Business Environment: Key Issues, PESTLE Analysis, Impact on Business, Challenges and Reflection

This report discusses the business environment of the UK automobile sector, including key issues affecting the industry, the implications of PESTLE analysis, the impact of these issues on business, and the challenges faced. It also provides reflections on the study and the challenges faced. The report highlights the importance of understanding the business environment and making strategic decisions to achieve sustainable profitability.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
Key issues affecting the automobile sector.................................................................................1
Implication of PESTLE analysis.................................................................................................4
TASK 3............................................................................................................................................5
Impact of issues on business ......................................................................................................5
TASK 4............................................................................................................................................6
Challenges and Reflection .........................................................................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business environment is a combination of internal and extremal factors which directly
impact over organisational decision making process as well as its productivity ratio. However,
understanding the environment within which an organisation operate its business function is
importance and significant. in order to accomplish the desired goal or objective in an effective
manner. Moreover, business environment enable an establishment to identify its potentiality or
capability so that they can grab all available opportunity in order to face all sort of challenges an
threats in an trenchant way (Aithal, 2017). This report is based on automobile sector which is
one of the highly growing sector within UK market as it mainly deals in designing, development,
manufacturing , marketing and selling of motor vehicles. In this study, it involves identifying
issues which effect automobile sector, application of PESTLE analysis in order to examining the
business environment. Finally, determining the effect of issues on organisation and develop
reflection for improving the overall firm's performance.
TASK 1
Key issues affecting the automobile sector
Automobile industry comprises large number of companies and organization who are
involved in the process of manufacturing, designing, developing, marketing motor vehicles,
motorcycle. As per recent study of current marketplace, it has been identified that automobile
division is one of the world's important economic sector in terms of revenue. Hence, present
world is wholly grounded over the concept of globalization which impose positive and negative
impact over companies and industries. However, it render enormous opportunity to enhance the
market and at the same time it brings different challenges which directly influence enterprise
decision making. Hence, in relation to UK automobile industry, it has the most productive
automotive labor market within the EU catering to strong domestic and export demand. Along
with this, it has regarded that automobile division plays a significant role in the enrichment of
UK as it generate more than £82 billion turnover and adding £18.6 billion value to the UK
economy (UK Automotive, 2019). However, due to the intense level of competition and rivalries
among companies, it make UK automobile sector more challenging and competitive that
influence its productivity ratio. Henceforth, there are some key issues which effect UK
automobile sector are explained below:

Changes in demography: The aspect of demography encompasses size, structure,
population, age, gender, income level and so on which has huge influence over company's profit
margin. Hence, customer demand and preference varies as per the fluctuation in their income
level which impact greatly over automobile industry's productivity and sales performance.
However, when population income increases it directly reflect in the growth of company's sales
and vice versa. However, UK automotive division are benefited from stable government which
help them to maintain their volume of sales and brand value among competitors. Therefore,
automotive sector of UK takes an initiative to determine the condition of population lifestyle and
demand so that they can take corrective course of action in order to capture the attraction of wide
range of population towards brand.
Illustration 1: Contributions of the motor industry to the UK economy from 2009 to 2018(in
billion GBP)

Regulation: In this phase, it involves all kinds of policies, procedures, regulation, rules
which is imposed by government for monitoring and governing the accomplishing activity of
organization in an efficacious or prompt manner. Hence, modification and alteration in
government policies or activities directly influence companies sustainability and profit margin
within competing marketplace. Therefore, UK automobile division makes an effort to adopt all
sort of changes and modification regarding rules and regulation that lead them to acquire best
position in competing marketplace. Moreover, it also create positive response over customer
mindset towards brand and it improves industrial proficiency ratio in an improved manner
(Akaeze, 2016).
Unemployment:This issue is also a one of the key factor in current UK automobile
industry as it link with growth and development of company's brand image among comparative
marketplace. The aspect of unemployment impact over both customer as well as employees. IN
context of manpower, if their living standing moves to decreasing rate due to unemployment
factor within the country, it reduces the productivity of organization. On the contrary, if
customer face unemployment issue, then it bring down the sales growth and profit margin of
establishment. Hence, in case of UK automobile industry, they makes an attempt in generating
enormous job opportunity which enhance the living condition of community as well as enrich
organization proficiency ratio in an amended way.

TASK 2
Implication of PESTLE analysis
Toady's marketplace of UK is highly competitive and challenging which influence
industry and organization growth and enhancement. Therefore, PESTLE analysis plays a vital
role in determining several forms of macro and macro forces that benefit company to improve
its overall performance (Artto, Ahola, Kyrö and Peltokorpi, 2017). Hence, PESTLE analysis is a
powerful tool which help organization to identify its external factors like competitors, customers,
suppliers, government and so on as well as enable them to implement best strategic decision in
order to gain competitive advantage within competing marketplace. Therefore, the PESTLE for
UK automobile industry are discussed below:
Political: Under this factor, it comprises government rules, regulation, policies,
procedures, political stability and many more which influence firm's potentiality in acquiring
sustainable profit margin. However, in relation to UK automobile industry, it undergoes the
primal threat from political factor which is:
Illustration 2: Number of people employed in the automotive industry in the United Kingdom
(UK) from 2013 to 2018

Safety regulations: IN relation to UK, it has been evaluated that driving motor vehicles are one
of the dangerous commodity as it create huge number of accidents per day. Moreover, , UK
government come up with new regulation in which they introduce strict safety regulation
regarding manufacturing of motor vehicles like seat-belt, passenger safety, wheel and etc. that
challenged negatively over UK automobile industry. However, automobile sector of UK makes
an effort to adopt new rules within their manufacturing process and product that enable them to
maintain their brand value in a better position as well as help them to increase their profit margin
rate in an impressive mode (PESTLE Analysis of the Automotive Industry, 2019).
Economic: In this components, it involves inflation – deflation, interest rate, exchange
rate, economic growth, GDP and so on which effect organization sustainability and productivity.
In context of UK automobile industry, it has been undergoes through a severe recession which
incurred huge burden over industries and companies in terms of maintaining their brand value
within existing marketplace. However, the stable nature of UK help automobile industry to
improve their overall economic performance that leads them to survive within market for a
longer period of time. Therefore, the increasing pace of UK population's income level
benefited automotive division to enrich their profit margin ratio among competitors. However,
industry takes an initiative in producing best quality of product and maintaining affordable
pricing strategies which assist them to retain existing customer and also to attract new consumer
towards the brad in an improved way ( El Namaki, 2018).
Social: Under this factor, it includes customer taste and preferences, income level,
population growth, demographic component and etc. that influence establishments decision
making abilities and procedures. In regard of UK automobile sector, the popularity of driving
is being increasing among UK population that impact challenge companies to maintain their
volume of sales in an competing marketplace. Henceforth, automotive division takes this threat
as an opportunity to grow by introducing or manufacturing impressive and best quality motor
vehicles. With the help of such activity, organizations were able to capture the attention of wide
range of population ans well as aid them to gain competitive advantage and sales growth in a
productive style.
Technological: This factor encompasses advanced, innovative technologies which
impact establishments sales performance and growth. However, in case of UK automobile
division, there is a huge level of demand among UK population regarding innovative and

creative commodity that negatively effect over company's development and sustainability.
Therefore, in order to overcome such negative impact, industry makes an effort to produce
advanced and modern technological based cars i.e. self – driving cars. Due to this, it help sector
to enhance its market share or size in an innovative style among competitors within a stipulated
period of time.
Henceforth, the mentioned PESTLE analysis enable UK automobile sector to determine
its potentiality or capabilities in order to cope up with all current market trend or demand
efficaciously as well as lead them to gain competitive advantage in a better manner.
TASK 3
Impact of issues on business
Business environment macro and micro factors are interlinked with each other that help
establishments to place the brand in a competitive position in a desired time duration. In addition
to this, it impact positively and negatively over company's growth and enhancement. Therefore,
corrective course of action leads and organization to acquire best position within competing
marketplace. Therefore, the impact of different issues of automobile sector over internal business
environment are discussed below:
Positive: In an UK automobile industry, the foremost benefit which it acquires is that
there is a huge number of demand among UK population regarding motor vehicles. This is
because, individuals disposable income has been increased in a better way. However, UK
automobile sector makes an attempt to identify the demand of customers and based on that
companies establishes innovative and advanced products (Kasemsap, 2016). Due to this, it help
organization to enhance their sales growth as well as to enlarge the profitability ratio among
competitors. Moreover, companies are adhere to all safety regulation or rules that empower them
to reduce the intervention of government within their business premises and can easily enrich
volume of sales.
Negative: In this component, if UK automobile industry denies to comply with
government policies and also the fact of rendering improved level of customer satisfaction by
manufacturing advanced or innovative commodity or by increasing cost for product. Hence, it
may decrease their productivity and sales growth as well as brings down the consumer base
towards companies.

TASK 4
Challenges and Reflection
I am glad to having an opportunity to conduct a study on business environment of UK
automobile industry as it help them to gain deeper understanding of internal and external factors
that influence company's productivity. However, AS per the earlier mentioned content, it has
been identified that UK automobile sector is increasingly growing and enhancing. However, on
the other hand it come across with various challenges which directly impact over companies
growth and proficiency ratio. The foremost threat which industry undergoes from political,
economic and social factors that totally hampers the sales growth of organizations. Hence, in
order to tackle over such issue, UK automobile industry examine the trend of market as well as
consumers and according to that takes corrective course of action for obtaining profit
maximization in an efficacious manner. With the help of this, industry was able to acquire better
position in a competitive world (Kasemsap, 2017). Apart from this, the another challenge which
I faced while processing this study is managing information. This is because there was a wide
range of possibilities for getting biased data from targeted sources or community. Therefore, to
overcome this, companies should make use of all innovative and advanced technologies that lead
them to acquire detailed information and also they can reach easily to large proportion of
population in an improved manner. Moreover, from this report, I was able to enhance my time
management, IT and researching skill which can be beneficial for my future studies and
researchers.
CONCLUSION
It has been summarized form the above report that business environment is a sum total of
internal and external forces which impact firm's ability in attaining desired proficiency and
productivity ratio. Moreover, with the implication of PESTLE analysis organization can examine
current market scenario and also empower them to make best strategic decisions for attaining
sustainable profit margin ratio in a stipulated period of time. Furthermore,

REFERENCES
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Kasemsap, K., 2016. The roles of lean and green supply chain management strategies in the
global business environments. In Designing and implementing global supply chain
management (pp. 152-173). IGI Global.
Kasemsap, K., 2017. The role of social entrepreneurship in the global business environments.
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IGI Global.
Krammer, S.M., Strange, R. and Lashitew, A., 2018. The export performance of emerging
economy firms: The influence of firm capabilities and institutional
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Mrkajic, B., 2017. Business incubation models and institutionally void
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Peltola, T., Aarikka-Stenroos, L., Viana, E. and Mäkinen, S., 2016. Value capture in business
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Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
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Schaltegger, S., Lüdeke-Freund, F. and Hansen, E.G., 2016. Business models for sustainability:
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Online

Number of people employed in the automotive industry in the United Kingdom (UK) from 2013
to 2018 .[Online]. Available through:
<https://www.statista.com/statistics/867642/automotive-industry-employment-figures/>
PESTLE Analysis of the Automotive Industry, 2019 .[Online]. Available through:
<https://pestleanalysis.com/pestle-analysis-of-the-automotive-industry/>
UK Automotive 2019 .[Online]. Available through: <https://www.smmt.co.uk/industry-topics/uk-
automotive/>