Global Environment Report

This report analyzes the global automotive industry using PESTLE analysis and Porter's Five Forces. It examines the political, economic, social, technological, environmental, and legal factors impacting the industry. The report also explores the competitive landscape, including supplier power, buyer power, competitive rivalry, threat of new entrants, and threat of substitutes. The report concludes by discussing the importance of understanding these factors for businesses operating in the global automotive industry.

Global Environment

Table of Contents
INTRODUCTION..........................................................................................................................1
TASK 1............................................................................................................................................1
a) Environment of the Global Automobile industry using PESTLE analysis................1
b) Environment of auto-mobile industry using Porter’s Five Forces analysis..............4
CONCLUSION..............................................................................................................................8
REFERENCES...............................................................................................................................9

INTRODUCTION
Global environment is main part of automotive industry because it analyses the entire
business process. Global automotive industry is expansion of new markets driving the growth
and development in terms of vertical integration of global market, site relocations. Global
automotive industry expand their business all over the world. Global environment is beneficial
for Global auto-mobile industry because it can be analyse the market, industry and competitors,
clients etc. This report will discuss about the PESTLE analysis of global automobile industry.
Further, it also describes Porter's five forces which is helpful for analysing global auto-mobile
industry.
TASK 1
a) Environment of the Global Automobile industry using PESTLE analysis
Global auto mobile industry is the fastest growing sector to expand their business across
world. There are multibillion companies and they have large number of brand in marketplace. In
19th century, Automotive industry started expanding their business in global marketplace. It was
became an essential part of country economy as it was generating high revenue in market which
was beneficial for organizations and country (Adenle, Stevens and Bridgewater, 2015). Eastern
Europe has become the major manufacturing country, which produced 3-4 million cars in 2010
and even Russia's production is increasing 1.6 million but nowadays, it will be 1.2 million.
AutomobileAutomotive industry has large size that's why its revenue and growth directly
impacted on country.
Auto-mobile companies also involved in marketing and sales. There are different
countries making cars and building their own industries and factories in Poland, Romania, and
Slovakia etc. In 21st century, the innovation and technology have important part of automotive
companies because they can be easily differentiate in the vehicles and manufactures. Therefore,
they mainly focus on the efficiency of fuel and environment. Automotive industry pollute
environment because they generate toxic gases. Thus, organization will try to control the fuel
utilization and produce an efficient or low emission cars in marketplace (Carlisle, 2014).
Currently, automotive industry launch a new product in market such as electrical vehicle that is
emission free. Everyone can use this vehicle. It describes the PESTLE analysis of automotive
industry which is impacting on the business process.
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Political Factor- Political factor plays important role in automotive industry because it
directly impacts on profitability of automotive industry. Central government mainly concern
about the low emission vehicle. The tax on luxury car and their fuel guzzler very high. It is
difficult for people to maintain their vehicle services. In UK and US, the government has more
concern about the safety and security so that it is providing low emission vehicle subsidy in
marketplace. In global market, it will increase the environmental friendly vehicle and most of the
customer will attract towards vehicles and their services. The government support to low
emission vehicle for minimum environmental impact. The government rules and regulation
affect the revenue of brand and their organization. With the help of technology, it can be easy for
automotive company to provide low emission vehicle in marketplace. The government also
passes all rules and regulation regarding healthy environment. It is important for organization to
maintain their services in market. Government change their laws and political regulation
according to the market (Cavusgil and Knight, 2015). Political factor is important to control the
business process. For example- automobile industry manage their cost so that the political factor
have important role in this area.
Economical Factor- Economic factor is also important in automobile industry. Economic
factor is important part of auto-mobile industry and this industry can be hit by the economic
crisis. In most of the cases, sales of vehicle is declining because of competitors . It is affecting
the economic conditions. If the condition of economyic better so the sale of car or vehicle remain
high. Central Europe is one of the fastest growing country. Automobile industry produces many
product in marketplace. Russia and China is also another greatest automobile country to launch
many product in marketplace. The economic size and conditions are impact on productivity and
profitability of automobile industry. Global automobile industry is dependent on the purchasing
power of customer. There are different ways to analyse importance of economic factors in the
industry. Firstly, it will measure according to purchasing power of consumer because automotive
industry depend on purchasing power of consumer (Del Giudice, Carayannis and Maggioni,
2017). The largest brand mainly focus on providing product and services in low price because in
this way, it can attract customer interest in organization.
Social Factor- Social factor affected automotive industry because of changing the
culture, preferences and trend etc. Automotive industry adopt this force to maintain their social
culture for organization. Customers want specific look and style of car and they give more
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preferences. In International marketplace, SUV has higher demand because of their features,
style etc. Automobile industry manufacture the efficient product while targeting customers. All
people have different choices regarding features and style. Social trend and culture keep
changing and it also affects the model and brand of company. Most of the companies sell
particular model in global marketplace. It is essential for company because customer purchase
same type of product in market (Adenle, Stevens and Bridgewater, 2015). Social factor is affect
the culture and traditional. Changing trend is necessary part of global market for growth
and development of business process. Consumers are focused on quality of product and they
give more priority to their looks, style, features so it is important for auto-mobile industry to add
all the features in their products.
Technological Factor- Innovation and technology are important element that is helpful
for automobile industry to implement new ideas in product development. There are many brands
and companies which invested lot of money such as Ford and Hyundai etc. Ford is a leading
brand and they produce low emission vehicle in marketplace. Volkswagen is another competitor
in the marketplace. Customer always shift from one product to another (Eterno, 2016). The
demand of fuel efficiency and low emission is very high demand in marketplace. In this way, it
can be said that technology is important part of auto-mobile companies and it directly affects the
production and sales of automobileauto-mobile industry. The technology has been expanding
their business process in every areas. The auto-mobile industry always plans an effective strategy
or approaches for development. It also implementimplements innovative idea in product
development. The competition level is high in global market so it requires to developdeveloping
the high quality product in market.
Environmental Factor- The government passed rules and regulation to use the low
emission vehicle in market. AutomobileAuto-mobile industry mainly focuses on low emission
product and vehicle. The UK government has started to test the pollution level of vehicles
therefore, after passing test companies are allowed to launch it in market. Environmental friendly
vehicle is necessary for growth and development. It is necessary test for vehicle to pass test, in
21st century, the government concern about the pollution control all over the world.
Legal Factor- Legal factor affect the productivity and profitability of organization. Auto
mobile industry sells the product in international marketplace by following rules and regulation
related safety and quality of product. There are different law regarding tax, environmental law
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etc. Against the pollution developed by government so it is required for companies to maintain
and protect the environment. Auto mobile industry is expanding business in international market
so that they have many chances for labour force and automotive companies are protest against
child labour. It always produces the high quality of product in market and provide environmental
friendly vehicle. Most of time, top labour and employment issues are faced in global auto mobile
industry regarding sexual harassment. Government provide non-discrimination policies to give
equal rights to employees (Adenle, Stevens and Bridgewater, 2015). For Example-Toyota has
launch a faulty airbag that cause for accidents so that the government made law regarding the
passenger safety and security.
b) Environment of auto-mobile industry using Porter’s Five Forces analysis
Porter's five forces model is helpful for analysing the automotive industry. It will analyse
the competition level of marketplace. This force analyse situations of US marketplace. These
factors are considered as common elements which determine the impact on economy of country.
(Adenle, Stevens and Bridgewater, 2015). It is Europe based company which started in
1926 and founded by Karl Benz. Automobile industry is a leading organization to manage their
business process in proper manner. They provide many features and characteristics such as style,
excellence, comfort, safety and their performance. It is a leading organization in the automotive
industry because they provide customer satisfaction. Auto-mobile industry is working on
providing the best quality of product and services to customer. They innovate new designs which
is more environmental friendly for customers. They also used the renewable resources like
lithium batteries.
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The automotive industry maintain its position in marketplace and they are manufacture
auto-mobile parts in marketplace. For developing effective strategies and planning, Automobile
industry faced many challenging issue and problem. Michael Porter has developed five forces for
identifying the external factors of automotive industry. The global automotive industry t require
to develop approaches and policies to identify need and requirement of business.
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Illustration 1: Porter's Five Forces
(Source: Porter's Five Forces, 2017)

Porter's five forces discuss in followings:
Supplier's bargaining power- This force analyse that how the supplier drive up prices of
product and services. It affects the organization because there are number of supplier of main key
aspects of product and services. In this way, it also identifies the cost of auto-mobile industry
from switch from one supplier to another. There are various type of supplier in automotive
industry and it is based on small or large organization. Automotive company manufacture new
product in marketplace. Automobile industry firm use high quality of raw material used for
manufacturing (Griffith and Yalcinkaya, 2018). The supplier of auto-mobile industry can be
includes different product like leather product, car interior, wood designer, electronic devices.
Supplier in the automobile industry are weak because most of the organizations are small player
and only few organizations has large size and they also expand business all over the world.
Buyer's bargaining power- In auto-mobile industry, they have many numbers of buyers
to buy single product in marketplace. Most of the buyers are bargaining for low prices. Small
buyers switch from one brand to another brand. They have low cost involved in switching form
one brand to another. If buyer switch to another brand that is offering the product and services at
low price. Automobile industry is the fastest growing organization therefore, they mainly focus
on large buyers. The bargaining power of buyer is moderate. Most of the customers attracted
because of brand value. The automobile companies focuses on brand to maintain the market
image and customer loyalty (R. Kattman, 2014). It is required for organization to design an
effective quality of product in market. They provide the high quality automobile parts in
competitive prices.
Competitive rivalry- The auto-mobile industry mainly concern about their brand image
and market value. There are various number of influential and recognized brand that exists in the
industry. Most of brands trying to exist in market because they have fear about large losses
(Thomas, Kremer and Litchman, 2016). The fastest growing organization fulfils need and
requirement of customer. The locality level of customer is high because big automotive
companies are understands need of customer to provide the best quality of product and services
as per their needs. However, various brand target to another market segment but sometimes, they
will overlap. Automotive company expand the business on the behalf of quality, price,
technology, design and customer safety etc. There are important elements which are required for
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growth and development. Overall competition of automotive industry is very strong in
marketplace.
Threat of New Entrants- In the Global Market, there are various new competitors
entering in marketplace but it is very difficult for new brand to enter in market because they need
large investment and promotions. Initially, it required for new automobile company to invest
huge amount for establishing business such as recruiting highly skilled employees, distribution
network and manufacturing facilitates and services. Another competition barrier's in marketplace
is existing brands because they always promote innovate ideas that implement in manufacturing
and production to produce the best quality of product. Brand image is essential for auto-mobile
company to maintain the competition level (Ryu, Sohrabi and Acharya, 2014). Most of the
customers attracts towards organization because of brand image. New business mainly focuses
on the high quality of product and their engineering. Government have applied high taxes in the
organization to discourage other country brands.
Threat of Substitutes- There are different types of alternatives and substitutes in
transportation such as buses, planes and trains, taxis etc. None of organization provide the
accommodation and convenience to customer. Another alternative modes is that the customer
need to worry about maintenance and services because organization provide services to reach
product on location and areas. Threats of substitutes weak in the marketplace. The automotive
industry considers substitutes including bicycle, car etc. It is difficult for consumer because
substitutes are not available in every area or location. Auto-mobile industry move and using
different substitutes for growth and development (Singh, Singh and Singh, 2018)(Thomas,
Kremer and Litchman, 2016). Another competitor's organization use the substitutes in place of
product and services so that it will generate threat in business process. For example- The
automotive company provide the best tool and services to customer that can be substituted with
different services and tool performing different operations and function. The substitution is easy
and low cost so that the power of company is weak.
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CONCLUSION
This report discuss about the PESTLE factor which analyse entire business process in
proper manner. It identifies the political, environmental, technological, social, legal factors
directly impact on automotive industry. Further, this assignment describe the Porter's five forces
to analyse need of business. It also implements new approaches for increasing business all over
the world. These five forces are helpful for maintaining the positions in marketplace. However,
in above the international market has been affected because of competition level in this industry.
Each and every automotive industry playing important role for investing huge amount for
innovation and technology for increasing the business all over the world. It also helps for
increasing share in marketplace.
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Illustration 2: Porter Five Forces
(Source: Porter's Five Forces, 2017)

REFERENCES
Books and Journals:
Adenle, Stevens and Bridgewater, 2015. Global conservation and management of
biodiversity in developing countries: An opportunity for a new
approach. Environmental Science & Policy, 45,. pp.104-108.
Carlisle, 2014. The Large Marine Ecosystem approach: Application of an integrated,
modular strategy in projects supported by the global environment
facility. Environmental Development, 11,. pp.19-42.
Cavusgil, and Knight, 2015. The born global firm: An entrepreneurial and capabilities
perspective on early and rapid internationalization. Journal of International
Business Studies, 46(1),. pp.3-16.
Del Giudice, Carayannis and Maggioni, 2017. Global knowledge intensive enterprises and
international technology transfer: emerging perspectives from a quadruple helix
environment. The Journal of Technology Transfer, 42(2),. pp.229-235.
Eterno, 2016. Zero tolerance policing in democracies: The dilemma of controlling crime
without increasing police abuse of power. In Global Environment of Policing (pp. 76-
100). CRC Press.
Griffith and Yalcinkaya, 2018. 13. Global product launch: a perspective on past, present,
and future research. Handbook of Research on New Product Development, p.267.
R. Kattman, 2014. In today's global environment organizational culture dominates
national culture!. Benchmarking: An International Journal, 21(4),. pp.651-664.
Ryu, Sohrabi and Acharya, 2014. Toward mapping gridded drought indices to evaluate
local drought in a rapidly changing global environment. Water resources
management, 28(11), pp.3859-3869.
Singh, Singh and Singh, 2018. Thinking Globally, Leading Locally: Defining Leadership in
Diverse Workforce. In Management Techniques for a Diverse and Cross-Cultural
Workforce (pp. 98-115). IGI Global.
Thomas, Kremer, and Litchman, 2016. Environment and evolutionary history determine
the global biogeography of phytoplankton temperature traits. Global Ecology and
Biogeography, 25(1),. pp.75-86.
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Online:
Porter's Five Forces, 2017. Available through: <
http://3.bp.blogspot.com/-MvpJaF4jhMs/UoJcghDugsI/AAAAAAAAAB8/xOPB1RdTvS
g/s1600/Porter%2527s+F+image-001.jpg >
Porter's Five Forces, 2017. Available through: <
https://www.cgma.org/content/dam/cgma/resources/tools/essential-tools/
publishingimages/porters-five-forces.jpg >
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