Impact of Cultural and Natural Environment on Rolls-Royce Motor Car

This report analyzes the impact of cultural and natural environment on Rolls-Royce Motor Car, a leading luxury automobile manufacturer. It examines the economic, non-economic, and natural factors that shape the behavior and operations of the company. The report also includes a PESTEL analysis and SWOT analysis to provide a comprehensive understanding of the business environment.

Contemporary Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................4
Impact of cultural environment and natural environment...........................................................4
ECONOMIC ENVIRONMENT..................................................................................................4
NON-ECONOMIC ENVIRONMENT........................................................................................6
NATURAL ENVIRONMENT....................................................................................................7
PESTEL ANALYSIS..................................................................................................................8
SWOT ANALYSIS.....................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Contemporary business environment encompasses of that environment which has
comprehensive competitive market which fluctuate and keep changes according passage of time.
It is essential for business owner to understand needs as well as development of such
environment in order to grab new opportunities and examine threats (Contemporary Business
Environment, 2020). In other words, it means certain circumstances, ideas, conditions that
prevails in same period or present time within business environment. While, Business
environment comprises of various factors or components which influence working and
operations of an enterprise. These forces has a capacity to affect ability of an organisation and
preserve strong customer relationships. It is a sum or collection of physical as well as social
factors that are required to be consider by company in order to make decisions and strategies
regarding business expansion or investment. Business environment is classified into three
different levels such as internal factors, external micro factors and external macro factors.
Intrinsic environmental factors refers to those surroundings which are exists within organisation
and also these internal components are generally utilise for purpose of manufacturing and
delivering variety of services to target market (Barr and et. al., 2018). Normally, these elements
are monitored and controlled by management of organisation. It includes organisational
structure, values, corporate culture, financial, human resource, physical resources, mission and
objectives, trade unions etc. External environment encompasses of all those elements which
prevails or exists outside of organisation. Although, company has no control on such factors as
these are dynamic in nature. These are categorised in two Micro environment and Macro
environment. Micro environment comprises of forces such as customers, competitors, suppliers,
marketing intermediaries, trade unions, workers, partners and so on. This environment is closely
associated with customer market. Macro environment contains various societal forces which
includes demographic, political, cultural, natural, technological and economic factors.
Rolls Royce Motor car is one of popular and well known British multinational
automobile manufacturer. Company is subsidiary of BMW German Group. Company is leading
marketer and distributor of lavish and super deluxe luxury cars as well as serves it worldwide. It
has it headquarters in Goodwood, London. Firm produce exclusive range of vehicles under
various brand names such as Ghost, Wraith, Dawn, Phantom, four-door sedan etc. Moreover, this

report contains brief information regarding how cultural as well as natural environment affects
and shapes entire behaviour of organisation.
This report exhibits information regarding economic policies, systems and conditions.
Further non-economic environment which include demographic, legal, political, social factors. It
provides close analysis of given organisation capabilities through Pestle and Swot.
MAIN BODY
Impact of cultural environment and natural environment.
Business enterprises are surrounded by different cultural and natural factors which
influence its behaviour, functions, working operations, policies, strategies, decisions etc. This
business environment is classified in two major sub environment: economic and non-economic.
All these factors required to be examine and study by business analyst so that it can operate its
functions according to external requirements. These cultural and natural factors plays vital role in
order to shape behaviour of an organisation (Blahová, Haghirianand Pálka, 2015).
ECONOMIC ENVIRONMENT
Economic environment comprises of those factors which are associated with country’s economy.
These factors has an ability to affect purchasing power of consumers, business operations which
influence productivity and profitability of an organisation. These particular factors are mainly
uncontrollable as these are beyond an organisation control. Economic environment include
employment or unemployment rates, income of consumers, inflation and deflation rates,
exchange rates, tax rates, recessions, size of market, demand and supply of product, suppliers,
distribution chain so on. UK is one of sixth largest economy in world as it has effective
economic system, conditions as well as policies (Hamilton and Webster, 2018). Current scenario
of UK is not much favourable for automotive industry that automatically impact internal
business structure of Rolls-Royce. Growth of British economy is somehow hampering as it
slowed due to referendum (Brexit). Brexit is an agreement in which European Union leaving
UK. UK automotive industry has great contribution as it adding approx £18.6 billion value to
UK economy and also employed more than 160000+ people directly in manufacturing and
excess of around 800000+ employees in wider automotive industry. Rolls-Royce Motor is one of
largest and wholly governed subsidiary of BMW. Company produce wide range of luxury
automobile vehicles and serves them worldwide. Organisation management required to

understand economic environment in order to evaluate prevailing conditions and changes. It
enables them strategize in better way and cope up with situational changes on time. There are
three major components of economy that shape behaviour of organisation. These can be
understood by following points (Boone and et. al., 2019).
 Economic conditions: this component refers to present position of economy of particular
nation or region. These conditions fluctuates according to economic as well as business
cycles as country’s economy has to face certain period of expansion and contraction.
Economic conditions are said to be favourable when economy expand positively
otherwise it has adverse effect. These conditions mainly concern with employment and
unemployment levels, productivity, exchange rates, inflation rate, GDP, per capita
income, foreign reserve, foreign trade and so on. In UK, presently economic conditions
are not great as it was earlier due to Brexit referendum and other reasons. Britain has
address slow growth in its GDP which fall down to 1.3% , consumption level which is
1.6%, low percentage of investment, decrease in exports and imports, fall down in
industrial production, fiscal balance so on (Temelkova, M., 2018). All these conditions
are arises due to the separation of European Union from UK which affect trading and
manufacturing of goods and services. These adverse economic situation will negatively
shape behaviour of Rolls-Royce as it influence export and import of its products to other
countries, investments in other projects. As result, it impact overall profitability and
productivity of organisation.
 Economic Policies: these are comprises of various decisions or measures which are
formulated and framed by government in order to guide systems of country for purpose
of setting and controlling taxation policies, government budgets, supply of money. These
policies are majorly affected by intervention of international institutions such as IMF,
World Bank etc. it include different type of policies namely industrial, fiscal, monetary,
foreign investment so on. In today scenario, UK has unstable industrial policies, export
and import policies because of Brexit revolution. According to provision of agreement,
there are chances that automotive industry needs to follow World Trade Organisation
policies and rules. This impact negatively over behaviour of Rolls-Royce as they have to
modify all there strategies and polices according to new law (Schaltegger and Burritt,
2017).

 Economic System: UK has a mixed economy system which allow free trade facility at
global level according to unified restrictions and policies imposed by government. Also,
country has developed as market oriented economy. Economic system of country is weak
due to unfavourable conditions and policies. In case of Rolls-Royce all these factors are
against of company growth and become an obstacle in earning higher profits (Khan and
Quaddus, 2015).
NON-ECONOMIC ENVIRONMENT
In addition with economic surroundings there are various other factors which might have
negative and positive impact over business activity of nation. These factors are associated with
non-economic issues which are incorporated in Non-Economic Environment. Such factors are
political and legal environment, technological, demographic, natural and others. In case of Rolls-
Royce, company management required to consider these factors also for their smooth
functioning and sustainable growth. As this environment is equally important to study cause it
has immense influence on business working style and decisions.
 Political and legal environment: in today’s era, importance of this political-legal
surroundings plays an essential role in success of business enterprise. This section
includes political institutions like legislature, executive, judiciary which are responsible
for governing, monitoring, controlling and regulating different business operations.
Government farmed various legal laws and policies under specific legislation framework
that are to be followed by every single organisations. In UK, since UK has to face
referendum on European Union in 2016 as majority of British public voted to leave EU.
Due to this political issue, there is unstable economic conditions and policies which may
create uncertain business situations in front of Rolls-Royce.
 Socio-cultural environment: this particular environment is associated with individual’s
attitude towards their health, wealth, work, ethical issues, religion, education, social
responsibility and so on. In addition to this, it includes taste and preferences of
customers, employee’s behaviour towards organisation culture etc (Liu. and Stening,
2016). UK has diversified and well known British culture and this differs country from
other nations. UK has heterogeneous social culture which is favourable for growth of
Rolls-Royce. Also, Rolls-Royce has a significant people strategy where each employee

work at their full potential in order to encourage diversity, wellbeing and development of
society.
 Technological environment: this environment is related to consistent implication of
scientific and technical knowledge in order to perform practical or operational activities.
Although, it highly associated with innovative techniques or methods in manufacturing
process of products and their distribution. UK has advanced and latest technological
facilities and infrastructure, machinery, latest techniques which provides enormous
opportunities to established large and small organisation (Lee, 2015). Rolls-Royce is
known for its hi-tech aero-engines and company has powerful research and development
centres where it can produce latest and advance technology cars to its potential end
users.
 Demographic environment: this environment contains various factors related to size,
density, distribution and growth rate of country’s population. All these factors directly
bring impact on demand and supply of different products and services. UK has high
number of population rate as well as diversified citizens which indicates that it has
positive environment (Lenart-Gansiniec, 2018). This environment has optimal impact in
shaping behaviour of Rolls-Royce as organisation offer lavish and luxurious experience
to its target group of customers. But on contrary, company might face problem as it only
serves and target high class of people and ignores lower as well as middle customer base.
NATURAL ENVIRONMENT
This particular environment is originally associated with ecological and geographical
factors. It includes atmospheric climate, scarce and natural resources, wildlife, forestation,
weather etc. Every organisation required to look after these surroundings as these have an
immense influence over growth and success of business. UK has effective and strong law
regarding prevention of environmental issues and organisations have social responsibility to
produce healthy and quality products to society. Rolls-Royce has effective CSR goals in order to
provide and enhancing living standard of communities through its Aerospace and Defence
activities (Bogdan and Beata, 2018). To resolve environmental issues company has take various
initiatives to reduce greenhouse gas emissions. It has organise campaigns in order to reduce
energy consumption as a result it is successful reducing overall 5-6% reduction in GHG
emissions. Company has invested million for maintenance and enhancing projects. Moreover, it

highly emphasise on environmental footprint with purpose of reduction in CO2 emissions, noise
pollutions, nitrogen oxide.
PESTEL ANALYSIS
 Political: these factors are highly unfavourable for Rolls-Royce due to unstable
economic conditions, system, policies in UK because of Brexit. Due to unstable political
situations it provide negative impact over company’s import and export, investment in
new projects, it affects overall policies and strategies of company (Child, 2015).
 Economical: In UK, as it discussed above that economic situations are not great because
of EU-UK referendum which are unfavourable for functions and operations of Rolls-
Royce. It majorly influence its productivity and profitability level. Economic conditions
are negative due to fall down in GDP, consumption level, investments etc.
 Social: these particular factors are positive for Rolls-Royce as it provide diversified
opportunities for firm. As company can produce and manufacture low segmented cars for
lower and middle class customer base at affordable price. It will result in enhancing of its
customer base and brand extension.
 Technological: these forces are optimal for Rolls-Royce sustainable growth as company
has hi-tech technology and techniques which it utilise in production process. This enables
firm to reduce its cost expenditure and provide high luxurious vehicles to its target
market. Also, company has powerful and effective research and development centres.
 Environmental: to reduce environmental issues company has undertaken various
initiatives in order to reduce impact of greenhouse gas emission, CO2 emission, noise
and air pollution, nitrogen oxide and so on (Blahova, Palka and Haghirian, 2017).
 Legal: these factors are unfavourable for growth of Rolls-Royce as in UK, there is
unstable legal laws which provide adverse impact over company’s policies and laws. As
they have follow guidelines of WTO which may affect its working operations.
SWOT ANALYSIS
 Strengths: Rolls-Royce has strong brand image and goodwill due to high class
performance in producing luxury and hi-tech quality vehicles. Rolls-Royce has global
presence as it serves its products worldwide in wide variants of luxury cars. Moreover,

company has powerful technical support from its parent organisation (Liu. and Stening,
2016).
 Weakness: major weakness that Rolls-Royce has is that produce and develop identical
design of its vehicles. Moreover, many potential consumers switch over other brands in
order to get different designs in same price.
 Opportunities: presently, customers are demanding for environmental eco-friendly cars
which is an opportunity for Rolls-Royce to produce eco-friendly luxury vehicles. Also
company can develop new product segment of motorbikes so that it will increase its
customer base.
 Threats: major threat for Rolls-Royce is its top competitors which are Mercedes Benz,
Aston Martin, Porsche, Jaguar and others who are engaged in offering identical luxury
vehicles. Also, people are getting price sensitive as they are not ready to purchase high
price vehicles (Khan and Quaddus, 2015).
CONCLUSION
From above research report, it can be summarise that contemporary business environment
is an essential element for business enterprises. There are various contemporary issues pertains in
external environment which has an immense impact over working, functions as well as
operations of business. Business enterprisers or owners are required to examine and analyse
these factors so that they can attain as well as sustain competitive advantage. In today scenario,
there is tremendous impact of such environment over functioning of business units due to
increase in number of organisations, new products and services. It bring pressure on company’s
to modify their strategies and policies according to moves of competitors. Business environment
is a mixture or combination of intrinsic and extrinsic components which have ability to influence
organisation’s operating conditions or circumstances. It includes economic conditions, policies
and system of country around which an organisation operates its function and alter its marketing
philosophies and concepts accordingly. Moreover, it contains non economic factors which
encompasses demographic, social, political, technological factors that also has ability to affect
inner capabilities of organisations. These factors brings enormous growth opportunities as well
as threats. There are various analytical models carried out by firm such as Pestle Analysis model,

porter’s five force model etc. these enables firm to act as first mover to fetch fresh opportunities
in addition to this company can assess upcoming threats so that they can convert the same in
their favour. Although, organisation run and produce various products and services that are shape
by consumers, suppliers, competitors. An organisation may have strong areas and also weak in
some that must be consider by management. This study enables them to identify weaknesses so
that they can be rectify as soon as possible. Furthermore, through business environment analysis
company can able eliminate or reduce risks of or uncertain failure of technical operations and
development as well as launch of new product. In addition, environmental analysis is process of
investigating numerous elements which provide positive as well as negative impact over
business. It depicts how innermost competencies, competitors benchmarking, positioning,
organisational structure and other factors affects overall working of enterprise. Through this
company can formulate and implement new strategies in order to direct organisation functions so
that it can attain its objectives and sustain competitive edge. Also, it can modify its vision and
mission statements through responding to prevailing factors in environment.

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