Paper on The Global Business Environment Assignment

THE GLOBAL BUSINESS
ENVIRONMENT

Table of Content
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
a) Major forces shaping business environment and gaining the competitive advantages ..........1
b) New and emerging business opportunities and critically assess other business currently
linked to global automotive industry...........................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES ...............................................................................................................................8

INTRODUCTION
Global business environment can be determined as the environment in different independent
nations with elements to the home environment of the company which effecting decision-making
relating to utilize resources and capabilities. Firms operating globally can understand the social
environment of the host nation to function effectively and efficiently (Hamilton and
Webster,2018). This report is based on case study which is related to “Electric vehicles in
Europe: gearing up for new phase”. This essay will explain major forces shaping the business
environment of car manufacturing industry. Also, explain ways of gain competitive advantages
by company in the industry. Furthermore, report will identify new and emerging business
opportunities for production and marketing of electric cars. It will assess other business currently
linked top global automotive industry.
TASK
a) Major forces shaping business environment and gaining the competitive advantages
Business environment is the total of all outside and inside elements which effect on business like
workers, wants and expectations of consumers, supply and demand, clients etc. Also, it includes
activities through government, invention in technology, social and culture trends, economic
changes and so on (Lewis and et.al., 2017). These elements influence the activities and operation
of firm. Also, these factors influenced on company when they operate in global environment.
Through this, company identify the opportunities of business for future as well as imp[rove the
performance, growth and profits of business.
In this context, various factors influence on operations on company which are operated in car
manufacturing industry like Volvo. Because, company want to electric motors or vehicles in
Europe. Therefore, company needs to identify the major forces or factors by utilizing the
PESTLE analysis which can influence on operation within the global environment. These
factors are involved such as follows:
PESTLE Analysis:
Political Factor:
This factor consists of outside elements like political stability, government regulations and
framework of political party in the nation. Thus, political environment is easily the most essential
concept of the business environment (Cumming and Zahra, 2016). It also involves tax policy,
foreign trade policy, trade restrictions which are influenced on company when they operate in the
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global environment. In this context, Volvo introduces the electric motor or vehicles in Europe, so
that different government regulations can be influenced on business in positive and negative
manner. For example: governments are promoted electric vehicles across Europe through giving
different subsidies and other benefits in both side on demand and supply. Many of governments
are created investments in infrastructure and mobility programs in electric vehicle in terms of
promoting the supply of vehicles (Rastogi and Trivedi, 2016). This can help to car maker like
Volvo in terms introduce the electric motors or vehicles in Europe. These kinds of factors
highly influenced on production and marketing of new product within global marketplace.
Economic Factors:
These factors are crucial of certain performance of economy. It involves economic growth, rate
of inflation, interest rate, demand and supply, economic policies and so on. These factors can
have long termed impact on firm in directly and indirectly ways. These kinds of factors influence
on the operations and overall company at the global business environment (PESTEL Analysis,
2016). In this context, car makers like Volvo want to introduce electric motors or vehicles, so
that they need to determine all economic factors within the selected country. For example:
Creating demand volatility through electric vehicles which will be happening alongside the shifts
in supply which come from renewable energies and distributed generations. This can be raising
challenges in relation balance electricity grids with more fluctuations in demand and supply. It is
expected that demand side result systems can gain in importance. Flexible demand can show
economic value which also beneficial for company who introduce the electric vehicles or motors.
These kinds of factors highly influenced on production and marketing of new product within
global marketplace.
Social Factors:
These factors show the demographic features, standards, value, trends of the population within
that company operates. This involves income distribution, lifestyle behaviour, cultural barriers
and so on. These factors can have impact on company in directly and indirectly manners. In this
context, car makers like Volvo need to launch internal combustion engine that is part of electric
and vehicles, so that they need to identify some social factors of the Europe. For instance:
company is focused of leading higher income consumer with different set of attitudes and
behaviours (Takata, 2016). Selectors are mainly high-income, well-educated customers who are
looking to save money and also concerned about the environment. Also, company should focus
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on design, brand and performance are important considerations of consumers which are most
important to the firm. These kinds of factors highly influenced on production and marketing of
new product within global marketplace.
Technological Factors:
These factors pertain to inventions in technology which can influence operation of overall
industry specially in car manufacturing industry. This mean to technology incentives, level of
innovation, automation, activity of research and development that possesses marketplace. These
factors influenced on car makers like Volvo while introduce the electric motor in Europe by
following different technological changes and innovations which can impact on overall business.
For example: technological advancement improving driving range of battery electric vehicles,
increasing availability and speed of charging infrastructure which can change charging behaviour
and requirement for charging infrastructure in the future. Advancement of technology across
electric value chain which are good for adoption of electric vehicles (Gibson, Rosen and Stucker,
2015). Therefore, company should focus on adoption different technological advancement which
can highly profitable for the business. These kinds of factors highly influenced on production
and marketing of new product within global marketplace.
Environmental Factors:
These factors have come to head only comparatively in recent time period. Due to raising
scarcity of raw material, pollution targets and carbon footprints set through governments. Also,
these factors involve ecological and environmental views like weather, climate change,
environmental offsets etc. In order to that, car makers introduce the electric motor or electric
vehicles. For instance: today's world, consumers are more conscious about the environment
while buying electric vehicles (Mueller and Shepherd, 2016). Therefore, company needs to focus
on manufacturing of vehicles through which reducing carbon footprints and also decrease
pollution within the Europe. This factor can influence on the operation and activity within the
global business environment.
Legal Factors:
These factors can have some concurrence with the political factors, they involve particular
regulations like discrimination, antitrust, employment, consumer protection, copyright and
patent, health and safety regulations. Therefore, company want to be aware of any possible
modifications in legislation and the effect on company in the future. For example: Company
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needs to focus on the adopting the copyright and patent laws because every car manufacturing
firm needs to introduce the electric vehicles within the Europe. These kinds of factors highly
influenced on production and marketing of new product within global marketplace.
Porter's five force model:
This kind of model which determines and analysis five competitive forces that shapes each and
every industry. It can assists define strengths and weaknesses of the industry. It is often utilized
to determine structure and corporate strategy of industry. This model can be implemented to any
segment of the economy to search for profits and attractiveness. Fives forces are involved:
Bargaining power of supplier:
This force reflects pressure applied through suppliers on business organizations via adopting
various tactics such as decreasing product availability, quality or raising prices. When suppliers
have strong bargaining power, it costs the business organizations (Amankwah-Amoah, Osabutey
and Egbetokun, 2018). Car manufacturer like Volvo want to introduce the electric vehicles in
Europe, so that they need to identify suppliers which is profitable or not. In this context, if
suppliers have focused into specific region and their compactness is larger than their buyers. This
force can influence on production and marketing of product to company in the nation.
Threats of substitute:
The availability of substitute goods or services creates the competitive environment challenging
for selected car manufacturing firm and other existing player. The threat of high substitute
presents customers can utilization alternative goods or services from other businesses to meet
their wants. Consumers can not conclude the similar utility from substitute product as they gain
from goods like electric motors of Volvo.
Bargaining power of buyers:
This force indicates the pressure which consumers utilize on business organization to acquire
large quality goods at reasonable prices with excellent consumer facility. Bargaining power of
buyer directly effects on capabilities in terms of achieve objectives of Volvo. Company needs to
introduce the electric motors in the Europe, but bargaining power of buyers is very weak
(Mathooko and Ogutu, 2015). Thus, this force influence on competitive advantage, profits and
growth chances of Volvo.
Threats of new entrants:
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This force indicates ways of imposing threats of new market players to existence market player.
If the industry can be profitable and barriers to enter the industry can be low, it can attract more
players. Therefore, the threats of new entrants can be high. If car manufacture entry in industry,
so that they need substantial capital and resources investment. In this context, there are high level
of threats from new entrants to company, because most of new car makers needs to introduce the
electric motors in terms of increase competitive advantages.
Rivalry of competition:
This force presents number of challengers which provide tough competition to Volvo in the
automotive industry. There are many competitors of company such as BMW, Audi and other in
the European automotive industry (Takata, 2016). This kind of force high influenced on
company, because they want to introduce electric motors in the Europe. Also, other like Ford
also plan for introduce this kind of product in the same market.
b) New and emerging business opportunities and critically assess other business currently linked
to global automotive industry
Each and every business needs to development and growth in the industry in which they operate.
Therefore, they are identified various new and emerging opportunities for business to success
and future of them. In this context, car manufacture Volvo needs to introduce the electric
vehicles in the Europe. Thus, they also identify the new and emerging opportunities for business
growth and development in manufacture industry at the Europe. The European automotive sector
has moved to the top of global industry (Gibson, Rosen and Stucker, 2015). It has accomplished
record sales and as leading employers and source of important grant making. It is an internal
portion of European society. There are many opportunities for Volvo while entering into
European manufacture marketplace. Such as:
Building truly customer-centric:
It is the necessary to build relationship with consumers which are more beneficial for each and
every business. In order to that, consumer is at the very heart for both individual mobility and
commercial vehicles. Therefore, all automotive companies like Volvo focus on customer-centric
concept which is important to win the next generation of consumers (Mueller and Shepherd,
2016). Therefore, build the relationship with consumers which help to increase sales and profits
of car manufacture company. Through this opportunity, company access the existing and new
consumers within the Europe. Entering into global market can help to take advantage of raising
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consumer demand in the marketplace. Highly focused on consumers can help to marketing of
electric cars of Volvo in the global marketplace like Europe.
Creation of new business model:
It is the largest business opportunity to create new or innovative business model and enhance
existing business model. In order to that, car maker like Volvo also focus on create the new
business model or increase existing model of business. For that, they want enter into European
market through introduce new electric motor or vehicle in the nation. Also, this can help to
develop value chain of business. Creation of new business model also help to production and
marketing of electric cars of Volvo in the global marketplace like Europe.
Competitive advantage:
Each and every business needs to compete with other company in same industry in which they
are operated. Therefore, company needs to focus on product and service, performance, growth
and development in relation to competition with their rivals (Takata, 2016). Firms can do
compete for increasing their growth and profitability in the industry as well as create high level
position within the industry. In this context, car manufacturing firm like Volvo want to introduce
electric vehicles in the Europe for gaining competitive advantage within European automotive
industry.
Development of new technology:
It is the largest opportunities for manufacturing company like Volvo while entering into
European market. Technological development is high level opportunity for manufacture business
which can help to increase profitability and productivity of the company (Amankwah-Amoah,
Osabutey and Egbetokun, 2018). Through this opportunity, company focus on production and
marketing of product in the nation. Therefore, company need to focus on new technology
development in production and marketing of electric cars within Europe.
Increasing market share:
Company has decided that they enter into global business environment, so that they create many
opportunities for business in relation growth and increase market share in the present and future.
In this context, car manufacture company like Volvo want to increase their market share, so that
they decide that introduce and develop the electric motors or vehicles in the European
marketplace. In relation to, they highly focused on adopting advance technology, human and
financial resources for production and marketing of product in the nation. If company has highly
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produced and marketing of new products, so that this can increase the market share in the global
market like Europe.
In order to that, company like Volvo also focus on future investment within other global
automative industry for enhance the profits of business. Therefore, company needs to invested in
different technologies which are linked with global automotive industry in current year such as
artificial intelligence, electrification and so on. It is strategy through automotive industry will be
changed. This kind of strategy will be profitable for the firm in long run, because of, these
technologies are highly beneficial for all automotive companies in the global environment. Thus,
this investment strategy can increase profits and productivity of firm (Mueller and Shepherd,
2016). This kind of investment also help to production and marketing of electric cars in the
European nation. Also, company needs to focus on investment while introduce internal
combustion engine (ICE) and to place electrification at the core of their future business. This
kind of strategy can change the history of the automotive industry. Also, this strategy is to define
consumer demand of electrified cars increasingly and also respond current and future needs of
consumers in the global marketplace.
CONCLUSION
This report has summarized that major forces such as government regulations, consumer
demand, environmental issues, legislation, technological advancement etc. can be influenced on
global business environment in which company want to operate. It can be concluded that
utilization of Porter's five force model by company to gain the competitive advantage within
global marketplace. Furthermore, study has completed that various opportunities for business
like increase market share, creating of new business model, building consumer-centric approach
which can help to production and marketing of products in the Europe.
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REFERENCES
Books and Journals
Amankwah-Amoah, J., Osabutey, E. L. and Egbetokun, A., 2018. Contemporary challenges and
opportunities of doing business in Africa: The emerging roles and effects of
technologies. Technological Forecasting and Social Change. 131. pp.171-174.
Cumming, D. J. and Zahra, S. A., 2016. International business and entrepreneurship implications
of Brexit. British Journal of Management. 27(4). pp.687-692.
Gibson, I., Rosen, D. and Stucker, B., 2015. Business Opportunities and Future Directions.
In Additive Manufacturing Technologies (pp. 475-486). Springer, New York, NY.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Lewis, H. and et.al., 2017. Design+ environment: a global guide to designing greener goods.
Routledge.
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.
Mueller, B. A. and Shepherd, D. A., 2016. Making the most of failure experiences: Exploring the
relationship between business failure and the identification of business
opportunities. Entrepreneurship Theory and Practice. 40(3). pp.457-487.
Rastogi, N.I.T.A.N.K. and Trivedi, M. K., 2016. PESTLE technique–a tool to identify external
risks in construction projects. International Research Journal of Engineering and
Technology (IRJET). 3(1). pp.384-388.
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.
Online
PESTEL Analysis. 2016. [ONLINE]. Available through. :
<https://www.business-to-you.com/scanning-the-environment-pestel-analysis/>.
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