Key Issues Affecting Automotive Sector: A Study on Volvo

This study highlights the major issues affecting the automotive sector, with a focus on Volvo. It includes a PESTEL analysis of the UK and discusses the impact of these issues on business activities. The report also explores the challenges faced while preparing the report and lessons learned from it.

BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
ASSESSMENT TASK....................................................................................................................1
1. Identifying and describing key issues affecting the automotive sector. .................................1
2. PESTEL analysis.....................................................................................................................2
3. Impact of issues on business....................................................................................................3
4. Challenges faced while preparing the report and lessons learned from it. .............................4
CONCLUSION................................................................................................................................6
REFRENCES...................................................................................................................................7

INTRODUCTION
Automotive sector is the business which produces and sells self powered vehicles, which
includes cars, trucks and farm equipments etc. Volvo is an luxirious car brand it is an subsidiary
of Chines auto mobile company Geely. Volvo makes sports cars, SUVs, sedans etc. Company
charges high prices as they promises to offer premium quality to customer's. The vehicles of this
brand are manufactured in nine manufacturing facilities all over the globe. The study will
highlight the major issues which affects the auto mobile industries. Further, the study will
contain the PESTEL analysis of UK. Moreover, the report will highlight the impacts of issue on
business activities (Hair Jr and et.al., 2015).
ASSESSMENT TASK
1. Identifying and describing key issues affecting the automobile sector.
The automotive companies comprises of a wide range of organisations which are
involved in design, development , marketing and selling of the vehicles. Automotive sector is the
world's largest sector which generates high amount of revenue. There are several issue from
which the automobile industry has to deal with and issues are as follows-
Globalization- The automobile industry has now become an global industry as the cars
manufactured by companies are sold to almost all the countries worldwide. The impact of
globalization is positive as well as negative. Advancement in the automobile sector is sharing of
technologies, this results in an effective competition. Due to globalisation an effective
competition is created in the market as there are wide range of car manufactures in the world and
companies have to make more efforts to sell their goods and sustain in the market for longer
duration (Sangari and Razmi, 2015).
Automobile industries to sustain in market have to sell their products at lower rates and it
impacts the overall profitability of the business. Consumers have wider range of options
available for making purchase this impacts their behaviors. Customers prefers to buy those
goods which provide high quality at reasonable prices this affect the organiosation as they have
to provide such styles of goods otherwise the sales of business will decline, thus this will result
in loss of profitability and market share (Aithal, 2016). Technology is one of the tool through
which assist the organisation in facing competitive situation and enhancing quality of goods. Due
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to globalization the competition in the automobile sector has been increased organizations has to
use advanced technologies and efficient R&D management.
Sustainability- Sustainability is an major issues for automobile sectors as there are many car
manufacturers in the market and all of them has creative and innovative ways of conducting
business. Automobile manufacturers are offering high quality vehicles with very advanced
features so to compete with that and sustain in the market for longer time is an difficult task. The
vehicles manufactured by the business are some how creating pollution in the environment and
all automobile producers have not plans for minimizing this issue. As a result this affects the
business sustainability in market (Andersson, Forsgren and Holm, 2015).
The needs and requirements of the buyers also keeps on changing so to deal with that
organisations must have creative ideas and new policies by which they can offer the products to
consumers according to their needs. As if vehicle producers are not in the condition to provide
better quality cars to consumers it becomes very difficult for an organisation to survive in the
competitive market. Automobile companies need to understand that how to classify, measure the
goods and services which can impact the behaviors of customers in an positive way. Unstable
purchasing patterns and changing financial conditions and changes in public policies makes it
tough for automobile producers to sustain in the market for longer time (Hitt and Xu, 2016).
2. PESTEL analysis.
Political- The biggest strength of UK country is its political stability. UK has successfully
maintained good relations with US and other countries. Country has good relations with other
countries it helps the Volvo in doing business at globally. Due to the fair political conditions the
company can sell their products to the other countries. However, their relations with
authoritarian regimes drawn a lot of criticism this may impact the business operations of Audi
(Hitt and Xu, 2016).
Economic- Economic position of UK is strong as compare to other countries. The GDP rate of
the country is very high and has diverse economy. The country stands at fifth highest GDP in the
world. UK has highest GDP rate and large amount of population allows the business
organization to become profitable. Due to availability of funds and sustainable financial
conditions Volvo can do business operations at global level.
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Social- UK has the biggest consumer market. According to the analysis done in 2018, UK has
the population of around 66.4 millions. UK is among on of the top 10 countries who have
educated population all over the world (Chungyalpa and Bora, 2015). This assist the Volvo in
doing business as the crowd is well educated so they better understand the features offered by the
Volvo and make purchases according to that.
Technological- UK is one of the technological advanced countries all over the world.
Technology sectors is main contributor to UK economy. These technological infrastructures
gives entrepreneurs lot of opportunities to operate business in UK. Volvo is benefited by these
technical advancement as latest and advanced machines are used in manufacturing the cars, thus
it helps the company in doing business at global level. The company is facing competition
successfully by the help of advanced machines and
technologies (Chungyalpa and Bora, 2015).
Environmental- Economic activities has an great impact on the environment of the UK. The
country has made great improvements in reducing the impact. They have faced challenging
weather conditions. This affects the business operations of the firms. As the car manufactured
creates pollution in the environment and the Volvo did not not have much measures to deal with
it so in this way environmental factors impacts the business to sustain long in market.
Legal- There in an act called employment act 1996, which protects the rights of workers,
paternity and maternity leaves, holiday packages minimum wage rates, sick pay and other rights
are also legally protected. This impacts the Volvo as they also have to take care of the employees
and do the work according to the guidelines mentioned in the law. All the laws of the country are
satisfactory according to which business activities are smoothly carried out in UK (Sun and
Richardson, 2016).
3. Impact of issues on business.
GLOALISATION
Positive- Car manufacturing has becomes a global industry from the beginning. The car industry
like Volvo globalized from its early days. As auto mobile brands are considered as the brand
image of that country. As Globalization helps the cars to be supply all over the world unlike
earlier when it estimated to a specified country or allocation. As imports and exports are now
become easy also customer base is also increase and because of the increase of the customer base
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it increases the productivity of the company and also the goodwill of the company which citizen
the Volvo company in the long terms (Sun and Richardson, 2016).
Negative- Due to globalization there are a lot of market competitive within the market. As
globalization brings lot of innovative ideas which sometimes becomes difficulty for the Volvo
company as day by day new technology and complex structure is come which is very complex to
beat (Ambler, Witzel and Xi, 2016).
SUSTAINABILITY
Positive- Volvo Cars consider as one of the ambitious climate plans within the car industry.
Their goals is to reduce CO2 emissions per car from now to 2025. They realize that the
electrification is not enough one ,it is also gone beyond radically reduce tailpipe emissions by all
out electrification. Their approach is to reuse or recycle materials. As Volvo is a human -centric
car company cares about the other people as well as world in that they live. Their commitment is
like to re-thinking sustainability and also go beyond the operations as well as cars into the
society. This makes them thinking again and again when they take any decision that could affect
the worlds and the people living in that (Um, 2017). A sweetish word Omtanke means caring as
well as consideration and also crucially to think again . Omtanke is considers as the name of
program of the commitment regarding the sustainability. Under this commitment it includes the
Volvo buses that will expand the number of filed test that provides the plug-in hybrid buses. The
Volvo groups becomes the first automotive manufactures who join the climate savers. As Volvo
cars reducing the efficiencies as well as cost savings that can baler to provide environmental and
economic benefits as in today's' world climate change is very significant.
Negative- If all the climate plans are not becomes successful such as reduce the carbon dioxide
emission up-to 2025 ,the brand image of the company spoils. Sustainability impacts the business
in this way that when the company is not meet society expectations and don't do practices which
are beneficial for society like green environment (Vij and Bedi, 2016).
4. Challenges faced while preparing the report and lessons learned from it.
There are few challenges which are faced while preparing this report and the chalenges are as
follows-
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Lack of knowledge- It was very challenging for me to preapre the report as I don't have enough
knowledge about the topic. Don't have enough knowledge about the globalization and
sustainability so to mentions their impact on the company is very challenging for me. In this
study I have done PESTEL of UK country and how such factors impact the Volvo business. Sue
to lack of knowledge I have to search for single factor impact very deeply, it was an very time
consuming and challenging task for me.
Relevant data- As to prepare this report the biggest challenge which is faced by me is that I
didn't get the relevant data about the topics, It becomes very tough for me to gather the data from
correct source. So for researching the topics of this report I have taken help of internet and
visited many websites, thus from this source I got some relevant data and prepares this report. I
have spend lot of time on searching about the topics mentioned in the study on internet and then
finally prepared this study.
Lessons learned from this study: There are few things which I have learned from this study as I
was not having enough knowledge about globalization so by preparing this report I gain enough
knowledge about it that how it can have positive and negative impacts on business operations.
Globalization has positive impact on business in this sense as the products and services offered
are reached to wider number of customers. By the development the cars manufactured by Audi
are not only limited to a single market this results in larger customer base and higher revenue
generation.
I have understood that globalization have negative impacts also as it creates an effective
competition in the market. As there are so many car producers so to offer premium quality
products at reasonable prices, so to face competition effectively and sustain in market Volvo has
to reduce the prices of its products. Volvo is an big brand which offers premium quality cars so
to lower the prices is not possible for the company. I have learned from the study that economic
and technical factors factors plays an important role in functioning of business as when the
economic conditions are good company can do smooth business and can lead to higher profits.
Technical factors like use of advance machines and technologies assists the organisation in doing
manufacturing process fast and efficient.
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CONCLUSION
The above study summarized that automotive sectors is an industry which manufactures
all types of vehicles including cars, trucks, buses etc. The industry is the only industry in world
which generates higher amount of profits. The study says that due to globalization the business's
goods and services are reached to larger number of audience. Sustainability plays an important
role in the functioning of organization as when the companies are well sustained in markets they
can generate do more business and generates higher revenue.
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REFRENCES
Books and Journals
Aithal, P.S., 2016. Study on ABCD analysis technique for business models, business strategies,
operating concepts & business systems. International Journal in Management and
Social Science. 4(1).
Ambler, T., Witzel, M. and Xi, C., 2016. Doing business in China. Routledge.
Andersson, U., Forsgren, M. and Holm, U., 2015. Balancing subsidiary influence in the
federative MNC: A business network view. In Knowledge, Networks and Power (pp.
393-420). Palgrave Macmillan, London.
Chungyalpa, W. and Bora, B., 2015. Towards Conceptualizing Business Strategies. International
Journal of Multidisciplinary Approach & Studies. 2(1).
Hair Jr, J.F. and et.al., 2015. Essentials of business research methods. Routledge.
Hitt, M.A. and Xu, K., 2016. The transformation of China: Effects of the institutional
environment on business actions. Long Range Planning. 49(5). pp.589-593.
Sangari, M.S. and Razmi, J., 2015. Business intelligence competence, agile capabilities, and
agile performance in supply chain: An empirical study. The International Journal of
Logistics Management. 26(2). pp.356-380.
Sun, H. and Richardson, J.T., 2016. Students’ perceptions of the academic environment and
approaches to studying in British postgraduate business education. Assessment &
Evaluation in Higher Education. 41(3). pp.384-399.
Um, J., 2017. The impact of supply chain agility on business performance in a high level
customization environment. Operations management research. 10(1-2). pp.10-19.
Vij, S. and Bedi, H.S., 2016. Are subjective business performance measures
justified?. International Journal of Productivity and Performance Management. 65(5).
pp.603-621.
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