External and Internal Environment Analysis of Ford

Introduction

External and Internal Environment Analysis of Ford will be evaluated in this report. Ford Motor Company is multinational automaker which is an American company. Headquarter of the company is situated in Dearborn, Michigan, U.S .It has presence in 220 countries across the world and has created outstanding demand of their automobiles (The Economist Intelligent Unit, 2016). Ford produces automobiles, commercial vehicles, luxury vehicles, SUVs, Automotive parts and Pickup trucks. It also provides services such as: automotive finance, vehicle leasing and vehicle service. Ford manufactures 5.5 million vehicles per year (Ford: 1, 2020). Revenue of the company was US$155.900 billion in 2019 and the company have 190,000 employees (Ford: 1, 2020). Toyota, Hyundai, Nissan, Honda, Tesla, SOA, Mazda Motor etcetera are the top competitors of Ford Motor Company.

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PESTLE Analysis of Ford:

PESTLE analysis of Ford shows the impact of the external environments such as: political, economic, social, technological, legal and ecological environments on their business actions. Therefore, Ford will be capable of taking significant initiatives to interact with the impact of the environments. PESTLE analysis of Ford has been analysed below:

Political Environment: Political environment informs about the impact of political factors on a company’s operations and companies can find out better way to handle the impact. Political environment of the 220 countries effect the business actions of Ford where it has presence (The Economist Intelligent Unit, 2016). Political environment of the countries bring both risks and scopes for the company. For instance, Brexit issue will have negative effect on the business actions of Ford. The company faces a bill about $500 million to $1 billion because of higher tariffs and weaker value of pound. Ford will face higher tariff of World Trade Organizations on both exports and imports that will increase their operational costly greatly which will reduce profit level.

Economic Environment: Economic environment indicates the effect of economic factors and how a company can interact with the effects. COVID-19 is the disease that is creating negative economic impact on Ford in recent times. Ford will face loss over $5 billion in second-quarter because of the pandemic of COVID-19 (Reuters: 2, 2020). The infections has grown rapidly and sales fell down enormously. The sales reduced to 35% in China and 12.5% in US. Because of the virus, most of the companies across the world are off and it will cause upcoming economic recession which will reduce the buying power of people. As a result, the sales of Ford automobiles will decrease more through-out the world.

Social Environment: Social environment refers to the impact of the culture, shared beliefs, morals and other social factors of a country and how companies should interact with the impacts. Operations of Ford are effected by the social factors of different countries. For instance, people’s interest toward electric and hybrid cars are increasing that encouraged Ford to emphasize on producing that cars. Therefore, Ford has decided to increase production of electric and hybrid vehicles and the company will invest $11 billion to increase the produce the cars within 2022 (Reuters: 3, 2020). By producing electric and hybrid cars more, Ford will be capable of increasing its sales globally.

Technological Environment: Technological environment plays outstanding roles in business world by fostering the growth of companies by creating new opportunities for them. People has become tech-savvy greatly and demand cars with modern technological facilities such as: exclusive view camera, automatic windows etcetera; therefore Ford manufactures their automobiles with latest technology. Most innovated car in the world is automated cars and Ford has invested $1 billion in the research for autonomous automobiles (Reuters: 4, 2017). The company want to be the market leader in manufacturing latest cars and invest huge amount in R&D sector. Investment in R&D sector assists them to utilize the latest technologies and deliver cars with latest features that increases customers’ gratification.

Legal Environment: Legal environment refers to the influence of legal factors in an organization and that assists organizations to take right step and avoid the negative impact of the legal factors. Intellectual property law, employee laws, customers’ safety law etcetera laws of host countries influence the operations of Ford. For instance, Ford has launched sustainable workforce plan in order to ensure safe work environment for the employees (Reliable Plant, 2020). This plan includes health safety and other welfare programmes for employees which will help them to avoid the legal complexities of employee laws. As a result, Ford will be able to operate its business smoothly.

Ecological Environment: Ford has declared their sustainable business plan to reduce their negative environmental impact. For instance, the company has decided to use 100% renewable energy in all manufacturing plants through-out the world within 2035 (Ford, 2019). Ford will ensure zero water withdrawals in manufacturing which will reduce water pollution. The company will use only recyclable plastics in their cars to reduce global pollution. All these sustainable business will decrease negative environmental impact of Ford on the world and it will enhance their reputation among customers which will make customers more loyal toward them. As a result, sales of Ford will increase because of the eco-friendly car making initiatives.

SWOT Analysis of Ford:

SWOT analysis of Ford has been stated below:

Strengths: Ford has its business in 220 countries of the world which is a great coverage (The Economist Intelligent Unit, 2016).Ford has built great global recognition in global automobile sector and brand value of the company is 11.2 billion USD (Statista, 2020.).The company invests huge amount in R&D sector that helps them to produce automobiles with latest technologies. Ford has diversified brands and car models through which they captures every type of demographics.

Weakness: Ford does not focus on the emerging markets such as: India and China that will make the company highly profitable.Ford recalled about 300,000 automobiles in North America and this type of recalls harm their brand value (CNBC, 2019).The company is dependent on US market and generate sales of 47% from the market; do not focus on other emerging markets (Automotive News, 2016).

Opportunities: By manufacturing electric and hybrid automobiles, Ford will be able to increase their sales in future.Ford has invested $1 billion in the research for autonomous automobiles that success of the research will boost up their revenue (Reuters: 4, 2017).Digital media marketing will help Ford to ensure customers’ engagement globally which will help them to foster sales.

Threats: Ford faces high competition in the market and Toyota, Hyundai, Nissan, Honda, Tesla, SOA, Mazda Motor etcetera are the top competitors of Ford Motor Company (Forbes, 2011).The company faces a bill about $500 million to $1 billion because of the Brexit issue (Reuters: 1, 2020).WTO will increase tariffs about 10% which is the consequence of the Brexit issue that will increase the operational cost of Ford (Reuters: 1, 2020).

Competitive Analysis: Porter’s Five Forces Model of Ford:

Porter’s five forces model shows the competitive position of an organization in their targeted market. Porter’s five forces model of Ford has been analysed below:

Threats of new entrants: Low: New entrants will need huge capital to enter in global automobile sector that makes the threats of entrants lower (Hoffman, 2012). New entrants will not have the brand equity and large distribution channel as like as Ford, that also makes the threat low for the company. Besides that, there are high barriers in entering the global automobile industry; therefore new entrants will not be capable of start their business easily.

Threats of substitutes: High: Threats of substitutes for Ford is high because switching costs to substitutes of Ford cars is cheap such as: public transport (Wu, Dufour, and Sun, 2010). People travel through public transport like train, bus, bike and others to minimize costs. Increasing fuel prices also compel people to travel by the public transports instead of automobiles that increases threat for Ford.

Bargaining power of suppliers: Low: There are many supplies in the automobile industry that ensures the availability of mechanisms which makes the suppliers less powerful for the business of Ford (Platto et al., 2016). Ford will be capable of switching suppliers within lower costs that reduces the bargaining power of suppliers to the company.

Bargaining power of buyers: High: Switching costs of Ford is very low that makes the bargaining power of buyers higher (Wilson, and McKinlay, 2010). Customers often find out cheaper automobiles. Therefore, they switch to the competitors of Ford whose are providing automobiles with reasonable prices.

Competitive Rivalry: High: Toyota, Hyundai, Nissan, Honda, Tesla, SOA, Mazda Motor etcetera are key competitors of Ford and the company faces high competition in the industry (Forbes, 2011). The competitors differentiate their automobiles to deliver exclusive customers’ experience and attracts customers toward them. Therefore, Ford have to make effective business strategies to remain in the leading position.

Unique Selling Point or USP of Ford:

Ford is one of the leader of global automobile manufacturer. It utilizes updated technologies to provide automobiles with latest technologies and deliver excusive customers’ experience that makes Ford stronger than their competitors. The uniqueness of the Ford cars are their USP. These USP has been analysed below:

Touch screen system: Ford Freestyle has 6.5-inch touchscreen information system which is a rear features that other automobile providers bring (Car Wale, 2018). The information system is compatible with Apple Car Play, Android Auto and SYNC3. This updated feature attracted many tech-savvy customers toward them.

Superior braking: Anti-lock Braking System (ABS) including Electronic Brake Force Distribution (EBD) helps to balance break force between front and rear wheels in order to prevent wheels from locking (Ford: 2, 2020). Therefore, people can stop the car in hurry and they will be able to avoid many accidents with this break balancing technology that Ford provides. As a result, customers purchase cars from the company.

Safety-equipment: Ford has increased its reputation by providing safety features on their cars that ensures safety of the customers. For example, Ford Freestyle has dual front airbags with ABS and EBD furthermore it has emergency assistance too that shuts down the fuel supply when cars face an accident and shares customers’ GPS location with emergency supplies (Car Wale, 2018).

Ford My Key: With the help of Ford My Key, people can set the maximum speed limit, set a reminder of tying seatbelt and adjust the volume of audio system (Ford: 2, 2020). The people who forget to tie seatbelt, can use Ford My Key to set remind and minimize risks. The technology also makes customers’ highly satisfied.

Fuel efficiency: Ford makes its automobiles with the feature of fuel efficiency that reduces fuel consumption. For instance, Ranger consumes fuel about 7.6L/100KM; Power-88/110KW; Torque-285/375Nm (Ford: 3, 2020). As a result, it reduces fuel costs of customers; therefore budget conscious customers buy the car.

Effective marketing strategies of Ford:

Active Patent: Ford has about 20,000 active patents that assists them to implement digital technologies (Patent sight, 2020). By utilizing these patents, the company ensures their step ahead technologically among its competitors because competitors do not have the right to manufacture the vehicles which is under the patents of Ford. Therefore, the company can maintain differentiation strategy successfully. As a result, it has become capable of capturing 5.59% market share on global automotive market (Statista: 1, 2020).

 Plants of Ford: The company have more than 65 plant across the world where they manufacture their vehicles (Auto Alliance, 2020). By manufacturing their vehicles in their plants, Ford can control the manufacture costs and become capable of providing vehicles with lower prices. As a result, Ford sold about 5.4 million automobiles in 2019 and became profitable than the competitors (Statista: 2, 2019).

Great global presence: Ford ensures its presence in 220 countries of the world which is a great presence (The Economist Intelligent Unit, 2016). Because of the great presence, customers across world can purchase Ford’s automobiles after getting near on their hand.

Different channel of distributions: The company use resellers, direct selling agents, e-commerce sites and authorized dealerships to distribute their automobiles. Ford have taken lease of most of the warehouse and distribution centres; therefore they can reduce operational costs and become cost efficient service provider of the industry. As a result, they generated revenue of US$155.900 billion in 2019 because of their cost efficient services (Ford: 1, 2020).

Analysis of Market Segmentation, Targeting and Positioning:

The racing car of Ford named ‘Ford GT’ has been selected as the sub-brand of Ford to analyse the sub-brand’s market segmentation, targeting and positioning in this part. Marketing and brand awareness strategies of the sub-brand has been also analysed furthermore marketing mix has been also demonstrated.

Market segmentation of ‘Ford GT’:

There are different way of conducting market segmentation such as: demographic, geographic, geo-demographic, psychographics and behavioural (Dolnicar, Grün, and Leisch, 2018).

Ford GT designs and delivers exclusive racing cars with outstanding speed and exceptional handling. Demographic customer segmentation has been applied to classify the customers who buy and use Ford GT. The logic of selecting demographic segmentation is, it is the appropriate segment that shows why customers of that group buy Ford GT.

Demographic customer segment characterizes customers according to the age, ethnicity, religion, occupation, income etcetera. Ford GT has targeted their customers on the basis of the occupation of the customers. They design cars for the professional racers who take part in car race. Ford GT has carbon-fibre body and it has 647-horsepower 3.5L Eco Boost V6 engine is the latest technological innovation of racing car that delivers best performance (Ford: 4, 2020). Aluminium structure of the racing car reduces the weight and ensure super strength. All features of Ford GT is best as racing car and racers choose the car to ensure fastest speed and reduce the chance of car damage while racing.

Market Positioning: Ford GT

Form the above graphic it is seen that, Ford GT manufactures racing car with medium quality within reasonable price. It refers to a good position of Ford GT for the advanced features it has. Ford GT has 647-horsepower 3.5L Eco Boost V6 engine that helps races to make race smoothly without difficulties (Ford: 4, 2020). It also has touchscreen of six inch and voice command. Price of the racing car is reasonable than the competitors’ racing cars. All the features of the car helps racers to run the car with fastest speed and strong outside of the car reduces the damage of accidents.

Marketing objectives which will increase brand awareness, market share, profitability and sales of Ford GT:

Racing cars fall in the luxury car categories of automotive industries across the world. Only racer are the buyer of racing car and they want their car with all latest features such as: strong body, highest speed, fuel efficiency, attractive and cool outlook, less weight for the comfort of run fast and other features. Many advanced features are added in Ford GT cars that attracts racer toward the cars but competitors of Ford GT provides more facilities in their racing cars that makes the competitors’ car best than Ford GT. For example, HENNESSEY VENOM F5: 301 MPH has 2,950-pound carbon fibre chassis and bolted a 1,600-hp, 7, 4-liter, twin-turbo V8; therefore the car can go from 0 to 249 to 0 mph in less than 30 seconds (Speed Vegas, 2018). Ford GT should research more add these type of advanced features in their cars to increase its demand.

Ford GT should take some significant steps to increase their brand awareness and market share; such as:

Ensure strong presence in website: Website helps companies to keep their customers’ engaged by providing the significant information that customers’ need to know (). Ford GT should ensure good presentation of Ford GT in their website including pictures, features and other information about the car. The sub-brand should use Search Engine Optimization to ensure first search result of their website when customers will search for racing car. It will increase customers’ visit on their official website; therefore more customers will be attracted toward Ford GT and sales will increase.

Emphasizing on social media: Around 3.8 billion people use social media across the world and it has become one of the most effective marketing media for companies (We are social, 2020). Ford GT should focus on social media marketing in order to attract customers globally within a moment. It also reduces marketing costs. By focusing more on using social media marketing, Ford GT will be capable of increasing their brand awareness and the people will know about the racing car who do not know about the car. As a result, racers will buy the car after knowing about it and the market share of Ford GT will increase.

Focusing on product development: By developing products, companies can maintain their customers’ base within targeted market. Ford GT should emphasize on product development and enhance the quality of their racing car like competitors’ car. For instance, HENNESSEY VENOM F5: 301 MPH can run 0 to 249 to 0 mph in less than 30 seconds which has become possible because of their product development effort (Speed Vegas, 2018). Ford GT should develop their cars to provide fastest services as like as competitors to maintain their profitability.

Crating video tutorials: You Tube is the second largest search engine and 2 billion people use the search engine (Oberlo, 2020). Ford GT should utilize YouTube to promote their brand. They can create video tutorials where they will present Ford GT more attractively. By targeting YouTube, they will be capable to attracting huge amount of customers worldwide because racing videos of the cars will make racers interest toward the car.

Recommended marketing strategies: Marketing Mix of Ford GT:

Price: Ford uses appropriate price for their automobiles that is one of the key reason of its higher demand. Ford GT is costly than other cars but it is reasonable in price than the competitors’ racing cars and it is fuel efficient that also reduces costs. For instance, price of Ford GT starts at $500,000 which has (Edmunds, 2020). Ford GT targets the racers who want racing car with good quality and reasonable price. The sub-brand have to maintain their cost-efficient services to maintain demand.

Product: Design of Ford GT is so much attractive and cool that attracts racers greatly and interior design of the car is also superb. 647-horsepower 3.5L Eco Boost V6 engine of the car, ensures high speed and racers can run the Ford GT fast than other racing cars (Ford: 4, 2020). It also has touch screen and vice command system. The strong outside of Ford GT reduces the risks of accidents and save racer from getting injured. The features of Ford GT creates value; therefore racers buy the car. Ford GT have to conduct innovation

Promotion: Promotion is the process of encouraging customers to buy the products or services of an organization and organizations must focus on their promotion strategies to ensure higher sales. Ford GT be sponsor of sports events, sports facilities and sports teams to increase their brand awareness (Vlaskovits, 2011).have to be more active in social media including YouTube in order to increase their brand awareness because most of the people of the world use these media to entertain themselves. Ford GT will be capable of doing promotion within lower costs if they conduct internet based marketing. Therefore, the sub-brand should adopt the promotional strategies to promote themselves.

Place: Place refers to the distribution channel of companies through which products are distributed to customers. Ford GT uses resellers, direct selling agents, e-commerce sites and authorized dealerships; therefore customers get automobiles near their hand and buy the automobiles of the company (Kimbrough,et al., 2010). Ford GT have to manage their supply chain in effective way to stay tuned with the prospective customers.

People: Ford appoints eligible and well experienced people in their company; therefore they can utilize their talent and maintain the quality and standard of the automobiles of Ford (Yang, 2014). Ford should arranges training and development plan for the employees to enhance their capability. As a result, Ford will be capable of delivering outstanding customer experience and it will increase customers’ gratification.

Process: Ford ensures development in their process to ensure outstanding growth (Pandey, McBride, and Eustice, 2011). The company have to identify the process that consumes too much time and resources in order to take steps to stop time and resource consumption. As a result, the profitability of Ford will increase.

Physical evidence: Outstanding and cool outside design and interior design of Ford cars are the physical evidence of the company (Hughes-Cromwick, 2011). Distinct colour and design of the Ford automobiles makes customers’ highly gratified. Ford should maintain their standard design and make their cars more attractive to increase sales and become highly profitable.

Conclusion

Ford is one of the most renowned automotive company of the world and has high demand. The standard design and cars with latest technologies attracts customers toward them. The company only sales automobiles through distributors but they should set up own outlets from where customers will directly purchase the cars. Therefore, Ford will be able to stay connected with the customers directly and can collect feedback from the customers. By collecting feedback, the company will be capable of developing their cars according to customers’ demand. As a result, sales of the Ford cars will increase enormously and the company will be drastically profitable.

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