Ford's Business in India: A Comprehensive Environment Analysis Report

This report provides a comprehensive analysis of Ford's potential business expansion in India, evaluating various factors that could impact its operations. The introduction highlights the importance of understanding a country's business environment, particularly for a global company like Ford. The study examines political factors such as government policies, corruption, and taxation, assessing their potential impact on Ford's supply chain and distribution. Economic factors, including India's growth rate, inflation, interest rates, and labor costs, are also analyzed, along with the competitive landscape of the automobile market. Social factors, such as consumer lifestyle, family size, income levels, and price sensitivity, are discussed to understand their influence on consumer buying decisions. Finally, the report explores technological factors, including India's advancements in technology, government initiatives, and the need for Ford to adapt its products to meet the evolving needs of Indian consumers. The report concludes by summarizing the potential opportunities and challenges Ford may face when entering the Indian market.

Running Head: MANAGEMENT IN A GLOBAL BUSINESS ENVIRONMENT
MANAGEMENT IN A GLOBAL BUSINESS ENVIRONMENT

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Table of Contents
Introduction......................................................................................................................................3
Body.................................................................................................................................................3
Conclusion.......................................................................................................................................4
Bibliography....................................................................................................................................5

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Introduction
While opening a new business in any country, it is very important for the management level
authorities to consider all the factors related to the business and operations. The proper and
accurate analysis of the Ground conditions of any new country gives a clear view of the
opportunities and scopes that can be availed by that company in that particular country.
Firstly, the following study is all about the challenges that are likely to be faced by an American
Automobile Giant named Ford while initiating a business in India.
Secondly, this study describes the different factors like political, economic and Technological
factors that have the potential to influence the operations of operations of Ford Company in
India.
Thirdly it has also included the Socio Economic factors that has discussed about the lifestyle of
Indian people in rural as well as urban areas.
Finally, the thesis statement of this study is to analyze and discuss the impacts of different
factors including Political, Technological, Socio-cultural and Economic of Indian society and
market on the operations of Ford.
Body
Business Expansion in India
The Ford Automobile recognizes that India is a very ideal market for opening a new business
because of many favorable factors.
According to Collings (2014), the fastest growing economy in the world, which is India, is likely
to provide a great platform for the organizations from outside to stay and install their business.
The influential factors like Political and Economic conditions are in favor of foreign investors in
the current scenario as compared to the circumstances that were present earlier.
Hill, Cronk & Wickramasekera (2013) have stated that the new government in India has
increased the Foreign Direct Investment for Automobile sectors in India have been increased to
89% under the reign of current government.
In addition, the growth in urbanization and increasing trend of using private cars by people can
provide a good market for Ford in Indian Markets.
Political factors

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Ford has decided to expand their business on a global arena and India is among the many
international markets that Ford is planning to enter. Mainela, Puhakka, & Servais, (2014) opined
that, in India, political factors comprise a crucial risk for a big brand like Ford that operates
internationally. Political environment in India is volatile since changes in the Government are
more often. This volatile environment can result in a massive disruption in the supply chain
management system of Ford as well as their distribution network. This is a severe bad influence
for a business that is entering a new market.
As per CPI (Corruption Perception Index) in 2015, among 178 countries India has ranked 87th
rank in transparency, facing a demotion from rank 84. Ford can get an idea about the degree of
corruption prevalent in India from this perception and business analyst of Ford can recommend
the formulating of an appropriate business strategy that is needed to be followed by Ford to
survive in such turbulent and corruptive political environment (blog.euromonitor.com, 2017).
It has been acknowledged that a comprehensive and convenient system of taxation prevalent in a
country promotes exponential growth in local, emerging as well as international business. As
supported by OECD (2017), effective and on time implementation of Goods and Services Tax
(GST) in India, have assisted the investments, competitiveness as well as significant growth in
economy. However, as mentioned by Sarasvathy et al. (2014), rate of corporate income tax are
being reduced by the Government that can hamper the infrastructural requirements. All these
factors related to tax system prevalent in India can are considered by Ford prior to enter the
Indian market to modify their business policies as per the taxation rules.
Government of India has recently focused on eco friendly as well as fuel efficient cars to be
operated in the country. In this perspective, entry of Ford in the Indian market can be profitable
for the organisation as they produce cars that require less fuel. Thus the company has a great
opportunity in gaining support from the prevailing Government that would greatly impact on
profitability as well as revenue of the entity.
However legislations in India have a great impact on the international business that is operating
in India. Cheng et al. (2014) mentioned that Companies Act, 2013, subjects to provisions that are
related to acquisitions and mergers, CSR and shareholding of the international business operating
in India with the local and national business entities. Ford needs to be prepared to face such
consequences on entering the Indian market as they operated as an independent organisation in
US. In addition to this, fiscal policies that are prolonged by the Indian government results in

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improvement of macroeconomic framework, sustainability, opening up of economy, overall
improved health outcome in terms of business (Amritt, Inc., 2017). Ford will be able to
acknowledge the outcomes of their business operations on analyzing the effect of these policies.
Economic Factors
As far the economic conditions of India is concerned, the country is growing at a tremendous
rate of 7.8% which is even greater than the Republic of China that used to be at the top position
(Wild, Wild & Han, 2014). It can be said that the Automobile market of India has also been
growing significantly. The “Make in India” campaign that was started by the Indian Prime
Minister in 2015 accompanied by raising the barrier of Foreign Direct Investment in Automobile
sector of the nation has paved ways for many companies to start their business in India.
However, Ambos & Håkanson (2014) have argued that the tremendous economic growth of
Indian Society has also resulted in the growth and inception of new Car Companies in India that
have managed to make a strong hold in the Automobile Sector. This includes Tata Automobiles
as well as Mahindra Auto.
It can also be said that the inflation rates and Interest rates provided by Indian Banks to the
people is of significantly economic value. As per Glavas & Mathews (2014), the current inflation
rate and interest rates for car loans provided in India is 1.91% and approximately 9.35%
respectively. Therefore, Ford can introduce its new versions of family car at cheaper rates to
attract the customers. Moreover, the labor and energy costs are comparatively low in India than
in other countries. The actual figures keep fluctuating, but it is always less than other countries.
As mentioned by Munyon et al. (2015), the average unemployment rate in India is about 4%.
This includes a number of Engineering Graduates that are unable to get jobs due to lack of
opportunities. Hence, it can be said that there can be number of candidates that will compete
among each other for the opportunities will certainly allow the Ford’s Human Resources
Management Department to choose the best and most potential people for the Jobs.
It is to be noted that the World Bank made a statement in 2014 regarding Fiscal Policies where it
has been mentioned that the weakening economies of major markets in the world can be the
reason for business failure if a new investment is done in any country (World Bank, 2017).
However, as per the Annual reports of Ford Automobiles, the Ford has managed to maintain a
significant Operating Margin of 6.7% in its Automotive Segment (Corporate.ford.com, 2017). In
addition, the Operating Cash flow has been quite considerable with nominal rate of growth

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despite having very strict fiscal policies in China. However, in case of Indian Societies, the
Income Distribution does not exist in some specific pattern that will help Ford grow in India (Jr,
2017).
Social Factors
Social factors like the lifestyle of the community of the country influence the buying decision of
the customers and affect the sales volume of the company like Ford Motor Company. In order to
expand business in India, Ford Motor Company has analysed cultural trends and lifestyle of
people in India. In India lifestyle of people is improving with an increase into GDP, people are
tending to purchase four-wheeler. This ensures a large customer base in the Indian market for the
automobile sector. Ford can grab this market opportunities in India by making a market entry in
Indian automobile sector.
In India, family size is maximum 4 which determine the suitability for selecting four wheelers.
As argued by Monga, Chaudhary & Tripathi (2012), According to PPP index India has 4th
largest urbanisation that refers large potential customer base in India for Ford. In Indian society,
the household income level is experiencing an upward migration that ensures a possible
opportunity for Ford making a market entry in Indian automobile sector. It can be counter argued
that among these high population most of the people are middle-class people who have less
affordability of cars (Thestatesman.com, 2017).
Another social perspective that Ford has to consider while expanding its business in Indian
market is that in India the car price under USD 12000 is present in 80% (approx) of Indian
market (Autocarpro.in, 2017). Thus, for this reason, Ford has to reconsider its pricing strategy, as
social and cultural set-up the USA is different from India. People in India are highly qualified
and discerning. Even they are much price sensitive and require the product to be value for
money. It can be counter argued that Ford has to invest more funds to ensure both sustainability
and cost efficiency for Indian customers (Thestatesman.com, 2017). As India is a developing
country, economic complications are present that lead the customer to prefer company and small
cars.
The culture among Indian people is much environment sensitive thus, they require environment
sustainability. Due to price sensitivity, people in India requires cars to be less fuel consuming
that takes less cost for running. Instead of potential opportunities, the Ford can face two major
hindrances due to social and cultural perspectives (Autocarpro.in, 2017).

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Technological factors
India has made an exponential growth in the past few years in the field of technology. As per
NASSCOM, the second most connected nation in the world after China is India (Techinasia.com,
2017). Consumer expenditure has been extended a lot and by 2020 it is expected that the country
will obtain higher income, high unemployment, high convenience and optimum accessibility.
Technology has also supported the enhancement in income of the people. Government has also
initiated tax free zones, Special Economic Zones and Software Technology Parks in the country
that will provide much assistance and a high technological environment to Ford, which is
planning to enter the Indian market (Techinasia.com, 2017).
However, Ford, being a US based organisation, is subjected to the most advanced technological
activities. Soria & Troisi (2014) informed that Ford will be facing a huge opportunity on entering
Indian market from the technological perspective as they are coming from a developed country
and operating in a developing country. Consequently technological maturity will be high. A
possible challenge will be faced in the legislation, where IT Act, 2000 focuses on the e-
commerce, e-business and new economy in India. Ford will be subjected to several compliances
of the legislation.
Among Indian automobile companies, the activities of R & D lay more emphasis to ensure more
technological advancement in terms of safety in four wheelers. In Indian automobile industry,
the technological solutions have thorough integration in supply chain management. As argued by
Monga, Chaudhary & Tripathi (2012), the government of India is undertaking technological
development projects like National Automotive Testing and R&D Infrastructure Project in order
to promote zero emission.
As counter argued by Shende (2014), though with National Automotive Testing and R&D
Infrastructure Project government promotes automobile industry growth in India, it also sets the
international standard for making a market entry in India. The advancement in technology also
has ensured the use of hybrid cars and alternative fuels. Ford, in order to satisfy Indian customer
needs, has to design hybrid car concept with technological advancements.
As argued by Monga, Chaudhary, & Tripathi (2012), cyber security also plays a significant role
in analysing customer’s requirements and providing information about the cars to the customers.
Hyundai, BMW and Maruti have already used the cyber technology for attaining maximum

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market shares in India (Thestatesman.com, 2017). Thus, it can act as a potential challenge for
Ford to match the customer demand of technologically advanced fuel efficient, low cost and
compact cars in Indian market.
Conclusion
After going through all the factors of business initiation in India, it can be said that the Indian
Economy is likely to provide a very Good Market for the Ford Automobile. However, the
company needs to make some advancement in its designs to provide some cheaper and family
cars for Indian people. In addition, as the trend of using hybrid cars in increasing in India, the
company can use this as a scope to expand its market further. However, maintenance of all the
factors is important for the organization to establish their base in the new country. It should be
the purview of the management to make sure that the policies and procedures that exist in the
company should be in accordance with the laws of the new country. Ford may face challenges to
deliver affordable sustainable vehicles to the Indian customer as demand by them. It will
increase the manufacturing cost of sustainable vehicles. Ford has to invest large funding for
establishing the sustainable industry in India. Thus, while making market entry-decision Ford has
to consider both opportunities and challenges lead by social and cultural factors.

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