Business Environment and Firm Performance Analysis

The provided assignment is based on various research papers and studies related to business strategy, organization culture, and leadership skills. It requires the analysis and application of theoretical concepts to real-world scenarios, making it an engaging and informative resource for students in the field of business and management.

Business Organisations and
Environments in a Global Context

Table of Contents
INTRODUCTION...........................................................................................................................1
BODY..............................................................................................................................................1
SWOT and Porter five forces analysis of Dacia.........................................................................1
PESTLE for evaluation of macro environment...........................................................................4
CONCLUSIONS..............................................................................................................................8
REFERENCES ............................................................................................................................9

INTRODUCTION
The external as well as internal factors which can influence business activity of an
organisation is covered under business environment. They have significant role in success or
failure of an enterprise. This report is based on Dacia which is a subsidiary company of Renault.
They are considered as one of the leading firm in terms of revenue (Srivastava and Jomon,
2013). In this file, Canada will be the business environment where they are trying to enter as a
part of market expansion. Various analytical approach will also become part of this project.
BODY
SWOT and Porter five forces analysis of Dacia
Duster is a popular name in auto-mobile industry, they hold a position in list of table
leader. Dacia is their Romanian subsidiary which is a successful company of their domestic
country. They have contribution of around 7.3% in total export of Romania. In terms of revenue,
they are considered as the top organisation in their nation. Their manufacturing plant produces
more than 600,000 unit in a year. Their have strong presence in some European countries and
they have significant amount of contribution in their parent company (Slater, Olson and
Finnegan, 2011). Following is the SWOT analyses of Dacia:
Strength
 Their growth rate is too high if it is compared to other organisations of their industry. In
very short period of time they capture large share of global market where they have
decent presence.
 They are very strong in their domestic market and they have capacity to influence the
economy of Romania. They hold major of share in their home industry and they are top
company in terms of revenue.
 Cited organisation has a sound distribution system, most of the car manufacturers
consider them as their main competitor because their sales networks is so strong that they
do not gives breathing space to other firms (Siewiorek and et.al., 2012). They are going
to follow same strategy in Canada, first they will select best channel of distribution and
than expand their sales network in all the part of country.
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 Their probability is high and they earn a revenue of around 4.3 billion EUR. Their profit
reveal their position in auto-mobile industry. This sector has seen many unfavourable
conditions but cited company did not see much fluctuation.
Weaknesses
 Every enterprise like to invest money in research and development, but Dacia has done
huge amount of investment in this field which was not necessary. In present situation
they are in a problematic situation where they do not know their result of their big bet
which is making a negative impact on their valuation. This move put them in a severe
financial trouble.
 Their organisational structure is complicated which is the prime reason that their decision
making process is lengthy and complicated (Michaelson and et.al., 2014). Manager in this
company remain confused for most of the time because they get information after it has
no use.
 They have high dependence on their domestic market and some European country.
Demand of cars in this reason in growing with a decreasing rate which is may put them in
serious trouble in forthcoming time.
 Their performance in key markets is below par, they do not have strong presence in any
of the big European country.
Opportunities
 They can expand their business in emerging markets like Canada which will help them in
maintaining their high growth rate and they can earn huge amount of revenue in
unfavourable time. They can also think about strengthening their presence in current
market where they are operating. This will provide them stability in hard time.
 They can acquire companies in emerging economy which will be a good move to enter
in new market.
 Demand of cars is growing at the rate of 4% globally so they have large area which is still
unexploited.
Threats
 Cost of raw material is increasing continuously, it will be a big challenge for them to
maintain their current revenue because their increased cost of profit may make a negative
impact on their business (Gulati, Puranam and Tushman, 2012).
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 Their competitors are getting more strong in their emerging market, earning high profit in
upcoming time is going to be one of the biggest challenge for them.
Porter's five analyses of Dacia:
Threat of new entry
In present situation they are very strong in their domestic country and they have good
presence in some of the European countries but they may face serious challenges like Tesla in
upcoming time. Current this company is operating in America only but according to their
expansion plan they will enter in European market. In present situation this is a serious threat for
them so they should allot the same amount of money to their research and development
department so they can make cars will can run by electricity and have mesmerising design. They
should also think about making vehicles whose speed in more than present one.
Threat from substitutes
As discussed above companies like Tesla can are considered as their major substitute.
Their new technology and designing is getting attention of customers from across the global.
Some domestic companies of car manufacturing can also replace them because they are getting
more and more stronger (Galaskiewicz, 20163). Their cost of production is not increasing as they
have home advantage and their government is also supporting them.
Suppliers power
Cited organisation deals with enterprises of other industry like glass, steal etc. They can
not make huge impact on business of Dacia because if one suppliers raise the price than they can
switch to other. They can make small impact by increasing prices of raw material but it will not
last for more time because cited enterprise will start exploring more options which they can find
easily until they is an actual enhancement in price in raw material.
Buyer's power
They can make a huge impact on business of this company, if they are now satisfied with
the product sell by Dacia than they can immediately switch to other car manufacturing
organisation which can make a dent in their business. Their dealers can also make influence on
their business decision because they are considered as the main reason behind their successful
distribution channel (Foss and Knudsen, 2013).
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Competitive rivalry
Cited organisation is strong in domestic market and they do not get any serious
competition in this area, but in international market they have many rivals like Kia, Fiat etc.
Some of the firms are performing better than cited organisation because of various reason and
some are going down because their product quality is not up to par.
PESTLE for evaluation of macro environment
Every enterprise get effected by the environment where they are conducting their
business. Dacia is try to enter in Canada so they can expand their business and achieve their long
term objectives. Following is PESTLE analysis of Dacia:
Political – Canada has not seen any major political changes in past two or three decades.
This is a positive information for cited enterprise they want to enter in a market where they get
good political stability. It is essential for their business because they are planning to open new
plant in this nation so if they will not get support from government and all other political parties
than they may face huge losses at the time of political instability. If this complaint do invest in
Canada than they will get strong in European as well as American region.
In present scenario, cited organisation do not have much fund to invest in their plant and
machinery because they are spending lot of money in researching and developing new
technology so they can improve their current product. If things go south than they have to face
serious financial trouble in upcoming time (Follett, 2013). Dacia can also think about entering in
Asian markets because they are ready to give them some special deduction in taxes, this will play
significant role in growing their revenue and business. Canada has seen many positive political
changes in last couple of years because of new leadership. This country was going down but the
are again on a right path.
Economical - Most of the countries are coping up with problem of low growth, they are
doing everything to keep their economy on a correct track but they are not getting much success.
Canada was also facing this issue but they has done impressive work in recent time. Their GDP
is 1.53 trillion USD, their growth rate was negative but in 2015 they register a annual change of
0.9%. In 2016, they maintain their good performance and they achieved a growth of 1.5%. This
is a good news for Dacia because demand of cars in this nation is enhancing, their population is
also increasing so in upcoming time auto-mobile sector will move in positive direction (Cuervo‐
Cazurra, 2011). Their projected GDP growth rate is 2.7% which is highest since 2011.
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Perentag3e of unemployed people is going down, earlier it was around 6.5% but now it has come
down to 6%. Cited organisation could hire more employment at low price if this rate was
increasing but they have to face some extra financial burden. Inflation rate of Canada is rising, it
has gone up from 1% to 1.2% in July 2017. This is not a good news for a company who is
thinking about selling cars in this region because in these situation, instead of spending money of
fixed assets people focus on buying consumer and necessary goods.
Social – Before entering a market, an organisation first need to understand their culture
so they can make their strategies accordingly. Unemployment is one of the biggest challenge that
Canada is facing. If Dacia will open a plant in this nation than they will generate many jobs,
most of the people will not agree with this but they is a kind of social service nowadays. Canada
is cool place, cited organisation should make cars by considering their culture and living
standards. They are conscious about their health so they will not accept a vehicle which spread
lot of pollution (Commander and Svejnar,2011). Their popoulat8ion is also increasing, if Dacia
want to operate their business in this nation for a long time than they have to thinks about
preferences of children and young people because in upcoming time they will be the person who
will control demand.
Canada is a country where people are very serious about their personal information. Cited
organisation should follow all the ethics, if they will do any unethical activity which mat be legal
than it will make a negative impact on their goodwill (Subashini and Kavitha, 2011). Major of of
this industry like Volkswagen committed a blunder which tainted their image in society. If Dacia
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follow culture and ethics than they can make capture more market in short period of time. Their
competitors may have various advantage like better financial position or technological
advantages but if they launch product by keeping culture of nation in their mind than they can
face various challenges given by their rivals successfully.
Technological – Canada is a nation where technological changes are adopted in quickly.
If Dacia want to capture significant amount of share than they have to install new technology in
their cars because it can belong key player in enhancing their sale in short time frame
(Buchwald, 2012). Ford and Toyota are market leader of auto-mobile industry in Canada, both
enterprises has same policy. They install new technology and invest huge sum in research
activity so they can produce better product to customer. These companies firmly believe that
nowadays cars are made by IT engineers instead of Mechanical engineers. Dacia can adopt same
strategies, they are already spending lot of money on developing new technology. This will help
them in entering Canadian market smoothly.
In forthcoming time, vehicles will be run electricity or hybrid fuel. Instead of focusing on
making cars run by petrol, they need to make vehicles run by electricity because this nation is
will appreciate this plan. Cited organisation should also think about making driverless car
because most of the experts of this sector believe that this is the future of auto-mobile industry.
They can invest more money in innovative ideas so they can fight with various threats that are
present in business environment.
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Legal – Safety of people is the priority of government of every nation. Dacia is known
for their up to mark safety features and they have won many awards because of this factor. At the
the time of entering Canadian market, they should maintain same level of security feature in their
product, this will give them some extra edge over their competitors (Aterido, Hallward-
Driemeier and Pagés, 2011). They have to follow various legal obligations which are present in
this nation, this will help them in developing better distribution system which is their core
strength. They are planning to adopt aggressive strategy where they will launch their cars at low
rate in initial time and when they get attention of significant number of people they increase their
prices accordingly. Rules relating to pollution and privacy of an individual is very strict in this
region so can not ignore this issue at the time of entering this market.
Environmental – Nowadays, people are aware of outcomes relating to damaging
environment. It can be considered as the main reason that most of the companies in automotive
sector are trying make cars which will run by electricity (Vahlne and Johanson, 2014). Canada is
a country which always give priority to environmental issue. In upcoming time they are planning
to ban vehicles which are run by diesel. Dacia should keep all the policy relating to environment
in their mind before entering in this market. They can get competitive advantage over their
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competitors by launching cars run by either hybrid fuel or electricity (Allen and Kraakman,
2016). Their research department is doing impressive work, they have al;ready invested huge
sum in this sector and they are planning to increase their investment so they can deliver make
product which are environmental friendly and have attractive designing.
CONCLUSIONS
At the end, it can be concluded that business environment where a company is operating
or planning to enter make a huge impact on their decision making process. An organisation can
do various kind of analyses like porter's five so they can get better understanding of micro
surrounding where they are running their business. With time, technology and way of doing
business is also changing. Enterprise need to make necessary technological development so they
can reach their long term objective by doing optimum utilisation of available resources. Firm
include data and graph at the time of planning expansion of business so they can get a basic idea
about the challenges they have to face in upcoming time. It helps them in using their strength in
right manner so they can get better returns in short period of time.
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Buchwald, P., 2012. The example of IT system with fault tolerance in a small business
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Subashini, S. and Kavitha, V., 2011. A survey on security issues in service delivery models of
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