Environmental Analysis of Automobile Industry

This report provides an in-depth analysis of the environmental factors affecting the automobile industry, with a focus on Land Rover. It includes a PESTLE analysis, SWOT analysis, and Porter's Five Forces analysis. The report highlights the challenges and opportunities faced by Land Rover in the current market, and provides recommendations for strategic planning.

1 Environmental
Analysis of Auto
mobile Industry

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................2
PESTLE Analysis...................................................................................................................2
SWOT Analysis......................................................................................................................4
Porter's Five Forces Analysis.................................................................................................5
CONCLUSION ...............................................................................................................................6
REFERENCES ...............................................................................................................................7

INTRODUCTION
Environmental analysis refers to the process which helps the organisation in examining all
the components internal or external which influence the performance of an organisation. Internal
components highlights the strength and weakness of business organisation whereas on the other
hand is the external components present the opportunities and threats outside the organisation.
Identifying, scanning, analysing and forecasting are the four steps which are involved in the
environmental analysis. The choose an organisation for this report is Land Rover which is a
British brand of a four wheeler owned by multinational car manufacturer Jaguar Land Rover. It
was founded by British Leyland in 1978 and headquarters is located in Solihull, West Midlands,
England. Firstly The Land Rover company started with manufacturing of a bicycle in
Warwickshire, England. At present this company is providing their products all over the world.
This report deals with the challenges which include several of models or tools such as SWOT,
PESTLE, Porter's Five Forces, Value Chain .
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MAIN BODY
PESTLE Analysis
Political Factor Political Stability: Higher the political stability and friendly business environment helps
the organisation in predicting the market growth trends. It to influence investors to trust
in economic and consequent organisational performance. It also helps that Land Rover in
presenting their business in several countries having all the political factors different for
each and every Nation. Instability in the the Global political environment affect the the
growth of organisation. Changing Policies: Constant changes in the government policies affect the business
performance is it leads to the increase in Environmental uncertainty. It is necessary for
the Land Rover to keep an eye on the current trends on the political scenario of a country
so that they can make changes in their Strategies and develop them as per the government
priorities (Andrey, P., Valentina, I. and Yuri, S., 2020).
 Bureaucracy and corruption: It implies a negative effect on the business environment.
The business environment get highly unpredictable for a Land Rover because of high
corruption level and week law enforcement in several countries. Corruption of back to the
several of business operations such as a licensing contracting and many more.
Economic factor Economic Cycle Stage: The performance of an organization get directly affected by the
economic development of a country. Developing economy leads to the growth
opportunities to the Land Rover. Along with this, the industry life cycle stage has its own
importance. A well developed structure implies business environment and increases the
growth potential of the gold industry in the specific country.
 Inflation Rate: The capabilities of Land Rover to pursue the long term strategies are
depend on the growth rate of GDP. Higher the GDP implies higher purchasing power of
customers. Interest rate influence the borrowing power and attitude towards the
investment which leads to the growth opportunities of Land Rover. Any changes in the
exchange rate effects the profitability and international presence of organization.
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 Labor Market Condition: Supply and demand of wage rate along with the supply of
skilled work force. Land Rover is required to know and make the predictions of the
condition of labor market which leads to the improvement in the working performance of
organisation.
Social Factors Age and gender role: It has been found that the needs and demand of customers get
different with the age and gender. As the people of different age group have different
choices. The Land Rover company is required to focus on the desire of their target
customers segment i.e. young generation boys. Through a marketing research, it has been
analyzed that the demand of cars are mainly done by the people of young generation with
the expectations of new innovation and advancement of new technology.
 Low carbon footprints and use of renewable energy: It has been found that customers
always look for new innovation or any change in the existing products. Innovation or any
change in the product leads to the attraction of customers towards the organization. Land
Rover can use the low carbon in their products which do not effect the environment as
much.
Technological factor
 Technological innovation and development level: It refers to the bringing the
technological changes in the cars or products produced by Land Rover. The
management is working on the CNG and electric car model. These technological
innovation bring several of changes in the organization which result in higher
demand of cars in the market. These growing embedded technologies in
automobile sector highly effect the working performance of Land Rover. The
advancement of technology also leads to the increase in the costing of product.
 Research and development on technology: By spending more money on research
and development leads to the enhancement of technological capabilities of
organisation. Advancement of technology in the manufacturing process result in
the decrease in costing of organization. It has been found that several of
competitors of Land Rover has introduced electronic batteries for the purpose of
decreasing their costs.
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SWOT Analysis
Strengths Strong brand: Land Rover company has two iconic brand of the group i.e. Jaguar. Along
with this, it has been supported by the Tata motors which is an advantage for the
organisation in being ahead with its competitors. Effective CRM: Land Rover is making strong relationship management which helps the
organisation in making the business sustainable by performing several practices such as
understanding the problems of customers, solving the issues faced by the customers and
many more. It result in the increase in the increase in the share of heart (Edmondson,
A.C. and Verdin, P.J., 2018).
 Smarter working: For the purpose of contour several of processes which leads to the
involvement of employees . Majorly the employees of young generation plays an
important role in creating efficiency, avoiding wastage along with ensuring the
profitability and sustainability of business organisation. The employees of engine
manufacturing in Land Rover are implementing the effective engine part fitting process
which leads to the improvement in the efficiency of business organisation.
Weaknesses Negative sales growth from the emerging markets: It has been found that the premium
segment of automotive companies are growing with the underlying potential of the
emerging markets but the market growth of Land Rover is negative.
 Market Myopia: It is analysed from a recent report that the UK and European nations are
generating more than 45% of it retail sales which leads to the loss of revenue in such
markets because these markets are consider as the mature markets. Higher competition in
the market result in the shrinking of revenue. If this situation stay for long run, it result in
the loss of market share of the organisation.
Opportunities
 Changing lifestyle & customer group:There are three forces which result in roiling the
auto mobile industry which include expansion of constant needs for safety & fuel
economy, increased availability of data and information along with the change in the
demand of customers.
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 Market Expansion: Land Rover have opportunity to expand their business and enter
into a new market in which they are not working currently such as Asian and BRIC
nations as it leads to the demand of vehicles.
 OEM priorities: For the purpose of improving electronic content, OEMs are required
to collaborate with the suppliers and experts which are available in the outside of
traditional auto mobile industry. In order to achieving the same, the organisation is
required to bring changes in the OEMs function which help them in looking to the top
sup[pliers for doing co investment in the global platforms (Cheluget, M. and Koech,
C.J., 2018).
Threats Intense Competition: Availability of several number of companies in the premium auto
mobile industry result in the higher branding by the organisations result in earning of less
profit margins. Each and every company is focusing on increasing its market share which
result in leaving the little scope of new companies.
 Product life cycle: Changes in the technology and competition in the auto mobile
industry result in the constant updation of models of the tends of vehicles result in
making the competitive advantage for today.
Porter's Five Forces Analysis
Porter's five force is a strategic management tool which help the organisation in knowing
about the competition level of an industry. The strengths of the factors of this model are different
from industry to industry. Below mentioned are the porter's five forces model in the context of
Land Rover: Threat of substitute products and services: It has been found that there are only a few
substitute products of Land Rover are available. Some of companies in auto mobile
industry work for ow earning of profit. Land Rover is working in such a market where
there is no any ceiling on the maximization of profit. It state that the threat of substitute
products is low. Threat of new entrants: The capital requirement in auto mobile industry is too high.
Hence it is difficult for new entrants for setting up[ a business. Along with this, strict
licence and legal requirements are required to to be fulfilled for an organisation before
starting selling the products. It implies that the threat of new entrants is low.
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 Bargaining power of supplier: It has been analysed that the suppliers do not have more
control over the prices which state that the bargaining power of suppliers of Land
Rover is also low. The products supplied by the suppliers in this are fairly standardised,
less differentiated with low switching costs. It also show the bargaining power of
suppliers is low (Adler and Ghadar 2017). Bargaining power of customers: It has been found that the buyers do not have so many
options to select any one. It seems that they do not have much control over prices. It
state that the bargaining power of customers is low.
 Rivalry among existing firms: the availability of competitors of Land rover is less and
these few competitors have a large market share. Less number of competitors in the
auto mobile industry implies the positive growth of industry. It implies that the rivalry
among existing firm is weak within the industry.
CONCLUSION
From the above report, it has been concluded that it is necessary fro the organisation to
analyse the internal and external analysis of environment as it leads to analysing the
opportunities and treats of the organisation. PESTLE is a model which is used by the
organisation to determine the several external factors which effect the business operations.
SWOT is a tool which is being used to analyse the micro environmental factors which are
effecting the performance of organisation along with the opportunities available in the market.
This model is useful for organisation as the management make effective strategies which help
organisation in grabbing all the opportunities which are available in the market. In addition to
this, Porter's Five forces model is being used by the organisation for the purpose of analysing the
competition in the market.
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