Nowadays, to successfully deal with
uncertainty in the external environment and achieve strategic competitiveness, all
the firms must be aware of and clearly understand their external environment.
The external environment of a company can be broken down into 3 segments, which
are general environment analysis, industry analysis and competitor analysis. General
environment analysis is to support the managers to identify firm’s
opportunities and threats in the industry. Industry analysis focused on the
determinants that will affect a firm’s profitability by all its decision made
while competitor analysis is to analyse the competitors’ within the same
industry in order to create an effective competitive strategies to compete with
them in the market.
In this chapter, we focused on the general
environment analysis of Ford. General environment can be classified into 7
environment segments which are demographic, economic, political & legal,
sociocultural, technological, global and physical. Although Ford cannot directly
manage all these segments in its general environment, but Ford can gather the
relevant information needed through these segments in order to take the actions
such as development and implementation of management strategies that suit the
company.In order to compete
and perform well in the industry, Ford must be aware of the nature and direction
of the economy. Economic factors is crucial for a firm as it let the firm to
compute the market and profitability performance. In the financial crisis in
2008, automobile industry has suffered deliberately due to the economic decline.
However, this situation has become
better since then. By expanding into the
developing countries such as India, China and Southeast Asia, Ford is able to
increase the company’s sales and market performance in the automobile industry.
These countries are able to revive the economy that suffering recession as they
perform well and adapt good trading strategies. The economic growth in these
countries has caused many foreign brands enter to the Asian market and partner
with the local brands. As the result, the employment rate is increase and the
local workers has a higher dispensable income. Besides, this will positively
affecting the customer purchasing intention since they have more income to buy
the expensive goods such as automobile. Thus, this indirectly produce an
opportunity for Ford to increase its growth and profitability.
Employment rate is one
of the crucial factor that affect Ford in terms of economic. Beside employment
rate, the other factor that will affect the sales of Ford is oil prices. As customers
are price sensitive, oil prices will affect the customers distinctly. Customers
definitely would not buy a car that has a large fuel consumption as the price
of oil is expensive. Thus, Ford has put a lot of effort to create fuel-efficient
vehicles and vehicles that run on alternative energy such as electric car to
satisfy customers demand and increase profitability.