Global Environment Assignment - Solution
Added on 2020-10-23
8 Pages3174 Words263 Views
Business Development
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Global Environment
With the commencement of globalisation, numerous factors emerged in globalenvironment which can affect functioning of a business in current market. It is very essential toassess them for formulating strategies in order to sustain in an economy. There are many reasonsdue to which these aspect arises and are regarded to be uncontrollable by any enterprise.Therefore, it is very necessary to analyse them and form defence planning in order to provideeffective growth as well as expansion. In this report, environment of the Global Auto mobileindustry has been assessed by using PESTEL analysis and Porter's five forces in order to carryout good understanding over automotive market.PESTLE analysis is considered to meet the assessment of macro environment and itsassociated impacts that affects the functioning and operations of the industry. These factors occurexternally and are needed to be identified for successful operating in Global Environment. Itinvestigates political, economical, social, technological, legal and environmental factors of theatmosphere.Political factor has a significant role and has a direct impact on profitability of automobile industry. Government of several nations are preferring those vehicles having lowemission. There are numerous taxes which are levied on all luxury as well as fuel auto mobiles.For instance, in United Kingdom, authorised bodies are providing subsidies for vehiclesfeaturing low emission. It has been noticed that there is an increase demand of environmentfriendly transports. They are getting high support from government of various countries due totheir less harmful impact on ecological surroundings (Alarcón, 2014). Rules and regulationwhich are assigned by the authorised legal structure of nation has a strong affect on revenuegenerated by this sector. Vehicles having latest technology of fuel has the ability to pass everycriteria which is set by several nations across the world. There are other aspect of politicalscenario such as policies regarding import as well as export and apart from this, associated taxescan differ according to several nation. Also, export and import legislation which changes acrossthe countries and also jeopardise the work of automaker and ca be headache for them. Hence, thepolicies of state is remarkable extent which influence the business of automotive industryallowing them to trade overseas. Also, in context of economic environment of business, there are several forces thataffects the financial stability of auto mobile sector. This industry is very prone to economiccrisis. When the economic conditions of global world is not good then they face a fall in their1
sales perspective. Demand related to high prices or luxury vehicles is completely affected bypoor conditions of an economy. Apart from this, there is a high tax which is levied on costlytransports. Sales of vehicles in a country depends upon developing status of the economy. As indeveloped market demand and sales of vehicles is very high as compared to those nations whichare developing or under developed. It has been observed that economy size and the relatedeconomical conditions of global countries that has an immense impact on profitability of thisindustry (Govindan, Khodaverdi and Vafadarnikjoo, 2015). Apart from this, there are manyfactors in an economy such as inflation rate, recession, trade barriers that can influence thesurvival of auto mobile sector in that particular nation. Car business is growing rapidly asdifferent nations are tend to gaining huge support and revenues from the industry. As per thereverberation, US is producing nearby 12.6 million cars, Japan 10.3million which has increasedin recent years. This affects the financial stability of manufacturers who are related to thissector. Market is directly influenced by forces which are related to socio-cultural aspects. Automobile sector is also impacted by dynamic social as well as cultural trends and the preferences ofindividual. Manufacturer of vehicles must consider these factors. Every new model is released bykeeping every aspect in mind which is associated with preferences of customers in a particularmarket. Apart from this, there are several specific models which are demanded at specific nationonly. For examples, in some markets Sedan can be in demand or SUVs, that can be dependentupon likes and dislikes of individuals who are living there. Age distribution criteria can beregarded as the most important factor for formulating targeting strategies (Kumar and Rahman,2016). Also, person belonging to different culture have varied style as well as preferences. It isvery important to consider demographical characteristics in order to choose particular segment ofthe customers for targeting which can lead to increase their sales in an effective manner. Forexample due to traffic or pollution aspect now individuals are shifting towards preferring publictransports or use of compact cars that definitely affects sale all over the world.Innovation as well as technology is regarded as an essential determinants of market sharein auto-mobile sector. These aspects can lead to increase the market share. The industrycompletely relies on the research and development departments and makes huge investment inorder to provide effective model that can satisfy the demands of customers. In present scenario,auto mobile sector is focusing on developing as well as producing such vehicles that creates less2
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