PESTEL Analysis of Ford Motors

This report utilizes PESTEL analysis to examine the macro-environmental factors influencing Ford Motors. It provides an overview of Ford Motors, defining PESTEL analysis as a framework for monitoring and analyzing macro-environmental factors impacting organizational performance. The report then delves into a detailed PESTEL analysis of Ford Motors, considering political, economic, social, technological, legal, and environmental factors specific to the company's operations. Each factor is analyzed in terms of its potential impact on Ford's profitability and sustainability. The conclusion summarizes the findings, highlighting the importance of PESTEL analysis in strategic decision-making for organizations like Ford Motors.

Introduction
This article is going to discuss one of the significant tools of scanning the business environment
called PESTEL Analysis. The discussion of PESTEL Analysis in this article has been done in
regard to Ford Motors an American multinational organization. Thus, the purpose of the article is
to analyze the macro-environment of Ford Motors with the help of PESTEL Analysis. An
organization operates in an environment which significantly affects the functions of the
organization. There are several factors in the business environment which control and affect the
functions of the organization. It significantly influences the performance and productivity of the
organization and hence the organization needs to analyze these factors to function smoothly in
the market (Song et al., 2017). PESTEL Analysis is an important tool with the help of which
these factors can be easily analyzed. PESTEL analysis also helps in creating strategic strategies
to avoid or minimize the effect of environmental factors on the company.
Overview of the Organization
Ford Motor is one of the American based multinational organizations which sells commercial
vehicles as well as automobiles. The Company offers the cars 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 in Dearborn, Michigan, United States of America. The organization offers its
services world-wide (Macdonald, 2017). The organization is the second largest in the USA in
terms of manufacturing vehicles while the 5th largest in the world. There are more than 199000
employees are working with Ford Motors currently.

PESTEL Analysis
The concept of PESTELanalysis can be better understand with the help of PESTEL definition.
PESTEL 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 company 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 (Nurmi and
Niemela, 2018). 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 (especially the foreign market).
PESTELanalysis is an acronym which stands for;

 Political
 Economic
 Social
 Technological
 Environmental
 Legal
PESTEL Analysis of Ford Motors
Political Factors
The political factor is one of the significant factors which can determine the profitability of the
organization. The political factor can significantly affect the long-term profitability of Ford
Motors. The concerned organization has a presence in several countries and hence it exposes
itself to several political systems. Therefore, it can be said that the organization is dealing with

several types of political system risks as well as the political environment. Any disturbance in the
political system of one country can have a 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 (Kara, 2018).
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 are favourable for
Ford Motors.
Economic Factors
Economic factor plays a very crucial role in making the organization successful. There are
several economic factors which directly influence the performance of the company such as the
rate of inflation, interest rate, saving rate, employment rate, economic growth rate, foreign
exchange rate, level of education, etc. If the growth rate of the economy 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 (Pan et al.,
2018). However, the inflation rate is 1.8% which is favourable for Ford Motors. Apart from this,
the unemployment rate is as low as 3.7%. The lower unemployment rate is a good indicator of
the growth and development of the country. It is also favourable for the concerned company.
Thus, it can be said that the economic factors of America are favourable for Ford Motors except
for the economic growth rate of the country.

Social Factors
Social factors also significantly influence the performance and productivity of the company. 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 in the country. The people of
the country want to maintain their status in society (Patil, 2018). 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 purchase a car. Thus, it can be said that social factors are also favourable 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 a competitive edge and
hence the organization can outdo the key competitors to gain a 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 a very developed and advanced in terms of technology in the world. It is
beneficial for Ford Motors to grow. The concerned organization needs to analyze the recent
technological development by the key competitors (Pan et al., 2018). 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 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 technological changes. Hence, the
organization must focus extensively on the disruption rate of technology.
Legal Factors
Legal factors also have a direct impact on the functioning of the organization. It is the
responsibility of the organization to adhere to 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 a significant impact on the organization such as discrimination law, data protection,
employment law, antitrust 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 (Nurmi
and Niemela, 2018). It will affect the reputation and public image of the organization. Therefore,
the organization should keep itself aware of the legal requirement to function 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 about 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 created norms to protect the environment. The
organization is being asked to ensure sustainable business practices so that the environment can
be protected (Song et al., 2017). The government of America is very much concern for the
environment and hence Ford Motors need to focus on making it's business activities sustainable
to sustain in the market for a long period of time.
Conclusion
It can be concluded that PESTEL 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 perform well in the market. Thus, with the help of PESTEL analysis, the
organization can ensure a high margin of profit.

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