The automotive industries macro environment consists of political factors, economic factors, social factors, and environmental factors. These factors are uncontrollable by the companies. Political factors are probably the most unforeseeable of all factors as no industry can predict the various decisions made by the government. Both Ford and Toyota must make each vehicle by the governments strict quality and safety regulations. Not only does the automotive industry have regulations on manufacturing of vehicles, but they also have workplace regulations that must followed. These workplace regulations may decrease overall production. Not only are there national regulations, but tariffs, trade barriers, taxes, levies, and exchange controls are imposed by each local government. The auto industry incurs significant overhead in obeying the regulations. Changes in regulations may also prone the industry further expenses.
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Economic factors in the auto industry consist of foreign currency exchange, cost of materials, and the buying behavior of the consumers. Recently the most influential factor on the auto industry is the rising prices of petroleum, making it more expensive for customers to drive less fuel efficient vehicles. Ford’s SUV sales declined due to rising gasoline costs. Toyota, however, their demand has increased because their vehicles consume less gasoline than most Ford vehicles (Toyota, 2003). The auto industry is susceptible to changes in foreign exchange rates. The Japanese yen and the U.S. dollar are constantly fluctuating. Purchased materials and products sold in foreign currencies are greatly affected by the constant changing exchange rates. An example would be the strengthening of the Japanese yen against the U.S. dollar can have an unfavorable affect on Toyota’s operating results.
Cars are viewed as a symbol of status. In some cases choice of brand a customer purchases is influenced by the way a person wants to be perceived by the public. In Europe, the demand for luxury cars are on the rise. Compact cars are in high demand in the Indian market due to population. Negative social effects that Toyota and Ford both have had were recalling cars due to faulty locks and corrosion of car parts (BBC, November 2005). Toyota also just had to recall millions of cars due to faulty accelerators. Lately technology has increasingly been the main source of increasing or reducing productivity. Ford and Toyota both have profited from using new technology advances in navigation systems, satellite radio, voice activated sound systems, and separate climate controlling for driver and passengers. Negative Recently the automotive industry has had to find ways for vehicles that use run off of other energy sources other than gasoline due to the increasing concern over the environment and global warming.
The increase in concern over the environment has been another factor for the automotive industry. Carbon Dioxide gasses emitted from vehicles are now regulated to limit the pollution. Many customers are switching to hybrid models due to the increasing prices of oil. Many automotive companies are also producing more hybrids due to the anticipation of petroleum running out within the next 50 years (BBC, June 2004). Ford introduced the new Hy-wire prototype, a vehicle that unites fuel cells and drive-by-wire systems. The Ford Fusion currently has better highway fuel economy than the Toyota Camry. Toyota currently has three vehicles that can be purchased as hybrids; the Prius, Camry, and the Highlander. Ford currently has the Ford Fusion and Ford Escape. Technology has also helped Ford and Toyota with customer service making it easier to shop for a car because they can customize their new vehicle online.
Each automotive manufacturer has certain target markets for each brand of car they manufacture. Toyota manufactures vehicles for all markets. The Toyota Scion is targeted for the youth market consists of 16 to 30 year olds with incomes ranging from 30,000 to 50,000. The Toyota Camry for one, is aimed at the middle class, 25 and older with income 40,000 and up. For the upper class market they have the Lexus, aimed at 35 and older with income 65,000 or more.
Ford also manufactures several cars for several markets. The Ford Focus, Fusion, and Fiesta are targeted at the youth market. The Ford Taurus, Escape, and Edge are targeted for the middle class market. The Ford Mustang, Expedition, Crown Victoria, and Flex are target for the Upper class market. Even though both Ford and Toyota have certain brands for certain markets, they still strive to get each customer their own unique and personalized vehicle.
Ford and Toyota both also have brands that cater to other target markets such as the family market with sport utility vehicles, and vans, while the business market is targeted with sport utility vehicles, vans, and trucks. The automotive industry has vehicles for basically every target market out their.
Not only are Ford and Toyota competitors, but they also share other competitors. The biggest competitors in the automotive industry by volume are Ford, Toyota, General Motors, DaimlerChrysler, and Honda. Each manufacturer also has several subsidiaries which compete not only with others but themselves. Ford’s main seven consist of Lincoln, Mercury, Mazda, Volvo, Jaguar, Land Rover, and Aston Martin. Toyota has four main subsidiaries consisting of Lexus, Scion, Daihatsu, and Hino. Ford not only has to compete with the major.
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BBC, November (2005). “Massive vehicle recall hurts Toyota”
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