[SOLVED] The Five Forces Framework in Business

This assignment provides a comprehensive analysis of the Five Forces Framework, a business model developed by Michael Porter. The framework helps businesses understand their competitive landscape, including the power of suppliers, buyers, potential competitors, substitutes, and barriers to entry. By applying this framework, businesses can make informed decisions to increase profitability or reduce competition in the market.

GLOBAL BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
A. PESTLE Analyses..................................................................................................................1
B. Porter's five force model.........................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES ...............................................................................................................................7

INTRODUCTION
The term environment refers to ever-changing situation where a company operates. This
concept inculcates every changing environment to help an organisation needs for better
improvement and high level of quality (Checchinato and et.al., 2018). This report will be
focusing on the two most important factors of a business environment such as PESTLE and
Porter's Five-Force Model. This report is based on auto-mobile industries, which is located in
Eastern Europe. Moreover, report will focus on Global Auto-mobile business enterprise using
Porter’s Five Forces factors.
MAIN BODY
A. PESTLE Study
The automobile industry is still one of the biggest manufacturing sectors but it goes
through different business environmental factors such as technological factors. In this context,
little emphasis within its industry and consultancy. Pestle environment is described as the
different framework of the macro environment. It is a tool used by marketing department to
examine and monitor different macro environment factors, which have an impact on the
company (Reyes and et.al., 2018). This influences marketing and relationship of organisation
performance with different countries in market price. As per the change in time or other factor, it
may help to improve and make better decision making for an organisation.
Nowadays, automobile sector is more durable, safe and less costly as compared to
pastime period. The automobile is entered into some new market with the help of technical and
innovation sector. The result of all macro environment factors, which is used to identify
weaknesses and threats to overcome any issues. In this way, such industry will give direct impact
through macro environment. In addition, analysis of macro environmental factors will help to
develop future changes in auto - mobile sector and make some appropriate strategies.
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macro environment factors are as follows:
 Political factor: In this context, automobile sector is one of the most growing sectors.
This is the biggest source of revenue for government departments and transformation of
auto- mobile sector. It includes government regulations and identifies rules for particular
industry. In addition, successful nation in terms of application of rules of law and control
level of corruption. All such political factors will help to provide quality of work in
automobile sectors. On the other hand, political sector also maintains the monitoring
system of automobile sector. As per the case study, overall growth will be based on
political factors in relation with different countries. Political factor will help in continues
betterment in automobile sector and provides mix job opportunities from lower based and
local people (Roberts and et.al., 2017). To manage the cost and significant role in such
kind of area automobile area. There are some big changes in overall development in
market share as per the needs of customers’ demand. Political factor is to be focus on tax
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Illustration 1: PESTLE ANALYSIS
(Source: PESTLE ANALYSIS, 2017)

policy, fiscal policy and trend policy is most important to improve current market
network.
 Economical sector: In economical sector, influential factors on economy are high
unemployment levels, which reduce demand of many kinds of goods. Moreover,
economic factor is based on different rates like foreign direct investment rate, direct tax
rate, indirect tax rate and interest rate or growth pattern rate. Macro economic factor deal
with management of demand in given particular economic conditions. With the help of
government department rates will be update as per change in economic conditions.
Further, consumer and business have easy access to credit facility and affect auto- mobile
industry. All such kind of rate will be affecting the auto-mobile sector to improve current
market share. In economic conditions, tax rate will be altered as per the change in
economic condition level.
For example: Britain is awaited to drop to 1.5 million from 1.8 million in 2005. French
Republic is expected to change at 3.6 million, compared with 3.5 million last year. There are all
such kinds of changes is depended on change in economic conditions of organisation level.
However, increase level of global environment on development countries.
 Social factor: Auto-mobile sector is largely affected by social sector. It inculcated study
of demographic as well target a particular range of customers. Social factors will focus on
the size of market, age distribution level. In addition, social factor is identify emerging
trends and help marketer to understand the customer needs and wants. Nowadays,
customers are more concise about price and every changing environment (Lewis and
Sweatman, 2017). On the other hand, social factor depend on culture to culture, people’s
style and preferences also different at market place. Factors include changing family
demographics, education levels, cultural trends, attitude changes and changes in
lifestyles. In addition, social media and new trends are to be giving direct impact on
changing trends. Further, may sometimes make the older models obsolete or go out of
fashion. Some time customer will be focus on durable and long-term investment system
in market place. This is the only factor, which helps to increase demand and improve
future performance level of auto-mobile sector.
 Technology: Nowadays, overall market will depend on technological factor and
improvement must be changes are based on technological factor. In addition, more and
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more innovation is help to improve current environment as well as capture new market
place. With the help of research and development to be find out some new factors about
automobile sector, and then make some changes on it. There are some new technological
sectors that play the most important role as per the needs of current environment. This
will help to manage the work as per the need of technological changes on it. There is
often a tendency to focus on developments only in digital technology, but consideration
to be focus on new method of distribution, manufacturing and logistics as well. (Luthans
and et.al., 2018). On the other hand, promotion sector will use new technology, so attract
more customers. It will be helpful to change the future conditions of market place.
Technology factor will give direct impact on operation and services industry for
improvement in market share. In the same way, innovation helps to attract more and more
customers as well as future updated technology so improve some level of changes in
securities industry place. The government department is also helped to technology factor
at the time of different types of research and development work. This will be help to find
out new facts about auto-mobile sector and improve market conditions.
 Environmental sector: The environment factor is playing the most important part for
auto-mobile industry. This factor is to be consider the internal and external and link with
micro environment related to auto-mobile sector. The external or macro-economic events
include interstate taxes, embargoes, interest rates, economic growth, recession, inflation
rate, exchange rate, minimum wage, wage rates, unemployment, cost of living, working
hours, credit availability, financing availability, etc. All such kind of interest rate must be
improve auto-mobile industry and there market structure.
 Legal factor: Legal factor is to be following all rules and regulations prepared by
government for auto-mobile department. This sector is work under different law must be
used for important factor and use time to time. In addition, price does new change
according to auto-mobile organisation. Price is to be fixing by government sector and set
as per condition of market (Brannen and Tietze 2017). They also must be aware of any of
legalisation and impact of business operation level. Some time law is not very much
important in auto-mobile industry. Customer is purchase new vehicle under the terms and
conditions of safety and securities. Therefore, organisation must use laws to improve
current environment. The overall law is based on product safety that is the most
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important factor for buyers and help in enhancing customers. Some factors inculcated
consumer law, health and safety and employment legalisation. Moreover, environment
law, tax law, transportation law and other law related to manufacturing industry. There
are accidental case is give negative impact on auto-mobile industry.
B. Porter's five force model
This is Porter’s Five Forces analysis is to be focused on the development of porter's
development of auto-mobile industry in different market. In this context, such kind of factors is
to be determining competitive intensity and attract the number of markets. This model is focused
on attracts number of new customers and identify competitive environment. To be used most
attracting technology and designs focus on environmentally friendly safety and competition in
the market. The Organisation must be tracked on competition and improve the competitive
environment in market place.
This is a most commonly used business strategies in different kind of market share and
has established its utility in many locate when research strategic administration models. In this
context, such kind of factor drive competitive market position. (Kasemsap and et.al., 2018). Five
powers allude to the level of the opposition in the market. It encourages in deciding the corporate
system. It distinguishes territories of chances and quality. It additionally assists enterprises and
business associations with improving their shortcomings and keep away from botches. This
causes associations to comprehend the benefits in an industry. Five powers allude to the
miniaturized scale condition. The general commercial enterprise attraction does not connote that
all firm in the commercial enterprise will tax return the same net income. Steadfast are able to
use their core competence, business concern model or system to accomplish a net income above
the business mean.
This structure influence to serve the clients and customers and make a benefit. The model
is broadly utilized for ventures and business structure to quantify the opposition force. Five
powers used to quantify quality and productivity of the business association (Charter and et.al.,
2017). They are to be focus on strength of the competitive market and understand the
organisation power ion different market. This is very useful for overall auto-mobile sector,
because it helps to understand the current weakness and strength of business level. It will help to
take the best decision of business and avoid the wrong step, which can affect the overall business
level. It additionally encourages in comprehending new items and administrations are possibly
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gainful. Five powers system is exceptionally business procedure investigation instrument. This
assistance ventures and business taking a gander at their chances and decreasing the aggressive
weight. Porter established this demand and projected a framework which examine the basic
construction which can be long to every industry. In addition, consists of five necessary factors
that summarize the most essential criteria to see in order to examine a particular sector's key
thrust of occurrence. Based on such an analysis, a strategy can be formulated proposed on
growth factors and certainty rather than scenarios and forecasts. This model is help to improve
and change level of business market condition. On the other hand, five-force model automobile
industry must be used are as follows:
 Threats of new entry: It is very difficult to enter into new auto-mobile industry because
investment is required. In addition, high competition and hiring of skilled staff are the
most important part at work place. All such kind of staff members is guided to attract
customers in market place. To improve overall working environment and increase future
condition must be change for it. Profitable products and markets pull in new section
which influenced by individuals' capacity and request. Settle can likewise confront
aggressive weight from their rivals (Langfield and Thorne, 2017). Five powers help in the
key reasoning of the auto-mobile sector. Consumer will decidedly modification their
brain and select the new commodity. So, in the marketplace there are the danger of new
entrants. Low standard of capital is compulsory to enter in the market. The new entrants
convey extra capability into a commercial enterprise. It is a warning as the existent
business concern may lose the marketplace stock certificate.
 Bargaining power of supplier: In this context, to be focus on supplier is play a most
important role in auto-mobile industries. Supplier cans determinant the gainfulness of a
firm by use pressure level for higher damage or by reduction the choice. If there are lots
of supplier in the market, the business concern man prefer for the best prize material for
same intention which expenditure the low-level. The measure of purchaser and shopper
are the quality of the auto mobile industries. Intensity of client is higher in the discount
shoppers. Settle has high client unwariness. It is influenced by purchasers or buyers an
organization has. They can select the businessperson who supply the more net profit
perimeter for the commercial enterprise. Because every business became success when
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they raise their profit. On the other hand, bargaining power of supplier is considerable
low in market place.
 Bargaining power of buyer: In this context, bargaining power of buyer will buy one
single vehicle at a time. It will be depend on cost of the customer switch form one
supplier to other. All such condition will be based on profit margin, if the customer
collect more profit to customer form one supplier it creates some other product. (Cook,
2017). The nature of providers is likewise depicted as the market inputs. In auto- mobile
sector buyer, because they can switch low price. To be focus on boost sales volume,
commercial enterprise, as per follow ever-changing user tendency. The bargaining power
of buyer will be advanced when the sizeable volume purchaser are concentrated buying
the product or services. There is a concentration of buyers.
 Threats of substitution: Threats of substitution depend on price performance and
different types of services and product will be offered. There are some alternative modes
that are available in the market. Will give negative impact on overall market place
(Kirton and Trebilcock 2017). The intensity of auto-mobile industries is likewise
influenced by the new participants into the market. There are some product demand is
affected and when switch cost in particular market. The new contestants barely enter the
market because of solid contenders and high cost of merchandising. Product distribution
is help to reduce the threats of substitution, so that each organisation is use curve out
unique product.
 Competitive rivalry: The level of customer loyalty is one of the most important parts to
improve current market share. Some time customer will be offer same product or services
to the organisation. Competitive factor will be focus on price, advertisement and other
factors.(Laszlo and Cescau 2017).Numerous contenders offering undifferentiated
administrations and items in the commercial centre which cause the market engaging
quality. Aggressive competition lessens both customers and providers. There are some
different promotional activities and marketing strategies for improving market share.
Rivalry among competitors can reduce the profitability, but may good for customer in
market place. A flourishing there gross sales, another institution will endeavour to down
there merchandising. For this they spend more cost on gross revenue promotional
material campaigns.
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CONCLUSION
This report is concluded that competitive environment in market place. As per case study
Five Forces Framework is a straightforward device yet groundbreaking business device it
dissecting the competition in the business, intensity of clients and providers and understanding
the quality of the organizations. The report is concluded that porter's five force model is help to
every changing business and increase more and more profit or reduce level of competition in
market place. Form the above report is focus on business taking a gander at their chances and
decreasing the aggressive weight. The five powers help where the power lies in the business
association.
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REFERENCES
Books and Journals
Checchinato, F. and Hu, L., 2018, July. THE ROLE OF DIGITAL PLATFORMS IN THE
GLOBAL BUSINESS ENVIRONMENT: THE CASE OF CHINA. In 2018 Global
Marketing Conference at Tokyo (pp. 707-707).
Reyes, J.D., Roberts, M. and Xu, L.C., 2017. The heterogeneous growth effects of the business
environment: firm-level evidence for a global sample of cities. The World Bank.
Lewis, H., Gertsakis, J., Grant, T., Morelli, N. and Sweatman, A., 2017. Design+ environment: a
global guide to designing greener goods. Routledge.
Luthans, F. and Doh, J.P., 2018. International management: Culture, strategy, and behavior.
McGraw-Hill.
Kasemsap, K., 2018. Mastering business process management and business intelligence in global
business. In Global Business Expansion: Concepts, Methodologies, Tools, and
Applications (pp. 76-96). IGI Global.
Langfield-Smith, K., Smith, D., Andon, P., Hilton, R. and Thorne, H., 2017. Management
accounting: Information for creating and managing value. McGraw-Hill Education
Australia.
Cook, N., 2017. Enterprise 2.0: How social software will change the future of work. Routledge.
Laszlo, C. and Cescau, P., 2017. Sustainable value: How the world's leading companies are
doing well by doing good. Routledge.
Kirton, J.J. and Trebilcock, M.J., 2017. Hard choices, soft law: Voluntary standards in global
trade, environment and social governance. Routledge.
Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
Brannen, M.Y., Piekkari, R. and Tietze, S., 2017. The multifaceted role of language in
international business: Unpacking the forms, functions and features of a critical challenge
to MNC theory and performance. In Language in International Business (pp. 139-162).
Palgrave Macmillan, Cham.
Wallace, D., 2017. Environmental policy and industrial innovation: Strategies in Europe, the
USA and Japan. Routledge.
Online
PESTLE ANALYSIS. 2017.[Online]. Available through: <https://fr.fotolia.com/id/141320411>
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