Impact of Increased Competition and Balancing Technology Demand on the Automobile Industry

This report analyzes the impact of increased competition and balancing technology demand on the automobile industry. It categorizes the issues using PESTLE analysis and discusses their positive and negative impacts on the business.

Marking scheme

Table of Contents
INTRODUCTION...........................................................................................................................1
Identification and description of key issue..................................................................................1
Categorization using Pestle analysis............................................................................................1
Positive impact of the issue upon business..................................................................................2
Negative impact of issue upon business......................................................................................2
Describing the challenges............................................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
The business and business environment refers to those factor which affect the internal
and external environment of the company. The chosen sector for this report is Auto-mobile
industry that deal with makers of passenger vehicle which further includes cars, sport utility
vehicles etc. In UK, the auto-mobile sector generate a huge revenue and also contribute big
amount for the growth of economy such that it has around 85000 commercial vehicles. The
current report will describe issue that affect automotive sector and which category of Pestle does
they fall. Further, report will describe its positive and negative impact upon business.
Identification and description of key issue
In the automobile industry, there are different issue that affect the overall industry in both
positive as well as negative manner. Such that technology factor, suppliers and fluctuation in the
customer demand, changes in the regulations unemployment rate in the country etc. Among all,
the two major issues of automobile sub sector are as mention below:
 Increased competition is the biggest factor that affect auto mobile industry such that
decrease in sales is directly proportional to increase competition. Even the demand of the
customers also increases day by day and in order to meet the demand, the industry tries to
innovative products so that it will help to leads their business towards positive direction
(Goto and et.al., 2019). Moreover, it is also analysed that due to increase global
competition which means that lower market price for many vehicles and it also affect the
margin of profit as well. In addition to this, it is also analysed that there is a stiff
competition in the market of automobile industry and to meet the demand of customers,
company keep providing innovative products. Such that Tesla is now working to provide
the electric car to their company which in turn help to minimize the environment
pollution issue. In the same way, as per the capability of the company’s most of the
company provide the best services to their users in order to minimize the error and stay
ahead in the competition as well.
 Balancing the demand of technology is another issue that affect the overall auto-mobile
sector in opposite way such that most of the customers demand to produce smart cars and
vehicles that that helps to save fuel and many more. But complying the same and
adopting new technique creates opposite impact upon the firm. In addition to this, this is
a key challenge in the industry such that it make the right power-trains and technology
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choices which supply the changing culture and social beliefs in this regulatory
environment. It is clear that technology has a direct impact upon the company’s
performance. Therefore, to meet the demand of customers, this industry faces issue
related to this and as a result, it affect the overall industry in opposite way. Also, most of
the automobile industry in the country uses the several technology and try to converging
the autonomous vehicle quickly. Such that these include artificial intelligence,
electrifications and sensor. These all assist to make a software that helps to introduce the
vehicles with a better manner. Even most of the top automobile company also planning to
start using advance technology cars and vehicles in which artificial intelligence are used
so that customers not bother to drive the vehicles. Thus, it is clearly analysed that the
impact of technology upon the industry is in both positive as well as negative manner. So,
it is depend upon the company how it tackle the issue and make decision accordingly.
Categorization using Pestle analysis
As per PESTLE analysis, it is analysed that both the issue of automobile industry falls
under each category and this are as mention:
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 Political factor: This factor deals with the safety regulation and driving motor vehicles
can be extremely dangerous. As a result, government across the world enforce also strict
safety regulation around the automotive industry (Pestle analysis of Automotive industry,
2019). That is why, it sometimes make more difficult to launch the new business in the
automotive space which further help the existing brands to maintain their place in a
market.
 Economic Factor: Increased competition is fall under the category of economic factor
such that this factor deals with the cost and fluctuation in the market. For instance, if the
economic condition of the country is not so good then the sales of the vehicles decreases
and vice versa. Further, due to increase competition, most of the companies tries to use
the innovative products in order to grab attention of many customers (Humphreys and
Munro, 2019).
 Social Factor: Changing in the human perception is consider one of the biggest
challenge for the industry. Such that recently most of the users, wants popularity of
driving and as a fact, companies who are operating under Automobile industry also start
working on this. So, every new model is released keeping the people’s preference in
mind. Also, the age distribution in various population is also consider another important
factor that vehicle based on the preference of their target population.
 Technological Factor: Balancing the demand of technology is categorize under
technological factor because this issue deals with new and advance techniques and even,
most of the company also implement the same so that it will increase the efficiency as
well as profitability. Moreover, customers demand to produce low emission and fuel
efficient vehicles and to balance the demand of customers by using advance techniques is
so difficult for auto motive industry (Yun and et.al., 2019). On the other side, it shows
that technology factor creates one of the most important factor that also affect sales and
profitability of the company.
 Legal Factor: This factor deals with the laws and regulation of the country and it also
affect the profitability and performance off the vehicle brands. As a result, government
made strict rules related to pollution and also vehicles being exported overseas which has
to pass strict emission controls. Also, company have to made rules which are strictly
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followed by the product safety. For instance, Toyota has to recall its vehicles because of
its faulty airbags and this affect the company’s brand reputation in negative manner.
 Environmental Factor: This is related to environment safety and carbon emission which
are growing stiffer around a globe (Perera, 2017). All, the new vehicles are strictly focus
upon the low emission vehicles, so that it consume fuel which receive tax subsidies and
as a result, favoured by the government and laws. Thus, every country has to pass
pollution test and make sure that company’s vehicles are not creates any negative impact
upon the environment.
Positive impact of the issue upon business
Increased competition creates positive impact upon Toyota such that it helps to generate
innovative skills among employees of the firm so that they meet the demand of customers by
providing the same. Further, if the economic condition of the country is positive then it will not
affect the company's overall position in opposite way. As Toyota meet the demand of customers
and provide the same product at low and reasonable rates so that it will maintain its financial
performance of the company (Head and Mayer, 2019). In addition to this, to stay ahead in the
competition, company who are operating under the automobile industry start recruiting top IT
professionals who help the company to develop innovative products and this in turn leads to
meet the demand of customers in positive manner.
On the other side, balancing the demand of using advance technologies into the working
area of Toyota also affect in positive ways. Such that recently it investing in low emission and
environment friendly vehicles and in future company also planning to release driverless car.
Therefore, it clearly reflect that this factor encourage to meet the demand and provide best
products (Rastogi and Trivedi, 2016).
Negative impact of issue upon business
Increased competition creates negative impact upon Toyota Business such that it may
increase cost and as a result, customers did not pay high amount, as a result, it affect the overall
business in negative ways. It also affect the brand image as well (Barik and Kumar, 2018).
Moreover, this strong competition in the market will also leads to creates negative impact upon
the customer because they have to pay high amount which in turn affect the overall saving and
most of the customers also shift towards another company to save their money.
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On the other side, balancing the demand of technology may sometimes breach the law and
it affect the brand reputation of the company as well (Li and et.al., 2019). Therefore, both issues
may affect the auto mobile industry in negative way as well. In addition to this, it is also
analysed that to meet the demand, sometimes company did not make substitute when the product
fails in a market because there is a need to manage any risk otherwise, it affect the brand image
of the company in negative manner. That is why, IT professional who are working under the
company must have a knowledge to deal with any issue other it creates negative impact.
Describing the challenges
The overall experience of this report is quite good but I faces two challenges such that
research skill because I did not have good skills and as a result, I faces issue related to
understanding terms. For instance, when I research on the issues that affect the automobile
industry then I realize that I lack some research skills which affect my project in negative way.
That is why, I make sure that to start working on the different project that help to enhance my
research skills. Moreover, this challenge is overcome with the help of mentor. Further, another
challenge is critical analysis skill, I do not posses the same. Therefore, I face issues and I also
realize the same when I start determine the positive and negative of the issue which the
Automobile industry faces. In the same way, in order to overcome the skills, I take a help of my
mentor and they provide me practical example which in turn assist me to develop the critical
thinking abilities in better manner.
But the overall experience is perfect because I learn many new skills and gain solution
that helps me to complete the project in better manner. Moreover, I also analyse that I enhance
my IT and management skills that will further help me in my future projects too. Lastly, I
realized that due to not having time, I did not make deep research on the topic and as a result, I
did not collect best and deep information related to topic. But overall project is so good such that
it helps me to provide different solutions and I also take decision to conduct the research in better
way. In addition to this, this project help to enhance my time management abilities because to set
every task, I start scheduling the work and this in turn help me to enhance the overall time
management skills which will definitely help me in my future work. Thus, working on this will
help me to develop an opportunity which in turn assist to gain different knowledge as well as
increase the capabilities that help me in my future projects.
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CONCLUSION
By summing up above report, it has been concluded that auto mobile industry contribute
biggest portion for the growth of economy but increases competition and balancing demand of
technology also affect the industry in opposite way. Further, report concluded these issues falls
under economical and technological factors under Pestle and these issues have both positive and
negative impact upon business as well. Also, study concluded that the impact of those factors
creates a negative as well as positive impact upon the firm as well as industry such that it will
meet the demand of customers while it increase the cost of the firm which affect the brand
image of a company.
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REFERENCES
Books and Journals
Barik, B. and Kumar, S., 2018. Macro Environment of Indian Life Insurance Business: A
PESTLE Analysis. Bimaquest. 18(3).
Goto, L. and et.al., 2019. Traditional and 3D scan extracted measurements of the heads and faces
of Dutch children. International Journal of Industrial Ergonomics. 73. p.102828.
Head, K. and Mayer, T., 2019. Misfits in the car industry: Offshore assembly decisions at the
variety level. Journal of the Japanese and International Economies. 52. pp.90-105.
Humphreys, M. and Munro, D., 2019. Brexit and the Car Industry. Routledge.
Li, D. and et.al., 2019. Brexit and the Auto Industry: Understanding the Issues for Supply Chain
Management. In Brexit Negotiations After Article 50: Assessing Process, Progress and
Impact (pp. 173-191). Emerald Publishing Limited.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Rastogi, N.I.T.A.N.K. and Trivedi, M.K., 2016. PESTLE technique–a tool to identify external
risks in construction projects. International Research Journal of Engineering and
Technology (IRJET). 3(1). pp.384-388.
Yun, J. J. and et.al., 2019. The role of a business model in market growth: The difference
between the converted industry and the emerging industry. Technological Forecasting and
Social Change.
Online
Pestle analysis of Automotive industry. 2019. [Online]. Available through:
<https://pestleanalysis.com/pestle-analysis-of-the-automotive-industry/>.
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