Business Analysis of Ford in China
Business Analysis of Ford in China
Ford Motor Company is looking forward to celebrating its 100th anniversary. In the past nearly 100 years, Ford has developed with the progress of car industry and become 2nd largest car manufacturer in the world. Today, the American & European car industry faces problems of over-capacity and oversupply. This causes the intense competition in this industry. The world car industry is encountering its biggest changes in history. Globalization is the most remarkable among those changes. We believe that the worldwide market competition causes the accelerating of globalization. This tendency makes the business environment more competitive and attractive.
Ford should take the chance of globalization to enter other markets outside US. Some opportunities clearly exist. China has a huge family car market. Ford should take this opportunity to enter the Chinese market.
In this report, the PEST analysis is carried out on the Chinese business environment so that the following questions could be addressed:
i. Whether the political, economical and legal system in China is favorable for our investment or not?
ii. Whether the Chinese car market is big enough or not? Will it keep on growing?
iii. Whether Chinese consumers will accept our products or not?
iv. Whether the human resources in China is suitable or not?
v. What are the benefits, costs and risks of producing family car in China?
In conclusion, the report suggests that Ford should invest in China to establish a family car factory. Recommendations on this project are given.
BUSINESS ENVIRONMENT IN CHINA
1. POLITICAL ANALYSIS
1.1 General
China is in a state of transition now. Being a socialist country, China has carefully changed its political system in recent years, while dramatic changes have taken place in its economic system. In 1979, China started its open policy and economic reform. The Chinese government persisted on carrying out the political guideline of developing economy and enriching Chinese people. In these years, although the leadership of this country had been handed over from Mr. Deng Xiaopin to Mr. Jiang Zeming and the world political environment had changed rapidly, the Chinese economy survived and kept going after the major world turbulences such as the collapse of Soviet Union and Eastern Communist countries, the Tiananmen massacre in its own country in 1989 and the 1997-1998 financial crisis in Southeast Asia. Being the largest developing country in the world, China has achieved an average annual GDP growth of nearly 8% in recent...