The Global Business Environment: Impact of Pandemic on Automobile Industry and Survival Factors for Automotive Industry

This report analyses the impact of pandemic on the automobile industry and survival factors for the automotive industry. It also discusses the impact of COVID-19 on Rolls Royce and their survival factors.

The Global Business
Environment
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Table of Contents
Introduction.....................................................................................................................................3
Main Body.......................................................................................................................................3
Impact of pandemic on automobile industry .............................................................................3
Survival factors for the automotive industry .............................................................................5
Conclusion.......................................................................................................................................7
References.......................................................................................................................................7
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Introduction
A global business environment is stated as the environment, which provides a better
technology, create more job opportunities, enables the infrastructure development with the help
of another country resources. The four main components of a business environment are
economic conditions, political as well as legal factors, cultural as well as social factors and
geographic conditions. It is basically considered as a amalgamation of both the external and
internal factors on the functioning of the firms. The chosen company for conducting the
environmental analysis is Rolls Royce. This company makes only premium cars and its
headquarter is situated in West Sussex, UK. This brand has been in the marketplace from 1906
but it was created as a subsidiary of BMW in 1998. This company price range starts from the
around more than 300 thousand dollar and their cars cannot be purchased by anyone. The person
needs to have a big reputation in the society as well as lot of money in order to purchase these
cars. In this report, it will majorly discuss about the environmental analysis of Rolls Royce and
the impact of the pandemic on this industry. This report will also cover the success as well as the
survival factors of the Rolls Royce in the pandemic(Belyaeva. and Lopatkova., 2020).
Main Body
Impact of pandemic on automobile industry
The COVID 19 pandemic has a severe impact on the sales of automotive industry in the
global level. This disaster pandemic has put an intense pressure on the employees as well as
senior mangers regarding the sales and revenues of the company. The main reason behind the
decrease in the sales number of the cars or other auto-mobiles is the risk of getting infected from
this virus. Due to having a lot of risk in the life, various countries government have imposed the
lockdown which states that the operations done by the companies or performing the various
activities by the firms will be stop(Bharathi. and Dinesh., 2021). The showrooms or the stores
are closed down that has a major impact on the revenues of the company. Various major impact
on the automobile industry are discussed below:-
 Various countries are facing the situation of lockdown scenarios that can have a major
impact on the global sales which moreover leads to the impact of global economy. This
pandemic also arises the risk of losing the confidence of customers in their products that
has direct in the profitability of the company.
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 Automotive companies various functions such as research and development, innovating
new ideas, experimenting and testing are stopped that may leads the specific company to
stay back comparatively with the rivalry companies.
 The pandemic has also a major impact on the shares on their company, in the whole
period time of the pandemic many automobile companies has to face the issues of
decreasing the values of shares. The decrease in the value of shares has a major impact
on the wealth on the owners and higher authorities of the companies.
 The supply of the resources has stopped from the different countries, the automobile
company who is very much dependent on the resources that came from country like
China has to face a lot of issues(Carou., 2021). The issues arises here because the
operations or trading of different resources are stopped due to risk of growth in the cases
of COVID 19.
 The manufacturing of new automobile are put stopped because the manufacturing firms
are closed due to the lockdown. A manufacturing firm requires a significant number of
workers and that's why they are closed down in order to decrease the risk of rising in
COVID 19 cases. Due to closed down of manufacturing firms it is difficult for the
automobile companies to meet up with the demand that may arise after the releasing of
some curbs in the country.
The impact of COVID 19 on Rolls Royce
A research conducted by the guardian times says that the COVID 19 has increases the
sales of their luxury cars because this Covid 19 has realizes the wealth people that life is short. In
2021, their annual sales was the highest sale in their history by selling around 5586 vehicles in
the regions like Greater china, America etc. The pandemic has shown that there is no sign of the
limitation of spending money by the very rich person. This demand has surged due to the
addition of new car in their list that is Ghost coupe and Cullinan SUV. But some reports also
said that the COVID 19 has a very major impact on the sales of Rolls Royce, the company has
reported it has faces a net loss around 3.2 billion euros in the 2021 which is double of what they
have in the year 2020 due to their aviation sector(Chewpreecha., Prabhu, and Mukhopadhyay,
2021). The reasons behind the positive impact of pandemic in the sales of Rolls Royce are
discussed below :-
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 The superior brands like Rolls Royce has not face the problems like mass market
manufacturing. Premium brands like these have low customer base level because these
cars are not meant to be purchased by everybody due to their high prices but their profit
margins are very high.
 The other reason for increasing the sales of this company is the increase in prices of
stocks of wealthy person that enables them to become more rich. The stocks prices of
many companies are boomed in this pandemic as well as the awareness of cryptocurrency
has also increased in this period of pandemic. This helps the rich person to get even more
richer(Contractor, and et. al., 2020).
 At the pandemic time, people have to spend more of their time on their houses they are
not able to travel and go to eat out due to imposed of lockdown in the country. So, the
wealthy person spend their money in purchasing the luxury products so that they enjoy
these by lining at their home.
Survival factors for the automotive industry
In this pandemic, automotive industry has to face a lot of losses but the premium brands
like Rolls Royce, Bentley has not face some major issues rather than they has gained a lot of
profit at the time of pandemic. Various survival factors for the automotive industry who has to
face a lot of issues are discussed below:-
 Ensure the health of staff :- The automotive industry must focus on ensuring the health
of staff in a regular manner in the pandemic. The illness to the company employees
makes it more difficult for them overcome from the shortage of products. It takes a lot of
time for recruiting the new employees for performing the activities. So it is very vital for
this industry to make sure that their employees well and when the limitations regarding
the pandemic is going to decrease it have to start manufacturing the cars to meet up the
demands(Huang, and et. al., 2022).
 Secure funding :- This pandemic has caused a great loss to the major automotive
industry so it is very important for these companies to secure the funds in order to
overcome from this loss. The funding is the most important thing in conducting any
activity because for performing any work it requires some resources and the resources
requires money to buy them. After the pandemic ends, the most needed thing to start the
functions was money because in the pandemic the company has to face a great loss.
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 Prepare for an efficient restart :- An effective restart is very much required for the
company to get back the sales into the track and recover the losses that occur in this
pandemic. To conduct an efficient restart it requires a very much effective plan and
various strategies. The company has also to focus on motivating the employees because
after the pandemic ends all the employees have to work at their best in order to recover
from the losses(Joseph, and et. al., 2021). This needs a lot of effective tools and
techniques in order to gain the weakness about the company and then recover from it.
 Globalisation:- It is basically a procedure to interact with other individuals,
organizations or governments. The automobile industry has to focus on expanding their
business in order to recover the sales that has got impacted at the time of pandemic. This
can be the most useful tool for the automotive industry to deal with the problems of sales
and revenues. It helps a company to boost their sales in much more effective way by
collaborating with some other firm and improve its performance and techniques in
performing the activities.
In the case of Rolls Royce, this company did not have to much use the survival and
success factors because they did not have to face a lot of implications at the time of
pandemic(Wang, and et. al., 2020). Their sales are the highest in the history in the year 2021
because many rich people get even more richer due to a significant increase in the prices of
stocks so they prefer to purchase some luxury products. The rich people buy the luxury items
because at the time of pandemic travelling in some other country or going to eat out in the city
are prohibited due to the risk of spreading the corona virus. The survival and success factors of
Rolls Royce at the time of pandemic is discussed below:-
 Unique Selling:- This company has a policy of selling their cars, these cars are not sold
to everybody. The persons who wish to buy a Rolls Royce must have a good profile in
the society because before selling this brand to any person the company conducts a
proper full research about the customer social profile of the past few years. This attracts
those customers who are wealthy as well as having a good profile in the society. These
kind of customers prefer to buy these cars in order to stand out from the crowd(Mao, and
et. al., 2021).
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 Right talent:- Rolls Royce hires the best talent in order to build a brand and perform an
effective and efficient activities. The employees are the most factor for the success of a
company because without the efforts of employees it is impossible to build a company.
A right talent provides a right plan and because of this plan it enables a company in
order to gain the success even at the time of pandemic(Rao, and et. al., 2021). A good
workforce helps to improve the productivity as well as the performance of an
organization.
 Hard work:- The most vital factor for the Rolls Royce in gaining the success is that
their hard work in making each car. This company makes the car by performing various
experimenting in order to make sure the safety level as well as the proper functioning of
all the system of car. The average time taken by the company to manufacture a car is six
months because these cars are made manually by the best technicians, engineers and
designers. This company also make highly customized products according to the need of
customers.
Conclusion
From the above report it has been analysed that the pandemic has a lot impact of every
types of industries including the automotive industries. But, the premium car brands like Rolls
Royce, Bentley has faced a lot of success at the same time(Valenzuela-Levi, and et. al., 2021).
The impact on the automotive industry due to pandemic is discussed with the survival factors to
overcome from the problems. The impact of COVID 19 on Rolls Royce as well as their survival
factors are also discussed.
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References
Books and Journals
Belyaeva, Z. and Lopatkova, Y., 2020. The Impact of Digitalization and Sustainable
Development Goals in SMEs’ Strategy: A Multi-Country European Study. In The
Changing Role of SMEs in Global Business (pp. 15-38). Palgrave Macmillan, Cham.
Bharathi, D. and Dinesh, G.P., 2021. Impact of COVID-19 pandemic on Indian services
sector. Available at SSRN 3885430.
Carou, D., 2021. The Impact of the COVID-19 Pandemic. In Aerospace and Digitalization (pp.
47-49). Springer, Cham.
Chewpreecha, U., Prabhu, V.S. and Mukhopadhyay, K., 2021. Regional Impact of Automobile
Policy in India. In Economy-Wide Assessment of Regional Policies in India (pp. 193-
234). Palgrave Macmillan, Cham.
Contractor, F.J., and et. al., 2020. How do country regulations and business environment impact
foreign direct investment (FDI) inflows?. International Business Review, 29(2),
p.101640.
Huang, H., and et. al., 2022. Assessing the role of financing in sustainable business
environment. Environmental Science and Pollution Research, 29(5), pp.7889-7906.
Joseph, C.S., and et. al., 2021, May. Predicting and Modelling Costs and its impact on
Profitability using Artificial Neural Networks: A Case in Automotive Passenger Car
Industry in India. In 2021 3rd International Conference on Signal Processing and
Communication (ICPSC) (pp. 436-439). IEEE.
Mao, Z., and et. al., 2021. Impact of coronavirus pandemic on sharing mode of
manufacturer. Computers & Industrial Engineering, 158, p.107386.
Rao, P., and et. al., 2021. Vulnerability of financial markets in India: The contagious effect of
COVID-19. Research in International Business and Finance, 58, p.101462.
Valenzuela-Levi, N., and et. al., 2021. Housing and accessibility after the COVID-19 pandemic:
Rebuilding for resilience, equity and sustainable mobility. Transport Policy, 109, pp.48-
60.
Wang, Y., and et. al., 2020. How does COVID-19 affect China’s insurance market?. Emerging
Markets Finance and Trade, 56(10), pp.2350-2362.
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