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14. ford performance in uk
14. ford performance in uk
14. ford performance in uk
14. ford performance in uk
14. ford performance in uk
14. ford performance in uk
14. ford performance in uk
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14. ford performance in uk

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  • 1. 1 Ford performance in UK Table of Content 1 PESTLE analysis of Ford...................................................................................................2 Political Factors: ......................................................................................................................2 Economic Factors: ...................................................................................................................3 Socio-cultural Factors..............................................................................................................3 Technological Factors:.............................................................................................................3 Environmental Factors............................................................................................................4 Legal Factors ............................................................................................................................4 2 Ford‟s business in future....................................................................................................4 3 Market structure in UK car industry..................................................................................5 UK car industry: oligopolistic market structure...................................................................5 Ford’s performance in UK......................................................................................................6 4 References..........................................................................................................................7
  • 2. 2 1 PESTLE analysis of Ford PESTLE (Figure 1) is short for Political, Economic, Sociological, Technological, Legal, and Environmental. Information observed through an effective PESTLE analysis provides to organization guidance in regards of environmental influences that are useful on decision making of any strategy (Srdjevic et al., 2012). It is very useful to use PESTLE analysis to understand the „big picture‟ of the environment where the organization is operating. Using PESTLE analysis is used to explore risks related to market (the need for a product or service) growth or decline, and such the position, potential and direction for an individual business or organization. From this overview, it can be seen that just like most major corporations, Ford Motor Company may have some flaws, but it is a cut above the rest with its capabilities and resources. Figure 1: PESTLE Analysis Political Factors:
  • 3. 3 Because government laws and regulations have been concerned with production of more eco- friendly automobiles, the strategic planning of Ford is influenced by Political factors. Thanks to these regulations, fuel-efficient cars are manufactured environmentally and friendly by Ford. Furthermore, the increasingly widened political environment of The U.S today makes it difficult for large firm to attract people from all backgrounds. Ford has successfully maintained its image as a worker truck. Attentions of other types of social-economic groups are also drawn to Ford‟s “high-class” expensive luxury lines of vehicles. Economic Factors: Ford Motor Company and other companies in the auto industry have all suffered in the past few years. Being able to maintain the prosperous business level when others needed assistance was an excellent example of how they adapted to the economic circumstances which are always changing. Financial crisis, recession and high fixed costs of the industry have caused Ford an adverse impact on their profitability. However, it was impressive for Ford Motor Company with its financing capabilities to be able to stay above the water. Socio-cultural Factors Ford‟s advertisements have been increased in recent years, which is very helpful for customers to know that the innovative and exciting company has had smoother design and capability for new and pertinent vehicles. Advertising has increasingly been brought to new drivers or their parents telling the reasons why Ford‟s new models are some of the best cars available for new drivers. Technological Factors: A “smart car” has been introduced as the joint venture between Ford and Microsoft. The car is able to read text message, understands what type of music the drivers prefer and has voice commands. In terms of inside-car technology, the leading role has definitely taken by Ford. With the onslaught on the latest products, Ford is obviously hoping that consumers will be brought back and their share price will be revived. Fuel-saving technologies are also central to Ford's future with many technologies introduced that help motorists monitor and thus reduce power consumption by driving more efficiently. It is also improving the fuel economy
  • 4. 4 of its conventional petrol and diesel-powered engines as well as remains committed to further investment in technologies such as electric and petrol electric hybrid vehicles. Environmental Factors A new line of economic cars has been released stressing on the car‟s environmental safety. When lots of people show their great concerns about going green, Ford‟s focus from large gas costing SUV‟s has been turned to more fuel economic engines and technology. Changes are being made by Ford to be consistent with the new government regulations and market conditions. Legal Factors In order to help Ford‟s vehicles pass the inspections of the Federal Government of the United States, all the necessary precautions have been surely taken care. Under all kinds of laws and regulations such as safety, finance regulations, Ford‟s compliances continue to be maintained with the ever-changing regulatory agencies where regulations are continually made. 2 Ford’s business in future It is torturing for Ford to have the stubbornly persistent downturn in the car markets in Europe. According to BBC News (2012), its sales figures has fallen almost 10% in Europe for the first six months of 2012 and down to the lowest level in 17 years. Since consumers turn to their competitors such as Hyundai and Kia - the South Korean manufactures, it is painful for many other main carmakers too, including Opel/Vauxhall, Fiat and PSA Peugeot Citroen. With its latest improved version products of best-selling models such as Fiesta, Mondeo and Kuga, it is clearly hoped that Ford‟s consumers will be brought back and its share price will be strengthened. But one of the basic technologies in Ford‟s future is fuel- saving. Many technologies are being introduced by carmakers, helping motorists monitor and thus reducing power consumption by driving more effectively. Therefore, the fuel economy of its conventional petrol and diesel-powered engines are also improved thanks to innovations such as the UK-developed 1.0-litre three-cylinder EcoBoost engine. Such cars are expected to account for one in four sales globally by 2020 (Marques et al., 2012).
  • 5. 5 Furthermore, Ford‟s fuel-saving technology is used to decrease labour cost and improve plant utilization in Europe where less than 65% of its capacity is used (according to industry watchers) (Madslien, 2012). If a factory was closed in, Germany would go a long way to do this rapidly, but this is politically not easy. Effort is being made by Ford to get the unions and national politicians in Belgium, Germany, Spain and the UK to make agreement on structural changes. These are believed to be essential to cope with the South Korean‟s modern, streamlined European operations in the Czech Republic and Slovakia, where it does not cost much to manufacture. Moreover, as part of its “One Ford” strategy, a global manufacturing system wanted to be applied across all its factories everywhere in the world has been come up with by automaker. As stated in Reuters (2012), investment costs in factories should be cut by 8% a year by the system, and it should also be more flexible for factories to be able to manufacture in terms of the range of models within their capabilities. Thus, European factories should be better made to compete for future production work or else that would go to Ford‟s factories elsewhere in the world where plants are newer and labours are cheaper. 3 Market structure in UK car industry UK car industry: oligopolistic market structure It seems like there is no competitiveness in the current market structure in the UK Car Industry and it is identified as oligopolistic. According to Wellmann (2004), there are three main characteristics in oligopolistic markets:  A few companies control the supply in the industry. Carmakers that were greatly presented in the UK in 2011 comprise of Ford, Honda, Nissan, Toyota, and Vauxhall Motors (owned by General Motors).  High barriers must be required to enter the industry. There are many barriers in the UK Car Industry to stop other companies from entering and gaining the market share. Right now the Selective and Exclusive Distribution network known as SED is one of the most important barriers. If there were not a right manufacture, dealers could not sell their autos in the showroom.
  • 6. 6  Firms must depend on each other. This is easily seen in any oligopolistic market, especially in the UK Car Industry. Price lists of most firms are set along with their suppliers focusing on their effect of the non-price competition. Lowering their pricings would not be profitable for suppliers in UK Car Industry since firms are interdependent therefore affecting rivals and definitely causing cut pricing or facing risk of losing market share. Because oligopoly is the market controlled by a few companies, dominating the majority of the market share, it is different from other types of market structure itself (Stackelberg, 2011). Three other basic types of market structure are (1) perfect competition; (2) monopoly competition; and (3) Monopoly. Perfect competition is the theoretical market structure in which there are unlimited contestability (or no barriers to entry), unlimited number of manufactures and consumers, and a perfectly elastic curve of demand. The second type is monopolistic competition or also known as competitive market. In this type, there are a large number of firms; each firm will have a small market share rate and their products are hardly different. Last type of market structure is monopoly where there is only one supplier of a product or service. Ford’s performance in UK As the UK Car Industry is very concentrated resulting in an increase in globalization in the auto industry concentration and there are significant effects of globalization and economic scales of auto market (Turnbull, 2011). According to Ford (2012), in comparison with the same period in 2011, Ford has been taking the leading role through 2012 with the increasing number in sales and share until the end of July. Car share has been boosted through 2012 thanks to an outpouring of new and technologically fascinating Ford products. Still, more Ford product news is coming out. It is very difficult for new firm to enter the UK auto industry, because there are high entry barriers in the market. Brand loyalty is focused in automobile industry (Gerlach and Witt, 2012), which is the advantage of the current auto firms in the auto market since more investment has been made to win a consumer than keep them like Ford, Toyota, and Honda do. In particular, Ford Motor Co. accounts for 46.0 percent in terms of garnering repeat business among top five automakers in a survey of Experian. In addition, there are six out of
  • 7. 7 top 10 cars with the most brand-loyal buyers are of Ford products which are Fusion, Flex, Edge, Five Hundred, Escape and Fiesta. In order to fight against the weak Pound in comparison with Euro, costs has been decreased all over Ford‟s UK market, including reduction in human resources in the central operation and also in automobile agent network. The average rise in price of 2.7 percent will be applied across Ford‟s area from December 1, 2012. Nevertheless, it is essential to have increased price to remain efficient business and to restore the increase in relative costs caused by the weak pound over a long period. Almost all of its stock and components are imported from the continent, apart from smaller capacity engines. The euro was almost 33%greater than pound this time two years ago. 4 References This document is provided by: VU Thuy Dung (Ms.) Manager Center for Online Writing Resources Facebook : https://www.facebook.com/vu.thuydung.5076 Email : assignmentsource@gmail.com Blogger : http://assignmentsource.blogspot.com/ Website : http://assignmentsource.com/

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