Analysis of Macro-Environmental Factors Affecting Volkswagen

This report analyzes the macro-environmental factors that affect Volkswagen, using PESTLE and SWOT analysis. It discusses the political, economic, social, technological, legal, and environmental factors that impact the company. The report also provides recommendations for Volkswagen through SMART objectives.

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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Application of PESTLE model to identify and discuss macro-environmental factors that
affects selected business..............................................................................................................3
Application of SWOT analysis to identify key strength and weaknesses..................................5
Recommend course of action for chosen organization by creating SMART objectives.............7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9
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INTRODUCTION
Business environment defined as collection of individuals, factors and entities that may
or may not be under the control of organization. However, this can hugely impact performance,
growth, profitability and survival (Phadermrod, Crowder and Wills, 2019). It is defined as set of
elements that is closely linked with business activities.
The present report is based on business activities of Volkswagen that established in 1937
by the German labour front. It is industry that deals in automotive industry. This is leading brand
that is world largest automobile manufacturer.
Furthermore, current environmental factors will be analysed with use of tools such as
PESTLE and SWOT. Lastly, recommendation will be given for chosen enterprise by creating
SMART objectives.
MAIN BODY
Application of PESTLE model to identify and discuss macro-environmental factors that affects
selected business.
This is defined as framework that analyses the components such as political, social,
technological, legal and environmental. Therefore, these are outlined in following context as
are-:
Political- The significance of political components in relation of business has grown heavily
within 21st century. In the current era, the political forces are continually increasing and this also
plays crucial role within area of international business (Büyüközkan and Ilıcak 2019). It is the
company that have strong supply and distribution network around the globe. Therefore, the one
of the negative impact is that political oversight has increased and automotive brands are under-
pressure as compare to decade or two ago. In addition to this, Brexit can also create situation of
uncertainty and this can give rise to complexities for large and global business brands. In
addition to this, the political environment of Asian market remained stable during recent years
and that led to faster the growth of automotive brand that includes Volkswagen.
Economic- The components can have direct effect on the business and its highly affects the
demand of the enterprise. Fluctuation within economic environment results into decline
economic activity that leads to decreased in demand and losses. In addition to this, Volkswagen
primary target market is social upper that prefers drive luxury and semi luxury vehicles. During
the period of declined economic activities the demand of the vehicle highly affected and this also
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has huge impact on revenue and profitability of the enterprise. Effective economic activities in
most of the markets have a crucial role in higher sales and profits. In addition to this, this reflects
direct relationship between forces of economic and survival of large international business
inclusive those in the automotive industry.
Social- These are the forces that plays crucial role within the growth of business industry in the
21st century. Therefore, sociocultural components affects the purchasing habits and preferences
of customers. With help of changing in social trends can change preferences of people (Bellver,
Bosch and Checa, 2019). These are the components that can affect the both things such as sales
and marketing. In addition to this, due to changing trends of product and sales strategies needs to
be updated accordingly.
In addition to this, social fluctuation are inclusive of population, demographics, income
and mobility etc. In the current era, the people are more interested in sustainable products and
sale of electrical vehicles kept on rising. Thus, it can be stated that role of social cultural
components of the business kept growing at huge context. In addition to this, the automobile
firms enhances the level of society and this also leads to changes the life of individuals.
Technological- This is component that plays crucial role within the automobile industry. In the
competitive era, the technical advancement are continually growing and this is affecting the
demand of the enterprise in huge aspect. From AI to automated driving, the automotive brands
tends to remain ahead of others and due to this entity needs to make huge investment in R&D.
Among all the brand, the chosen entity has brought more eco-friendly and safer cars to the
market. Therefore, chosen entity must show their ability to produce battery powered car in order
to bring long term sustainability within market.
Thus, this has invested a lot in manufacturing and distribution processes of technical
advancement more efficient than its rivals. Hence, it can be stated that the role of technical
advancement in automotive industry has central and the business invest in the areas assist to
determine the level of success. Highly maintained technical advancement must be used in cars
such as Audi, Bentley etc.
Environmental- It is component that plays one of crucial role within automotive industry.
Hence, the laws relates with pollution has grown stringent across the work and within some
market that are quite large penalties and this does not meet the criteria. In the year 2015, VW has
forced to recall billions of cars due to inability to meet the emission standard. It resulted into loss
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of billions. This is mandatory for the chosen entity to put the major consideration on entity as
Volkswagen as this are more environment friendly.
Legal- The laws and legislation set by the government has huge impact on the working of
enterprise. Therefore, legal and regulatory has enhanced tighter and brands faces huge
compliances risk within all areas from labor to environment and to drive safely. Thus, chosen
entity needs to step out this negative light with help of being more thoughtful towards
environmental factors. In addition to this, the role of legal components within the area of
international business and automotive industry cannot be delayed.
Application of SWOT analysis to identify key strength and weaknesses.
The one of the largest car makers in the world is Volkswagen. It will be helpful to
understand strength and weakness for the chosen enterprise. By use of it, the current position
within market can be easily analysed (Achinas, Horjus and Euverink, 2019). Therefore, these are
outlined as-:
SWOT analysis of Volkswagen are as-
Strength-
1. Presense all over the world- This operates its operational activityies in more than 153
countries. This has largest factory in german and second largest in the china and third
largest facory within Brazil.
2. Strong R&D- This is entity that has made huge investment in research and development
section on new public demand, demands and technical invention cars. In addition to this,
Research and Development activities will stronger day by day (Walsh,
Bhagavatheeswaran and Roma, 2019.).
3. Merger and Acquistion- This has strong startegy in relation to acquiring other
companies. It is enterprise that has acquired 7 brand and this is inclusive of Audi,
Porsche, Bentley and Skoda are few among the most notable.
Weaknesses-
 Most of cars are not environmental firendly- This has been found out that carbon
dioxde harms the ecosystem. In addition to this, the some active brands names Porsche,
Bugatti and Lamborghini emits the excessive carbon-dioxide.
 Not strong brand like Toyota- It is the entity that has not build presense similar to that
of other known brands. In addition to this, chosem entity produces ad sells luxurious cars.
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Thus, the family belong to medium calss can be terned out as the big weakness es for
company. It leads to result as this could not growyh other car firms like Toyata.
Opportunities-:
 Changing technology- The working of the chosen enterprise widely get affected by
diesel scandals. Hence, the entity needs to take initiatives to recover the company's
image (Walsh, Bhagavatheeswaran and Roma, 2019.). This enterprise can change its
technology to more environment friendly cares that can offer opportunities to build strong
image by avoiding uncertainities.
 Decreasing fule prices- If the firm is producing the car that is more carbon dioxide then
they can change their tehnical advancement for betterment of environment and also helps
to full-fill social responsibility.
 Getting stronger thriugh acquision- This is the entity that has been successfully
acquiring the other firms and are getting larger in terms to size. Therefore, this entity has
already gone through process of merger and acquistion.
 Marketing and customer engagement- Digital advacnemnt has brought excellent
marketing and custoner engagement opportunities for the automobile brands. With the
use of technical advancement, the entity can build more stronger relationship with
customers. Hence, it aids to creates stronger image and also retain more customers. In
addition to this, social media, firm website and blogs can be some of great channels for
employee and customer engagement. This will aids to engage the customers on various
issues that is inclusive of environment, sustainability and electric mobility.
Threats-:
 Intense competition- The automobile industry has seen growth in demand over the
years. It led to higher the sales but competition can be intense now. Therefore, the many
of the rivalries of Volkswagen group in the international automobile industry. There are
several of the majors are international players. In addition to this, chosen enterprise
spends a lot over the research and development to bring out the streamlined international
operational within enterprise.
 Legal and compliance issues- This can be defined as major troubles for the automotive
industry. In the current era, the VC has landed themselves into major troubles in relation
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to emissions. In addition to this, the government and legal oversight has grown across the
world that is causing automotive brand in the more financial stress.
Recommend course of action for chosen organization by creating SMART objectives.
It is referred to the extent in which something can be evaluated against the standard.
Therefore, SMART objective can be inclusive of Specific, measurable, achievable, realistic and
timely etc. These are outlined as-:
S- Smart-: In this, VW needs to take the initiatives with help of making huge investment within
technological advancement so that innovative commodities can be produced. It can assist to earn
long term profitability and productivity to have better advancment in future.
M- Measurable-: By making investment in their existing vehicle and to producing the more
electrical vehicle the entity can able to earn long term profitability within the market (Walsh,
Bhagavatheeswaran and Roma, 2019.). This approach can be helpful to earn 30% market share
within three months. By investing in electrical vehicles the entity can be earn 20% profitability
within 3 months.
A- action-: It can be done if the enterprise take initiatives to hire the skilled labour workforce.
By hiring qualified employees the entity can able to put more focus on innovative approaches.
This will aids to earn more amount of profitability within the enterprise.
R-Realiable-: The entity needs to put more focus on to producing the commodities that are of
effective qulity (Walsh, Bhagavatheeswaran and Roma, 2019.). It aids to streamlined the
working of enterprise in huge aspect. With help of consistent focus on good and quality scenerio,
the chosen firm can able to enhanced the productivity and profitability.
T- Tactics-: In order to be highly comoetitive withuin the market and to enhance brange image.
Thus, following tactics must be adopted. These as are-:
 Entity needs to put more focus on innovation strategies so that long term growth can be
captured.
 The company must take initiatives to look over structurubg and restructuruing the
advertising plan of action. Hence, the entity also looks over to bring permament
innovation within product and services.
CONCLUSION
Hereby, this can be summarized that business environment termed out as external and
internal working of the enterprise that aids to attend the long term competitive advancement. The
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present report is based on business activities of Volkswagen that is global leading brand engaged
in automobile industry. Furthermore, the report has laid focus on to cover current environmental
factors that can be analysed with use of tools such as PESTLE and SWOT. Lastly,
recommendation has been given for chosen enterprise by creating SMART objectives and by
undertaking effective course of actions. .
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REFERENCES
Books and journals
Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis based
SWOT analysis. International Journal of Information Management. 44. pp.194-203.
Büyüközkan, G. and Ilıcak, Ö., 2019. Integrated SWOT analysis with multiple preference
relations. Kybernetes.
Bellver, J., Bosch, E. and Checa, M.A., 2019. Second-generation preimplantation genetic testing
for aneuploidy in assisted reproduction: a SWOT analysis. Reproductive biomedicine
online, 39(6), pp.905-915.
Achinas, S., Horjus, J., Achinas, V. and Euverink, G.J.W., 2019. A PESTLE Analysis of
Biofuels Energy Industry in Europe. Sustainability. 11(21). p.5981.
Walsh, K., Bhagavatheeswaran, L. and Roma, E., 2019. E-learning in healthcare professional
education: an analysis of political, economic, social, technological, legal and
environmental (PESTLE) factors. MedEdPublish. 8.
Phadermrod, Crowder and Wills, 2019 Büyüközkan and Ilıcak 2019. Bellver, Bosch and Checa,
2019 Achinas, Horjus and Euverink, 2019 Walsh, Bhagavatheeswaran and Roma, 2019.
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