The Global Business Environment

This essay explores the impact of the global business environment on companies and strategies to gain a competitive advantage. It focuses on Volvo cars as a case study in the automotive industry, discussing the use of Porter's five forces model and the Porter Diamond model. It also examines the emerging opportunities in the production and marketing of electric cars. The essay concludes with a discussion on the best and worst companies to invest in the automotive industry.

THE GLOBAL
BUSINESS
ENVIRONMENT

Table of Contents

INTRODUCTION
Business operate in the turbulent environment that constantly chances and leads to
diverse impact in the performance. In order to sustain in the global business environment
effective decision are taken by exploring the opportunity as well as threat that exist in the
external environment. Preparation of adequate strategy by gaining the deep insights enhances the
probability to attain success and get the benefit of competitive advantage. Further, the term
globalisation may positively and negatively affect the operation by enhancing the opportunity as
well as global competition (Black, Morrison and Gregersen, 2013). So the internal manager need
to have foresight vision in order to tackle the situation and explicitly cater long term advantage.
For the better understanding Volvo cars has been selected which is the part of Automotive
industry and cover the global market successfully. The company engages in the activity which
are associated with the production and sales of heavy vehicles like buses and truck. To cater the
existing demand the company has become revolution by modifying the technology and coming
up with electric cars to cover the potential market successfully. The essay focuses to shape the
existing policies by making the necessary precautions for future in order to gain the long term
competitive advantage. Along with that focus is given to identify and exploit the opportunity
available in the external market to gain the profitable situation effectively.
MAIN BODY
A. “Electric vehicles in Europe: gearing up for a new phase?
Business environment refer to the surrounding that consist of diverse factors like
competitive pressure that can affect the ability of firm to operate in the external condition. It
basically involve the various major forces that direct affect the profitability of firm. So the
successful organisation analyse the external changes or force and promote the upcoming
changes. Accordingly, the car manufacturing company which is Volvo can shape its process that
leads to the sustainable development.
Further, application of Porter's five force model is the strategic model or frame work that
determine the significant forces which can be the strength of company if it inculcate the strategy
properly and leads to competitive advancement. It simply determine the attractiveness and
profitability that differ from one region to another. So the Volvo car company need to understand
diverse phases and can effectively shape the functioning of firm. It involve forces like Threat of

new entrant which is low for Volvo cars because it is the well established brand and serve the
worldwide region. The company generally gets the benefit of economies of scale in order to
manufacture the heavy vehicles and expand its reach by manufacturing the other products like
marine as well as industrial engines. Along with that it has invested in the manufacturing of
electric vehicle cars that helped the company not to get affected by the arrival of new companies
(Blodgett, Hoitash and Markelevich, 2014). The other force is Threat of substitution that is
high for respected company as the company is large in size and the existence of neck to neck
competitors are less for heavy vehicle. This lead the company to lavish its position of market
leader and capture the wide market share. Additionally, it adopt the differentiate method that
help to display the unique image of serving supreme quality and bring transition by adopt the
emerging needs of customer. Thus, the third force is Threat of competitive rivalry which is low
for the Volvo cars as most of the customer prefer vehicles that have greater quality and customer
experience them at reasonable prices. As a result, Volvo adopts the unique strategy where it
position the brand on the basis of its quality that appeal the interest of consumer. It basically uses
the market research to remain ahead otherwise there is a huge competition within auto-mobile
sector.
Further, due to the sound availability of substitute the Bargaining power of buyer is
high because they get the pool of successfully companies that effectively cover their need. So the
comparison is made on the basis of quality as well as prices due to which it is essential for to
remain updated and cover the market significantly. The fifth force is Bargaining power of
supplier which is low because of the large size of firm due to which the vendor are not in right
state to bargain. Also they get the immense profit by being the part of renowned company.
Thus, on the basis of five force the Volvo car has embrace the chances by identify the
changing requirement of society and simultaneously carry out the functioning of firm. Like,
being a car maker it significantly took the adequate step for environment where it move into the
production of electric car vehicles. Along with that it has effectively cater the existing as well as
potential needs of the customer by bringing the necessary amendments and carrying out
operations effectively. Investing in such inventions attract the internal as well as external
stakeholders and enhance the growth as well as development of company. The company was
founded in the year 1927 in the Sweden and diversity its business in the developed as well as
emerging economies of world. The major purpose of such diversification is to gain the global

dominance by effectively participating in the auto maker sector that has helped company to
become of the world's largest manufacturer. Further the main reason for company to evolve is by
forming the partnership with other manufacturer like Renault and explicitly gain the position of
global leader. Research and development is the essential part on which the Volvo company
constantly invest so that they remain well versed with the need as well as demand of customer.
Therefore, this pushes the efforts of firm in order to meet the need of the customer and diverse
the market range significantly.
Moreover, Volvo company can slightly bring the affirmative chances which are essential
to cater the future needs and requirement of the potential market. The company can more focus
to open the various brick and mortar outlet as well as enhance the global presence so that it can
cater the need of each and every corner of the world. Along with that the company can exploit
the national and international growth by paying attention to the constructive feedback of people
(Carneiro and Brenes, 2014). Currently, the company has invested in the electric cars but along
with that it should invest to bring the innovation in terms of product quality as well as design so
that the customer prefer Volvo cars over other electric cars like Tesla. Further, investments
should be made in the demand forecasting so that the company can effectively enhance its
operational unit. Along with that focus is given to strengthen supply chain management to
widely reach out diverse area and mitigate the chances of risk associated with global operation.
Therefore, the prominent reason to implement vital changes is that it can retain its leading
position and retain the interest of existing as well as potential customer within global market.
Competitive advantage is basically the preferable situation that assist the company to
overpower the other competitive pressure because they have the advantage to exploit significant
resources or sound workforce. This strengthen the operations and help to gain the advantage
situation. Volvo car maker carry out its operations on the basis of by using the differentiation
strategy in order to gain the attention of consumer and establish the valuable image. Application
of Porter Diamond model involve diverse factors that collectively function to analyse the
national competitive advantage. The first component is Factor condition involve the diverse
resources like capital, availability of natural resources and skilled manpower that may or may not
be present with the nation (Chand and Tung, 2014). So availability of the diverse resources like
in Germany the manpower is specialised within the field of car engineering due to which it is
preferable for company to function within such areas. As it can also assist company in terms of

bring certain modifications to enhance the performance. Second factor is Demand conditions
under which company can only involve the huge competitive pressure if it generate the sound
demand from home country. Launching products that hit the preferences of customer enhances
the market size and leads to growth. Third factor which is in context to related as well as
supporting industries that too operate with objective to encourage the actions of consumer. So
Volvo need to identify the performance of competitors and accordingly remain competitive and
gets the advantage of fast mover in terms of advancement of technology. Alongside, the fourth
factor is about planning out the firm strategy and structure to compete against rivalry. It
determines that competitive pressure can be offset on the basis of set strategy as well as structure
that need to be inculcated viably (Popescu, 2013). In case of intensively rivalry pressure focus
needs to be given by Volvo to come up with innovation and function successfully. Therefore,
this subsequently helps to gain the competitive advantage in terms to establish proficient image
and gain durable amount of profitability.
B. Emerging opportunities gained due to production as well as marketing of electric cars
Global car manufacturer in order to sustain the operations within external environment
analyse the opportunity and constantly function with the objective to cater wide market possibly.
There are possible drivers that need to be anticipated by an organisation for which PESTLE
analysis is used in order to predict the changing drivers and sustain the core business functioning.
Explanation of the model include elements like Political factor that include the laws, regulation
as well as political condition which affect the production as well as sales of the Volvo cars.
There are various economy that are more prone to increase the infrastructure and boost up the
overall economy that automatically increases the demand of vehicles (Shenkar, Luo and Chi,
2014). So Volvo along with develop economy need to concentrate on other region and enhances
the profitability. On other side usually the government in order to promote the use of public
transport enhances the taxes imposed on the heavy vehicles which may leads to the shift in
demand. So significant policies needs to articulated in order to cover wide foreign market
effectively. Economical factor include the diverse condition that need to be concentrated by
firm and set the strategy wisely. It include the disposable income of consumer, interest rate,
inflation and so on that explicitly help to decide the significant strategy and enhance the
performance successfully (PESTEL Analysis of Volvo – USA Market, 2018). In terms of Volvo
company overcome the uncertainties as well as challenging situation by making the strategy as

per diverse condition like at the time of inflation respected company tries to reduce the pricing of
offering to maintain its sales. Social factor encompasses the deep understanding on the dynamic
preferences of customer that is understood by the manger in order to bring the changes and leads
to the immense growth (Sørensen, 2012). Currently, people are more conscious in terms to
safeguard the interest of environment so they prefer the product and services that are
environment friendly. By concentrating on the emerging demand of the customer helps the firm
to posses the desirable position and retain the durable growth. Technology factor involve the
rapidly changing and innovative method that help to satisfy they current needs of the potential
market. Generally modern car embraces the changes and explicitly adopt the latest addition so
that customer gets each and everything under a reasonable package. Volvo company is the
greater hub that focuses to use the high tech tools and technique and participate in the
advancement by indulging into research and development activities. Environment factor in
terms of automotive sector promote the wide usage of green technology that safeguard the
interest of surrounding as well as society. Volvo cars has become one of the leading companies
of world that has addresses the challenges and seek to gain opportunity for sustainable motives.
Like, it has shifted from the fuel car to the fully automatic car to reduce the dependence on
renewable sources along with that it has participated to reduce the carbon footprint. Further,
there are certain countries like Europe and USA where the government policies as well as
regulations in terms of environment condition are strict. Adoption of the sound policies as well
as regulations has assist company to gain the enrich position effectively as well as efficiently.
Legal factor involve significant legislation or government law that is necessary for the Volvo
company to render in order to carry out smooth operations. This basically helps the firm to
maintain the relationship with internal stakeholders that include employees. Along with that it
attract the external stakeholders like investor and customer to remain the part of company for
long duration (Wetherly, 2014). Certain laws which are related to gender discrimination, health
and safety law need to be effectively fulfilled so that the functioning takes place as per the
guidelines. The employer of the Volvo company organises training session where the new and
existing employee are taught to use the new technology without any damage. Such expertise
knowledge helps in effective participation of business activities. Therefore, all the external
opportunity with the help of PESTLE analyses needs to be identify in order to expand the
functioning successfully and gain enormous growth.

Automotive industry comprises of various companies that produces as well as sell car to
the diverse global market (Best and worst cars to invest, 2018). But there are certain business
that fall under Auto-maker industry and is not desirable for the individual to make long term
investment. Lincoln is the luxury brand and is considered as worst performing company due to
which it is not feasible for the general public to incest in such car that receive low rating and
preferences of the customer. Similarly, Acura is gain the luxury brand that is outperforming in
the market. The sales of company is comparatively low in comparison to the other competitors.
Like, in 2018 the sales of company was around 2.4% which is not the preferable situation for
firm in terms to gain the positive response of customer and expand the sales successfully.
CONCLUSION
From the above report it has been determined that global business environment need to be
effectively identified as it involve the dynamic factor that keeps on changing. So all the major
forces needs to be studied by using the Porters five force model which helps the business to
strengthen its abilities and function effectively. Along with that Porter Diamond model help the
firm to gain the national competitive advantage and seek the advantage in terms of the other
competitive pressure. Further, adequate study of the external analysis that involve the PESTLE
analyses help to identify the opportunity with objective to exploit the advantage of sustainable
development.

REFRENCES
Books and Journal