Key Issues Affecting Automobile Industries

This report discusses the key issues affecting the automobile industries, including globalization and sustainability. It also includes a PESTEL analysis of the UK and explores the impacts of these issues on business activities. Challenges faced in preparing the report and lessons learned are also discussed.

REPORT

Table of Contents
INTRODUCTION...........................................................................................................................1
ASSESSMENT TASK....................................................................................................................1
1. Describing the key issues affecting the automobile industries. ..............................................1
2. PESTEL analysis. ...................................................................................................................2
3. Impacts of the issues on business.............................................................................................3
4. Challenges faces in preparing the report and lessons learned from the report. ......................4
CONCLUSION................................................................................................................................5
REFRENCES...................................................................................................................................7

INTRODUCTION
Automotive sector is the business which produces and sells self powered vehicles, which
includes cars, trucks and farm equipments etc. Audi is an German automobile manufacturer
which designs, produces, distributes premium quality cars to customers. The company is the
member of Volkswagen group. The vehicles of this brand are manufactured in nine
manufacturing facilities all over the globe. The study will highlight the major issues which
affects the automobile industries. Further, the study will contain the PESTEL analysis of UK.
Moreover, the report will highlight the impacts of issue on business activities (Antikainen and
Valkokari, 2016).
ASSESSMENT TASK
1. Describing the key issues affecting the automobile industries.
Automotive industries includes a wide range of organisations which are involved in
designing, marketing, manufacturing and distribution of motor vehicles. Automotive industry is
the world largest economic sectors which generates high amount of revenue.
There are various issue which the automobile industry has to deal with, issue affecting the
automobile industries are as follows-
Globalization- The automobile industry has now become and global industy as the car
manufactured are sold to almost every countries in the world. Globalization has both positive and
negative impact on business. Development in the automotive industry is sharing of technologies,
which results in effective competition (Antikainen and Valkokari, 2016). Globalization has
created an effective competition in the automobile sectors as there are many car manufacturers
companies in the world and business have to make more efforts to sell their products and sustain
for a longer duration in the market. The competition is related to services cost, products, prices,
target markets, quick response to companies etc.
Automobile companies to stay in the market has to sell their vehicles in low rates which
impacts the overall profit generation of the business. Customers has wide range of options
available in the market and this impacts their behaviors (Chládková, 2015). . Consumers expect
to buy the products which offers high quality at reasonable prices and this impacts the
organisation as they have to provide such type of products otherwise the overall sales of the
organisation will be decreased and it will result in loose of market share and profit. Technology
1

is one of the main tools which assist the companies in facing competition and quality of products
and services. Due to globalization there is very though competition in the automobile industry so
companies have to use efficient technology and efficient R&D management (Ricciardi, Zardini
and Rossignoli, 2016).
Sustainability- The sustainability is an issue to the automobile industry. There is an large
number of automobile manufacturers in the market all the companies have new and innovative
ideas of doing business. Car manufacturers are offering premium quality vehicles with advanced
features so to deal with that and sustain in the market is become very difficult task (Makarova
and Polyanin, 2015). The car manufactured by the companies are creating pollution in the
environment and the automobile producers don't have any plans and practices to deal with the
situation. As a result this impacts the sustainability of the business in market.
The customers needs and choices also keeps on changing with time so to deal with that
companies must have innovative and creative ideas buy which they can offer new and good
quality products to the consumers. As if the car manufactures can't provide better and advanced
products to the consumers it becomes difficult for businesses to sustain in the market.
Organizations need to understand how to classify, measure the products and services which can
positively influence the behavior of consumers. Changing financial conditions, unstable
purchasing patterns of consumers, and change in public policies makes it difficult for
organization to sustain for long term in the market (Corcoran and Gillanders, 2015). .
2. PESTEL analysis.
Political- The political stability is an biggest strength of country. UK has maintained very fair
relations with US and and many other countries. As the country has good relations with other
countries it assist the Audi in doing business globally. Due to political stability of the country car
manufacturer can export their goods to other countries. However, their relations with
authoritarian regimes drawn a lot of criticism this may impact the business operations of Audi
(Corcoran and Gillanders, 2015)..
Economic- Economic position of UK is strong as compare to other countries. The GDP rate of
the country is very high and has diverse economy. The country stands at fifth highest GDP in the
world. UK has highest GDP rate and large amount of population allows the business
2

organization to become profitable. Due to availability of funds and sustainable financial
conditions Audi can do business operations at global level (Chládková, 2015). .
Social- UK has the biggest consumer market. According to the analysis done in 2018, UK has
the population of around 66.4 millions. UK is among on of the top 10 countries who have
educated population all over the world. This assist the Audi in doing business as the crowd is
well educated so they better understand the features offered by the company and make purchases
according to that (Doh, McGuire and Ozaki, 2015).
Technological- UK is one of the technological advanced countries all over the world.
Technology sectors is main contributor to UK economy. These technological infrastructures
gives entrepreneurs lot of opportunities to operate business in UK. Audi is benefited by these
technical advancement as latest and advanced machines are used in manufacturing the cars, thus
it helps the company in doing business at global level. The company is facing competition
successfully by the help of advanced machines and
technologies (Makarova and Polyanin, 2015).
Environmental- Economic activities has an great impact on the environment of the UK. The
country has made great improvements in reducing the impact. The has faced challenging weather
conditions. This affects the business operations of the firms. As the car manufactured creates
pollution in the environment and the Audi did not not have much measures to deal with it so in
this way environmental factors impacts the business to sustain long in market (Doh, McGuire
and Ozaki, 2015).
Legal- There in an act called employment act 1996, which protects the rights of workers,
paternity and maternity leaves, holiday packages minimum wage rates, sick pay and other rights
are also legally protected. This impacts the Audi as they also have to take care of the employees
and do the work according to the guidelines mentioned in the law. All the laws of the country are
satisfactory according to which business activities are smoothly carried out in UK (Makarova
and Polyanin, 2015).
3. Impacts of the issues on business.
Impacts of issues on businesses are as follows:
Positive impact of Globalization- One of the most positive impact of globalization is the
it provides enhanced quality goods due to competition all over the globe. Company by doing
3

business globally get a larger customer base as the products and services are sold to countries all
over the world due to development. Through globalization organizations and countries have an
access to larger customer base (Ketata, Sofka and Grimpe, 2015). As instead of selling the goods
in one country only Audi can expand their business to different regions also. Thus, assist in
boosting the sales of the company and helps in generation of higher revenue. Competition from
various countries drives the companies to improve the quality of products. Thus with the help of
globalization more business is generated by the companies.
Positive impact of Sustainability- Sustainability is an issue which is been faced by
many businesses but it has some positive impact also on business as when the company is
sustaining well in the market it can do more business and generates higher profits. The
sustainability methods and principles have an positive impact on Audi as many stakeholders and
consumers expect ton see initiatives sustainability as it becomes a new part of tactical,
operational and strategic environment of many organizations. It enables Audi to attracts new
workers, customers and shareholders, and helps in improving view's of public towards business
(Ketata, Sofka and Grimpe, 2015).
Negative impacts of Globalization- Globalization has lead to more production for
organizations in order to met the demand all around the world. It create fluctuations of prices.
As there are large number of car manufactures all around the world so to deal with that Audi has
to make new polices and practices it impacts the business as lot of time and money is spend.
There are lot of car manufacturers who are offering quality products at reasonable prices so to
face the competition Audi also has to cut their prices and may have to sell its cars at lower prices
(Prajogo, 2016).
Negative impact of sustainability- Sustainability impacts the business in this way that
when the company is not meet society expectations and don't do practices which are beneficial
for society like green environment. All this impact the business of Audi, in this way that their
brand image is suffered and customers don't prefers to buy the goods of the brand. Thus, by this
the growth of the organization also suffers and may lead to financial issues(Levi-Jakšić,
Jovanović and Petković, 2015).
4. Challenges faces in preparing the report and lessons learned from the report.
There are some challenges which are faced while preparing this report are as follows-
4

Lack of knowledge- It is the challenge for me to prepare this report as I don't have much
knowledge about this topic, I don't have much knowledge and skills about the globalization and
sustainability so to mentions their positives and negatives impacts on business is been very
difficult for me. I have done PESTEL of the country UK and how these factors impacts the Audi
company in doing business activities. So due to lack of knowledge I have to search for each
factors impact very deeply, it cost time also and it becomes an challenging task for me.
Relevant data- As to prepare this report the biggest challenge which is faced by me is
that I didn't get the relevant data about the topics, It becomes very tough for me to gather the data
from correct source. So for researching the topics of this report I have take help of internet and
visited many websites, thus from this source I got some relevant data and prepares this report. I
have spend lot of time on searching about the topics mentioned in the study on internet and then
finally prepared this study.
Lessons learned from this report- There are many things which I have learned from this report
as I was not having knowledge about globalization so by preparing this report I learned so much
about it and how it can have positive and negative impact on business operations. Globalization
has positive impact on business in this sense as the products and services offered are reached to
wider number of customers. By the development the cars manufactured by Audi are not only
limited to a single market this results in larger customer base and higher revenue generation.
I understand that there is an negative impact of globalization also it creates an effective
competition in market as there are many car manufactures and they promises to offer premium
quality products at reasonable prices, so to face the competition and sustain in market companies
have to reduces the prices of goods. Audi is an brand which offers higher quality so to lower the
prices is not possible for the company. I have learned from the study that economic and technical
factors factors plays an important role in functioning of business as when the economic
conditions are good company can do smooth business and can lead to higher profits. Technical
factors like use of advance machines and technologies assists the organisation in doing
manufacturing process fast and efficient.
CONCLUSION
The above study summarized that automotive sectors is an industry which manufactures
all types of vehicles including cars, trucks, buses etc. The industry is the only industry in world
5

which generates higher amount of profits. The study says that due to globalization the business's
goods and services are reached to larger number of audience. Sustainability plays an important
role in the functioning of organization as when the companies are well sustained in markets they
can generate do more business and generates higher revenue.
6

REFRENCES
Books and Journals
Antikainen, M. and Valkokari, K., 2016. A framework for sustainable circular business model
innovation. Technology Innovation Management Review. 6(7).
Chládková, H., 2015. Selected approaches to the business environment evaluation. Acta
Universitatis Agriculturae et Silviculturae Mendelianae Brunensis. 63(2). pp.515-523.
Corcoran, A. and Gillanders, R., 2015. Foreign direct investment and the ease of doing
business. Review of World Economics. 151(1). pp.103-126.
Doh, J., McGuire, S. and Ozaki, T., 2015. The Journal of World Business Special Issue: Global
governance and international nonmarket strategies: Introduction to the special
issue. Journal of World Business. 50(2). pp.256-261.
Ketata, I., Sofka, W. and Grimpe, C., 2015. The role of internal capabilities and firms'
environment for sustainable innovation: evidence for G ermany. R&d Management.
45(1). pp.60-75.
Levi-Jakšić, M., Jovanović, M. and Petković, J., 2015. Technology entrepreneurship in the
changing business environment–a triple helix performance model. Amfiteatru Economic
Journal. 17(38). pp.422-440.
Makarova, Y.L. and Polyanin, A.V., 2015. Formation of the business environment in the
agricultural sector. Вестник аграрной науки. 53(2).
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics. 171.
pp.241-249.
Ricciardi, F., Zardini, A. and Rossignoli, C., 2016. Organizational dynamism and adaptive
business model innovation: The triple paradox configuration. Journal of Business
Research. 69(11). pp.5487-5493.
Teece, D.J., 2018. Business models and dynamic capabilities. Long Range Planning. 51(1).
pp.40-49.
7

8

9

10

11