EXTERNAL ENVIRONMENT ANALYSIS

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TABLE OF CONTENTS
EXECUTIVE SUMMARY 2
INTRODUCTION 3
PART A: EXTERNAL ENVIRONMENT ANALYSIS 4
1. Political 5
2. Economic 6
3. Social 8
4. Technology 9
PART B: DEMOGRAPHIC FACTORS 10
1. The influences of demographic factors 10
a. Genders difference. . 11
b. Age gap. . 11
c. Living circumstances. . 12
d. Purpose of using. . 12
e. Job position and financial problem. . 13
2. The organization, strategy and recommendation of Ford Vietnam 13
CONCLUSION 15
REFERENCES 16
APPENDIX 1: COMPANY PROFILE 18
EXECUTIVE SUMMARY
Ford Vietnam was established in 1995, and is one the most popular motor vehicles in the country. As any usual company which operates in automobile market, Ford’s organization is impacted by many internal as well as external factors which could lead to the changes within its future strategy. However, this study will mainly analyze the effect of external environmental factors on Ford Vietnam and also evaluate its current position and responses but skip the internal one.
The report includes two big main parts. The first one will mention about the primary external influences on Ford Vietnam organization as well as its important to the operations. The remains will focus on one of the most relevant issue that all companies in every field have to concern, the demographics factor. In this report, there are many methods has applied. For examples, PEST analysis to find out external factors that have strong impact on business of Ford in Vietnam. Demographic factors are also shown in this report to explore demography in Vietnamese market in order to support Ford business. In the term of demography, the report will show genders difference, age gap, living circumstances, purpose of using, job position and financial problem, the organization, strategy and recommendation to Ford Vietnam in the Vietnamese market. Besides, this report also recommends new strategies to Ford in order to have sustainable development in the long term in Vietnamese market
After the analyzing, the reports can explain and provide the readers the more obvious overview from the current organization of Ford Vietnam

 
INTRODUCTION
Ford established in Vietnam in 1995and it is a joint venture between Song Cong Diesel Company with 25% and Ford Motor Company with 75%. The Ford assembly plant is located in Hai Duong province with ISO 14001, ISO 9001 and QS 9000. In 11/1997, Ford began businesses with plant capacity 14,000 cars/units per year. Ford Vietnam is one of the biggest automobile companies in our country. Ford sells a broad range of automobile and also provides financial services. The following is the Ford’s organizational structure. There is a CEO, a chairman and a number of vice presidents. Under CEO work-
-Chief operating officer
_Chief technical officer
_Chief financial officer
_Executive vice presidents
_Group vice presidents
There is a clear chain of command following from CEO to Vice presidents to Department directors and employees. The degree of centralization is fairly high. Although employees are free to give opinions, the ultimate decision power resides in the hands of top management only.

PART A: EXTERNAL ENVIRONMENT ANALYSIS
For external factors analyzing, this study will apply the most common and simple model PEST analysis to clarify the important of each elements to Ford Vietnam. Four main elements of model consist of Political, Economic, Social and Technological. The PEST analysis is a very popular useful tool for analyzing and understanding the role of those factors in the growth of automobile industry; the benefits and opportunities that Ford Vietnam could received.

Figure 1: PEST analysis model

1. Political
The first factor to be mentioned here is political. Political shows how changes in government policy might impact on the business. Political factors are all about some important things such as taxation, business laws and regulations, domestic trade administrations and antagonist trade administrations, etc. Each country has different kind of policy that rules all the fields of economy. Ford needs to grasp clearly all that policy and adopt it in the most useful way. Vietnam is Socialist Republic with one-party state and Vietnamese political environment is under communist system. It leads to the stable political. Nowadays, Vietnam’s government is improving the legal system to improve and protect the consumer’s right. It also creates the standard conditions for all businesses to develop and get more profits.
Why political factor is important? And how it effect on Ford strategy? Let’s take a small example to clarify the questions. In the UK, the Government has introduced financial measures to favor cars with lower CO2 emissions. If the automobile has a high CO2 emissions rate, there will be higher tax charge. In Vietnam, there are different regulations about the rate of CO2 emissions. The maximum rates of CO2 which to be charged higher tax are not the same between the UK’ laws and Vietnam’ laws. As a result, Ford Vietnam can not apply exactly the car model used for UK market to Vietnam market but they have to change the model, criteria and technology to make it suitable for Vietnam conditions. It means Ford must re-organize the operation’s structure to keep it still smooth, fit to Vietnam’s demands but doesn’t increase the costs. In addition, market prices, oil charges are also noticed in legal system of taxation. Different introductions of the new schemes in the US and European automobile industry were in strict regulations to produce high mileage cars along with a major increase in automobile sales and productions (Hill.2008). As the example above, Vietnam has its own political, different market prices and different oil charges. If there is any change in the countries political, Ford must update the change and make the organization goes along with it.

2. Economic
The second external factor is economic factors. Economic ones elaborate about economic advancement by corporation, tactics concerning crisis, general demands, interest rate, economic growth, distension and access of exchange rates, etc. Any change in the economy leads to the adjustment of supply and demand of consumers on Ford’s products and services. This paper analyzes some characteristics of economic as example to see clearly the role of economic factors in Ford’s organization. The first one is the growth of functional market. This function can show the potential demand of customer. If the growth in Vietnam is high, it means the large amount of cars that Ford can sell in Vietnam market. As a result, they will increase the supply to meet that high demand. In contrast, if the growth rate is low, they need to restructure the organization for the purpose of avoiding the surplus of capacity as well as costs increasing. In conclusion, base on economic growth, Ford can estimate the potential customers to have the right strategy and earn optimistic revenue. The next characteristics are inflation and economic advancement. Economic advancement is a very important part which will actuates the advancement of an appropriate economy as a whole and which will recognized on distinctive GDP. Inflation is also another very important criterion for Ford to consider. Both of two rates reflect the situation of resident’s financial. If the inflation is not stable, the price is unstable, of course. It’s not secure for customers about the price of Ford car. As a result, less people are able to buy a new car during the high level of inflation period because of the high price. It means the sells of Ford will be serious damaged by inflation. However, there was a very good sign for Ford. From 2012 to first quarter of 2015, the inflation rate of Vietnam is going down. Ford can push their operation up to take available advantages. Vietnam economic growth is increasing and the inflation becomes more stable. Although the car demand in Vietnam comes mainly from high society, these conditions would expand the market shares to other classes of society.

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