Environmental Analysis of Automobile Industry - Desklib

This report covers challenges that are faced by organisation from internal and external business environment. Furthermore, Swot analysis, Pestle analysis, Porter's five forces and value chain analysis is explained in the context of Aston Martin organisation.

Environmental Analysis
of Auto mobile Industry

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
PESTEL analysis.........................................................................................................................3
SWOT analysis............................................................................................................................4
Porters five forces model............................................................................................................5
Values Chain Analysis ...............................................................................................................6
Porters generic strategies ............................................................................................................7
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Environmental analysis is defined as strategic tool that consist various activities such as
identifying internal and external elements of environment that have power to affect business
performance and functionality (Al-Shami and Rashid, 2021). Proper analysation of these factors
enable business to take effective decisions and formulate strategies that helps business to attain
determined goals and objectives on time with great efficiency. Auto mobile industry comprises
various organisations that involve in designing, manufacturing, marketing as well as selling
motor vehicles. In this report chosen organisation is Aston Martin which is British independent
sports car manufacturing organisation established in 1913 by Lionel Martin and Robert Bamford.
Headquarter of organisation situated in England, United Kingdom. This report covers challenges
that are faced by organisation from internal and external business environment. Furthermore,
Swot analysis, Pestle analysis, Porter's five forces and value chain analysis is explained in the
context of Aston Martin organisation.
TASK
PESTEL analysis
PESTEL analysis is an external analysis which helps business to identify factors which create
impact on company and present outside business (Levner and Ptuskin, 2018). It consist different
factors like interference of government on business, economic factors, factors related to society,
technological up gradation, laws and regulation and many more. Explanation of these factors in
context of Aston Martin are mentioned below:
Political factors: Political factors create various impact over Aston Martin as due to Brexit,
there is uncertainty occur in political environment of UK and government of UK has made
various changes in their rules and regulation. These changes in rules create problems for
company as they needs to consider these factors. Due to increasing inequality in UK, there is
various changes occur in taxation policy which create impact over profit of company. Local
government are also containing carbon footprint in taxation policy which create impact over
company
Economic Factors: Economic factors are those factors which are related to exchange rate,
interest rate, labour rate and can be impacted on cost of company. Skilled labour in UK are
available in high numbers which create opportunity for Aston Martin to provide quality products

to their customers. There is high risk due to change rate which can create impact on creative and
investment of company.
Social Factors: Social Factors are those factors which are connected culture, values of society. It
create impact over business of Aston Martin as there is changes in preferences of customers
(Mengtian and Luyang, 2017). There is also rise in disposable income of people living in UK
which provide opportunity for business as they can sell their luxury cars to their customers.
There is also growth in used car market which create threat for Aston Martin as it does not allow
people to live in their market.
Technological Factors: Technological factors are those factors which are related to
technological advancement, up gradation and innovation which provide growth to business of
Aston Martin. This organisation is focusing on enhancement of experience of customers with
offering of increasing speed as well as access. There is used of advance technology in Aston
Martin which provide them opportunity to expand their marketing share.
Legal Factors: Legal factors are those which consist different rules, laws, regulation for
business. It is an important factors which can create negative impact over survival of business.
There are different types of laws are present in UK which is to be consider by mangers of Aston
Martin as it allow them to conduct their operation without any problems. These laws are related
to environment protection, data protection, employment laws.
Environmental Factors: Environment factors are those factors which are related to pollution,
climate condition and corporate social responsibility of business (Panigrahi, 2021). There is
increasing awareness in people of UK related to environment which can create impact over
business of Aston Martin. There is various regulation over this organisation related to
environment and in order to overcome of this, company needs to invest more on their operation
to reduce pollution and carbon footprints that results in increasing cost of company.
SWOT analysis
SWOT is an internal external analysis tool which helps an organisation in strategic planning and
strategic management. It helps to identify various factors like opportunity, strength, threat and
weakness. SWOT analysis of Aston Martin helps to identify various factors which are mentioned
below:
Strength Weakness

 Aston Martin is an organisation which
has its long history as company has
been started in the year 1913.
 It is focusing on providing designing
team and heavy duty manufacturing
which create opportunity for company
(Ravi and Shankar, 2017). They ensure
to build powerful, coveted and perfect
car for every people and emphasis on
increasing performance and good
quality of products and service.
 This organisation is producing luxury
cars and targeting to affluent class
which helps them to get profit as well
as increase purchase values for
customers.
 Aston martin has lover marketing share
in compare to other companies as their
main focus is on luxury market and not
trying to expand to other target market.
 Aston martin has small selection range
as they only have few model which are
available at time. It limits choices of
customers although company is
providing best quality of products and
service to customers.
Opportunity Threat
There is increasing demand of Budgeted auto
mobiles and it is high time for company to
expand their market share by providing their
products in mass market (Shalender and
Yadav, 2019).
Company can expand their availability in
different place. Aston martin is providing their
products in different country but to penetrate
their needs, business needs to work on
expanding themselves.
 There is increase in prices of petroleum
products which boost market of electric
car and threat threat for Aston Martin.
 Increasing competition is another
factors which create threat for company
as it does not allow them to increase
their marketing share. There are various
competitors are present of Aston Martin
including Jaguar, Bentley, Porsche and
others.

Porters five forces model
Porters five forces model is one of business analysis model which helps company to
understand different levels of profitability of company. This model is introduced by Michael E.
Porter in the year 1980. It consist five factors which in context of Aston Martin is mentioned
below:
Bargaining power of supplier: Auto mobile industry of UK is dividing among
manufacturing segment and component segment (Teoh and Gaur, 2018). There are around 2600
component manufacturing which is of different range are present in UK. It reflect that there are
high competition in supplier market which reduce bargaining power of supplier.
Supplier power of customer: Customers are important for business and Aston Martin is
providing services in luxury and high market where there are various of customers are available
in market. In this situation, power of customers is high for Aston Martin as customers as there
are various of options available to customers in market.
Competition: Competition in Auto mobile industry is high as there are various producer
of sports car. All these customers are providing high quality of products to their customers and
also earning profit. But still, Aston is competing in market in effective manner and considered
among top 10 car manufacturing companies. So, they has moderate threat from this factors and
create impact over operation of company.
Threat of substitute: Luxury car segment is one in which products are purchased by
customers for their luxury not as necessity (Thakker and Rane, 2018). Basic needs of customers
can be satisfied by any organisation and business can differentiate their products in terms of their
services. There is moderate threat of substitute for company as different brands are offering same
services.
Threat of new entrants: Aston martin is providing their products in Luxury auto mobile
segment where huge investment is required. So it is not easier for a company to enter in this
industry as company has low threat from this factor.
Values Chain Analysis
Value chain analysis: Value chain analysis is considered as the process that involved
various activities that are related to the changing input into output that have extreme value for
customers (Yu and Zou, 2017). Aston Martin conduct value chain analysis through examining
each step of production process that is required to develop products as well as identifying the

ways that enable organisation to enhance overall efficiency of the chain. There are various
primary and secondary activities are included in value chain analysis that are mentioned below:
Primary activities: Inbound logistics: Inbound logistics is the primary activity of Aston Martin that is
associated with receiving, storing as well as disseminating inputs of products. Respective
organisation outsource various inbound logistics activities like warehousing, material
handling and receive store costumer information from different digital media
organisations. Operations: Operations include various activities that is related to transform raw material
into finished products that have value for customers. Aston Martin manufactures cars
according to needs and demands of customers. Marketing and sales: Aston Martin conducts various marketing and sales activities to
attract buyers and influence them to purchase organisational products. Respective
organisation conducts various advertisements, promotions and and pricing activities to
gain higher customer base. Outbound logistics: It is related to the distributing finished products and services to
customers through a channel of partners. Aston Martin creates distribution network and
schedule to provide products to customers on time.
Supportive activities: Firm infrastructure: It is the supportive activity of Aston Martin that is related to
managing legal services, financing and accounting, quality management and planning.
These activities enable business to run all operations in efficient manner (Zhang and Li,
2021). Human resource management: Human resource are the key of business success. Aston
Martin conducts various activities to recruit skilled candidates, training and development
and provide the appropriate compensation.
 Technology development: In current competitive environment it is necessary for
organisation to develop technology in order to gain competitive advantages. Aston Martin
use technologies such as field testing, component designing, process engineering and
various other.

Porters generic strategies
Porters generic strategies are those which are emphasising on how a companies can get
competitive advantage in market. There are mainly three strategies to be included in this model
including cost leadership, differentiation as well as focus strategies. These strategies in context
of Aston Martin are mentioned below:
 Cost leadership: Cost leadership is one of strategy in which a firm can get competitive
advantage by reducing their prices and be a low cost produce in market. This factors
require adoption of new technology which allow firm to reduce their cost of
manufacturing and increasing numbers of products to be sell by company in market.
 Differentiation: Differentiation is another strategies which allow firm to differentiate
their products and service from those of competition. Aston Martin is developing its
unique image in minds of their consumers and developing different products as per
requirement of customers.
 Focus strategies: Focus strategies is one which depending on competitive scope within a
industry. Aston Martin can follow this strategy by focusing on cost or by focusing on
differentiation.
CONCLUSION
From above mentioned project report, it can be concluded that environmental analysis is
important for any organisation as it helps them to identify different factors which can create
impact over operation of company. These factors are present in internal as well as external
environment. In order to identify these factors, company can conduct different analysis like
PESTEL analysis, SWOT analysis, Value chain analysis, porters five forces model, porters
generic strategies. PESTEL is an external environment analysis which helps business to identify
factors like government stability, laws and regulation, economy growth technological
advancement and many more. SWOT is an internal external analysis which helps business to
identify strength in order to get advantage to opportunity and identify weakness to identify
threat. Managers of company also conduct porters five forces model which helps them to analyse
industry and different components of industry.

REFERENCES
Books and Journals
Al-Shami, S. and Rashid, N., 2021. A holistic model of dynamic capabilities and environment
management system towards eco-product innovation and sustainability in automobile
firms. Journal of Business & Industrial Marketing.
Levner, E. and Ptuskin, A., 2018. Entropy-based model for the ripple effect: managing
environmental risks in supply chains. International Journal of Production
Research, 56(7), pp.2539-2551.
Mengtian, C. and Luyang, L., 2017, April. The policy performance evaluation of new energy
automobile industry based on DEA method. In 2017 3rd International Conference on
Information Management (ICIM) (pp. 1-5). IEEE.
Panigrahi, R., 2021. Evaluating level efficiency versus growth efficiency in the Indian
automobile industry in a non-parametric DEA approach. Global Business
Review, 22(4), pp.963-976.
Ravi, V. and Shankar, R., 2017. An ISM-based approach analyzing interactions among variables
of reverse logistics in automobile industries. Journal of Modelling in Management.
Shalender, K. and Yadav, R.K., 2019. Strategic flexibility, manager personality, and firm
performance: The case of Indian Automobile Industry. Global Journal of Flexible
Systems Management, 20(1), pp.77-90.
Teoh, C.W. and Gaur, S.S., 2018. Environmental concern: an issue for poor or rich. Management
of Environmental Quality: An International Journal.
Thakker, S.V. and Rane, S.B., 2018. Implementation of green supplier development process
model in Indian automobile industry. Management of Environmental Quality: An
International Journal.
Yu, N. and Zou, B.Q., 2017. Assessment and Application of Energy Saving and Emission
Reduction of Automobile Parts’ Green Design. In Civil Engineering and Urban
Planning: Proceedings of the 5th International Conference on Civil Engineering and
Urban Planning (CEUP2016) (pp. 1089-1097).
Zhang, X. and Li, W., 2021. Research on Innovation Promotion and Application of Guangzhou
New Energy Automobile Industry. In E3S Web of Conferences (Vol. 292). EDP
Sciences.