct
investment position in 2015 was 261, 275 in next period and reached 297 in 2017. It is expected
to increase in the future and it can be said that Ford will be able to attain desired growth quite
effectually. The increase in FDI was effectively found in Canada as higher investment positions
in Europe (+7.7%) and North America (+1.9) which is another reason for increase in growth of
FDI in Canada.
Opportunities and Threats
There are several opportunities for Ford to expand its operations to Canada and provide
quality products to people. It has the opportunity to meet demand of LCV (Light Commercial
Vehicle) which is demanded by businesses to load goods and transport it to destination. On the
other hand, electric, hybrid cars can be provided to customers. While, autonomous driving
technologies can be implemented for better growth in the future. Threats are global financial
crisis in various countries which is creating excess capacity conditions for firm. While,
emergence of different Asian alternatives to mobile solutions are leading to threat company in
Canada. It can be said that threats are increasing but Ford can overcome the same by
implementing strategies.

CONCLUSION
Hereby it can be concluded that expansion decision of business to new country is crucial
decision as in-depth analysis need to be made regarding external and macro-economic factors so
that expansion may be viable and feasible for company. Ford will be able to initiate its
operational activities in Canada as it can be analyzed from PESTLE analysis that Canada has a
favorable environment for company. Political stability, economic, legal, technological and
environmental factors are good. Furthermore, financial performance of company is also adequate
and is earning good profits from past several years which mean that it is financial viable option
for Ford. Moreover, it can be said that overall background of company is good and will be able
to effectively expand in Canada and profitability position will be elevated quite effectually.

REFERENCES
Books and Journals
Razin, E., 2017. Immigrant entrepreneurs in Israel, Canada, and California. In Immigration and
entrepreneurship (pp. 97-124). Routledge.
Arthurs, H.W., 2018. The hollowing out of corporate Canada?. In Globalizing Institutions (pp.
29-51). Routledge.
Hohmeier, K.C., McDonough, S.L. and Wang, J., 2017. Co-creation of market expansion in
point-of-care testing in the United States: Industry leadership perspectives on the community
pharmacy segment. Research in Social and Administrative Pharmacy. 13(4). pp.746-753.
Warren, W., 2017. Coordination of entrepreneurial growth methods and business retention and
expansion outreach. Community Development. 48(2). pp.187-206.
Drewniak, M. and Dalaklis, D., 2018. Expansion of business activities in the Arctic: the issue of
search and rescue services. Ocean Yearbook Online. 32(1). pp.427-455.
Online
Foreign Direct investment (FDI) in Canada in 2017, by industry (in million Canadian dollars).
2017 [Online] Available Through: https://www.statista.com/statistics/462913/foreign-direct-
investment-in-canada-by-industry/
Foreign direct investment, 2017 [Online] Available Through:
<https://www150.statcan.gc.ca/n1/daily-quotidien/180425/dq180425a-eng.htm>
Canada GDP-Gross Domestic Product. 2018 [Online] Available Through:<
https://countryeconomy.com/gdp/canada>