Environmental Analysis of Automobile Industry - The Global Business Environment Assessment-1

This report provides an environmental analysis of the automobile industry using SWOT analysis, PESTLE analysis, Porter's Five Forces Model, Value Chain Model, and VRIO Model. It includes a discussion of the internal and external factors affecting the industry, as well as recommendations for future growth.

The Global Business
Environment
Assessment-1

Table of Contents
INTRODUCTION ..........................................................................................................................3
SWOT Analysis:..............................................................................................................................3
PESTLE Analysis:...........................................................................................................................4
Porter's Five Forces Model:.............................................................................................................5
Value Chain Model:.........................................................................................................................6
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Global business environment is defined as the environment in different sovereign that is
beyond the scope or control of any countries or community. It is majorly impacting the overall
functionality of the business. It is also vital for the firms to have the effective consideration of
the market by which they can establish good brand image across the globe. Aston Martin is the
British manufacturer of luxury sports cars. The company is founded in 1913 by Lionel Martin
and Robert. The headquarter of this company is in Gaydon, Warwickshire, England. This
respective report will analyse the internal and external environment with the helps of applying
SWOT analysis, PESTLE analysis, Porter's five forces, Valuer chain model and VRIO model.
SWOT Analysis:
It is the strategic toll which helps in understanding the internal capabilities of the business
by which they can also analyse strength,weakness, opportunities and threats of the company. In
context to Aston Martin, this is explained as follows:
Strengths Weaknesses
 Aston Martin is having the strong brand
image across the globe with their
effective sales power as well.
 They are having world class design and
engineering topped with stellar
execution.
 Aston Martin is using innovative
technological features in their
operations to offer better products.
 They are having limited number of
suppliers which become the weakness
foe them in order to get the sub-parts in
an sufficient amount.
 Risk is being associated with the
geographical growth strategy which
also existing in the business
environment.
 Aston Martin is having higher
dependency on their dealers for the
further sale and their promotional
activities.
Opportunities Threats
 They can do the transition form the
hardware to the software driven devices
 The big threat for the company is high
fuel consumption of their car model

by which they can grab the new market
segment.
 Aston Martin ca n move their product
line to Electric vehicle market due to
increasing demand for the same.
which tends to have greenhouse gas
emissions.
 There is huge unpredictable
development in the emerging markets.
PESTLE Analysis:
It is the framework which assess the political, economical, social, technological, legal and
environmental factors that are impacting the overall functionality of the business in the large
market. By this, an organisation can make the required change in order to sustain in the
competitive market. In consideration Aston Martin, PESTLE Analysis is explained below:
 Political factors: These are the factors which is related to the government controls and
influence over economy and includes trade tariffs, taxation, fiscal policies and conflicts.
In context to Aston Martin, the car manufacturer in UK are currently meeting up
ministers and seeking financial helps in order to re boast their industry. As per the Sunday
times, the government was evaluating options in order to boost sales that includes the
loan guarantees for cars. The other consideration of the business is future auto mobile
industry which is depends upon the large extent on short term financial helps from the
government.
 Economical factors: These are the factors which is having direct impact on the long term
prospective of the company and includes inflation rate, unemployment rate, interest rate,
foreign exchange etc. in consideration to Aston Martin, there is the negative impact of
credit crunch and the industry is facing smallest sales figure which leads to have slow-
down in their overall operations.
 Social factors: These are the factors which includes the demographics, culture, consumer
buying pattern, health, opinions and attitudes of the individual. In context to Aston
Martin, due to down turn in the overall economy by which people usually are more
concern while purchasing luxury goods towards their corporate social responsibility of
the company.

 Technological factors: These are the factors which includes the automation or change in
the technology which is leading to have more impact over the sale of the company that
also includes the communication, technological development etc. In context to Aston
Martin, as of 12th largest manufacturer of vehicles around the world, they are known foe
their new designs, process and technological innovation centre. However, Research and
development budgets remains the same foe the company by which they can ensure higher
profitability.
 Legal factors: These are the aspects which affects both the internal and external
environment. It includes the employment law, consumer law, regulatory bodies and the
environmental regulations. In consideration to Aston Martin, the legal consideration
applied on the company is being divided into two major categories which are regulations
on import and also related to the export of the vehicle. In comparison to other countries,
the UK taxation law is lenient for the auto mobile manufacturer.
 Environmental factors: These are the factors which includes the physical environment
and the general protections. It is vital to have the contribution to the social welfare or the
environmental consideration foe ensuring safety of the natural resources. In respect to
Aston Martin, the current trends s that the customer is demanding more fuel effective
vehicles in term of saving point of view as well as green living point of view. Thus,
manufacturers have make difficult choice whether to have fuel effective cars by
compromising on horse power or to have high power with more consumption of fuel.
Porter's Five Forces Model:
It is the model that identifies and analyse the five competitive forces which shape the
industry by determining the strength and weakness of every industry. This helps in analysing the
competition within the industry and ensures higher level of profitability. In context to Aston
Martin, there are five factors of this model which are given below:
 Power of Competition : In the emerging market, there are large number of firms who
are operating in the market and also meeting the competitive edges. When so many sports
car are operating the fast lane, the bargaining power of competitions leap out. All the ultra
high end vehicles are being produced by the car manufacturers as there is huge
competition. There are other brands which are dominating the market of Aston Martin by
offering luxury cars.

 Power of suppliers: These are the individuals who are engaging in supplying the factors
of production to the business so that all the order can be timely fulfilled by the
companies. In context to Aston Martin, The UK auto-mobile company is divided into
component and manufacturer segment. As per the government statics, there are 2,600
manufactures in the UK from different countries who are serving to auto-mobile industry.
But due to competitive factors within the suppliers market, they are not having very
strong bargaining power but some the presence of the company give the power to the
supplier to bargain at the given point of time.
 Power of customers: In the large market there are consumer who is having perfect
knowledge of the market and also having their changing demand in the large market as
per the current market tends. It is said that consumer is the king and in auto mobile sector,
there are wide range of high end luxury goods to choose the best vehicle for their own
use. The ultimate power lies with the customers and they are having high power in the
market.
 Threat of new entrants: These are the new firms which are offering better products in
the market and when taking the consideration automobile industry, the investment
required to open their own auto mobile company is so high which leads to have little
threat from the entry of new firms in the market.
 Threat of substitute products: These are the type of goods which can be replaced by
other products as these are giving same level of satisfaction in the market. The luxury
cars are segmented as the luxury not the necessity. So the basic ned of the individual can
be fulfilled by any car below the GBP 20,000 range. Thus the factors which differentiate
the car lies in the perception of the customers to any of the car brand. Thus, competition
from car brand such as Lamborghini can apparently satisfy the same need.
Value Chain Model:
It is the business model which describe the full range of various activities tat are needed
in order to create the products ad services in the market. In context to Aston Martin, these are
explained as follows:
Primary Activities

These are the activities which is having five components and all the essential for value
added and also creating the competitive advantage in the market. In relation to Aston martin five
factors are given below: Inbound logistics: It includes the receiving, warehousing and the managing the overall
inventory which is needed for producing the luxury car of Aston Martin. Operations: It includes all such factors which is considered by Aston Martin for
converting the raw material in a finished goods for say a luxury car. Outbound logistics: It includes the certain distribution channel by which the cars of
Aston Martin can be reach to the final users. Marketing and sales: It involves the certain strategy which helps in enhancing the
visibility and target the appropriate customers which includes advertising, promotion and
pricing of the cars.
 Services: It includes the programs to manage the products and enhance the consumer
experience. In context to Aston Martin, this includes the maintenance, repair , refund and
exchange.
Support Activities:
The main role is to support the primary activities which is more efficient when the one of
the activities increase its efficiency out of four, it benefits at least one of the primary activities. Procurement: It is the basis on how the company is procuring or obtains raw material in
order to have better goods. Technological development: It is the technological development which is also leading to
have better products within the organisation and Aston Martin can meet the competitive
edges in the market.
 Human resource management: It is related to the hiring and retaining of the employees
which can fulfil the firms strategy and gradually helps Aston Martin to promote and sell
their product.
VRIO Model:
This model is about a resource or capabilities to understand its competitive potential and
the VRIO frameworks looks at value, rarity, imitability and organisation. This is related to the
main consideration of the business which needs to be analysed. In context to Aston Martin,
VRIO analysis is given below:

 Valuable: These are the resources which is having highest value within the operation
and they are giving strength to the company. In context to Aston Martin, the financial
resources of the company are highly valuable and this also helps in investing into external
opportunities which are rises. Financial resources helps in having the major consideration
in the market in adopting new technology and also can have the innovation as well.
Moreover, the patent are valuable as these allow the company to sell its product without
any competitive interference which leads to generate higher revenue.
 Rare: The employees of Aston Martin are rare as they are highly trained and skilled
which are giving their best in attaining the organisational goal. This also leads to have the
higher profitability with the more efforts of the employees.
 Imitable: In relation to Aston Martin, the distribution network is very costly to imitate by
its competitors. This has been developed over the years and competitors have to invest
more amount if they are to imitate a similar distribution system.
 Organisation: The financial resources of Aston Martin are well organised and they can
be further used to invest at the right time when they are needed in order to get new
technology or process.
CONCLUSION
This is concluded from the above report that external and internal factors have the
significance impact on the overall functionality of the business. For accessing internal
environment, SWOT and VRIO analysis is being is being conducted by which company can
access the valuable factors as well. Moreover, PESTLE analysis is being conducted in order to
understand the impact of various factors on business.

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