Analyzing The Macro Environment Economics Essay

Plague analysis aid to measure the concern environment and is a great strategic tool for understanding the large image of the environment in which concern operates, enabling the company to take advantage of the chances and minimise the challenges faced by their concern activities. When strategic planning is done right, it provides a solid program for a company to turn into the hereafter.

With a PEST analysis, the company can see a longer skyline of clip, and be able to clear up strategic chances and menaces that the administration faces. By looking to the outside environment to see the possible forces of alteration looming on the skyline, houses can take the strategic planning procedure out of the sphere of today and into the skyline of tomorrow. Byars, L. ( 1991 ) . The consequences can so be used to take advantage of chances and to do eventuality programs for menaces when fixing concern and strategic programs ( Byars, 1991 ; Cooper, 2000 ) . The usage of PEST analysis can be seen effectual for concern and strategic planning, selling planning, concern and merchandise development and research studies. PEST besides ensures that company ‘s public presentation is aligned positively with the powerful forces of alteration that are impacting concern environment ( Porter, 1985 ) . PEST is utile when a company decides to come in its concern operations into new markets and new states. The usage of PEST, helps to interrupt free of premises, and aid to efficaciously accommodate to the worlds of the new environment.

Pest Analysis

The Ford Motor Company is an American transnational corporation based in Dearborn, Michigan, a suburb of Detroit. The car manufacturer was founded by Henry Ford and incorporated on June 16, 1903. In add-on to the Ford, Lincoln, and Mercury trade names, Ford besides owns a little interest in Mazda in Japan and Aston Martin in the UK. Ford ‘s former UK subordinates Jaguar and Land Rover were sold to Tata Motors of India in March 2008. In 2010 Ford sold Volvo to Geely Automobile ( Thompson, J. 2002 ) . The basic challenge for the Ford motor company is the mobility of the labour. Mobility is a basic human demand. Developed and emerging economic systems likewise require transit systems to acquire goods to market and people to the topographic points where they work, store, dine and gather. Another challenge for the Ford motors are climate alterations Due to alterations in clime alteration and associated ordinance is taking to new vehicle criterions and increased costs. However, the benefits of more rigorous vehicle nursery gas ( GHG ) criterions are eroded as vehicles spend more and more clip tick overing in gridlock conditions. Other policy steps designed to cut down gridlock, such as congestion revenue enhancements and prohibitions on autos come ining metropolis bounds, may turn out to be more effectual for cut downing GHG emanations from vehicles in urban countries. However there are great chances available to ford motors to work successfully in future ( Thompson, J. 2002 ) .. The pest analysis is discussed with the aid of following factors

Political Factor

These refer to authorities policy such as the grade of intercession in the economic system. In instance of Ford the company should concentrate on those countries where authoritiess are acute to supply better instruction and there is political stableness. Different articles show that Ford is looking at China as it is hub for car fabrication. However the company ‘s move must be in conformity to the governmental policy. The Acts of the Apostless of the company must n harmonizing to the revenue enhancement policies of the authorities. Political determinations can impact on many critical countries for concern such as the instruction of the work force, the wellness of the state and the quality of the substructure of the economic system such as the route and rail system which in return impact the scheme for Ford motors ( Kotter, J. and Schlesinger, L. 1991 )

Economic Factors

Economic conditions affect how easy or how hard it is to be successful and profitable at any clip because they affect both capital handiness and cost, and demand ( Thompson, 2002 ) . If demand is buyout, for illustration, and the cost of capital is low, it will be attractive for houses to put and turn with outlooks of being profitable. In opposite fortunes houses might happen that profitableness throughout the industry is low. The timing and comparative success of peculiar schemes by Ford motors can be influences by economic conditions.

Higher involvement rates may discourage investing because it costs more to borrow as if china addition the involvement rate it would endure a batch to Ford because US car manufacturer Ford has announced farther investing in China, with programs to construct a $ 760m ( ?474m ) mill in Hangzhou. A strong currency may do exporting more hard because it may raise the monetary value in footings of foreign currency. Inflation may arouse higher pay demands from employees and rise costs

higher national income growing may hike demand for a house ‘s merchandises ( Kotter, J. and Schlesinger, L. 1991 )

Social Factors

The demographic tendencies such as population, age, gustatory sensation and manner will besides hold impact on the scheme of Ford Motors. For illustration the ageing population has been going a job. This has increased the costs for houses who are committed to pension payments for their employees because their staff is populating longer because of this Ford might hold stopped its production works in Europe. The ageing population besides has impact on demand: for illustration, demand for sheltered adjustment and medical specialties have increased whereas demand for playthings is falling. This besides consequences in demand for autos falling in the hereafter. Cut on the forces and on the occupations. The impact on many lives and to the strong partnerships in the providers. The minimum figure of staffs can be an intervention

Technological Factors

Ford Motors have upgraded engineering on the merchandise of Ford for beef uping the growing sections and to bring forth profitableness. The company ‘s Chicago Assembly Plant that can be usage for the production of vehicles. Creation of new little autos and crossing over autos signifies technological promotion Fuel salvaging devices can besides be introduced. ( Kotter, J. and Schlesinger, L. 1991 )

Now if we evaluate the success of Ford Motors in future we can reason that Ford motors might non be every bit much successful in future as in the yesteryear. Even the tabular array in the given article suggests that new autos sold in the UK was approximately 11 % .. However the closure of the production works will ensue in loss of volume for the Ford.

Question 2

Ford Motors Company is an oligopoly construction market house which They are mutualist because the figure of competition is few and any alteration in monetary value & A ; merchandise etc by an house will hold a direct influence on the luck of its challengers, which in bend retaliate by altering their monetary value and end product.

The size of rivals is big as there are barriers to entry and issue. Thus under oligopoly a house non merely considers the market demand for its merchandise but besides the reactions of other houses in the industry. No house can neglect to take into history the reaction of other houses to its monetary value and end product policies. There is, hence, a good trade of mutualities of the house under oligopoly ( Tsiakkiros A. 2002 ) .

The oligopoly market is extremely concentrated as there are less houses as in the instance of Ford motors where there is a trust of few giants houses ( Tsiakkiros A. 2002 ) The houses under oligopolistic market employ aggressive and defensive arms to derive a greater portion in the market and to maximise sale. In position of this houses have to incur a great trade on advertizement and other steps of sale publicity. Thus advertisement and merchandising cost play a great function in the oligopolistic market construction. Under perfect competition and monopoly outgo on advertizement and other steps is unneeded. But such outgo is the life-blood of an oligopolistic house. However this would hold impact on the public presentation on the Ford Motors. In instance of perfect competition, monopoly and monopolistic competition, the concern houses are assumed to act in such a manner as to maximise their net incomes. The profit-maximising behaviour on his portion may non be valid. The houses under oligopoly are interdependent as they are in a group. So ford will non be able to hold a end of net income maximization. This market construction would besides impact the consumer because in oligopoly the challengers houses are to be looked carefully. For illustration if ford increase the monetary value the other house might excessively which in consequence suffers the consumer. So we can reason that Ford is one of the dominated car fabricating company