Skoda's Business Environment Analysis

This assignment analyzes the business environment of Skoda, a car manufacturing company. It delves into internal factors like strengths and weaknesses through SWOT analysis and external factors using PESTLE analysis. The report examines how political, economic, social, technological, legal, and environmental factors influence Skoda's operations. It also discusses the interrelationship between internal and macro factors and emphasizes the importance of considering both for effective decision-making.

Business And Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types and purposes of organisations along with their legal structures...................1
P2 Size and scope of various kinds of organisations..................................................................4
P3 Relationship between organisational functions and their linkage to organisational
objectives and structure...............................................................................................................5
TASK 2............................................................................................................................................7
P4 Different external factors which influence positive as well as negative impact on business
operations....................................................................................................................................7
P5 SWOT analysis of Skoda.......................................................................................................8
P6 Strengths and weaknesses intercalates with external macro factors....................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
It is highly important for all organisation to operate their business activities and practices
as per the environment in which it exists. There are various internal as well external factors
which can affect organisation and its future growth, so it is highly important for company to
consider all those forces while making important decisions regarding work place. Without
considering business environment and its different factors, no company can lead to high level of
success and growth. In modern world, it has become mandatory for all organisations to make
their rules, regulations, policies, plans and strategies, only after determining all internal as well
as external factors (Kaplan and Norton, 2017). This project report is based on SKODA AUTO
which is one of the leading auto mobile manufacturer company. It is a private organisation which
provides its products and services worldwide. In this report, different types and purposes of
company has been determining along with their size and scope. Different organisational
functions has been evaluated and it is also determined that how they link to business objectives
and structure. For identifying internal and external factors, SWOT and PESTLE analysis of
SKODA has been conducted.
TASK 1
P1 Different types and purposes of organisations along with their legal structures
Organisation is that place in which various individual come and work together for
accomplishing some common goals and objectives. There are various activities and practices are
operated in company so that it can generate high level of profit. Every business enterprise have
their own goals and objectives for which they operates various functions. Every organisation is
divided into different sector. On the basis of economy sectors are categorised into three parts
and these are follows as under:
Primary sector: It involves those companies which acquire their resources from nature. In simple
words, organisations which comes under farming, fishing etc. are considered as primary sector
companies which depends upon natural environment (Cavalcante, Kesting and Ulhøi, 2011).
BHP Billiton is one of the leading company of primary sector.
Secondary sector: It involves those companies which acquire their resources from primary sector
for operating their business activities and services. The traditional building Co. is best example
of secondary sector.
1

Tertiary sector: It involves those companies which satisfy customer needs and demands by
providing them different types of services, in simple words, this sector involves service provider
organisations.
Hence, these are three major sectors which which are based on economy. Apart from this,
there are there are other three factors which are follows as under:
Private sector: In involves those [privately held companies which establish to accomplish their
goals and objectives by providing high quality products and services to their customer. In simple,
words, this types of company gives its core attention to customer satisfaction because without
satisfying their needs and wants it can not survive in market place for long time period. The main
purpose of privately helps company is to maximise financial profit at any cost. Pret A Manger is
great example of partnership firm (Blome, Hollos and Paulraj, 2014).
Legal structure of private sector are follows as under:
 Sole trader: This type of company is also known as single proprietorship in which an
organization or form is operate by only one person. In simple words, sole trader is only
person who controls and monitor all the activities of his company. Biggest advantage of
single proprietorship is that one single owner do not have to take permission of others for
making any important decision regarding work place. CLT Accounting services Ltd. Is
one of the leading sole trader company.
 Partnership: It is that kind of company which have more than two owners. In this type of
company, while making important decisions it becomes important or them to take
permission of other partners. In simple words, one partner can not take all the important
decisions regarding work place, which is biggest disadvantage of partnership firm. But
there is huge advantage of this company is well because in case of organisational lose all
partners equally divides that lose.
 Franchising: It is that form of business through which franchisor of a product, service
and business gives right to other person to use his business model. Also, it is good
method of increasing liability of chain. Subway, Domino's etc. are great example of
franchising firm.
 Public limited company: It is that organisation which is private in nature but offer its
shares to other organisation or people. It takes help of stock market so that it can easily
2

distribute its market share. AEGIS GROUP PLC is on of the leading public limited
company.
Public sector: This type of companies are controlled and monitored by government or legal
bodies. The main purpose of publicly held organisation is to provide various products and
services to general public so that they can improve their standard of living. It provides various
types of services to individual on lower prices so that poor people can also buy them for
satisfying their needs and demands. There are some major services which is provided by public
company are military, transportation, health and social care, police etc.
Legal structure of Public sector organisation is follows as under:
Central government: It is also known as federal government. The main objective of central
government is to help poor people and protect their rights. For this, it delegates its power at
various level of country. Different states of country gets their power from federal government so
that they can resolve problems of general public. Apart form this, major responsibility of central
body is to maintain national security and exercise international diplomacy (Tallon and
Pinsonneault, 2011 ).
Local government: It is that lower level of public management which gets power from central
government. It gives high importance to general public and resolve all those problems which
affects local people.
Voluntary sector: It involves those organisations which works fro social welfare, also it includes
some charitable trust which is operated by donations and provides various skill building
programs to those people who comes under poverty line. So, the major purpose of voluntary
sector is to provide various kinds of facilities and services to those individual who are mentally
or physically sick and comes below poverty line. Cancer Research UK is one of the leading
health and social care organisation which provides treatment of cancer at free of cost.
Hence, these are the different types of organisations which have their own goals and
objectives. The main objective of all sector is profit maximisation but they enhance their profit in
different ways. Private companies focus only on financial profit, but on the other side public
sector generates profit and spend it in social activities. Various celebrities and successful
entrepreneurs donates huge amount of capital in voluntary sector so that voluntary companies
can help poor and disabled people at free of cost. So, it can be said that there are different types
of organisation which establish for different purposes.
3

P2 Size and scope of various kinds of organisations
There are various types of organisation which have different goals and objectives. Also,
they establish for their own purposes. Mainly, there are three types of companies which are
private, public and voluntary. All of them have different size and scope which can be determined
by below mentioned points and these are follows as under:
Private sector: It involves those companies which have prior objectives of profit maximisation.
They operates their organisational activities and services in effective manner so that they can
produce high quality products or services. By doing this, it can highly satisfy their needs and
demands. In modern world, there are various private organisations are developing which use
most effective tools and techniques so that it can survive in market place for long time period
(Alchian and Demsetz, 2017). This type of enterprises are operates by entrepreneurs who takes
various risky decisions for leading their company at high level of success and growth. They takes
help of various strategies so that they can easily accomplish their desired goals and objectives.
Privately held companies gives high importance to customer satisfaction to achieve their most
important objectives which is profit maximisation, which can be possible only by providing
quality products and services to their customers.
Size and Scope: SKODA is one of the lading auto mobile manufacturer company which comes
under private sector. It have produced approx around 1,127, 700 unites within 2016. its size can
be determined by its number of employees. Currently, it have strength of approx 31,000
workers. This company covers 10% market share of automatise industry in whole world. The
main objective of this organisation to provide high quality products and services to its customer
for satisfying their different needs and wants. It was established in 1895 and till 2016 its sales
reached to 1.13 million cars in 2016. This business enterprise is one of the five oldest
organisations manufacturing cars and has solid history alongside Peugeot, Tatra, Opel, Daimler.
In present time, this company have wide future scope as it has established such strong image in
domestic and international market place (O'Reilly, Chatman and Caldwell, 2011).
Public sector: It involves those companies, which majorly works for enhancing social welfare.
Publicly held organisations are controlled by government. The major function of public
enterprise is to make various rules and regulations for protecting and promoting interest of
general public. Also, it makes various modifications in taxation, monitor policy, exchange rate so
that it can control and monitor other organisations and their business daily activities. There are
4

various public companies in United Kingdom which provides various services to general people
on lower prices so that they can make improve their daily life.
Size and Scope: London Transport is one of the leading company of public sector which is
specialised in providing transportation services to people so that their journey can become more
comfortable. In present time, publicly helps organisation have strength of 14,000 employees who
are skilled and operates its different activities and practices in most effective manner. This
company provides its services at lower prices so that rich as well as poor people can utilise its
transportation services for their personal use. In future time, it will expand its business in all over
the United Kingdom.
Voluntary sector: This type of enterprise is known as non profit organisations which does not
work for generating profit, in fact they gets donation from celebrities and successful
entrepreneurs so that it can utilise them in social activities such as conducting skills building
programs for homeless people so that they can earn their livelihood (Jans, Proper and
Hildebrandt, 2011).
Size and Scope: There are various charity firms or non profit organisations in United Kingdom.
The Henry Smith Charity is one of them which have strength of approx around 6,00 workers
which helps it in conducting skills building programs for poor people and orphan children so that
they can earn money for living their life. The NGO makes various effort so that it can enhance
social welfare and also can help homeless people as possible as it can.
P3 Relationship between organisational functions and their linkage to organisational objectives
and structure
In modern world, there are different types of organisation such as private, public and
voluntary company. All business enterprises have their own working styles and systems which
make them different from others. Also, they set their own goals and objectives, and use various
tools and techniques so that they can accomplish those desired results in most effective and
systematic manner. Skoda is a private company which gives core attention to profit
maximisation. It increase its profitability and productivity by providing high customer
satisfaction because it consider clients as key factor which can help it in leading at high level of
success and growth. Different objectives of Skoda are follows as under:
High profitability and productivity: It is most important objective of company (Green and et. al.,
2012). For enhancing its profitability and productivity, it provides high quality products and
5

services to its customer as per their requirement. This organisation have price range from low to
high so that middle class family can also its cars. This strategy helps it in attracting a huge
number of customers.
Organisational development: Skoda have good market image in United Kingdom. In present
time, it wants to expand its business in all over the world so that it can cover large market share
and also can develop its business.
Minimise operational cost: In manufacturing car, company have to bear various operational
cost. So, it next objective is to use those effective tools, procedures, strategies and techniques to
minimise its operational cost so that it can manufacture on low cost and can generate high level
of profit.
Customer satisfaction: The last objective of Skoda is to provide high customer satisfaction by
providing them quality products and services. This organisation focus more on quality so that it
can make its clients satisfied (Doyle, 2011).
Hence, these are some most important objectives of Skoda for which it operates various
activities and practices so that it can accomplish them in most effective and systematic manner.
Different organisational functions of this company are interrelated with each other which can be
determined by below mentioned points:
Human resource management: This is most important function of Skoda which assists it in
hiring high skilled employees so that they can produce quality products and services which will
help it in enhancing its profitability as well as productivity. It is highly interrelated with
marketing functions because for attracting big pool of talent (candidate) it takes help of
merchandising department as in that it promotes various advertisements within market place for
vacant job.
Marketing and sales: The next and foremost function of Skoda is merchandising which helps it
in promoting and advertising its different products and services so that it can attract a huge
number of customers. Also, it provides various important information about market trends to
company so that it can produce its goods and services according to them (Drucker, 2011). But for
conducting market research it requires specific amount of capital which it gets form finance
department.
Finance department: It is that functional unit of Skoda which helps it in managing its current
working capital and also estimate that how much capital company needs in future. For different
6

marketing activities and plans, merchandising department have to take help of finance section so
that it can achieve appropriate amount of capital.
Hence, these are some most important functions of Skoda which interrelates with each
other. Just like this, organisational functions also relates with organisational culture. This
company have flexible structure which does not put pressure on its different departments. But if
it will have complex structure then, it will become difficult for sales department to generate high
level of profit. Also, it creates unnecessary problems for company which affects its profitability
as well as productivity. So, it can be said that business stricture and functions are interrelated
with each other (Nielsen and et. al., 2013).
TASK 2
P4 Different external factors which influence positive as well as negative impact on business
operations
There are various internal as well as external factors which can influence positive as well
as negative impact on business operations of Skoda. Micron environmental forces can be
controlled by company but macro-environment forces can not be controlled by organisation. So
it is highly important for this car manufacturing enterprise to identify all those external factors
and their influences which can affect organisational growth and development. Mainly there are
four major macro environmental factors which influence positive as well as negative impact on
this company and these are follows as under:
Political factors: It consists of various rules and regulations which are made by legal bodies in
order to restrict companies so that they will produce quality products and services. It is
mandatory for all organisations to follow those rules and regulations otherwise they can suffer
from various financial penalties which can influence negative impact on their market image as
well. It is highly important for Skoda to make sure that its all business activities and practices are
operating as per legislative considerations. In present time, Political factors of UK are stable
which influence positive impact on this company, but in chance of instability in legal rules and
regulations organisation can suffer from different kinds of losses (Alon and McKee, 2012).
Economical factors: This type of forces focus on income level and economic condition of UK
people. It is highly important for organization to consider customer buying behaviour or their
income level before deciding pricing policy of their products and services. Because without
7

considering this aspect they can not achieve their desired results and also can not fulfil customer
needs and demands (Guil and et. al., 2014). In present time, economic conditions of UK in
improving day by day, so it is great opportunity for Skoda to expand its business in United
Kingdom. But in upcoming days, it is estimated that income level of UK people will be
decreased which will impact negative impact on this company.
Social factors: This factor is highly related with social cultural environment. It is huge
responsibility of manager of Skoda to perform all social responsibilities for enhancing social
welfare. By doing this it can attract a huge number of customer and also can build strong
corporate image within market place. But negative impact of this factor is that, for performing
different CSR activities it have to spend a huge amount of capital which will increase its cost.
Technological factors: In modern world, due to high use of technology market competition is
increasing very fast. There are various new business entities which are entering into market place
with innovative products and services which helps them in attracting a huge number of customer
(Van Tuyckom, 2011). So, to survive in such competitive marketplace for long period it is highly
important for Skoda to take help of technical forces which will influence positive impact on this
company, by taking help of technology it can produce and design innovative cars which will lead
to high level of success and also will help it in increasing its market share. But negative impact
of this factor is that, for installing technical forces company needs huge amount of capital which
can put this organisation into financial debts.
Hence, these are some most important external forces which should by considered by
Skoda while making decisions regarding work place because these forces can influence positive
and negative impact on this company. But if organisation determines all the macro
environmental forces then it can make most effective and successful decisions for its work place
which will leads it to high level of success and growth.
P5 SWOT analysis of Skoda
There are various internal forces which can also affect company and its
operations. Skoda can take help of SWOT inlays to determine its different strengths, weaknesses,
opportunities and threats (Hill and Westbrook, 2013).
8

(Source: Abiolu B., 2017)
SWOT analysis:
Strengths: Weaknesses:
 This company have good market image
in market place, also it is part of VW
which increase its popularity more.
 Considered as European quality brand
for cars
 High financial performance within
market place
 Strong market strategies
 High usage of digital technology
 Poor presence in other countries
 Less skilled employees
Opportunities: Threats:
 Business expansion in other countries
to enhance organisational presence
 Increasing the product portfolio
 Approaching new target groups
 Continuous decrement in demand due
to rivalry firms
 Continuous changes in legal rules and
regulations
 Changing customer trends on regular
basis
9
Illustration 1: SWOT Analysis

P6 Strengths and weaknesses intercalates with external macro factors
There are various strengths and weaknesses of Skoda which interrelates with macro
environmental factors. There are various external forces which work as organisational strengths
as well as weaknesses. While making any important decisions regarding business, company
have to determine interrelationship betwixt internal and external forces. In present time, this
company giving core attention to technological factors because with the help of this it can
become more advance and also can produce quality products and services. Skoda is a car
manufacturing company so it have to deal with technical forces for manufacturing such
innovative car designs and engines (Jackson, Joshi and Erhardt, 2015). This company use digital
technology in their business operations which can be prove as biggest strength of this company
because it helps it in covering large market share as compare to its market competitors. On the
other side, political issues of UK is not stable which is influencing biggest negative impact on
this organisation because continuous changes in legal rules and regulations can reduce the
organisational and employee productivity. Also it hampered on its corporate image in market
place. For example if there will be unnecessary legal rules and regulations then it will bound
organisation as well as its employees to provide their services in marketplace.
CONCLUSION
By evaluating this project report, it has been concluded that business environment plays
most important role in every organisation. It is most important aspect which should be
considered by all companies while making any new strategy and decision regarding work place.
In other words, there are various internal as well as external factors of business environment
which can influence positive or negative impact on organisational operations, so it is prior
responsibility of mangers to take important actions only after determining all those factors and
their influence. This project report is based on SKODA which is auto mobile manufacture
company. In this project report, various environmental factors has been determined which can
influence impact on this company. Also, different types of organisations along with their size and
scope has been evaluated. Various functions of SKODA has been explained which are
interrelated wit its business objectives and organisational structure. There are various tools such
as SWOT and PESTLE analysis through which this organisation can determine its all internal as
well as external factors which influence impact on its business functions. Also, there is huge
interrelationship between internal and macro factors which has been evaluated in this report.
10

REFERENCES
Books and Journals
11