Factors Affecting Electric Vehicles in the Automobile Industry

This report discusses the factors that affect the growth of electric vehicles in the automobile industry. It explores the PESTEL environment factors, Porter's Five Forces framework, and the national & international aspects. The report also provides insights into the competitive environment and limitations of theory.

Electric vehicles

Table of Contents
INTRODUCTION...........................................................................................................................1
Explain PESTEL environment factors at work in industry in relevance with case study......1
Discuss knowledge and understanding of theory...................................................................3
Provide knowledge of national & international aspects.........................................................3
Describe understanding of competitive environment and explain Porter five forces framework
................................................................................................................................................4
Discussion of criticism/ limitations of theory........................................................................5
Examine knowledge of national and international aspects.....................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Automobile industry from past many years have been gone through many drastic changes
and bring invention and innovation in their operations to emerge out as a global leading industry
(Montalván, 2019). Electric vehicles are a particular segment in automobile industry which
demand is increasing at constant rate. Present report has been made on Volvo, company offer
their services with having it’s headquarter in Sweden and strong base of distribution channel
network. In this report formative discussion has been made on factors in external environment
that have significant impact on business operations. Along with this Porter five force model is
also included in present report through which entity can evaluate different aspect and gain
significant advancements.
Explain PESTEL environment factors at work in industry in relevance with case study
PESTEL Analysis-
It has been identified that United Kingdom automobile industry is world famous and
recognised as leading sports car manufacturing industrial segment in which companies like
Jaguar, Volvo and other operate their services (Reinhardt, 2017). With having 71.6 million dollar
turnover automotive industry in the year 2015 emerged out as a leading industrial segment.
There are different types of factors that shape business environment of car manufacturing
industry which is being defined below with the assistance of pestle:
Political factors-
In this force like legislations, competition laws, policies related to automobile industry,
taxation policies and more are included. United Kingdom is offering stable and supportive
environment for car manufacturing industry and also provide assistance to weak player in
industry with the assistance of AAP (Automotive Assistance Programme). Due to brexit this
industry gets seriously affected. Along with this with the implementation of, Co2 emission law
by government also impact upon organisational functioning.
Economic factor-
It includes elements like distribution, inflation rate, interest rate, economic policies and
more. Organisations operate their services in car manufacturing industries are get highly affected
due to economic conditions prevailing in nation. This has been identified that United Kingdom
having high disposable income to which entity can maximize their profitability at great extent.
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Social Factors-
This element of pestle analysis includes aspects like household income, transportation,
beliefs, perceptions of individual and society. It has been identified that maximum number of
individual prefers to have their own personal car. Along with this younger generation are more
towards innovative cars. Thus, this creates opportunity for Volvo to maximize their sales. While
it has been underlined that due increase in price of fuel operations of auto-motive industry gets
affected. For this respective is entity is required to undertake strategies fulfil society and
individual needs in effective manner.
Technological-
According to given data, it has been identified that United Kingdom automobile industry
falls under one of the most unique and innovative producer of engine and cars as they take
maximum use of Co2 technology in the process of manufacturing. It has been identified that
they have newly formed a team known as NAIGT (New Automotive Innovative Growth Team)
which is having 20 year mission to develop technology roadmap for CO2 emission hydrogen free
cars. Along with this that has been identified that with the assistance of technology
manufacturing industry undergoes through various stages of innovation in order to fulfil
consumer expectations of having latest accessories and features.
Environmental-
In this factors like environment policy like CO2 emission, petrol, gasoline usage in
automobile sector is included that have capability to damage environment. It has been identified
that consumers now a days are more attentive towards environmental issues that can have
significant impact upon automobile industry. For this Volvo is required to undertake
environmental friendly measures in their manufacturing process of car as to fulfil growing
demand of environmental friendly vehicles in future.
Legal Factors-
Legal services like government policies related to control and manufacturing system, legal
laws and obligations and other essential policies are included. It is essential to abide by car
manufacturing industry. Along with it has been identified that there are certain global trends that
are imposed upon an automobile industry as manufacturing of car is developing at a rapid rate in
developing countries but most of the countries is having strict rules and regulations for quality
standards that require being follow by organisation.
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Discuss knowledge and understanding of theory
Porter Diamond Model
Factor Conditions-
In this different type of resources that may or may not available in the country are
included resources like human resource, natural resource, infrastructure resource etc. In this it
has been identified and due to brexit labour price increased that have capability to impact upon
Volvo. For this is in order to attract skilled, talented and experienced employees, company is
required to offer any benefits in order to grab more competitive advantage.
Demand Conditions-
In order to become Global leader it is essential for organisation is required to undertake
maximum competitive advantage in order to increase overall sales and profit revenue generation
capability of entity (Rivai and Lukito, 2018). For this company is required to increase size upon
factors like market growth rate etc.
Related supporting industries-
In order to become leading international supplier as to have easy access to acquire inputs
and resources Volvo is required to merge up with EV charging stations in order to provide one
stop centre for charge and chill experience.
Firm strategy, structure, & rivalry-
Competition is one of the most important factor to which entity can stimulated growth in
national and international market place. In context with Volvo leading competitors like Tesla,
Lexus, BMW, create competitive environment automobile industry.
Provide knowledge of national & international aspects
By expanding business operation in international market place entity can gain financial
stability. Both national and international platform offer wide range of benefits to business
organisation through which they can ensure maximum growth. It has been identified that Volvo
is having access to both international and national trade aspects which advantages and
disadvantages is further being define below:
Advantages
By performing operations in national and international base entity can gain advantage of
new and innovative opportunities to conduct their business operations. Along with it has been
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identified that it also allows company to have access for many resources through which they can
conduct the services and operations in effective manner.
Disadvantages
It has been identified that in many international locations there is strict rules and
regulation imposed by government for using natural resources which is having significant impact
on company operations. Thus, it is essential for Volvo to produce in order to undertake
advantage of resources at effective manner.
Describe understanding of competitive environment and explain Porter five forces framework
Porter Five Forces Model
Bargaining power of supplier- It has been identified that in automobile industry
bargaining power of supplier is comparatively low. As due to high competition suppliers want to
perform their operations with leading entities in order to ensure continuous growth. This creates
an opportunity for Volvo to negotiate raw material resources and other variable prices at
suppliers in order to gain maximum benefit.
Bargaining power of buyer- Automobile sector is having high bargaining power of
buyer. It has been identified that leading entities like Tesla, Audi and General Motors who are of
bringing innovative electric vehicles to customers that makes consumers to easily shift their
preference.
Threats of new entrants- It been evaluated that threat of new entrants is high in
automobile sector as in this new entrants are required to invest high capital in order to ensure that
sustainability and existence in marketplace (Li, Y., 2019). With the help of this opportunity
Volvo by investing maximum funds on innovation of electric vehicles can overcome strong
competition.
Threats to substitute- Due to increasing competition and existing leading players like
Tesla and General Motors there is high threat of substitution prevailing in automobile sector. As
these entities are offering affordable electric vehicles with advanced features to customers in
order to ensure phone competitive growth.
Competition rivalry- Due to of competitors like Audi, BMW and Tesla Volvo is facing
high competitive rivalry in respective sector. For this entity is required to invest in innovation of
affordable vehicles to customers with advanced features as to attract their attention towards
organizational offerings.
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Discussion of criticism/ limitations of theory
 It has been identified that nowadays business environment is dynamic and undergoes
with regular changes thus, model is only suitable for traditional market structure but fails
in today’s dynamic market segment.
 This is mainly what time consuming process and are not applicable to every industry.
Examine knowledge of national and international aspects
National and international trade act as an essential element for growth and development of a
nation, as in this process related to export and import of product and services undertaken through
which country can increase the taxation income through which government can gain significant
profitability. There are different types of benefits that are provided on both of the platforms
through which organisation can expand their rapid growth. For this it is require understanding
key aspects that are affecting business functioning in order to overcome competition and have
easy access to network, resources, raw material and opportunities. It has been identified that by
providing public EV charges through help of platform business model and offering battery
disposal services entity can get significant benefits. It has been identified that Sweden is
planning to bring fossil fuel free transportation system by the year 2030. This creates an
opportunity for Volvo to set up their business with high profitable advantages.
CONCLUSION
As per the above mentioned report it has been concluded that, there is significant increase in
demand of electric vehicles from past many years due to world change in shift towards
environment sustainability. In this technology provide great assistance through which business
organisations can undertake advantage of many environment friendly measures to produce cars.
For this with the assistance of PESTLE and Porter Five Force analysis entity can overcome
threat factors and can gain significant advantage from prevailing opportunities to increase overall
profitability and productivity at great extent.
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REFERENCES
Books and Journals
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.
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.
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