Business Environment

Business Environment

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). In this report, the the taken
industry is auto mobile industry. This is a vital part of UK economy having over £ 82 billion
turnover. Currently, there are more than 40 firms which manufacture vehicles into UK, ranging
from international volume car makers, van, truck as well as bus builders to specialist niche
players. in this industry about 168,000 individuals are employed directly into manufacturing as
well as in excess of 823, 000 across the broader automotive sectors, this accounts for 14.4% of
whole uk goods exports, value £ 44 billion and invest £ 3.75 billion each year within automotive
r&d (UK Automotive, 2019). 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 negative
impacts 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 of respective country economy for more than £ 82
billion turnover as well as £ 20.2 billion value added (UK Automotive, 2019). 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 (Brexit key issues, 2019). 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
1

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:
The enhancing rate of globalisation is an effective news for the development of auto-
mobile industry. But due 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 (UK Automotive, 2019). 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

 Political factors: This factors plays crucial role as well as has direct effects upon
respective sector profitability. The most 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 sectors have
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 (PESTEL Analysis of Automobile. 2019).
 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 £
3
Illustration 1: PESTEL Analysis
(Source: PESTEL Analysis, 2018)

34.1 Billion to EU 37% and quantity is 1 325 868 units to EU 50.7% (PESTEL Analysis
of Automobile. 2019). 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
adapt to these factors. As each year new models are introduced by keeping the
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.
 Technological factors: Technology as well as innovation has become essential
determinants of market share within auto mobile industry. The more creative firm have
high market share. The whole major players done investment into research and
development. Brands such as Aston 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
introducing similar products at low price. This enhances the products of electric
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.
 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.
4

 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).
From the above PESTEL analysis, this have been concluded that mentioned two key
issues are political and technological. As respective sectors is looming No -deal Brexit prospect
and 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, in respective industry the new technology is enhancing day by day due to which
international competition occurs as a key issues.
Impact on businesses
Positive impact: Brexit: As due to no deal Brexit, the Aston Martin have to depends upon World trade
Organisation rules which 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
(Brexit key issues. 2019). Moreover, this enhances the respective company passenger cars
and sports cars exports and total productions.
 Global competition: The enhancing rate of globalisation is an effective news for the
development of auto- mobile industry (Raziq and Maulabakhsh, 2015). This help
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:
5

 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).
 Global competition: Also, the various international competitors such as Toyota,
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
customers also get attracted. All these leads towards minimising their sales and
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 over come 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
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 of the
respective industry are complex as well as competitive. 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. Moreover, PESTEL analysis,
this have been concluded that mentioned two key issues are political and technological. As
respective sectors is looming No -deal Brexit prospect and also, in respective industry the new
technology is enhancing day by day due to which international competition occurs as a key
6

issues. In addition to this, due to no deal Brexit, the Aston Martin have to depends upon World
trade Organisation rules which 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. Also, because of
international competitions enhances the innovations level that outcomes into sales maximisation.
Where as global competition reduced the customers loyalty and others.
7

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. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Hockerts, K., 2015. A cognitive perspective on the business case for corporate
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. and Maulabakhsh, R., 2015. Impact of working environment on job
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
PESTEL Analysis of Automobile. 2019. [Online]. Available Through:
<(https://www.marketingtutor.net/global-automotive-industry-pestle-analysis/)>
Brexit key issues. 2019. [Online]. Available Through:<https://www.bbc.com/news/business-
48545733>.
Brexit negative impact. 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>
PESTEL Analysis. 2018. [Online]. Available Through:<https://blog.v-comply.com/pestel-
organization-success/>
UK Automotive. 2019. [Online]. Available
Through:<https://www.smmt.co.uk/industry-topics/uk-automotive/>
8