Macro Environment and PEST Analysis of

Ford Cars ltd

Presented
By
Ranjith Raaja.R
1091042
Group-3
 Table of Contents

Industry definition

Introduction to Industry

PEST analysis of Ford

SWOT Analysis of Ford

Consumer Buying Decision Process

Refrences
Executive Summery

In Global markets among different Industries i found Automobile industry because the scope
of the automobile industry is high when compared to the other industries. In today’s life
automobiles became necessary. In that automobile industry i choose the Ford motor company
to analyze their Macro and Micro Environment. This paper is focused on PEST Analysis of
FORD, SWOT Analysis

I focused more on the Political, Economical, Social and Technological Factors which are
playing a major role business environment of Ford.
Industry Definition-
Automobile can be defined as the vehicle which runs on two, three, four or more tyres, the
purpose may be to travel on the roads by people or to carry the loads from one place to
another place.

Introduction to Automobile Industry-

First Automobile is a three wheeler which was invented by Nicolas J. Cugnot. Initially
invented automobile is made by steam engine and later it was designed by fuels which are
currently available in the market. At present few Automobiles are running based on the
renewable energies like Solar and Bio Fuels. Some cars are designed to run on Electricity.

From the past records we can identify that America is dominating in automobile Industry.
Currently countries like India and Brazil are presenting their growth rate in the global
markets of automobile industry.

Introduction to Ford-
Ford motor company is a global leader in automobile industry, which is founded by Henry
Ford. It is performing its business in 7 continents and 90 plants are speared worldwide. It
employed 201,000 people in their business. Ford manufactures Cars &Commercial vehicles.

Ford operating its business in fallowing continents

North America
Europe
Asia Pacific
Latin America
Middle East
Africa
Caribbean

Ford is partnering with some of the companies to produce better optional vehicles. Ford is
partnering with companies like, BP, Microsoft, Sony, Roush, Adventure island & Water
country USA.
PEST Analysis-
Pest analysis represents Political, Economical, Social and Technical factors of an
organization.

Political factors explain about taxation, employment laws, internal trade regulations and
competitor trade regulations.

Economical Factors explains about economic growth by industry, policy towards

unemployment, inflation and influence of exchange rates

Social Factors explains about income distribution, labour, life style changes, health &
welfare, attitude to work and living conditions.

Technical Factors explain about Technological efficiency, technological transfers, rate of

spending in R&D, Energy use cost and New Innventions.
Ford pest Analysis-

Political Factors-
Exchange rates, oil prices & free trade flows which influence the consumer to invest on the
vehicles.

Foreign ownership regulations and technological cooperation’s between countries

helping the ford in raising the funds and building the advanced models which can cope with
the current scenario.

Introduction of new business laws Impacts the ford to change its rules and regulations
which are necessary to producing a quality vehicle.

Forced Groups (Labour unions) who plays a major role in the production of a vehicle in a
ford manufacturing organization. The labour unions should work according to the rules and
regulations amended by the business laws.

Investor’s climate- In most of the company’s investors had a premier role to play in the
growth and development of the company.

Economical Factors-
Growth potential of target market - The growth potential of target market will determine
the purchasing power of the buyer. That is the major reason ford is operating in the countries
like America, India and Brazil where the growth potential is high when compared to the other
markets.

Adopted from Nieuwenhuis & Wells

Based on the above geography of demand for vehicles, we can state that ford is operating its
business in the potential target markets.

Target Market Size – Again the sales of the ford was influenced by the Market size where it
is operating its business. When the target market GDP growth is high the consumers will
show more interest to have a premium or luxury vehicle.

Economic Development – Economic development is the major part which will determines
the development of a particular economy as a whole and which will influence on individual
GDP.

Oil Price Fluctuations- The oil fluctuations influence the sales of the ford company. If the
oil prices are more it will difficult to sell the premium and luxury cars. Cost conscious
customers may not show interest to buy the cars which provides low mileage.

Altogether the mentioned economical factors will determines the growth of the potential
markets, margin cost of the operations, return rate on the investment, and strategy to provide
the price of the vehicle.

Social Factors-
Social factors plays a role in trend in demand based on the various factors like attitudes,
demographical, beliefs of the consumers in that particular market region Some of social
factors of Ford are given below

Geographical Changes - The consumers of ford had changed from one geographical region
to another geographical region

Eg- The US for consumers will use the cars or commercial vehicles which have large
engines. But the Brittan consumers are habituated to use the cars or commercial vehicles
which are designed by small engines.
Adopted from Windecker

Consumer Attitude – Consumer attitude plays a role in selecting car model and design, If
the consumers are favour about sport they will select the sports model car for their usage. But
if the consumers are cost and safety concerned them probably will choose a normal car which
will provide mileage and better safety.

Travel Habits – The ford company is designing the cars based on the travel habits of the
consumers. Ford is a medium cost car which can be affordable by the medium class people. It
is providing the facilities based on the travel habits of the whole family.

Technological Factors -
Technological factors of the ford motor company are very advanced when compared with
their competitors. The technological factors of the automobile company will influence on
most of the things like sales percentage of the cars, consumer satisfaction which leads to the
automatic growth in the sales figure.

Supply chain collaboration – It is the Initial and too crucial factor in the ford motor
company, because the consumers of car are more concerned about the ordering and when the
company is going to deliver the car. The Ford Company is having strong supply chain
collaboration which is in more than thirty countries.

Operations Capability – Ford Operation are more capable to provide the better service to
consumers. Ford motor company is operating its manufacturing in more than 30 countries, so
Ford operations are very efficient so it is able to providing quality vehicles at right time.
Technological Improvements in distribution – Ford motor company is one of the
automobile companies which is providing the car view and specification in online through its
website named a www.ford.co.uk . One more advanced technological thing is consumer can
customize the materials what he requires inside as well as outside of the car. The Customer
will get the delivery after min 1 month and max 2 months. If the ford is having the booked
car in the assess they will deliver within one or two weeks.

Product Development – Ford Motor Company is providing the consumer to customize the
car and its needs. So ford had gained a chance to innovate a new car based on the most of the
customer’s selection and preferences. The ford company cars manufacturing will be
influenced based on the consumer customization needs.

Swot Analysis of Ford Motor Company

Strengths of Ford –
Brand Image- Ford brand is well-known in automobile industry. Its brand image is well
know in the global markets due to huge marketing & advertising.

Online Marketing capability - Ford is one of the well-known automobile company which is
providing the online consumer selection of cars through its website. In online the consumer is
allowed to customize the engine, colour, interiors and exteriors.

More consumer choices – Ford is one of the automobile company which is providing the
consumer more variety of cars and commercial vehicles. Ford is manufacturing fallowing
kind of vehicles.

Cars
Commercial Vehicles (Jeeps, Vans, & Trucks)
Heavy Vehicles.

Operations and distribution efficiency - Ford is the rich in its operations and distribution
because it is operating its business more than 30 countries and it enhances its manufacturing
process more than ninety plants.

Relations with high profile companies - Ford Company is maintaining the relations with
high profiled companies like Suzuki and Isuzu Motors Company to develop qualitative
vehicles and in the part to technological aspect for motor company is maintaining relation
with Toyota and Honda motor services.

Employee are assert - Ford motor car company recruits a qualified and skilled employees in
all its functions. Ford will maintain good relation with the employees by paying them better
wages in automobile industry. Ford is more concerned about the working environment and
safety aspects of the employees.
Weakness of Ford –
Sales Decline - The sales figure of the ford company was declined from the year 2008 to
2009 due to global recession in the world financial market. Recession is one of the major
factor for decline of sales and one more important factor is ford will manufacture the standard
cars which are not able to cope up with current market automobiles.

Huge unfunded pensions and other obligations - Ford is one of the automobile company
which takes more responsibilities in the health and safety of the employee. Ford invests more
money on maintaining a good working environment.

Low productivity - Ford expanded its business operations in diversified geographical areas,
so management is missing focus on some lines performance and it influence the ford to cause
the low productivity.

Weakening operations in North America – In the North America part ford operations has
been declined due to the huge competitors like GM, Toyota etc. The revenue of Ford was
declined by 2.4%.

Opportunities of Ford –
Production of the fuel efficient cars – At present ford is producing the cars with low
mileage and pick up. Ford is having a great opportunity to produce fuel efficient cars and
commercial vehicles. The automobile industry is having one more fuel efficient types like,
cars which can run on renewable energies like solar power and bio fuels.

Production of Hybrid Vehicles - Ford had one more option in designing the cars and
commercial vehicles based on electric engines. If the cars are designed based on electricity
engines the consumers will show more interest to buy the cars, the reason is the car
maintenance charge will low when the car is run on electricity.

Opportunities in India and China markets- Ford is having the market opportunities in
India and china countries because two countries are having huge geographical market and
population. The most of the people in these two countries are more interested to own a four
wheeler for their family. That is the reason ford fiesta is a most successful car in these two
markets.
Threats to ford
Price Rise in raw material prices – Raw material prices like hard steel and rolling steel cost
will influence the margin price of the car. As a whole it will influence the profit margin of
the ford because of low margin price.

Rapid growth of competitors - Ford growth and development may effected by rapid growth
in no of competitors in the automobile industry. From the beginning America demanded
automobile industry. Ford’s main competitors are General motors, Toyota, Honda, BMW,
etc.

Less Capital spending - Ford is spending low on its operations and research development
activities, when compared to its competitors. The competitors are spending huge amount on
R&D programmes.

Consumer Buying Decision Process-

There are following five stages in consumer buying decision process.

1. Problem identification:-

The buying process starts when the buyer recognizes a problem or need. The need can be
triggered by internal or external stimuli. Marketers need to identify the circumstances that
trigger a particular need. By gathering information from a number of consumers, Marketers
can identify the most frequent stimuli that spark an interest in a product category. They can
then develop marketing strategies that trigger consumer interest.

2. Information Search:-

The consumer tries to collect information regarding various products/service. Through

gathering information, the consumer learns about completing brands and their features.
Information may be collected form magazines, catalogues, retailers, friends, family members,
business association, commercial, chamber of commerce, telephone directory, tradefair etc.
Marketers should find out the source of information and their relative degree of importance to
the consumes.

Personal Sources: Family, friends, neighbor, as quittances.

Commercial Source: Advertising, sales persons, dealers, packaging, displays.

Public sources: mass media, consumer, rating organizations.

Experimental sources: Handling. Examine, using the product.

3. Evaluation of alternative:-

There is no single process used by all consumers by one consumer in all buying situations.
There is several First, the consumer processes, some basic concepts are:

First, the consumer is trying to satisfy need.

Second, the consumer is looking for certain benefits from the product solutions.

The marketer must know which criteria the consumer will use in the purchase
decision.

4. Choice of purchasing decision:-

From among the purchase of alternatives the consumer makes the solution. It may be to buy
or not to buy. If the decision is to buy. The other additional decisions are:

Which types of car he must buy?

From whom to buy a car?

How the payment to be made? And so on.

The marketer up to this stage has tried every means to influence the purchase
behavior, but the choice is properly consumers. In the evaluation stage the consumer forms
preferences among the brands in the choice set. The consumer may also form an intention to
but the most preferred brand.

5. Post Purchase Behavior:-

After purchase the product, the consumer will experience the same level of product. The
Marketer’s job not end when the product is buying must monitor post-purchase satisfaction,
post-purchase action, post-purchase use and disposal

 Post Purchase Satisfaction:-

The buyers satisfaction is a function Of closeness between the buyers expectation and
the products Perceiver performance. The larger the gap between expectation and
performance, the greater the consumer dissatisfaction.

 Post purchase Action:-

The Consumers satisfaction or dissatisfaction with the product influence subsequent
behavior. If the consumer satisfied, he or she will exhibit a higher probability of purchasing
the product again. Dissatisfaction consumer may abandon and return the product.

 Post-Purchase Use or Disposal:-

The marketer should also monitor new buyers use and dispose of the product. If the
consumer store the product in a close, the product is probably not very satisfying. If the
consumer throws the product away, the marketer needs to know how they dispose of it;
especially it can be hurt the environment.

References –
www.economywatch.com, History of automobile industry.

www.businessweek.com, GM & Ford – Roadmaps for Recovery.

www.ivoryresearch.com, The Analysis of Strategic Rationale and

Implications of ford uk plant closure.

www.mba-tutorials.com, Ford Motors Swot Analysis.