Key Issues Affecting Automotive Sector: A Study on Volvo

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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