Environmental Analysis of Car Manufacturing 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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