Impact of Environment and PESTLE Analysis on Ford Motors

This report discusses the impact of environment and application of PESTLE analysis on Ford Motors, a leading organization in the automotive industry. It explores the micro and macro environmental factors affecting the organization and discusses the strategies adopted by Ford to overcome challenges. The report also includes a SWOT analysis and a competitive analysis of the organization.

BUSINESS
STRATEGY

Table of Contents
TASK 1............................................................................................................................................4
P1 Explain the impact of environment and application of PESTLE analysis to a business
organisation............................................................................................................................4
TASK 2............................................................................................................................................6
P2 Application of Micro environment analysis to a business organisation............................6
TASK 3..........................................................................................................................................10
P3 Analysis of competitive environment of an organisation................................................10
TASK 4..........................................................................................................................................12
P4 various strategies that are helping on overcoming threats of business environment......12
CONCLUSION..............................................................................................................................18
REFERNCES.................................................................................................................................19

INTRODUCTION
Brexit is not only related to United Kingdom (UK) is leaving European union but it has
an impact on various organisation functioning in this country. The automotive industry is also
experiencing lot of changes and is getting impacted in a negative manner. There has been a
requirement that this industry has to form various new strategies for the purpose of sustainability
and growth. Present report is based Ford motors one of leading organisation of automotive
industry that is having its headquarters in Detroit. Henry ford laid the foundation of this brand on
June 16, 1903. there are lot of factors that are present in macro and micro environment. It posses
force on functioning of a administration (Johnson, 2016). This report discussed about such
factors based on use of frameworks such as PESTLE analysis. Further, SWOT analysis and all
such information is used in formation of strategies by Ford. These strategies are to be formed to
deal with various changes that are impacting performance of this organisation because of
prevailing referendum of Brexit.
TASK 1
P1 Explain the impact of environment and application of PESTLE analysis to a business
organisation
Micro environment: Micro environment is the environment that is having an immediate and
direct impact on functioning of a organisation (Lozano,, 2018).
Macro environment: These are the environmental factors that are connected with economy as a
whole. It is related with various trends that are flourishing in the external economy of a country.
Such as GDP, Spending, employment, inflation rate and fiscal & monetary policies.
PESTEL analysis:
There are various different external factors that are present in macro environment of a
business organisation and poses impact on how these organisations are functioning. Below
discussed is the PESTLE analysis of Ford motors, the sudden BREXIT change has resulted in
this company getting affected by lot of environmental factors in both positive and negative
manner as discussed below:
Political factor: These factors are related with how governmental actions are affecting a
particular organisation. In UK BREXIT is a referendum that is part of political decision taken by
UK government.

Negative: The overall political instability in European union is posing a threat for Ford as
it is resulting into negative impact on performance of this organisation in the market. It has
resulted in reduction of demand in the market as there has been increase in tariff rates on exports
and imports that leads to delay at UK border ( Ling, 2019).
Positive: Free trade agreements & government incentives in case of emerging markets is
providing ample number of growth opportunities for Ford. Government in Asia is supporting
automotive industry as there is projected increase in demand in coming period of time. For
example: in Brazil registration number increased by 11% it lead to various growth opportunities
for Ford.
Economical factors: There are various economical factors related to economy of a country and
posses a impact on overall functioning of an organisation (Landrum,. and Ohsowski, 2018).
Positive: Various emerging players of Asia are offering a demand for vehicles which
Ford is willing to fulfil. There have been many open trade agreements that is promising for
increased sales.
Negative: This may have a negative impact in the form that such open trade agreements
between economies of a country also result into increasing risk of competition and chances of
market saturation in future.
Social factor: Consumers today have lot of options available with them when it is related with
auto-mobile industry.
Positive: There has been opportunity for hybrid & electric vehicle category and demand
for hybrid cars is increasing. Ford has already been involved in introduction of variants in such
categories for increasing their revenue.
Negative: there are multiple players in a country and there is presence of near saturated
markets all this is posing difficulty in attracting buyers for Companies like Ford.
Technological factors: Technology is playing a significant role for consumers while choosing a
vehicle. The Population is experiencing demand for such cars that are up to with current and
updated technological strategy like automatic windows.
Positive: Ford has successfully incorporated most modern gadget in their vehicle.
Negative: there is a requirement of huge investment that have to be done by Companies
such as Ford for adoption of new and latest technologies (Gerged,, Cowton,. and Beddewela,

2018). Such as there has been a recent investment of one billion dollars in autonomous research
of vehicle done by Ford to emerge as a leader in market.
Legal factors: These factors are connected with a variety of authorized rules and regulations that
have to be followed compulsorily by business organisations.
Positive: following of all safety regulations and environmental regulation has lead to
increase in growth of organisation such as Ford. Ford has the opportunity to align themselves to
such regulations for better designs of product and safer working environment.
Negative: there are lot of regulations, which lead to rise in amount of overall regulations
for a industry or a organisation. It leads to lot of policies and procedures that have to be adopted
by various stakeholders that are part of the organisation (Goodman, Korsunova, . and Halme, ,
2017).
Environmental factors: there are many different types of factor that are present in external
business environment and have to be taken care to reduce their overall negative impact.
Positive: global demands is creating a opportunity for automotive industry to expand
their production towards hybrid and electric models of vehicles. Ford is also focusses on
emerging segment of markets which is helping them in holding potential for future growth
prospective.
Negative: for organisation Working in automotive industry there is always a increased
pressure to have high concern for environmental factors and to make sure that they are not
posing any negative impact on the external environment in form of emission of harmful
substances.
TASK 2
P2 Application of Micro environment analysis to a business organisation
There are various micro environmental factors that have an impact on the internal
functioning of a business organisation. These factors are affecting functioning and achievement
of business objectives. In case of Ford such SWOT analysis is done below:
Strength:
Global recognition: Ford is a recognized brand name in automotive business plus is
having a high range of success in many countries because of quality products which they offer to
their customers.

Diversity: Ford is a brand that is successfully catering to requirement of all demographic
groups with the help of their diversified car models (Peng, 2017). They make sure that they are
updating themselves as compared to demands of their customers.
Weaknesses:
Product recalls: In the year 2016, Ford faced huge amount of losses and a negative
impact on their overall brand image because of product recalls. They will recall around 830,000
vehicles to be replace because of faulty door sides latches.
High dependence on markets of UK: Ford is dependent on European and U.S. Markets.
It is limiting its profitability and overall revenue. There have been predictions made that in future
car sales cam come from different emerging markets such as India & China.

Opportunities:
Increasing of customer base: Ford is having a great opportunity to work on the market
in countries such as China which is providing them opportunity to increase their base by more
focus on digital marketing skills for enhancement of supplier engagements and customer base.
Self Driving car: Ford has the opportunity to invest in technological of artificial
intelligence. In the year 2017, Ford has made investment of Dollar one billion in Artificial
intelligence for development of self driven technology.
Digital marketing: Digital marketing is a tool that is used across worked by many
organisations (Gattorna, , 2017). Ford has opportunity to work on their present base of
customers by use of digital marketing tools.
Threat:
High amount of competition: ford is facing very high competition as there has been
huge competition from their rivals such as tesla, tata and Toyota. Ford is struggling for
maintaining its innovative position in the automotive industry because of presence of such
competitors.
High economic fluctuations: In the year 2018, performance of Ford is not according to
expectation of management. Income of this brand has shown a huge decline. Major reason for
such reduction in overall performance is the BREXIT referendum that is taking place. It is
leading to various fluctuations in overall exchange rate of currency and is larding to increase in
threat for their further implementation of new strategies (Yuliansyah, Gurd, and Mohamed,
2017).
Regulations & compliance: These two are threats that automotive brands are facing in
past years as there has to be many environmental improvements that are prevailing across
different parts of world. Vehicle are now inspected highly for their various quality & safety
issues. Ford is a brand that is facing large number of challenges if it is not able to comply with
such type of regulations.
Above discussed are SWOT analysis of Ford based on various micro environmental
factors that are having a impact on overall functioning and decision making by this organisation.
BREXIT is a external environmental factor but is having very huge impact on overall internal
functions that are impacted by such political factors (Hsu, Moore and Neubaum, 2018).

VRIO Analysis: It is a framework that is commonly applied to a organisation for assessment of
four characteristics such as valuable, rare, imitability & organisation in context of Ford this
concept is applied as discussed below:
Value These are the factors that are responsible for
identifying various resources being valuable
for administration. In Ford, this brand has four
major resource that are very valuable for them
it includes strong brand image, competent
workforce, global presence and early adoption
of new technology (Zhu and Chertow, 2017).
Rareness This feature is associated with how much rare
are the resources present with a organisation.
In case of Ford such resources includes early
adoption of technology, global presence and
strong brand image.
Immitability It can be said that there are some resource that
can be easily imitated by competitors and some
may not. In case of Ford, strong brand picture
and early adoption of technology are the two
resources cannot be easily imitated by other
competitors of Ford as these are the resources
that require huge investment to be done.
Hence, it can be said that these resources are
very valuable and cannot be imitated by other
organisations.
Organisation All the resources of a organisation have to be
organised properly so that there is optimum
utilisation of capabilities of the organisation. In
case of Ford, early adoption of technology is a
resource that helps them in achievement of

competitive advantage in long run and is also
very helpful in survival of the organisation.
Valuable Rare Imitable Organisation
Strong brand
image
Yes yes Yes No
Global presence Yes Yes No No
Competent
workforce
Yes No No No
Early adoption
of technology
Yes yes Yes Yes
After making a thorough evaluation of the above discussed capability of a establishment
Ford will be able to prepare strategies by considering the above mentioned resource that are
providing them a economical advantage.
TASK 3
P3 Analysis of competitive environment of an organisation
Porters five force model was started by Michael porter for creation a thorough analysis of
different economical forces that can have an impact on operations and functions of a
organisation. This is a model that can be used for the purpose of making an analysis of how
factors can posses impact on Industry & helpful in formulation of a corporate strategy. This is a
model that is used for determining of various strength & weaknesses of an industry. Five force
analysis of Ford is discussed below:
Threat of new entrants: In case of innovation, there is a hazard for fresh entrants as
innovation in new products can take place by various competitors or there can be new start ups
that can enter the organisation and can poses a threat for Ford. In case of automotive industry this
threat of new entrants is low as it requires a massive investment for new entrants. Major
competitors are Tesla motors that are focusing on premium electric vehicles.

Bargaining power of Buyers: In a case of Ford the overall bargain power of buyer is
high. Also, there is a probability that buyers in Ford can have an impact on prices of their
products to a extent and have a impact on their overall profitability. This leads to restriction on
Ford that they cannot raise their prices up to a level.
Threat of Substitutes: Ford is a company that is facing threat from various substitutes.
Substitute products in automotive industry is comprising of different transportation modes such
as public transportation etc. but the overall component of design and quality is a factors that can
be a barrier when it comes to substituting a particular product by Ford.
Power of suppliers: There are different suppliers that are Suppliers in case of automotive
industry are related with supplying of aluminium, rubber etc. suppliers provide such materials to
offer at competitive prices to their buyers for having a long term business relationships. There is
moderate level bargaining power of suppliers in case of Ford.
Competitive rivalry: Automotive industry is facing a very high competition because of
leading manufactures such as Toyota, general motors and Daimler. This presence can make the
market more challenging. Company is supported by quality vehicles and able to respond well in
a more positive manner in dealing with the competitive pressure.
Porters five force analysis of Tesla: Tesla is one of the biggest competitors of Ford. Below
discussed is the five force analysis of Tesla:
Threat of substitutes: In case of tesla such type of threat is not much high as they
believe in high satisfaction level of their customers which prevents them from switching to any
other brand.
Bargaining power of suppliers: This is a force that is related with suppliers having a
influence on business activities. Tesla must make attempts for maintaining long relationships for
a longer period of time so that they are able to achieve cost effectiveness (Aldea, Iacob, . and
Quartel, 2018). This is very necessary for maintaining adequate level of profits in an
organisation.
Bargaining power of customers: This is a force that is connecting with identification of
customer ability to possess an influence on Tesla. Tesla is a business organisation that is
commerce in electric vehicles that cannot be purchase very frequently by customers as they are

very price sensitive for these merchandise. It is important for Tesla to maintain the bargain
power of customers to prevent them from switching from their brand.
Threat of new entrants: A new entrant can have an impact on business if it is becoming
difficult for a organisation to function in a industry. There is not much threat for new entrants as
it is not possible for any new entrants to enter into a new market very easily and establish their
brand image as Tesla s having in the market Rugman, . and Verbeke, ., 2017).
Competitive rivalry: There is presence of high competition in the automotive industry,
but Tesla is possessing a differentiation advantage of electric vehicle which they produce
(Whitehead, 2017). It is helping them in having a competitive advantage as compared to their
competitors such as Ford.
Conclusion
TASK 4
P4 various strategies that are helping on overcoming threats of business environment
Strategic marketing plan
Strategic marketing plan is imperative for every organisation so that overall understanding can
be developed by considering of some set objectives for a particular phase of time:
Executive summary: Ford motor company is a leading brand in the automotive industry.
They are working towards making people's live better by use of mobility and accessible options
in vehicles for their customers (Idemudia, 2017). There is a strategic plan that has been prepared
for achievement of various objective laid down initially in this strategic marketing plan. Further
there are some of the strategies that can be adopted by Ford for accomplishment of their overall
objectives has been discussed.
Objectives: There are some objectives that have been set by the association of Ford as discussed
below:
 Increasing overall share of market buy a rise of 10 percent and increase of revenue by 15
percent in coming time period of four years.
Vision: Ford has a vision that is focussed on achievement of high level of performance in
their industry.

Mission: Ford has a mission of benefiting their target customers by use of mobility. They
below in designing of products in such a way that they are bale to handle all the issues and needs
of their customers related to transportation (Chotipanich, nd Issarasak, 2017).
Tactics: Tactics have been developed by Ford by making use of marketing mix as a
strategy to be adopted in the business as discussed below:
Product Main products of Ford include trucks, auto
mobiles, buses, tractors etc. Ford is a company
that is famous for their auto mobiles. Its
subsidiary that is Ford Motor credit company
that proposing financing to their customers.
Place FORD is using various places for
implementation of their distribution network.
Major four techniques are used by Ford for
distribution of their products that includes auto
parts stores, ford part website, dealerships and
ford motor credit company. In all these ford
dealerships is the places use for distribution of
their products. For achievement of objective of
increasing of market share Ford can make use
of dealerships in major areas for distribution of
their products and enhancing their customer
reach (Irtaimeh, Al-Azzam, F. and Al-Qura'an,
2016).
Promotion For motors is promoting its products by use of
conventional tactics such as personal selling,
direct selling, public relations. Advertising etc.
in this advertising is one of the effective
strategies that can be adopted by Ford motors
in increasing their reach to their customers and
achievement of laid down objectives.

Pricing Fords' pricing strategies are depended on
market. It is a element of marketing mix that
involves various strategies for determination of
prices of products based on market conditions.
There are basically two main price strategies
such as market orient plan an premium pricing.
In present scenario market oriented strategy
can be used as a tactics by Ford in
enhancement of their present markets share
and competitive pricing will also provide them
a competitive advantage as compared to their
competitors (Halpern, and Graham, 2018).
Bowman's strategy Clock: It is a mode that is used for designing of a marketing strategy
or analysis of competitive position as compared to their competitors (Magnin, 2016). It is a
representation of relationship prevailing between overall value of customers and prices of
products. Below discussed are some of the strategies that can be used by Ford in achievement of
their laid down objectives:
Strategy 1: Low price/Low added value: It is a segment that is used in case of a
companies when their products do not posses any differentiated value. In this strategy a company
can apply cost effectively by selling their products in volume and then attracting new customers
on a continuous basis.
Strategy 2: Low price: This is a strategy that can be used by a company in case of they
are low cost leaders. In this strategy overall profit margin of leaders becomes very low and they
require to sale very high volume of products (Lozano,201). A company can sustain this approach
and become a powerful force in market by reducing the competition as a threat.
Strategy 3: hybrid strategy: In this strategy a company can offer their product and
services to their customers at low prices but with a high value as compared to their competitors.
Companies try to build up a reputation that helps them in offering their products at fair prices.
Discount stores are example of this particular strategy (Swaminathan,. and Meffert, 2017) . In

Ford, this strategy can be used by making their prices more attractive for their customers and low
as compared to other competitors.
Strategy 4: Differentiation: In this strategy a company is able to develop products “&
services that are having unique attribute and value for their customers. A company can develop
designs of their products in such a way that they are providing them with a competitive
advantage. Branding is very effective tool that can help in premium pricing. In Ford this brand
can make use of strategy by development of such products and services that are completely
unique and innovative for achievement of their laid objectives.
Strategy 5: Focused Differentiation: In this strategy company can offer products that are
having high perceived value as compared to high prices (Morden, ., 2016). This is a strategy that
is adopted where customers are having preference for a particular product or service based on
their perceived value. I n this case perception of value must be high real value of the product
does not matters for customers. In Ford the existing brand image of their products and quality
can help them in implementation of this strategy by increasing perceived value of their products.
Strategy 6: Increased prices & standard products: many times, companies are using this
strategy in which they just increased the price of products without having any enhancement in
value of their products or any new innovation (Cordell, and Thompson, 2019). If prices increased
and customers are able to accept the new prices then it will lead to enhancement of present
percentage of profits by companies. In case of Ford if the brand is already having very high
satisfaction level of their customers then they can increase the overall prices of their products
(Linder, and Williander, 2017).
Strategy 7: High price/ Low value: This is a strategy that can be implemented by a
organisation if they posses monopoly in the market (REZAEI, KHAVARIAN, . and
GHAFURZADEH, 2016). As they are not having any concern about increasing the value of their
products. In case of Ford, there is a need to develop an innovative product which can provide
them a competitive advantage and a power of monopoly only this can be helpful in addition of
more value to their products and compete on the basis of new prices.
Strategy 8: Low value/ Standard price: If a concern is having small value of product then
price is the only strategy that can be used for achievement of higher market share. In Ford a
market survey must be done to understand how the value they provide in their products to their
customers (Indartono. and Wibowo, 2017). In such case, if there is no high value which

customers are perceiving in their products in this case pricing must be used as a strategy for ever-
increasing their market share and overall revenue.
All the above discussed are some of the strategies that can be adopted by Ford according
to prevailing market conditions and overall value perceived by their customers from their
products. Differentiation is a strategy is the most popular Strategy that can be adopt by
Companies in the given phase of time.
Implementation: It is necessary in given scenario that Ford is having a particular
strategic plan that has to be implemented in the given course of time. There are many external
forces that can be a threat for Ford those have to be minimized by use of above discussed
strategies and then implemented accordingly. Ford has prepared a budget as discussed below:

Evaluation: It is very important to evaluate performance of employees so that there is a tactics
record of successful and timely implementation of a particular strategy that has been adopted by
Ford.

CONCLUSION
From the above made analysis of two companies of automotive industry that is Tesla and
Ford it can be said that Tesla is a brand that is performing better in the external market as in
recent survey it was a finding that market value of this brand is dollar 88.2 billion and in case of
Ford it is dollar 36.6 million. Hence, it can be said that such figures clearly indicate that the new
innovations that Tesla is bringing for their customers is very unique and difficult to imitate by
other competitors such as Ford.
Furthermore, It can be concluded from above report that for the purpose of formulation of
strategy for the organisation for the purpose of preparation of a strategic plan that can help them
in identification of objectives, tactics etc. it is very important for every organisation for
understanding of the factors that are posing a impact on overall business environment. For
developing an understanding various models are sued such as PESTLE analysis, SWOT analysis,
VRIO analysis for developing and understanding of how such factors are posing an impact over
functioning of organisation that are part of automotive industry. Porters five force model can also
be used with this regard for understanding influence of different stakeholders in a business.

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