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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
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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:
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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
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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).
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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.
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 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
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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

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