Electric Vehicles: PESTEL Analysis, Porter Five Forces Model, and International Trade

This report discusses the PESTEL analysis, Porter Five Forces Model, and international trade in the context of electric vehicles. It explores the factors at work in the industry, the competitive environment, and the advantages and disadvantages of national and international trade. The report also examines the limitations of these theories and provides recommendations for dealing with competition and making informed decisions.

ELECTRIC
VEHICLES

Table of Contents
INTRODUCTION.................................................................................................................................3
Explain PESTEL environment factors at work in industry in relevance with case study...................3
Discuss knowledge and understanding of theory...............................................................................4
Provide knowledge of national & international aspects.....................................................................4
Describe understanding of competitive environment and explain Porter five forces framework.......5
Discussion of criticism/ limitations of theory....................................................................................6
Examine knowledge of national and international aspects.................................................................6
CONCLUSION.....................................................................................................................................7
REFERENCES......................................................................................................................................8
Books & Journal:...............................................................................................................................8

INTRODUCTION
Automobile industry has drastically changed over a period of time by bringing nee
innovation and invention to the industry. Volvo, manufacturing company headquartered in
Sweden. Firm deals in trucks, equipment, technology etc. with strong base of network
distribution channel. Demand of customers and market situations are dynamic in nature. In
this dynamic market, electric vehicles are in emerging trend. Due to rise in competition,
strategies as well as tactics are being developed by entities to survive in market. In this
modern time, most of the company are now introducing electrified cars into industry. This
report includes PESTEL Analysis, knowledge and understanding of theory by using Porter
Five forces model & national and international aspects.
Explain PESTEL environment factors at work in industry in relevance with case study
PESTEL Analysis- It is a tool which is used by organisation to track and monitor the
external environmental which affects the business and its functions as well as operation. It
includes several elements which are described below-
Political factors- In this element, it comprises of environmental and labour law, trade
restrictions, political stability etc. Such type of elements affects the business at depth. In
relation with Volvo, spending on infrastructure assists firm to increase sales of commercial
vehicles (Widmer, 2017).
Economic factor- These are those which involves inflation & deflation rate, wages
etc. Such elements slow down the growth of business and enterprise depending upon the
effects. In developed country like US, as disposable income of citizen is high it becomes easy
for Volvo to acquire skilled workforce for their operations and carrying out business
smoothly as well as effectively (Mi, 2017)
Social Factors- Further comes social component in which standard of living, income,
culture region etc. are involved. It is very crucial to run business & provide product according
to customers’ needs as well as requirements. Not every country has same culture or region for
example in US; people are sensitive to their cars because they use cars mostly for mobility.
Also, fuel is expensive which is not affordable by every individual & which depicts it is
challenging task for Volvo to meet all requirements to run their activities.
Technological- Many enterprises focused on adopting new technologies to their
business. For example- Toyota & CMC are using new equipment and systems in their cars in
Japan. So, to enhance profit of firm Volvo also has to be more innovative towards their
product so that they compete with rivals easily in market. Because now everyone in industries
are adopting electric vehicles to save environment from pollution.

Environmental- It involves pollution, climate change, waste management etc. These
are elements which have deep impact on suitability of business. In context to Volvo, they
need to focus on their sustainability of corporation by focusing on environmental issues and
solving them properly.
Legal Factors- As in automobile industry, duty on vehicles in too high which disrupts
the business environment of firm. Thus, in relevance with specified company it becomes
difficult for them to expand their business globally.
Discuss knowledge and understanding of theory
Porter Diamond Model- It is tool which specifies that competitive advantage within
the different nations that every enterprise acquires. It also allows companies to prepare
effective strategies to face rivals across the globe appropriately. This has several components
which are discussed below-
Factor Conditions- This is defined as various types of resources which are available
or might not be available within the country. Resources such as natural, infrastructure, human
resources etc. In Europe, skilled workers are available at affordable prices which are used as
competitive advantage by Volvo. It is essential to focus on this element so that problems &
challenges do not arise in near future. This is because; it is not easy to acquire EV batteries as
they are cost expensive (Kang, 2017).
Demand Conditions- In this, to have competitive advantage market demand is to be
there so that profit & sales revenue is increased in home market demand such as market
growth, rate etc. Thus, Volvo has to focus on this factor to be the global leader.
Related supporting industries- This states that to access market easily it is essential
to merge with international suppliers so that it has ease access to acquiring of inputs in the
industry. For example- Volvo is merged up with Renault with motive of making trucks and
buses together & which results in ease of doing business in context of both entities
(Reinhardt, 2017).
Firm strategy, structure, & rivalry- Competition play vital role in development of
firm strategy and structure. Because it assists in determining degree of competencies in
particular nation. In context to Sweden, chosen firm Volvo also has competitors such as
BMW, Lexus and Audi.
Provide knowledge of national & international aspects
International market is a source for business to enhance and increase their financial
position worldwide. Both at national and international aspects functions and operations are
different from each other. Mostly international trade is done for various reasons such as
increasing efficiency of business, taking economic advantage, higher growth as well as
development etc.
Thus, Volvo has access to both national & international trade aspects in appropriate
manner. It makes their business more profitable and competitive in market.

Advantages
Through national as well as international trade, firm is able to explore more new
opportunities for business expansion.
Evolving with both these trade assists countries to develop their status of economy at
wider scale (Petrauskiene, 2020).
Also, resources are used at optimum level when such trades are adopted by
organisations. So, AB/Volvo uses their resources in efficient manner at every phase of
activities.
Disadvantages
Developing countries are dependent on economy of developed countries. This leads to
exploitation of economy.
As trade is done at large amount of using natural resources, it has a deep impact on
sustainability in all the sectors within a country. So, to produce EV’s, Volvo has to use
resources at larger level.
Describe understanding of competitive environment and explain Porter five forces framework
Competitive environment-
In business sector, competition is rising at rapid scale which is affecting the growth as
well as development at deep level. Microeconomics refers to studying decisions related to
business as well as individual whereas macroeconomics is defined as analysis on decisions
made by countries across the globe. Both these have impact on business environment at depth
because decision making is done with different point of view. So, Volvo has been extending
their product line and network channel globally but with changing demand & needs of people
is being a difficult task. It is necessary so that firm is able to go with electric vehicles
effectively at wider aspect.
Porter Five Forces Model
This is framework which is adopted by many entities to analyse and determine degree
of competition in market within different industries. In relation with Volvo they use this tool
to implement appropriate strategies for firm. This comprises of various components which
are listed as follows-
Bargaining power of supplier- Power of supplier is high when there are only few
vendors for supplying resources in market, resource or raw material is valuable etc. These are
some factors which indicate the high power of vendors. In relevance with chosen entity,
power of supplier is low because business is globally available (Rahman, 2019).
Bargaining power of buyer- In this, buying power of selected enterprise is moderate
because there are numerous numbers of suppliers available through they get raw materials at

affordable rate. Also, as company has wide distribution of network, it becomes easier to look
for suitable vendors.
Threats of new entrants- In this, there are many new entrants of products of Volvo
which are threat for their old products. This is because as company is introducing new models
with better and higher prices in market, it is becoming more difficult to sell old products to
customers. As company is deciding to produce electrified vehicles, there are many new
entrants in same field such as Kia Soul, Tesla Roadster new etc.
Threats to substitute- In automobile industry, there are many companies which sell
low variants of cars and models to people. Also, selected entity itself replaces their old
products by new products. This affects the sales revenue of organisation because of which
threat of substitute is rising.
Competition rivalry- Further, there are many competitors of AB/Volvo in market
such as BMW Group, Audi etc. which compete for same purpose which is larger market
share growth & strong customer base. Hence, rivalry stimulates industries to focus on
enhance their performance as well as progress level for more profitability.
Discussion of criticism/ limitations of theory
 It is only useful or is used when structure of market is simple enough to understand.
At time of complex one, it becomes difficult to go through the process in smooth
manner.
 Also, it is suitable for traditional market structure but in case of today’s dynamic one
it fails (Montalván, 2019).
 Moreover, it is time consuming process which requires high level of skills & deep
understanding of market in and outs.
 This model also is not applicable to every industry because not all of them fits
properly to model factors either they are in positive or negative.
Examine knowledge of national and international aspects
National as well as international trades are responsible for growth & development of
country. This is because import of export of goods enhances and increases tax through which
government gains profit at higher rate of scale. Further, when industries go for these trades
decision making is done properly because running business in both area is not easy (Li,
2019).
There are many key players which affect such trades such as economy, government,
religion, culture etc. In relation with Volvo, their market is growth all over the world &
which allows them to expand their international business more at rapid level. Rational for
going with national and international trade is that it develops infrastructure of country
through various source of income, improve stability of economy in nation & many more.
Also, to analyse as well as to identify level of competition corporation adopts international
trade. Through this, there is ease access of raw materials, resources, networks, new
opportunities etc (Butt, 2019).

CONCLUSION
After a brief analysis of above report, it is analysed that electric vehicles increases
sustainability of business for longer period of time. So, to adopt the technology one needs to
be innovative & competitive at every aspect national & international. Also, Porter diamond
model has been discussed to analyse competition level. Further, aspect of trade is being
explained at depth. Porter five forces tool also has been adopted to examine degree of
competition in market appropriately. Hence, to deal with competition as well as rivals it is
crucial to take proper decisions & conduct market research.

REFERENCES
Books & Journal:
Widmer, 2017.Wireless power transmission in electric vehicles. U.S. Patent 9,561,730.
Mi, 2017.Hybrid electric vehicles: principles and applications with practical perspectives.
John Wiley & Sons.
Kang, 2017. Enabling localized peer-to-peer electricity trading among plug-in hybrid electric
vehicles using consortium blockchains.IEEE Transactions on Industrial
Informatics,13(6), pp.3154-3164.
Reinhardt, 2017, June. Macro environmental analysis of the electric vehicle battery second
use market. In2017 14th International Conference on the European Energy Market
(EEM)(pp. 1-6). IEEE.
Petrauskiene, 2020. Situation Analysis of Policies for Electric Mobility Development:
Experience from Five European Regions.Sustainability,12(7), p.2935.
Rahman, 2019. PESTEL analysis of Germany.
Montalván, 2019. Extending PESTEL technique to neutrosophic environment for decisions
making in business management.Neutrosophic Sets and Systems,27(1), p.20.
Li, Y., 2019, November. Research on the Influencing Factors of China’s Service Trade
International Competitiveness Based on Michael Porter diamond Model. In IOP
Conference Series: Materials Science and Engineering(Vol. 688, No. 5, p. 055053).
IOP Publishing.
Butt, 2019. Government’s role as moderator in relationship of porter’s diamond factor
conditions and firm’s performance.International Journal of Research in Business and
Social Science (2147-4478),8(6), pp.40-48.

Goldfarb, 2018.AI and international trade(No. w24254). National Bureau of Economic
Research.
Rivai, H.A. and Lukito, H., 2018. Impact of Government’s Support, Competitive
Environment and Customer-Oriented Business on Intention to Adopt Information
Technology (IT) in Small-Micro Enterprises (SMEs).Advanced Science Letters,24(5),
pp.3332-3336.
Nurlansa, 2016. Analysis porter’s five forces model on Airbnb.Elinvo (Electronics,
Informatics, and Vocational Education),1(2), pp.84-96.
Juliana, 2019. Factors Influencing Competitiveness of Small and Medium Industry of Bali:
Porter’s Five Forces Analysis.Russian Journal of Agricultural and Socio-Economic
Sciences,89(5).
de Rochambeau, 2017. Intra-national trade costs and economic isolation.International
Growth Centre Blog.