Environmental Analysis - Forces Influencing Business in the 21st Century

Environmental Analysis

Forces Influencing Business in the 21st Century

February 09, 2008

Environmental Analysis

There are four key sectors of industry: the primary sector, largely raw material extraction industries such as; the secondary sector, involving manufacturing; the tertiary sector, which deals with services and distribution of manufactured goods; and the quaternary sector, a relatively new type of industry focusing on technological research, design and development. Ford Motor Company falls into the secondary sector of industry, and it is Ford Motor Company that will be discussed within the context of this environmental analysis. The key macroeconomic variables affecting Ford Motor Company are inflation, interest rates, productivity, employment and unemployment, consumer expenditures, public debt as well as personal disposable income.

To fulfill the requirements assigned the following two macroeconomic industry variables have been chosen and dated back to cover the previous five years dating between two thousand and three to two thousand and seven. Both examples have been provided by EIU Data Services specifically through the markets indicators and forecasts sections as linked to from the University of Phoenix university library country profiles and economic data pages.

Selected Financial Performance Indicators

Indicator 2002 2003 2004 2005 2006

Sales and revenue ($ billion) 167.0 166.1 172.3 176.9 160.1

Income/(loss) from continuing operations ($ billion)1 2.2 0.6 3.2 1.6 (12.6)

Net income/(loss) ($ billion) 0.9 0.2 3.0 1.4 (12.6)

Stock price range (per share) ($) 6.90–18.23 6.58–17.33 12.61–17.34 7.57–14.75 6.06–9.48

Diluted per share amount of income/(loss) from continuing operations ($) 1.14 0.35 1.59 0.87 (6.72)

Diluted per share amount of net income/(loss) ($) 0.51 0.13 1.52 0.77 (6.72)

Cash dividends per share ($) 0.40 0.40 0.40 0.40 0.25

Automotive gross cash ($ billion)1 25.3 25.9 23.6 25.1 33.9

Shareholder return – Bloomberg Total Return Analysis (percent)2 (39) 79 (6) (45) 1

Based on the data presented on the above bar graphs representing United States personal disposable income as well as United States consumer expenditures on transportation and communications the logical conclusion would be that North American automobile manufacturers would be selling vehicles at an all time high. Alas this has not been the case. Ford Motor Company has fallen out of favor with consumers over the last several years and in two thousand six the company lost almost 13 billion dollars.

Based upon the conducted environmental scan Ford Motor Company faces not only many challenges in its future but opportunities within its operating environment. Some of the challenges Ford must face will be a negative reputation in the workforce after cutting 14,000 salaried positions, which equates to one-third of Ford’s North American workforce. The other major challenge facing Ford is the reduction of at least 16 North American manufacturing facilities by the end of 2012. Of the opportunities facing the Ford Motor Company is its continued efforts to implement its Way Forward plan for North America appears to be the most formidable plan to return Ford to the profitable spectrum of operations. Among the actions taken by Ford Motor Company in two thousand six were the closure of two assembly plants, the offering of separation packages to its union associated workers and the reduction of its salaried workforce. In effect Ford Motor Company was able to cut its operating costs by about one third creating an extremely necessary opportunity to return to profitability. Other opportunities for Ford include