Ford Motor Company is an American multinational corporation specializing in motor vehicle production. Its product portfolio includes cars, pickup trucks, and electric cars. When considering the number of units produced and revenue collected, the company is ranked fifth in the world and second in the United States. Central to this clear success path are various factors, strategies, and business acumen shaped by political, economic, technological, environmental, and legal aspects. A keen consideration of all these factors reveals that continued innovation around electric vehicles is the leading trend with the highest impact potential. Furthermore, a close consideration of its mission, vision, and objectives makes it clear that the company is targeting to produce vehicles effectively, leading to excellence in the automotive industry.
Ford Motor Company Overview
Founded in 1903 by Henry Ford, Ford Motor Company is one of the leading American automotive companies known for its cutting-edge technology and engineering ingenuity in motor assembly (Weiss, 2014). Apart from Henry Ford, the company also had eleven other investors who heavily banked on its growth during its foundation. In 1919, the company was officially incorporated, and here, Ford, his wife, and his son took over the full ownership of the company from the other investors. The first model that the company registered was Model A which opened the market for the subsequent models, including the iconic Model T (Weiss, 2014). By the beginning of the first world war, the company had begun going global, with its first overseas assembly line being in Manchester, England. These efforts set the manufacturer on a path of success that it still enjoys.
Currently, the company is among the leading motor manufacturing companies that design, manufacture, market, and service cars, sport utility vehicles, and trucks in the United States. Also, the company is known for the early production of hybrid, electric cars, and high-end customized sport utility vehicles that are used worldwide. To serve its customers effectively, the company has three major segments: Automotive, Mobility, And Ford Credit. The Automotive segment is known for producing and selling the Ford and Lincoln motor vehicle brands. Besides, this segment has maintenance parts and runs service centers in collaboration with local dealers and distributors. The second segment, the Mobility segment, provides mobility services. These include producing and installing industrial parts used in heavy commercial services (Hiraide & Chakraborty, 2012). Lastly, the Ford Credit segment works with various financial institutions to offer financing-related facilities to ease motor vehicle purchase and leasing. This segment works with not only individuals, but also private companies, governments, and even motor dealers. Besides, the company works to provide loans to dealers with credit facilities in terms of vehicle inventory.
Generally, the company’s success is attributed to critical management exploits. Its excellent management is credited with bringing the company out of bankruptcy more than once, and now, it is the second-largest automaker, just behind General Motors. Much more, the company has more than 186,000 employees working on its hundreds of assembling lines across the globe. With this kind of workforce, it is no surprise that the company generated $136.3 billion in revenues in 2021 alone despite the hard-hitting hurdles that the COVID-19 Pandemic presented.
Ford Motor Company General Environment
Globally, Ford Motor Company operates in the automotive industry. This industry encompasses automakers from every corner of the world. Among the most known include Japan’s Toyota, Volkswagen, BMW, and Mercedes Benz. Also, in this category, there are England’s Land Rover and South Korea Hyundai. With their presence in almost every corner of the world where their vehicles are sold, used, and serviced daily, these companies are very competitive. To better understand the working of this industry and the factors that shape its strategy, there is the need to conduct an analytical assessment of various Political, Economic, Social, Technological, Environmental, and Legal (PESTEL) Factors.
PESTEL analysis is a strategic management tool that focuses on assessing the political, Economic, Social, Technological, Environmental, and Legal factors affecting, influencing, and shaping a company’s strategic standpoint (Corporatefinanceinstitute.com, 2022). To underscore how it is used, the political aspect of the PESTEL focuses on government-driven actions and policies (Lynch, 2018). Among these include aspects of corporate taxation, fiscal policies, free trade, and disputes, among other laws regulating regulations (Corporatefinanceinstitute.com, 2022). The economic part of the strategic tool focuses on the broader sense of interest rates, inflation, and the exchange rates that govern a given company.
The social factors in the strategic tool stand for social factors. These factors include all the human influencing aspects that tend to affect how stakeholders approach their work. Among the social factors in the social sense are demographic consideration, lifestyle, and even consumer beliefs (Lynch, 2018). Technology aspects include various innovations and inventions that dictate the management teams and the multiple elements. These might consist of automation, research, and development in the motor industry.
Environmental factors in the PESTEL involve the consideration of the key environmental impacts. The key ones include the carbon footprint, impact of production on climate change, and the occasional extreme weather conditions. Lastly, legal factors include those that emerge from changes to the regulation of any given environment (Lynch, 2018). These include considering contractual agreements, statutory regulations, and aspects of licensing.
Ford Motor Company PESTEL Analysis
Many political factors play a critical role in shaping the Ford Motor Company’s business strategy. Among the key ones, the United State government provides vital support to automakers regarding financial reprieve and funding for technological advancement. Another critical political factor is the apparent increase in international trade agreements. From the global perspective, there is the reality that various trade agreements have helped harness the business of motor vehicle production in multiple ways (Lazdowski, 2020). The end game for this good political support is the fact that these companies end up creating opportunities for their citizens. Also, this increases Ford Motors’ production opportunities. Additionally, the nations where it operates have continuously worked to advance rural development. This has raised the need for more vehicles and positively impacted its production capacities.
Focusing on the company’s economic factors, it is ostensible that various aspects have favored how the company has grown. While the COVID-19 slowed economies to unimaginable levels, the growth of many economies whereby the United States is leading has seen the company enjoy an excellent run. In this, the company can make huge sales yearly and hence, make huge sales. Economically, Ford Motors enjoys a high growth rate among its overseas markets in Asia and Africa (Erasmus, 2018). These new markets are known to cause thousands of cars yearly, and this alone has seen Ford Motors enjoy a good run in its production. These opportunities are constantly presenting the company with a new market frontier. On the downside, the dollar’s ever-growing strength means that slow sales disrupt its sales in the global center stage from time to time.
Socially, Ford Motor Company is continuously being strategically shaped by several factors. Herein, the world has seen increasing demand for electric and hybrid vehicles. This presents a massive opportunity as the company can diversify its market to meet the demand of this social segment. Also, there is an apparent attitude of moderation by car customers. Unlike other industries, customers in the vehicle industry tend to take their time for customer service (Hiraide & Chakraborty, 2012). This presents the company with an opportunity in that a slight improvement in services will outsell it. Lastly, the company is known for its focus on producing cars for all market segments. As a result, an opportunity for an ever-growing market with the increase of the middle-class social part.
Technologically, the company has various critical factors shaping its production and doing things. In this, there is continuous innovation around electric vehicles. This presents a new market frontier that the company should give focus on. Also, there is an increase in the technology linking the company to autonomous driving. This is likely to shape the company’s handling of innovation matters (Wang et al., 2021). The company has various innovations lined up regarding fuel-saving and accident reduction technology. In more than one way, these are continuously working to help the company improve its production efficiency and quality of cars produced.
Lastly, various factors shape the environmental and legal aspects of the business. Environmentally, factors include climate change, the need to reduce the carbon bring, and oil reserves that directly impact the motor industry (Lazdowski, 2020). These, in more than one-way, work to ensure that they shape the way the organization does production. Legally, the company is bound to adhere to environmental protection regulations. Also, the company is bound to meet various energy and industry standards that work to ensure that the cars produced are of high standards.
Most Apparent Trend
Considering the PESTEL factors, it is clear that the technological aspect is the most apparent. The rise of electric vehicles and their popularity in more than one way affect Ford Motor Company in various ways (Li, Khajepour & Song, 2019). Many cars produced by Ford Motors are gasoline-based, and the entrance of electric vehicles seems to be the perfect industrial turbulent force that will likely impact the company’s strategy in the coming years.
While the production of electric vehicles seems to place a potential need for a change of strategy, various uncertainty points arise. Electric cars have a short-range compared to the number of current charging stations (Li, Khajepour & Song, 2019). This means that they can only be used in urban areas and countries with a good electricity supply. Vagueness about their popularity for middle-income earners is another uncertainty facing them (Li, Khajepour & Song, 2019). In other words, only the wealthy few can afford these vehicles, casting doubts on their popularity and future use.
Strategic Analysis for Ford’s Company’s Mission, Vision, And Objectives.
A focus on Ford’s mission, vision, and objective statements reveals the reality that the company is focused on producing products that are quality effectively. The company is poised to become a top car manufacturer globally with the task. Its objectives, including the need to reduce pollution, promise the possibility of impacting the innovation aspects (Wang et al., 2021). Besides these three combined, there is the reality that the company intends to benefit its customers through cheaper but still high-quality motor vehicles.
In summary, it is clear that strategically, Ford Motor Company is one of the well-constituted motor-producing companies in the world. From the analysis, it is clear that the company is performing superbly. Despite this, the company is likely to make considerable strides in production if it embraces new production technologies. Among all the presenting opportunities, the need to focus on electric vehicles is the perfect opportunity Ford Motor Company can ride in the future. Needless to mention, the company needs to capitalize on the electric vehicle wave to grow and diversify its customer base. The company will continuously boost its influence and market presence with such a move.
Weiss, R. P. (2014). Corporate security at Ford Motor Company: from the great war to the cold war. In Corporate security in the 21st century (pp. 17-38). Palgrave Macmillan, London
Hiraide, N., & Chakraborty, K. (2012). Surviving the global recession and the demand for auto industry in the US–a case for ford motor company. International Journal of Economics and Finance, 4(5), 85-93.
Wang, Z., Li, W., Bian, K., & Yang, S. (2021). Analysis of Improving the Future Business Policy of Ford Motor Company. World Scientific Research Journal, 7(1), 51-55.
Erasmus, D. (2018). The 500 000th Ford Ranger!. Farmer’s Weekly, 2018(18036), 58-58.
Li, Z., Khajepour, A., & Song, J. (2019). A comprehensive review of the key technologies for pure electric vehicles. Energy, 182, 824-839.
Corporatefinanceinstitute.com. (2022). PESTEL Analysis. Corporate Finance Institute. Retrieved 27 May 2022, from https://corporatefinanceinstitute.com/resources/knowledge/strategy/pestel-analysis/.
Lynch, R. (2018). Strategic management. Pearson UK.
Lazdowski, Y. J. (2020). The Inception of the Ford Motor Company. In Persistence and Vigilance: A View of Ford Motor Company’s Accounting over its First Fifty Years. Emerald Publishing Limited.