Table of Contents INTRODUCTION...........................................................................................................................1 Key Issues...............................................................................................................................1 PESTEL and the two issues affecting the sub-sector.............................................................2 Impact on businesses..............................................................................................................4 Reflection...............................................................................................................................5 Conclusion.......................................................................................................................................6 References........................................................................................................................................7
INTRODUCTION Business environment is defined as the combination of whole internal as well as external factors which influence a firm's operating situations. It involve factors such as customers, suppliers, competitors and other (Bocken, Rana and Short, 2015). For this report, the chosen company is Aston Martin which is British independent manufacturer of luxury sports cars as well as grand tourers. Its headquarters is in Gaydon, Warwickshire, England, UK. This report covers the key issues that impact sub sectors of auto mobiles, Pestle models for categorising two issues, its positive and negativeimpacts upon business. Apart from this, the two challenges that they faced are also discussed in this report. Key Issues Key issues are considered as the highest priority problems which are impacting a enterprises that develops the largest negative effects (Hair Jr and et. al., 2015). In approx whole industry there are some issues or problem that they are facing and effects their business. In UK, the auto mobile industry is the vital part ofrespective country economy for more than£82 billion turnover as well as£20.2 billion value added. These industry are facing various key issues such as Emissions woes, electric challenges, Brexit and others. Some of the key issues are discussed below: Brexit: Within United Kingdom, the auto-mobile company has been warning repeatedly of the no deal Brexit from the EU referendum in year 2016. Also, the investment in UK respective sector have fallen in previous 2 years, slumping 46.5% in 2017. The British car plants rely heavily upon elements imported from EU while various finished cars they generate are exported to European mainland. In case they are facing uncertainty in context of tariffs, then this will cause bottle neck as well as delays that will develop UK less economic. It have been said that Brexit is only a crucial factors that troubling the whole UK sector. Various company sees the lower exports to China as well as slow sales into Europe. This impacts the sub sectors of auto- mobile industry such as 1.8 million new passengers cars were exported from EU27 to UK in year 2018 that shows 85% of whole imports of UK cars and 32% of overall EU27 car exports. Moreover, Out of 10 passengers cars 8 are made in UK are exported (key issues,2019) Global competition: 1
The enhancing rate of globalisation is an effective news for the development of auto- mobile industry. Butdue to this, the competition level enhances which is a key issues for respective sectors. As in auto- mobile sectors, there are various major competitors that are Land Rover, Jaguar, Bentley, Rolls Royce and others which operates internationally and gives tough competition to one another. Several brands targets different market segments but they they overlap. All these brands compete on the basis of price design, quality, technology and others. So ,competition are considered as the main key issues for the auto- mobile sectors. As they are introducing innovations in their products such as electric cars and so on. This impacting the sub- sectors of auto mobiles as due to this there is high production of SUVs cars, light trucks and others, development in various passengers vehicles and others. PESTEL and the two issues affecting the sub-sector PESTEL analysis is defined as the framework which is utilised through marketers for analysing as well as monitoring the external factors which has an effects upon company (Hamilton and Webster, 2018). The auto-mobile industry is the multi billion sector with large brands competing for market share. UK have been a colossal manufacturer of auto-mobiles in previous 10 years. It produces more than 8 million vehicles, engines and exporting above 80% of these. Also, auto mobile sector of UK stands as driving force of their economy. The PESTEL analysis of auto-mobile industry are discussed below: 2 Illustration1: PESTEL Analysis (Source:PESTEL Analysis,2018)
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Political factors:This factors plays crucial role as well as has direct effects upon respective sector profitability. Themost prominent factors impacting the respective sectors is looming No -deal Brexit prospect. Brexit is impacting all the industry positively and negatively. As in domestic market such as with Britain on road to cutting lies with European mainland, auto mobile manufacturers are confronted with an uncertain market place and risk of operating cost is more. Also, the investment into respective sectorshave reduced, decline in quality of about 46.5% in year 2017. Moreover, this impact the sub- sectors such as in year 2018 the UK passenger cars output, total production is 1,519,440 and Domestic market is 281 832. Also, 1.8 million new passenger cars were exported from EU27 to UK (). Economic factors:These are also the crucial factors in respect of auto-mobile sectors. This sector was affected badly through economic crisis (Hillary, 2017). As due to this the sales of auto-mobiles decreases mostly into developed countries. Also, because of Brexit the economic condition of UK get affected due to which the sales of the respective industry minimises. Also, the UK assembled the passengers cars headed to EU27 in 2018 and 51% of whole UK car exports. Moreover, the value of UK total car exports value is£ 34.1 Billion to EU 37% and quantity is 1 325 868 units toEU 50.7%. All these shows that respective industry sub sectors is impacted in both positive and negative manner. Social factors:The auto-mobile sector is impacted through the changing societal trends as well as the customers preferences (Hockerts, 2015). Vehicles manufacturer has to adapttothesefactors.Aseachyearnewmodelsareintroducedbykeepingthe preferences of individuals into mind. Also, the particular styles are preferred in specific cultures. Into few market place, the demand of the SUVs is high where as in others Sedans may be preferred. Moreover, the social trends always keep of changing which impacts the popularity of models as well as brands and also enhance the competition level into the global market. Many times, the keeps on changing trends remove the older model obsoletely from respective market. Technologicalfactors:Technologyaswellasinnovationhasbecomeessential determinants of market share within auto mobile industry. The more creative firm have highmarketshare.Thewholemajorplayersdoneinvestmentintoresearchand 3
development. Brands such asAston Martin, Ford, and other are investing into low emissions and environmental friendly vehicles. The Aston Martin had launched the first and all electric cars. This enhances the competitions level as many more brands are introducingsimilarproductsatlowprice.Thisenhancestheproductsofelectric passenger cars, SUVs and many more. The technological innovation has considered as the major differentiation basis for auto- motive makers. This is so the clients concentrate to move towards fuel efficient as well as high mileage vehicles. It is the essential factors that effects the respective sectors profitability and sales. ï‚·Environmental factors:The legislation associated to environment friendliness as well as carbon emissions are leading stiffer across the globe. Whole major players into auto mobile sectors had the concentrate upon low emission vehicles. The vehicle that are low upon emissions as well as fuel consumptions receive tax subsidiaries and are favoured through government. Moreover, the pollution test has developed stricter and the vehicles passes those tests are only permitted into specific market place involving UK and EU as well. Currently, the environment friendliness have become an essential tests for cars manufacturer as government has initiated concentrating upon pollution control. ï‚·Legal factors:Legislation is considered as the crucial factors which impacted the vehicle brands performance as well as profitability (Kolk, 2016). Vehicles such as cars etc. manufacturer selling into global market are subject to regulation associated to safety as well as quality of products. The pollution legislation has developed stricter. Also, with new safety laws being passed patents and copyrights regulation are modifying the shapes and legal woes stemming fro competition, the auto-mobile sector identify few relief within developing country in which enabling laws as well as tax cut are assisting auto- makers to provides new models to clients (PESTEL Analysis of Automobile.2019). Impact on businesses Positive impact:ï‚·Brexit:As due to no deal Brexit, theAston Martin have to depends upon World trade Organisation ruleswhich means that in UK the producers of cars such as Aston Martin can manufacture at least 55% of car with the parts sourced in BRITAIN. They perform harder to reach at the level of 55% but warned that competitors car firms can struggle. 4
Moreover, this enhances the respective company passenger cars and sports cars exports and total productions. ï‚·Global competition:The enhancing rate of globalisation is an effective news for the developmentofauto-mobile industry (Raziq andMaulabakhsh,2015). Thishelp respective organisation to perform the innovation in their respective products which enhances the cost and sales of company as society are moving towards the innovative goods. Moreover, as the competition level increases the level of innovation also get maximises which aids them to manufacture more innovative products like electric cars, low emissions vehicles and many more. Negative impact:ï‚·Brexit:As the UK exits from the European, the price of Aston Martin luxury sports cars enhances which minimises their sales. Also, it share price fell more than 15% as this swung to loss into their first annual report. Moreover, the share price is reduced by 38% from their IPO price of 1,900 pence (Brexit negative impact,2019). ï‚·Globalcompetition:Also,thevariousinternationalcompetitorssuchasToyota, JAGUAR and many others are the major rivals of the Aston Martin. They are also producing the similar products at lower cost with standards quality by which the loyal customersalsogetattracted.Alltheseleadstowardsminimisingtheirsalesand profitability as well. As the same type of product are manufactured through different brand at lower cost so most of the people switch to others which impacted negatively upon the respective organisation business. Reflection While doing this report I face the various challenges but the main two challenges that I have faced are data collection through secondary sources and lack of timing. As the insufficient information are identifying by the secondary sources such as journals, websites and many others (Teece, 2018).Moreover, this is the time taking project as in this various relevant information and data are to be accumulated but due to lack of timing it can not be possible effectively. So, in order to overcome from this particular challenges, I have performed the appropriate research with the assistance of various websites, articles and many more. Also for overcoming from the lack of timing challenges I do time management and also set the time and schedules for the 5
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particular task and divide the timing accordingly. All these help me to overcome from both the challenges and accomplish the report in effective and efficient manner. Conclusion As per the above report, it has been concluded that business environment is essential as this aids company to know about the whole internal as well as external factorsso that they can able to develop realistic plans. Also helpful for identifying the threats and opportunities of firm. Within Auto-mobile industry, there are several key issues such as Brexit, global competition and others which impact the respective sectors and company in both the manner positively and negatively. Such as international competition enhances the innovations level that outcomes into sales maximisation. Where as global competition reduced the customers loyalty and others. 6
References Books and Journals Bocken, N. M. P., Rana, P. and Short, S. W., 2015. Value mapping for sustainable business thinking.Journal of Industrial and Production Engineering,32(1), pp.67-81. Hair Jr, J. F. and et. al., 2015.Essentials of business research methods. Routledge. Hamilton, L. and Webster, P., 2018.The international business environment. Oxford University Press. Hillary,R.,2017.Smallandmedium-sizedenterprisesandtheenvironment:business imperatives. Routledge. Hockerts,K.,2015.Acognitiveperspectiveonthebusinesscaseforcorporate sustainability.Business Strategy and the Environment,24(2), pp.102-122. Kolk, A., 2016. The social responsibility of international business: From ethics and the environment to CSR and sustainable development.Journal of World Business,51(1), pp.23-34. Raziq,A.andMaulabakhsh,R.,2015.Impactofworkingenvironmentonjob satisfaction.Procedia Economics and Finance,23, pp.717-725. Teece, D. J., 2018. Business models and dynamic capabilities.Long Range Planning,51(1), pp.40-49. Online PESTELAnalysisofAutomobile.2019.[Online].AvailableThrough: <(https://www.marketingtutor.net/global-automotive-industry-pestle-analysis/)> Brexit key issues.2019. [Online]. Available Through:<https://www.bbc.com/news/business- 48545733>. Brexitnegativeimpact.2019.[Online].Available Through:<https://www.cnbc.com/2019/02/28/a-no-deal-brexit-is-already-happening- for-us-aston-martin-ceo-says.html> PESTELAnalysis.2018.[Online].AvailableThrough:<https://blog.v-comply.com/pestel- organization-success/> 7