Global Business Environment in Automobile Industry

This assignment provides an overview of the changes happening in the automobile industry and how organizations are coping with them through a PESTLE analysis. It discusses the political, economical, social, technological, legal, and environmental factors affecting the industry. The conclusion highlights the challenges faced by companies and the measures they are taking to grow their business.

Global Business
environment

Contents
Introduction.................................................................................................................................................3
Overview of Automobile industry after September 2017............................................................................3
PESTLE analysis of industry and organization’s response to change..........................................................3
Conclusion...................................................................................................................................................4
References...................................................................................................................................................5

Introduction
Automobile sector is a trillion dollar industry; it consists of manufacturing and selling of
automobiles. In this assignment, PESTLE analysis is done for indentifying the changes that are
happening in the industry and how organizations are coping with it.
Overview of Automobile industry after September 2017
Automobile industry has gone through many ups and down in last few decades but, since
September 2017, they are coping up with issues of continues decline in sales. All global players
are facing this problem because of different reasons like increasing popularity of application
based cab service and shifting mindset of millennial.
PESTLE analysis of industry and organization’s response to change
External factors are key drivers of change and they made a huge impact on Global
Automobile industry (Perera, 2017). Below is Pestle analysis of organizations that are operating
in Automobile sector.
Political factor – European countries are facing issue of political instability of Brexit. This
continent was providing significant number of sale to automobile makers like BMW, Ford and
Toyota. These nations started investing more money in Asian market where demand was going
up in order to compensate for the loss that was happening in Europe due to Brexit. Companies
like Tesla are not much dependent on European market, their sales has not declined in past two
years. This company does not have high manufacturing capacity so they are still focused on
domestic market.
Economical factor – Demographic change created new challenges for many Automobile
companies. They failed to predict demand of customers and this result in sharp decline in
organization’s revenue. In Asian countries, purchasing power of people is increasing. Enterprises
like Renault, Hyundai and Volkswagen launched new models of SUVs because they analyzed
that with increased income buyers will buy better product even if they have to pay more.

Social factor – Safety was not considered as a serious concern earlier but Volkswagen scandal
this features was used a USP for selling vehicles. Companies started spending money on
improving safety features in their upcoming models and this decision helped them in resolving a
major concern which could create trouble for whole industry. Although safety features are
installed according to the region where cars are sold; in markets like India, some global players
for example Renault followed global standard to attract more buyers.
Technological factor – Almost every global player is focusing on mass production of electric
vehicles because they understand that Electric cars are future of this industry. This technology
has created many new challenges for industry as developing a whole new ecosystem takes time.
Companies like BMW and TESLA are investing heavy amount in R&D so they can capture
more market share before others enter in the market (Perkins and Murmann, 2018).
Legal factor – Issues of faulty airbags, strict emission control and pollution laws are still
growing since September 2017. These problems are old but they still create hindrance in smooth
operations. Companies like BMW are strengthening their legal division because they understand
that legal trouble can reduce organization’s sales.
Environmental factor – The main reason behind spending huge amount of R&D is carbon
emission. Global automobile firms like BMW understand that they have to do launch vehicles
that do not harm environment. Most of the companies have set some targets relating to reducing
pollution and Electric vehicles are their key solution.
Conclusion
At the end, it can be concluded that most of the companies are facing issue of declining
sales but they are continuously taking effective measure grow their business. Future challenge
may shut down some automobile enterprises or force them for merger.

References
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Perkins, G. and Murmann, J.P., 2018. What does the success of Tesla mean for the future
dynamics in the global automobile sector?. Management and Organization Review. 14(3).
pp.471-480.