SWOT Analysis of the Automobile Industry

This assignment requires a thorough SWOT analysis of the automobile industry. Students must identify the key strengths, weaknesses, opportunities, and threats facing this sector, drawing upon provided academic sources and online resources such as Marketing91's SWOT analysis of the automobile industry. The analysis should consider various aspects of the industry, including technological advancements, consumer preferences, economic conditions, and competitive landscape.

International Business
Context

TABLE OF CONTENTS
INTRODUCTION:.........................................................................................................................1
PART A...........................................................................................................................................1
Audit of auto mobile industry and Internal analysis of Apple....................................................1
RECOMMENDATIONS AND CONCLUSION:..........................................................................6
PART B............................................................................................................................................6
Evaluating macro environmental factors that influence auto mobile industry...........................6
..........................................................................................................................................................7
RECOMMENDATIONS AND CONCLUSION:........................................................................11
CONCLUSION:.............................................................................................................................11
REFERENCES:.............................................................................................................................12

INTRODUCTION:
Business environment in global market provides vast opportunities for business to grow. It helps
business to have a depth knowledge of its surrounding environment that consists of both internal
and external factors. The external factors are government consumers, competitors, etc while the
internal factors include employees, system, culture, etc. All these factors and forces are
combined together and is known as called business environment. It consists of micro and macro
factors in which business operations are performed. Macro forces are external environment
which can not be controlled and affects the performance of business while micro consists of
internal environment that exist within the business. This assignment will throw light on the
macro and micro environmental factors that influences Apple Inc. in US. Further, it will show
how a company will be affected by entering in auto mobile sector in US. In addition to this what
are the opportunities for growth in this sector and possible future threats is discussed.
For undertaking this present organisation selected is Apple Inc. The cited firm belongs to
technological sector and operates globally. The existence of the company on such a great level
requires understanding its business environment. Thus, this report will help them know the
current and future status of auto mobile sector and to enter into it (Poulis, and et.al 2013).
PART A
Audit of auto mobile industry and Internal analysis of Apple
Auto mobile industry is the most important building block of society as it provides status
symbol to be shown. It is very useful fr people who prefers to use public transportation. This
industry gives opportunities for other industries to set up. It provides employment to number of
people and helps in meeting their needs. The current state of this industry in UK is neither too
good nor too bad. It is due to the exit of UK from EU. After this major decision it has affected
the entire European market. Most of the industries are finding it difficult to deal with it. They
have to change their business strategies and objectives. On the contrary, its positive effect is that
there is been increase in demands of people and now they are freely able to trade with UK. Trade
between UK and other countries has increases and industry having plant in UK is able to take
decisions on their own (Turker,, 2015).These industries do not have to depend on EU policies for

trading. This sector showed its high production in 17 years. It boosted UK economy in great
way. UK has some biggest car manufacturing plant of Nissan, land rover and Volkswagen.
Potential Future trend -It is believed that UK will be able to grow in same way as it is now.
There will be more growth in auto mobile industry and it will lead to economic development. By
2025 this sector will launch electric car in UK for trial. This will be done to protect environment
and reduce use of diesel cars. Further, many new company like Apple, Volkswagen will enhance
living standard of people by providing them driverless cars. Also, government will force these
industries to produce fuel efficient cars to reduce emission of carbon di oxide. Its negative
impact is that increase in import- export tariffs by almost 10% will increase the cost and price of
cars. It will have a huge impact on production and trading with other European countries.
Moreover, the major consequences will be on people who are employed in this sector. There will
be threat of getting unemployed of these people. It is because no EU policies will be applicable
to them and they might have to leave UK (.Poulis, and et.al 2013). Thus, UK will restrict the
entry of immigrates and other people will not be able to do job there. It will affect demands of
people as change in trends will force to buy the latest cars. But if companies are not able to meet
their demands due to tariffs, it will lead to decrease in sales. Also, increased price of product will
not allow customer to purchase and it will result in fewer profits.

The future trends, opportunities and threats of auto mobile industry can be found out by doing a
SWOT analysis. It provides a clear view on this segment will survive in near future. It shows
strengths, weakness, opportunities and threats in particular business environment. It is describes
below as:-
Strengths- The major strengths of this industry is it has become a crucial part in country
economic growth by contributing in GDP. It has provided and created large number of jobs in
other sector. It has improved quality of life by improving standard of living. With the evolution
of CNG and shell gas it has provided people opportunity to create a healthy and safe
environment. With frequently innovations and use of advanced technology it has produced low
cost and more secured vehicles (Brannenand et.al 2014). They are increasing expenditure in
Research and development for growth by using renewable resources of energy like wind, solar ,
etc.. Now the market growth has shifted towards Asian market due to improved economic
conditions, changing lifestyle, etc. with there focus on developing countries and market
competition companies have started producing value for money vehicles. It means features of
fuel efficient, high mileage, etc. this has helped them to target middle class people to satisfy their
needs. It has lead to growth in these countries and enhanced their lifestyle. It has also attracted
Illustration 1: SWOT analysis

companies like Volvo, BMW to target high class customer. Asian market like India, China,
Bangladesh provides cheap work force and high resources for manufacturing. So this industry is
establishing their production plant there in order to reduce cost and increase profits. It also helps
them to have large customer base for their products and accordingly market segmentation can be
done. These are markets that has been benefited by this sector.
Weakness- Its main weakness is government intervention. This sector is controlled by
government due to various policies, rules and regulations made by them. It affects their growth
rate as they are not able to operate freely. These restrictions are imposed to protect environment
and interest of customers (Purcell, and Scheyvens,, 2015). if It is not imposed they can harm the
climate. Other than this second biggest problem faced by them is bargaining power of customers.
Now the market is changed from market demand to supply. It means that due to intense
competition and variety of choices available to customers they can choose whatever they want.
This shows that customer is the king and company needs to lower their price to attract them.
Also, customer can bargain with price offered to them to purchase product. The common
problem of this sector relating to recalling of vehicles due to some technical defect has created a
bad image in the minds of people. This has created confusion among them to purchase the
product. It has lead to decrease in sales and difficulty in retaining the customer.
Opportunities- This sector is having a vast amount of opportunities in near future. It will help
them to grow more by providing fuel efficient vehicles. It is a very good option available to them
if they want to survive in the market. This can be achieved by following the strategy of product
development. Economies like UK and US are best options to provide electric vehicles to them.
Moreover, making strategic alliances with other companies can be done to expand market and
offer different products. Segmenting market and identifying customer needs can be done to
expand this sector. Also, collecting information and data from around the world can be useful in
developing this sector. Entering new markets like Asian and other nations through market
expansion strategy will increase product demand (Cavusgil, and et.al 2014). By investing in
original equipment manufacture (OEM) business can give contract to other company for
producing goods. It will help in reducing cost and building strong relationships with them. This
will smooth the ease of doing business and production of goods.

Threats- The increasing competition in global world in the major threat that has put strong
barriers to restrict new companies to enter. They give intense and tough competition to each
other in order to gain market share. In doing this they provide cheap quality vehicles to
customers at low cost. This can often lead to loss of life and creates bad image in the society.
Uncertainty in economic conditions such as recession, un -employment, etc. occurs at irregular
times that impacts for a long period of time. Also, due to increase in investment of research and
development prices are increasing and company is not able to determine the return on investment
(ROI) (.Forsgren, and Johanson,., 2014).
Apple started working in 2014 with almost 1000 employees to develop a new product.
This product relates to auto-mobile sector and is known as Apple cars. The first thing Apple
should do is to identify the current and future trends of this market in UK. What is the possible
growth and how people will react to their new product. As Apple belongs to technological sector
they must have planned something extra ordinary to enter in this sector. The major strength of
Apple in this field will be use of the latest technology. People who already are loyal Apple
customers will help in advertising their product. Also, having large customer base of iPhone,
iPads, etc. Will help Apple in selling this. But its weakness will be to gain market share by
competing with others. Companies like Tesla have already launched similar products and has got
a positive response from customers. Moreover, it will be very difficult for Apple to attract
audience as many strong players are already existing. People will not trust or relay on this as
entity has not produced product before. For growth in this sector Apple can make alliance with
other brand to sell their product in UK. This will result in building positive image in the minds of
people therefore making it easy for entering. Further, they can focus to expand their market in
Asian market like china and India where there is large audience is available. Entity can also
focus on countries where pollution level is very high and government is focused towards
reducing it. Apple can enter through MOU with government and start selling their cars. At last
threat is that these cars can cost a lot to consumers to pay for it (Geppert, and et.al 2016).
Further, people may not be interested in purchasing by thinking that it is just an experiment. The
other companies focus on this product can give stiff competition to them. Also, there might be
scarcity of resources in the future that are needed for car to run. If product fails it will have bad

image and market value of entity will fall. It can also influence sales of its other product such as
iPhone and iPad. This can hamper the entity to enter in this sector.
RECOMMENDATIONS AND CONCLUSION:
From the above research it is concluded that there is very stiff competition in auto mobile sector
as all the entity is focused towards changing needs of customers. Due to increase in pollution
they are pressurised by government to produce fuel efficient cars. The main strength is emerging
new market and changes in living standards of people that has created more demand. Also,
continuously product innovation has helped in stable growth. Its weak point is shift of market
from demand to supply and government intervention (Beamish, 2013). There is vast opportunity
for growth by making strategic alliance or market expansion. But threat is tough competition and
uncertainty in economic conditions. Apple must be able to identify demand of UK people and
then only launch their product. US market differs from UK so it is not possible that they get
similar response of people. After exit of UK from EU will affect their strategies and business
operations. If their product fails it will create a bad image of enterprise and this will lead to fall
in market value of Apple. Therefore, they must have a clear vision and idea to enter in auto
mobile industry.
PART B
Evaluating macro environmental factors that influence auto mobile industry
Auto mobile industry is a multi billion industry with several top class brands competing for
market share. Recent growth has majorly contributed in world's economy in terms of revenue.
Due to its large size its business strategies and development is affected by many environmental
factors. These factors decide their sales and growth of company in a country. The increasing
pollution level has pressurised this industry to take effective measures regarding the production.
PESTEL is a mnemonic which denotes P for political, E for economical, S for social, T for
technological, E for environmental and L for legal. The business like Volkswagen will analyse
these factors while taking decisions (Daniel, and et.al, 2017) How these factors impact this sector
is presented below in PESTEL analysis:

Political factors- They directly impact the profitability of this sector. Now government are
forcing to produce low emission vehicles and has increased taxes on luxury vehicles. They are
fully supporting this industry by providing subsidy for that. Further, the demand has also grown
for fuel efficient vehicles. Moreover, various political factors include fiscal policy, import export
tariffs, etc. differs in various countries. In addition to this changing government regimes can
create negative or positive market situation for business. These factors can not be controlled and
managed by organisation instead they have to manage their costs and strategies. This is done by
understanding political environment and future prospectus of change in that. Any change in laws
and taxes affects the production and profits of company. Apple needs to have thorough research
in UK if they want to enter in auto-mobile ( Ojala, 2015). The import and export laws varies in
different country so it affects the trade. Further, fiscal policy, fluctuations, etc. forces company
to modify their strategies for day to day operations. Apple must look what is the future growth
in Europe and then they should clarify its mission for entering in this sector. If there is any
change in import export tariff then it becomes difficult for company to do trade with other
nations. Auto mobile sector is highly dependent on import export as they have to meet the
demands of customers in different countries. So it will have a great impact on them because they

have to follow several rules regarding this. It includes the political framework within which
business decisions are affected by government. The government may take various decisions like
a new tax law by which the entire organisational operations will be affected. These factors
influence the business to a great extent. It will also affect the financial sector as it provides loans
to people for fulfilling their demands. Asian, European and US markets are different so every
company related to this sector is highly influenced by change in political situations of any
country (Picciotto, and Mayne. Eds., 2016).
Economic factors- They show the national income of people and country. The auto mobile
industry helps in development of other industries like steel, glass, etc. which contributes in GDP
as well as providing employment to the people. If economic conditions are not good it affects the
sales. In under developed and developing countries these factors impact auto mobile sector to a
great extent. There are various techniques that are used to analyse economic conditions but
mostly used is to analyse the purchasing power of people of that nation. These people demand
can be fulfilled by reducing the cost and providing them products. If GDP of nation grows, it
shows that economy is developing. This provides a great chance for auto mobile industries to
take advantage of it. Other factor like inflation rate describes increase in price of goods and
reducing customer purchasing power. In this situation the enterprise can reduce their cost and
gain market share. Moreover, foreign exchange rate determines the currency rate of that nation.
For example India's currency rate is determined by dollars, thus if price of dollar increase it
leads to increase in price of rupees. So if Apple produce products in US and sells it in India it
will earn a huge profit (Gummesson,, 2015). This is due to foreign exchange rate. On the other
side uncertainty in the economic conditions that arises due to fall in currency rates or increase in
price of fuel impacts the organisations. This enables them to change their prices in order to meet
the demands of customers and help in economic growth and development of nation. It leads to
decrease in profits due to lows price selling of product.
Social factors- Every organisation is deeply influenced by socio- cultural forces. These forces
include the elements of society in which business operates. These elements are the needs and
culture of the people. Auto mobile sector have to design and develop new models in order to
fulfil the changing needs of customer. Taste and preference of society changes from time to time.

It should be identified by having research in market and taking feedback that will help in
understanding desires of various customers (Dunning,., 2013). The main factors that has to be
analyse in this is age distribution. Most people prefer to buy SUV's to go on long trip while
others prefer to buy family cars. If there is change in taste of people then entire society gets
affected due to this change. It also defines the lifestyle and standards which are been maintained
in the society. It enhances their living standards and lead to better image of society. This can be
best done by segmenting age group and income level of people. Then accordingly production can
be done and demands can be met. For example culture of UK people is high class as they prefer
to buy luxury cars as compared to Indian market. Its negative side is change in social trends can
lead to older models go out of fashion. It creates burden of company on how to dispose
remaining model. Technology also plays an important role in determining change in trends of
people. As they get to know about the latest designed model they start demanding that. Also,
popularity of brands and models in different countries allows people to change their taste and
preferences (Coffie, and Blankson., 2016).
Technological factors- Innovation in technology helps a company to gain huge market share.
The more innovative a company will be more customers will be attracted towards them. These
innovations help in creating the demands of the new product and growth and development of
industry. Also, customers focused has shifted to low emission and high mileage cars. With the
help of new technology the changes in the market arises which leads to the reduction in costs and
increasing the profits. It helps business to adopt new technology that specifies their coming
products. Customers get attracted towards new products and they start demanding it.
Technological changes also allows under developed and developing economies to grow. All
organisations focus on how to innovate new designs and software to produce cars. The
technological changes in market forces companies to implement them. It can be implemented in
production process to reduce the per unit price of product. Research and development department
always try to find out the latest changes in this filed so that it can be implemented. For example-
if there is any change in design then it has to be modified in each unit. Any use of new raw
material then it must be informed to production unit to apply (Schniederjans, and et.al., 2015). In
present times customers are demanding fuel efficient cars so it essential to have research to how

to produce them. Also, the needs of electric vehicles in near future will force auto mobile sector
to spend huge amount on research. It will be useful for them in discovering and innovating new
technologies. It also helps company to maintain competition in the market. With use of more
advanced technology more customers are attracted that leads in creating demand. It increases
sales and revenue of company .The variety in cars that they produce differs according to the
segments. They also have to ensure safety of customers as cars are the most complex product to
produce (Luo. and Shenkar, 2017) It is because lot of components and parts is required in it. If
there occurs a minute defect in components it can lead to major accident. So industry by using
technology ensures product safety and give assurance to customers for using it. Government also
support by sharing information and data with different countries. Thus, auto mobile sector is
highly influenced by changes in technological factors.
Environmental factors-It is determined by external environment in which organisation do its
operations. In 21st century government has now focused more on controlling pollution and for
that they have made strong laws. This has forced all the major players in this sector to produce
low emission vehicles to protect and secure the environment. It is also done to create healthy
environment by providing new types of vehicles. In recent times increase level of pollution in
UK and European countries has forced EU to impose strong and effective policies and
regulations on auto mobile industry (Chen, and et.al 2015). That has impacted the overall
business strategies and decisions. Some times it consists of both internal and external forces in
which the business operates. Moreover, the industries that provides raw materials for
manufacturing car also harms surrounding environment. The wastage of materials like tyres,
scrap, etc must be disposed in a manner that do not harm climate. For this local authorities are
responsible in making policies and
rule. UK and US have now imposed pollution tests that each company has implemented while
producing goods. These include vehicle passing, safety tests, etc.
Legal factors- Another important factor that has to be followed by this industry are laws. These
laws affect the performance and profitability of firm in various countries. It differs according to
political and local conditions of various countries. In also consists environment, safety, consumer
right laws, etc. that business has to deal with it. Vehicles that are imported to other countries

have to pass tariffs and duties that are mentioned in legal laws. It is also ensued that no firm do
business by fooling people and gives power to take legal actions against them. These factors
show the way business respond to society and people (Poulis, and et.al 2013). In UK has
implemented laws such as minimum wage, health, safety, etc. that ensures business operations
and consumers safety. This industry is having a lot of complexity because most legal cases
belongs to this sector. If any one of law changes it impacts all companies that are operating in
that country.
RECOMMENDATIONS AND CONCLUSION:
All the factors discussed above are in context of auto mobile sector that is second largest industry
in terms of revenue. Various factors affects this sector in unique way. The first one is political
condition of country in which they operate. Now more and more government and customers are
focusing on low emission vehicles (Cavusgil, and et.al 2014). This has changed the social trends
of people for meeting their needs. However, the significantly increase of new markets has
affected the intensity of competition in this sector. Every enterprise is focusing on investing
more in technology to produce advanced products by reducing per unit cost. It will help them in
gaining more market share. This sector has also emerged effectively in under developed and
developing economies to help them grow and develop.
CONCLUSION:
From this assignment it is concluded that internal business environment provides the
opportunities for growth and development. It shows what are the possible future threats of auto
mobile industry in world economy. Further, how external factors affect the business environment
and how these factors influence business strategies and decisions that are implemented. Various
factors such as legal, social, etc influence business operations and its objectives.

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Online
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