Environmental Audit- Individual Management Report

Running head: ENVIRONMENTAL AUDIT
Environmental Audit- Individual Management Report
Name of the Student
Name of the University
Author notes

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ENVIRONMENTAL AUDIT
Executive Summary
This the report that have the internal and external environmental analysis of the company
Audi. The report aims to analyse the factors that affects the business contexts of Audi in
different business environment. The analysis has been done by using a number of business
analysis tolls like PESTKE, SWOT and Porter’s Five Forces analysis. The evaluation gives a
clear idea of the market factors that are unique for the company. Political and technological
factors influences the operations of Audi to a certain level. The technological advancements
and financial resources of the company are the most important part of the business of the
company. At the same time, there are various aspects in the business of Audi that need to be
improved. One of these are the research and development works. Again, the market
competition is a great challenge for the company dealings.

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Table of Contents
Introduction....................................................................................................................3
Analysis of the organization’s external business environment – macro factors
(PESTEL Framework)...............................................................................................................3
Analysis of the sector/industry through Porter’s Five Forces model.............................6
An analysis of the Organization's internal business environment –VRIO framework. .7
SWOT............................................................................................................................8
Conclusions....................................................................................................................9
References....................................................................................................................10

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Introduction
Analysing the environment in which the company is performing or going to perform
is an integral part of business management. The main objective of analysing the environment
of the business is to understand the trend of the market while targeting the customers for sale.
The products and procedures of a business is decided according to the business environment
the company is working in. this is crucial for both the new and existing companies in the
market. The new companies will need to have environmental analysed and examined before
entering the market. This gives them the idea of the risks and the way to mitigate them. On
the other hand, the existing companies have to have a regular environmental audit in order to
understand the changing internal and external factors in the market. This report aims to do an
environment analysis for the automobile company Audi. This brand is one of the most
reputed luxury cars manufacturer that have its branches in many parts of the world.
Audi AG is the German automobile manufacturer of luxury vehicles. The yearly
turnover of this company is €59.248 billion (2018) (audi.com 2020). This brand is owned by
the famous Volkswagen group. The total number of employees working under this company
name is about 91,674. This company is known for its quality products and the use of
technology in their cars. The main competitors of this company are BMW, Mercedes Benz,
Porsche, Jaguar, Volvo, Aston Martin and Toyota.
Analysis of the organization’s external business environment – macro
factors (PESTEL Framework)
Analyzing the external factors that can affect the context of business of Audi is
important to increase the sustainability if the business and decrease the competitive risks.
Therefore, PESTLE analysis is used as a tool for analyzing the external environment of the
business of Audi cars.

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Political Factors
 Audi has its showrooms in a number of countries all around the world. The
political power of these places and the stability in the politics influences the
context of business (Rosca, Arnold and Bendul 2017).
 The government policies regarding the labour laws and taxation are crucial for
the business of Audi. As the company manufactures luxury cars, it has to go
through various political pressures in different part of the world. For example,
the labour laws of China and Japan are different than that of Australia and
USA.
 The investors in the country that do not have any IP protection law, would not
be interested in investing Audi’s business (SHTAL et al. 2018).
 There are risks of military invasion in some of the developing or disturbed
countries. This possess a great risk to the business of the company and the
strategies have to be built likewise.
Economic Factors
 For any company like Audi, the rate of the GDP growth of the country is
proportionate to the growth of the company.
 The economic system and its type also influences the operations of the
company.
 The country that have higher interest rate would be beneficial for the company
growth. This means more investments and more profits.
 The stability of the economy is important for Audi’s business to prosper.
According to Mocker and Fonstad (2017), the investors will only show the

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interest to invest if the exchange rate is high and the currency is string in
international venture.
Socio-Economic Factors
 The socio-economic factors of country highly impacts the marketing aspects
of Audi. The demography of the country is the decider of how much profit the
company is going to earn.
 For a luxury brand like Audi, the class distribution is immensely important.
The luxury cars have a specific type of target audience that comprises of high
class customers (Witkowski, Kurowski and Lesicki 2018). Hence, it is
important that the company must try to invest in the markets that have their
target customers.
Technological Factors
 The recent breakthroughs in the technological sectors always influences the
business and competition context of the luxury brands. Audi has been
dependent on the technological advancements to attract the attention of its
customers and investors.
 Technology also has an influence on the costs of the company products. The
improved technological inputs can cut the costs of the company operations.
Legal Factors
 Different types of laws in the countries influence the business strategy of the
companies. The intellectual property laws, discrimination laws and many other
like that are to be analyzed by Audi for business purposes (Lee 2019).
 Customer laws to ensure certain level of quality in product and cost are to be
assessed for business of Audi in international markets.

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Environmental Factors
 The weather condition of a country can influence the ability of managing the
resources and transportation of the company.
 The waste management is another aspect that the company has to take
seriously in order to maintain environmental balance in their production.
Analysis of the sector/industry through Porter’s Five Forces model
Threat of New Entrants
This is an industry that required huge investment and limited number of target audience. This
is the reason that the threat of new entrants in this sectors is low than other automobile
business.
Bargaining Power of Suppliers
The economic scale of the company is high in the market and the bargaining power of the
suppliers is also high. As opined by Phadermrod, Crowder and Wills (2019), the use of highly
compatible technology in the cars reduces the number of valid suppliers in the market. Hence,
the company has to rely on the minimum number of suppliers for their business.
Bargaining Power of Buyers
The bargaining power of the customers is low in the luxury cars industry. Thais is why the
company can use this as an advantage for their brand. The company has high brand reputation
and the customers it have has high economic base (Akhmetshin et al. 2017).
Threat of Substitute Product

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There are few companies that offer the luxury cars like that of Audi. Therefore, the threat of
substitution is low. The company can even eliminate this threat if they concentrate more in
their product quality.
Rivalry among the Existing Firm
The number of the competitors in the market are known but the competition can be tough. All
these companies have high brand reputation and almost same quality products. Audi has to be
more innovative and updated in their technology to capture markets.
An analysis of the Organization's internal business environment –VRIO
framework
Valuable
 The financial resources of the company are highly valuable as they help the company
to fight the external threats of the market.
 The differentiation strategy of the company is highly valuable for their business.
 Another valuable resource of the company is its employees.
 It can be said that the cost structure of the company is a valuable resource for the
company operations (Zulfiqar et al. 2019).
 The research and development works in the company are not a valuable resource for
the company.
Rare
 The strong financial resources of the company are rare in the market.
 The patents of the business of Audi is rare resource.
 The distribution network of the company another rare resource.
Imitable

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 The financial structure and resources of the company are very difficult to imitate.
 The employees of the company are not quite imitable. The other companies can easily
hire them by offering better compensation plans (Prajogo 2016).
 Distribution channel is costly to imitate.
Organization
 All the financial resources of Audi are well-organised and strategically invested.
 The patents of the company are well-organised.
 The VRIO analysis of Audi shows that the distribution channel of the company is
orgnaised.
SWOT
Strengths
 The use of technology and engineering makes the company products unique and
customer friendly. The precision of the cars design helps the company to gain the
markets.
 The trust factor of the company has been instrumental in building a huge brand name.
 Audi has various series of cars models that are of premium and super premium
quality. This increased the demands of the cars in the customers (Gürel and Tat 2017).
 The sleek and sophisticated design of the cars make the brand a distinguished one in
the market.
Weaknesses
 The diversification of the brand product is not present. It only have luxury cars and
unlike its competitor BMW do not invest in low cost cars.
 The frequency of the promotional ads of Audi are low.

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Opportunities
 There are huge numbers of emerging markets that the company needs to target.
 Audi can invest in diversifying their markets.
Threats
 Limited customers and markets are causing saturation in the markets.
 There are risks in expanding to the international market that Audi has to face in near
future.
 Competition are high in the luxury cars markets.
Conclusions
The above discussion shows that Audi has string resources and financial supports that
is at the base of their business operations. The competition in the market is high and
therefore, the company has to work in its strategies. Especially in the research and
development aspects, there are huge scope for the company to work. Again the strong
competition that the company is facing in the international market is a great threat. The
unique and sophisticated design of the Audi cars are a huge plus point for the company. The
brand recognition has been a positive aspect of the company it could use for its business
development in other countries. The distribution channel and organizational framework is
quite impressive of the company. The brand need to work on some of its operational and
research aspects for better results in production.

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References
Akhmetshin, E., Danchikov, E., Polyanskaya, T., Plaskova, N., Prodanova, N. and
Zhiltsov, S., 2017. Analysis of innovation activity of enterprises in modern business
environment. Journal of Advanced Research in Law and Economics, 8(8 (30)), pp.2311-
2323.
audi.com (2020), Audi, available at: https://www.audi.com/en.html
Gürel, E. and Tat, M., 2017. SWOT analysis: a theoretical review. Journal of
International Social Research, 10(51).
Lee, M.C., 2019. Audi AG’s Liquidity Risk and Corporate Governance.
Mocker, M. and Fonstad, N.O., 2017. How AUDI AG is Driving Toward the Sharing
Economy. MIS Quarterly Executive, 16(4).
Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis
based SWOT analysis. International Journal of Information Management, 44, pp.194-
203.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business
environment in delivering business performance. International journal of production
Economics, 171, pp.241-249.
Rosca, E., Arnold, M. and Bendul, J.C., 2017. Business models for sustainable
innovation–an empirical analysis of frugal products and services. Journal of Cleaner
Production, 162, pp.S133-S145.
SHTAL, T.V., BURIAK, M.M., AMIRBEKULY, Y., UKUBASSOVA, G.S., KASKIN,
T.T. and TOIBOLDINOVA, Z.G., 2018. Methods of analysis of the external environment
of business activities. Revista ESPACIOS, 39(12).

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Witkowski, K., Kurowski, M. and Lesicki, D., 2018. CSR in automotive sector-leaders or
deceivers? The case of Audi AG. Central European Review of Economics & Finance,
25(3), pp.5-19.
Zulfiqar, S., Sarwar, B., Aziz, S., Ejaz Chandia, K. and Khan, M.K., 2019. An analysis of
influence of business simulation games on business school students’ attitude and intention
toward entrepreneurial activities. Journal of Educational Computing Research, 57(1),
pp.106-130.