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Impact of the Macro-environment on Ford Motor Company

Organization Selected : Ford Motor Company

INTRODUCTION

The concept of business strategy relates to the process of developing policies that provide proper direction to the people of the organization in completing their function in the assigned period. It is defined as a working plan used to attain the set vision and mission of the company. This kind of strategy is useful in accomplishing long-term benefits as well as giving tough competition to rivals. But in this context, it is essential for management to conduct proper internal and external analysis before formulating such type of strategy (Klettner, Clarke, and Boersma, 2014). In this regard, a report is presented on Ford Motor Company of UK. It is an American multinational auto-maker industry headquartered in Dearborn and founded by Henry Ford in 1903. In this assignment, appropriate frameworks are mentioned along with the impact and influence of the macro-environment on the present firm. In addition to this, internal capabilities, as well as the environment of this company and some theories, concept, and models related to devising strategic planning, is also discussed.

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TASK 1

P1 Impact and influence of the macro environment

Macro environment consists various factors that arise in economy and impact business organizations in a large manner. This kind of factor present in business environment includes current trends in inflation or deflation, monetary, fiscal policy, Gross Domestic Product, and more. Generally impact of these elements are beyond control by management of a firm and impact on strategies, policies, decision making and performance level of business in both positive and negative manner (Johnson, 2016). Along with this, macro environment also made a huge impact on willingness and purchasing power of customers. In context with Ford Motor Company, it sells commercial or auto-mobile vehicles and luxury cars under the Ford and Lincoln brand respectively. It is considered as second largest auto-maker industry in UK and fifth in the world. To increase growth of business, management of this firm needs to analyse impact of macro environment before building any kind of strategy for the same.

PESTLE Model for macro environmental analysis of Ford Motor Company

This type of analysis help in evaluating impact of factors like political, economic, social, technological, legal and environment on business operations. It also beneficial in analysing unpredictable environment through which enterprise like Ford Motor can operate its business in more successful manner.

Different factors of macro environment:

Political factor- This factor generates a major risk for international brands and reputed company of a country. In this context, unstable environment of politics create troublesome for businesses while calm and stable one seems to be beneficial. As government of UK is stable therefore, it provides a big platform for international companies to carry their business operations in profitable manner. Thus, under this region, performance of Ford is considered as commendable. Some important political factors that affect profitability of Ford are- support of governmental for technological innovation, enhancement of international trade agreements, effort of regulatory bodies in developing infrastructure and more. All these things, give opportunity to this auto-mobile company in improving performance level of business and growing at international level.

Economic factor

This factor plays a crucial role in business of this auto-mobile association. As UK's economical condition reflects positive signs in terms of recovery from financial crisis. Thus, growth of economy helps in attracting various international companies and brand to make collaboration with local firms and get enter into global market (Bucolo and Matthews, 2011). But strengthening of currency rate of UK creates threat on profitability of Ford also as it reduces profit margins. The main reason behind this if currency is high then cost of raw materials also increases which indicated this company to improve efficiencies of business and maximise opportunities to enter in foreign market.

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Social factors

Ford Motor offers a wide variety of products because of presence of diverse culture in United Kingdom and other countries where it exports. Therefore, social and culture factor of macro environment also plays an important role in running business of a firm. Presence of diverse culture may disturb sales performance and effectiveness of marketing techniques used by a company in large manner. In this regard, favourable social image and low effect of environment is taken as key to success for big international associations. As per current marketing condition, management of Ford concern more on engagement with domestic and international clients and serves them high quality services for building a better image of brand. This would ultimately lead business in generating high revenue and sales. As culture of a market states lifestyle and choice of customers so, it affects choice in car also like Hatchback, SUV, Sedan and more.

Technological factors

Some factors that influence operational activities of a company includes innovation in techniques, technological advancement and more (Porter, 2011). These things creates opportunities as well as threats to companies like rise in use of mobile computing and online fulfilment services is beneficial for Ford Company to go through the same. For an instance, parts of Ford's product can easily be delivered to different segments by using mobile marketing. On the other side the capacity of firms in providing alternative fuel vehicles are hampered because they are having very limited number of fuel stations from where they can generate alternative fuels.

Legal factors

It includes different kind of legislations and norms which impact on remote or macro environment of a firm. Thus, in this context, management of Ford needs to must satisfy its business with legal requirements so that operations can be carried out easily. In this regard, by addressing the effect of Environmental Protection Regulation Act, 1998, business of present company can gain sustainability at marketplace. Along with this, by concerning on Health and Safety Law, 2015 aid in improving product design.

Environmental factors

With an expansion of business, a pressure on management will increase due to demand of addressing an environmental problems as well as adopt measures to protect ecology from harmful effects. Thus, changes in climate, trend of low-carbon and declining oil reserves give opportunity to Ford to serve new products by addressing the same in production.

Ansoff’s growth vector matrix

It is a strategic planning tool which provides framework for management of a firm by which they can devise strategies for increasing growth in future. This well-known classic and traditional strategy was created by H. Igor Anssof. As employers of Ford has implemented various strategies for maintaining its position in marketplace

Different steps of Ansoff's Matrix

Market penetration: This find of alternative helps a firm in increasing its profit share in existing marketplace. It gives strategy through which organisations can sell their commodities by finding new customers present in existing area (Scholes, 2015) . In context with Ford, it persuades policy like 'One Ford” and “Global Marketing' which reflects effective quality communication about products of this firm. Recently, this company look forward to enhance market portfolio in substantial manner by creating new product features and introducing innovative technologies on competitive price rates.

Market development

Using this strategy, management emphasis more on expanding business beyond existing marketplace in which it currently sold commodities. For this process, managers of Ford requires to understand requirement and culture of such area where it wants to expand business. With reference to presence of competitors, effectiveness of cost evaluation and pricing strategy is needed to be evaluate also. Therefore, by understanding behaviour and new trends of market, Ford Company can enhance its business.

Product development

This alternative assists to introduce new product or services in existing market area by making an investment in R&D of additional products, acquisition of amendable rights and more. Ford has made investment in fuel efficiency vehicles by applying 'One Ford' marketing technique. It helps in conveying high level communication as well as expanding licensing marketing in all around the world through which new market area can be captured.

Diversification

It is completely different from above mentioned strategies as based on creating innovative products in new marketplace (Sumer and Bayraktar, 2012) . In this regard, Ford is launching 'new small car' based on less fuel consumption, plug-in-hybrids and battery powered vehicles. These types of products are manufactured with smart technologies which shows economical and environmental friendly feature of the same.

TASK 2

P2 Internal environment and capabilities

Internal environment of an enterprise constitute the strengths and weaknesses of business that are needed to be considered while assessment. It describes type of culture present at workplace, capacity of technologies used in business, skills and knowledge of workers, management efficiencies and more. These kinds of factors put an impact on internal capacity of association used to deliver function of business in purposive manner. But these elements are generally considered as under control of management. By building core competency in factors present in internal business environment can enhance performance of enterprises. This would also aid organisations in gaining numerous benefits such as winning competitive advantage, enlarging profitability ratio and more. Moreover, factors of internal environment mostly creates positive impact upon business by enhancing its capabilities in fulfilling demands of customers as per their expectation.

The Ford Motor Company is considered as fastest growing industry in auto-mobile sector by introducing more new and innovative products as per value of customers (Tavitiyaman, Qu and Zhang, 2011). It used to redesign structure on regular basis for matching production according to demand. Along with this, it is undergoing far ranging transformation and most rapid which leads Ford to gain success in future.

SWOT Analysis of Ford Motor Company:

Strengths:

As per financial report, currently near about 202,000 number of employees are working in Ford Motor Company. The main strengths of this company is shown by its design, manufacturing process, market and services including a full line of Ford Cars, SUVs, Trucks and luxury vehicles of Lincoln. For expansion of business model, management of this firm persuaded on emerging opportunities by making an investment in autonomy, mobility and autonomy. This industry serves the best-selling pickup truck like F-series in domestic as well as international market area with a record of 42 years. In 2017, it has sold more than 200,000 commercial vehicles and covered a share of approx 32% in UK marketplace. Along with this, brand reputation which is combined with second most loyal base of customers also shows plus point of Ford. Get the best essay help from Global assignment help.

Weaknesses

Limitation of network in terms of production facilities is one of the most weakness of Ford as compared with Toyota's expansive global network. Costs and prices of products of Ford are relatively much higher than its competitors (Williams and Figueiredo, 2011). While in context with innovation process this firm has produced various innovative products or services but considered as slow in responding to emerging trends. Thus, it shows that internal capabilities and strategies of Ford is much more weak as compared with other top auto-mobile companies like Toyota.

Opportunities

Increasing demand of customers for availing more fuel efficient vehicles, making investment in Solar Power sectors, strategic partnership and new emission standards are giving numerous opportunities to Ford in expanding business in global market. For building brand image, this firm has to focus on providing better quality vehicles, safety rating and convenience features.

Threats

Presence of Chinese auto-makers, Low-cost manufacturers, weak USD, increase gasoline prices, loss of market share, emission of harmful and poisonous gases like carbon di-oxide are some of issues that are being faced by automotive organisation. This has impacted on their profit ratios along with on their goodwill as well.

VRIO/VRIN model

This tool is considered as a complement tool to PESTLE analysis and used to assess situation inside the enterprise i.e. resources, potential for improvement in weakness area, competitive implication and more. It assists organisations by identifying need of outsourcing resources which is not valuable (Bharadwaj and et. al., 2013). The management of Ford consider people associated with business as best resource for achievement of sustainable competitive advantage at marketplace. The main provisions of using VRIO model is to determine different features of human resources that could be used for further purpose in order to attain highest position in marketplace. Some major aspects that are needed to oversee according to this tool is analysing different roles and responsibilities of employees as well as their efforts in improving performance level of business which ultimately lead to attain competitive advantage. Thus, it helps in improving internal strength of Ford and increasing internal capabilities used to accomplish goals of business within set time framework. This model include four alternatives as Value, Rare, Imitability and Organisation as defined below:

Valuable

This factor emphasises more on providing success of enterprises. As in a company like Ford, different kinds of resources are available that helps in gathering future opportunities. It also aid in reducing threats which impacts on profit ratio of business. Since, main resources of a firm is human resource necessary part of enterprise whose contribution help in attaining long term sustainability of business operations. The effectiveness of capabilities could be achieved by creating diversification in resources and reducing cost of manufacturing. But, if such kind of resources will not meet as per criteria then it will affect performance level and profitability of business. This would effect in wining competition advantage also. For an instance, if employees possess high skills and knowledge of construction then then will be considered as most valuable assets of business and strength as well.

Rare

It provides rare and valuable resources which help in granting competitive advantage on temporary basis. This technique shows situation when same resources is used by many companies and becomes competitive to each (Kalyani and Sahoo, 2011) . It also shows products or services provide by a company are rare in marketplace and unique. Thus, in context with Ford, this feature entails that due to intense competition, profit ratio of this firm is decreasing at high rate. So, it needs to recruit high skilled employees at workplace and provide training to them and existing one also (Azar, 2011). This would help in implementing changes in system and creating new features in products by contribution of employees easily.

Imitability

This concept entails that resources that are present in enterprise is much expensive in nature which is not possible for others to make a copy of that. This would help Ford in analysing techniques and resources it has which seems to unique from others. In context with human resource, talent and skills of employees a firm has cannot be copied by others. So, it is essential for management of Ford to provide benefits to employees so that retention of them can be gained for long term profitability.

Organisation

The value of resources cannot be achieved if it is not organised in proper manner. Hence, it is essential for employers of a company to organise its management system, strategies, policies, structure and culture in a proper manner. It would make able in realising potential of its valuable resources which are rare and costly to imitate by others. Through this thing, Ford can become able to achieve high competition and sustainability at marketplace.

TASK 3

P3 Porter’s Five Forces model

This model is considered as one of the usable technique to understand concept of competitiveness of business environment (Porter’s Five Forces of Competitive Position Analysis, 2018). Management of a firm used this tool in determining competitors present in same marketplace, power of suppliers and buyers related with manufacturing and delivering commodities and more. Therefore, by analysing this, managers of a company can formulate effective strategies for enhancing share of profitability in marketplace. In addition to this, it also entails factors which may impact on decision making power of management. As per present scenario, Ford Motor Company used to maintain its position i.e. one of the biggest auto-makers in world by developing and reforming strategies on regular basis for addressing issues shown in following Five Force analysis:-

Five Force Model:-

Competitive rivalry (Strong Force): In automotive field, Ford Motor Company is facing a tough competition which assist it to compete against top players like Honda, Toyota and more. These competitors used to aggressively innovate and market their commodities. Due to high cost and investment, automotive industry has faced high exit barriers. This kind of situation exerts a strong competitive force against Ford Company (Auzair, 2011). So, it needs to develop strategies, produce innovative and unique products by which competitive advantage can be maximised.

Bargaining power of customers (Moderate Force)

This factor influences business of a company in a large manner. It pertains to effect of customers on businesses and environment of industry. As people are always awaited to get car and vehicles on affordable costs as well as contain unique features. So, this kind of behaviour puts impact on business and company faces moderate switching costs. Products of Ford are available on high costs and moderate in context with price as well as contribution to revenue. Purchasing behaviour of customers assist Ford to make changes in price strategies so that maximum satisfaction of them can be addressed.

Bargaining power of suppliers (Moderate Force)

Overall supply of resources and less number of suppliers shows limited bargaining power on companies like Ford. In addition to this, low forward vertical integration in moderate manner also weakened bargaining power of suppliers.

Threat of substitute (Moderate Force)

Many kinds of substitutes are presenting in marketplace of products of Ford which include public transportation, trucks, cars and bicycles. But these substitutes have low performance as compared with products of Ford (Jocovic and et. al., 2014). So, this firm doesn't need much to address the same.

Threat of new entrants (Weak Force)

Auto-mobile companies like Ford used to make a huge investment in manufacturing products of transportation and maintain its facilities. So, it acts as a barrier for new entrants to produce a threat for business of established firms.

TASK 4

P4 Theories, concepts and models, interpret and devise strategic planning

Bowman model is used to explore numerous options for a company related with strategic positioning of its products or services that provides an opportunity in attaining high competitive advantage (Annabi and McGann, 2013). As per concept of this model, it identifies options through which management of a firm can tightens position of business. It has evaluated that associations mainly have two aspects that helps in sustaining position at marketplace that are price and perceived value. This would aid Ford Motor Company to ascertain its current position of business in market. This model has provided eight different positions as explained below:

Position 1

Low price and low value-added

This concept shows that there is no competitive position of a company in current market area. As products or services of Ford Motor Company are used as public and commercial transportation where many competitors are present. So, this kind of strategy has no used for Ford in order to remain competitive in marketplace.

Position 2

Low price

These strategies assist a firm to change its price strategies and offer products on low cost if it wants to gain attentions of large number of competitors (Grover and Kohli, 2013). As products of Ford are manufactured on high cost and available in the best quality so, it is not possible by this firm to offer on low price for wining competitive advantage.

Position 3

Hybrid

This kind of strategy is used by such industries which offers product or services on low costs with higher perceived value as compared to other firms. The main issue this concept produce is volume therefore, mostly uses by departmental stores. Hence, it also consider as ineffective for Ford to increase market area.

Position 4

Differentiation

The main objective of this type of strategy is to provide best quality of products having unique features and valued by customers more (Ackermann and Audretsch, 2013) In this regard, brand value plays an important role in making differentiation as it allows firms to produce highest highest level of services and convince people to buy the same. So, it can be applied by management of Ford to gain high competitive advancement.

Position 5

Focused differentiation

In this era, products or services are positioned in as per high perceived against high prices. This strategies can also be applied by Ford as services it offers are based on perceived value alone of customers.

Position 6

Increased Price and Standard Product

It is considered as most risky strategy as company used to increase price of products without adding value in the same. Therefore, if still customers buy such goods then it will rise profitability ratio otherwise company will face loss.

Position 7

Monopoly pricing

It is used by those associations who have not much face competition and allows to use monopoly pricing. As it will not go last for long term profitability so, Ford doesn't use this policy.

Position 8

Loss of market share

This policy creates a big change in market by which a company can definitely face loss in market share. It is used when management has seen that its value of products are much low so, they can sell the same on low price.

CONCLUSION

From above mentioned report, it has been concluded that business strategic plan can be helpful for firms when it comes to hit long term targets. On the other hand, for stronger sustainability it can be said that there are many factors which needs to be understood by business organisation. Through this, many decisions can easily be made which may aid in attaining specific goals and objectives.

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