Environmental Analysis of Car Manufacturing Industry

This report analyzes the major forces influencing the business environment of the car manufacturing industry, discusses the reasons for the production of electric cars, and explores new and emerging business opportunities in the industry.

Environmental Analysis
of an industry

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK A...........................................................................................................................................1
Major forces influencing business environment of car manufacturing industry.........................1
Organisational changes which may take place in future..............................................................3
Reason for production of electric cars.........................................................................................4
TASK B...........................................................................................................................................4
New and emerging business opportunities..................................................................................4
Auto-mobile business that may not be profitable for a long run.................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Environmental analysis can be determined as a strategic tool that is a process of
identifying all the external and internal elements that can effect the operations of an organization.
The analysis helps an organization in determining the level of threat and opportunity factors
which may influence organizations performance. Present report is based on Volvo group, which
is a multinational manufacturing company headquartered in Sweden (Grant, 2016). Company
deals in production, distribution and sale of several auto-mobile products which includes trucks,
buses and cars. This report includes major forces influencing the business environment of a car
manufacturing industry. Further this report contains the reason for drive towards a production
of electrification of cars. Lastly, this report consist of emerging business opportunities which
may arise with the production and marketing of electric cars.
TASK A
Major forces influencing business environment of car manufacturing industry
Auto-mobile industry is a huge industry involving several multinational company which
is influencing the economy of their countries, but there are several external and internal
environmental factors which may influence the business of auto-mobile companies. Volvo is a
huge brand dealing in global market and offering its products in all the major geographic regions
like India, US, Australia, etc. This makes the brand more effective by making its products
available to maximum number of consumers.
Volvo is introducing a new innovation and change in its product range of cars by
bringing electrification in the cars. These electric cars are being planned by the company in order
to achieve its future objectives in the current market, but there are several environmental factors
which can influence electrification which can be analysed with the help of porters 5 forces.
Porters 5 forces is a model which is used for analysing company's competitive position in the
market (Halperin and et.al., 2017).
Porters 5 forces includes several forces which includes barriers to entry, threats of
substitutes, competitive rivalry, bargaining power of buyers and bargaining power of suppliers
which can help Volvo in identifying and analysing the factors affecting an electrification of cars.
 Barriers to entry: This factor helps an organization in measuring easiness and
difficulties which can be faced by new entrants to enter into the industry. Major barrier to
entry into market of electric car is cost, which is involved at a high level, but Volvo is a
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well equipped company with sufficient financial resources which can help the company
in entering into market of electric cars. Another issue which can influence Volvo is
access to production inputs and financing which must be considered by the company
before the manufacturing of electric cars. Volvo is having a good access to distribution
channel which is the most important advantage for the company as they can offer their
new product, electric cars to maximum number of consumers with the help of diversified
distribution channel. It is a positive aspect for Volvo to enter into market of electric
vehicles as the company have all the necessary resources which are required in producing
and distributing electric vehicles.
 Threats of substitutes: A company can determine the substitutes available in the market
for the products which are being offered in the market by the company, this can help in
analysing the market by determining all the substitutes available in the market. Volvo
needs to analyse the cost of electric cars in order to compare it with other substitutes
available in the market. It is essential for the company to determine all those things which
can be prevented by the customers to buy substitute products and move forward with
product produced by the company. The price performance trade off of the substitutes
must be considered by Volvo before electrification of new products which are to be
introduced by the company. The substitutes available in the market for electric cars
consist of Tesla and Nissan which are to be considered while pricing and marketing of
the products (Takata, 2016).
 Competitive rivalry: This force helps a company to analyse the level of competition
between the existing competitors in the market. Rivalry among the auto-mobile
companies has become highly intensive in a certain period of time, although Volvo is the
most recognisable brand for its products. As most of the companies like BMW,
Volkswagen, Porsche and Nissan have already announced for a mass investment in
electric car segment, it is necessary for Volvo to consider these rivals as they can effect
the market of electric cars. Some of the companies are already involved in production of
electric cars which are to be undertake by the company in order to achieve desired
objectives from the electric cars segment. This can be a negative aspect for the company
as it can directly compete with the vehicles which are already in the market, so the
company needs to bring some uniqueness in its electric vehicles segment.
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 Bargaining power of buyers: Bargaining power of buyers in electric vehicles industry
is significant. Price sensitivity is an important factor which can effect the bargaining
power of buyers. In an environment where competition is at its best and it is from well
recognised auto-mobile companies, pricing is to considered by Volvo as it is much more
expensive than other companies which can effect the bargaining power of consumers.
Another aspects which can effect bargaining power of buyers is their ability to go for
substitute products through extent of product differentiation between various electric
vehicles manufacturers (Mathooko and Ogutu, 2015).
 Bargaining power of suppliers: It can be recognised as the relationship of suppliers
with the company. Volvo is a multinational organisation with a huge distribution channel
that consist of several suppliers which is a positive aspect for the company in order to
offer its new modified products to reach maximum number of consumers with the help of
diversified distribution channel. Electric vehicles distribution can be challenging for
Volvo as it will require number of suppliers who are ready to supply the new product in
the market and only those suppliers are to be approached who have a good approach in
the market and that can offer the product to maximum number of buyers (Takata, 2016).
Through this analysis, it can be understand that auto-mobile industry is being evolved
with the time on a regular basis. It has adopted several changes in order to meet all the aspects of
customer satisfaction through which he customers can be attracted and desired objectives of the
companies can be achieved.
Organisational changes which may take place in future
In order to apply electrification in the products of Volvo, company needs to implement
some changes in the organization through which objectives of the company can be achieved
easily. These changes may effect the operations of the organisations as it is difficult for an
organisation to adapt such changes for the purpose of electrification. The major change which
can take place for the purpose of electrification can be technological changes which can
significantly pressure the company to change its workforce as per the technology which is going
to be consumed for the purpose of electrification. Skilled workers can be required for the new
technology who are having sufficient knowledge of these technological machineries which are
going to be used for the purpose of electrification (Weiss and et.al., 2015).
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Reason for production of electric cars
In a recent period of time, innovation in the auto-mobile industry had been seen in past
few years and these innovations take place on a regular basis. These changes includes from the
evolution of vehicles which are being produced by different companies have their unique selling
proposition which make them to stand different from other competitors by bringing something
unique in their products and services. This may result in increase in sale of a particular company
with the innovations introduced by a specific company. A huge competition has made essential
for the companies to undertake such innovations in their products in order to survive in the
market and industry of auto-mobile (Onn and et.al., 2017).
These innovations and modifications in their products make the companies stand unique
and different from others. This helps an organisation in taking a position in auto-mobile industry
by the companies to gain a competitive advantage. This can help a company to survive for a long
period by modifying and innovating its products on a regular period of time. Changes are
essential for an organization as it can help the organisation in gaining a competitive advantage
with the help of changes that have already taken place in the industry.
TASK B
New and emerging business opportunities
There are several new business opportunities being generated with the electrification of
vehicles by the auto-mobile industry through production and marketing of electric cars which
can be grabbed by entrepreneurs and business executives. New products bring new ideas, and
new ideas bring new opportunities for a business which can hep a company to expand and
diversify its range of products by obtaining that opportunity. Volvo is a company which is
having sufficient resources which can help the company to expand its business by obtaining new
opportunities which can be grabbed by the company I order to expand its business after the
introduction of electric cars by Volvo.
There are number of businesses created with the electrification of vehicles. As new
vehicles needs different requirement of equipments and resources which can help an individual
or a company to start a business related to electric cars in order to attract a new consumer base
for a new product which is being introduced in the form of electric cars (Onn and et.al., 2017).
Electric cars can capture automotive markets as Volvo and many of the companies are
involved in the production and distribution of electric vehicles which results in developing
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electric car business opportunities. These business opportunities can be grabbed by Volvo in
order to increase its range of products by brining in new product or service with electric vehicles.
The business opportunities which can be generated are as follow:
Electric Vehicles charging station
The vehicles which operates and move with electricity needs to be refilled when the
battery is discharged, so charging stations for a electric vehicle is a good opportunity for Volvo
in order to increase its range of services. Charging stations can be installed and developed as per
the standards which are being accepted in the area where it is to be installed (Raslavičius and
et.al., 2015).
Electric car servicing garage
Electric cars are being manufactures in a different manner than normal cars which works
on fuel, so the technical skills required in the servicing of electric cars may differ from servicing
of fuel based cars. Electric vehicles need special skills for servicing that consist of motor repair
and inverter repair which can be offered by Volvo as a new service.
Electric Vehicle Blog
In a recent period of time, blogging has evolved on a consistent basis where presently,
blogging has become a source of income for many of the people and it is being seen as a
business opportunity. Volvo can start a blog related to electric vehicles which includes several
aspects such as news regarding electric vehicles, technologies innovation, etc. This can also
generate income by advertising and affiliate marketing (Luthra, Garg and Haleem, A., 2016).
Online shop for electric spare parts
The operations of business are being evolved in a recent period of time, the way of
distribution of goods whether it be tangible or intangible, everything is available online through
internet websites. This has made convenient for the companies to offer its products to a large
number of people with the help of several aspects of digital marketing which includes marketing
and distribution through social media, online websites and mobile application which has made
convenient for the both consumers and sellers.
Volvo can start a business of electric vehicle reselling through mobile applications which
is a new concept for electric vehicles that can be beneficial for the company as no such
application is being formed and this can also help to approach new customer base and offer new
electric cars of Volvo directly with the used cars.
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Another concept of online business can include spare parts of electric vehicle. Fuel based
cars use totally different equipments than cars that work on electricity and the parts are not
usually available online, so Volvo can undertake this idea of selling spare parts of electric
vehicles online with the help of mobile application. This is a cheap method through which
company can offer its products globally in a more convenient manner to achieve the desired
objectives which the company might have from the new business.
Electric car battery shop
Electric cars requires batteries to work and survive. They are of no use if the batteries are
being expired of its not working properly which could prevent the vehicle to work and the
vehicle is of no use without battery. So, Volvo can introduce a battery outlet for overcoming this
issue of battery by making batteries available at retail stores so that maximum number of
consumers of electric vehicles ca approach the outlet for the purpose of battery exchange.
These opportunities are essential to be considered while launching electric cars as it can
help the company in diversify their business by bringing a new range of products which also
helps in creating a new customer base.
Auto-mobile business that may not be profitable for a long run
In order to start a business, it must have a proper business plan which must contains of a
feasibility study that the business can survive for a long term or not. Idea of electric vehicles
charging station is to be studied a bit as it can have several consequences of failure in the coming
future. Many of the car developing companies are involved in preventing the refiling of battery
as it consumes too much of time and reduces the performance of engine. These companies are
bringing in such technology where cars are not be refilled again and again, and it works
consistently on a regular basis by self charging. Self charging is to be introduced by many of the
companies where cars will be charged automatically as they move with the help of technology.
This is to be considered by Volvo in order to start a new business and grab the opportunity of
building a charging station for electric vehicles. It is essential for Volvo to conduct a feasibility
study in order to start any of the new business which is being generated by launching of electric
vehicles (Nallusamy and et.al., 2016).
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CONCLUSION
From the present report it can be concluded that environmental analysis is an essential
part of business which helps in determining the internal and external factors that influence the
business. Further this report concludes that there are several major forces which shapes the
business environment of car manufacturing company, this can be determined and analysed by
porters 5 forces which is being described in the report and from which all the factors affecting
business environment of electric vehicles are determined. Lastly this report concludes that there
are several business opportunities are being generated with introduction of electric vehicles
which helps emerging entrepreneurs to start their business by grabbing the opportunity.
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REFERENCES
Books and Journals
Ciambrone, D.F., 2018. Environmental life cycle analysis. CRC Press.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Halperin, I. and et.al., 2017. The effects of attentional focus instructions on punching velocity
and impact forces among trained combat athletes. Journal of sports sciences. 35(5).
pp.500-507.
Luthra, S., Garg, D. and Haleem, A., 2016. The impacts of critical success factors for
implementing green supply chain management towards sustainability: an empirical
investigation of Indian automobile industry. Journal of Cleaner Production. 121.
pp.142-158.
Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management. 29(3). pp.334-354.
Nallusamy, S. and et.al., 2016. Environmental sustainability evaluation for an automobile
manufacturing industry using multi-grade fuzzy approach. In International Journal of
Engineering Research in Africa (Vol. 19, pp. 123-129). Trans Tech Publications.
Onn, C.C. and et.al., 2017. Vehicle electrification in a developing country: Status and issue,
from a well-to-wheel perspective. Transportation Research Part D: Transport and
Environment. 50. pp.192-201.
Raslavičius, L. and et.al., 2015. Electric vehicles challenges and opportunities: Lithuanian
review. Renewable and Sustainable Energy Reviews. 42. pp.786-800.
Takata, H., 2016. Effects of industry forces, market orientation, and marketing capabilities on
business performance: An empirical analysis of Japanese manufacturers from 2009 to
2011. Journal of Business Research. 69(12). pp.5611-5619.
Weiss, M. and et.al., 2015. On the electrification of road transportation–A review of the
environmental, economic, and social performance of electric two-
wheelers. Transportation Research Part D: Transport and Environment. 41. pp.348-
366.
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