Ford Motor is one of the top five companies in the worldwide automotive sector. A globally recognized brand, Ford is a force to reckon with in the automobile industry. As the company has its operations spread across the globe, multiple macro-environment factors are bound to influence the performance of the organization.
The global automotive industry is significantly swayed by political, economic, social, technological, environmental and legal factors over which we have little and no control. Vehicles being durable goods, the consumer buying decision regarding purchase of vehicles is appreciably determined by a complex combination of some or all of the above factors.
I recommend to read Ford SWOT Analysis.
Table of Contents
Ford Pestle Analysis
This PESTLE analysis of Ford Motor Company aims to identify the impact of Pestle factors on Ford Motors.
How Political Factors Affect Ford
The international political scenario provides both threats as well as opportunities for Ford. On one hand, political instability in the European Union, especially Brexit, can result in a negative impact on Ford’s performance in these markets. In case of a “hard” Brexit the UK stands to lose access to free trade agreements with other European countries. This may result in a marked reduction of demand in that market. Coupled with increased tariffs on imports/exports together with delays at the UK border, the European political playing field may prove to be a cause for concern.
On the other hand, free trade agreements and government incentives in the emerging markets provide ample opportunities for growth. Governments in markets of South America and Asia, where demand for automobiles is projected to increase, are actively supporting companies who bring technological innovation and economic growth. For example, Ford’s registration numbers in the Brazilian market rose by 11% in 2019. These encouraging factors provide ample growth opportunities to Ford.
How Economic Factors Affect Ford
Recent times have witnessed a global slump in the number of car sales all over the world. Along with the US, which accounts for the largest market share in case of Ford, even developing markets such as India have witnessed a downturn in the number of vehicles being sold. This is poised to be one of the significant factors that may be pushing the world economy towards another recession.
With the dollar getting stronger, this translates to customers paying more in their respective currencies. Also must be taken into account the fact that emerging players in Asia still offer a sizable demand for reliable vehicles which Ford is in a position to fulfill. Open trade agreements between emerging economies hold promise of greater sales, though it carries the risk of increased competitions and future market saturation as well.
How Social Factors Affect Ford
Consumers today are literally inundated with choices when it comes to the automobile sector. With multiple players and a near-saturated market, Ford may find it difficult to attract buyers. There is opportunity, however, in the Electric and Hybrid vehicle category. Globally, demands for hybrid cars have been on the rise, and Ford has already taken steps to introduce variants in this category. With rising interest in eco-friendly and fuel-efficient cars, Ford can position itself as a major player in the hybrid car segment.
How Technological Factors Affects Ford
Technology plays a big role in the vehicular choice of today’s consumer. A tech-savvy population has seen greater demands for cars that are equipped with modern technological devices such as automatic windows and rear-view cameras. Ford is not behind in this segment as it continues to incorporate the latest gadgets in their vehicles. However, this has to be done judiciously as the cutting-edge of today quickly becomes passé.
Another technological innovation that can favor Ford is the advent of driverless cars. Along with Google and Tesla, Ford has invested upwards of $1 billion into autonomous vehicle research, and hopes to emerge as a market leader.
How Legal Factors Affect Ford
Global environmental and safety regulations, labor laws and intellectual property rights are some of the legal factors that affect the growth of Ford. In order to increase its business Ford can align itself with these regulations by ensuring better product designs and a safe work environment.
How Environmental Factors Affect Ford
As mentioned earlier, the global demand is shifting towards environment-friendly cars, especially electric and hybrid vehicles that have little to no emissions and environmental impact. Ford has already made significant headway in this respect with the Focus Electric and Fusion Hybrid models. The company is certainly focusing on this emerging segment as it holds potential for growth.
Conclusion
With the promise of increasing demand and better business conditions, emerging markets and technological advents hold ample opportunities for Ford to expand its operations and build on a developing customer base.
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