Strategy, Enterprise and Innovation - Analysis of Aston Martin's Internal and External Environment

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This report analyzes Aston Martin's internal and external environment using VRIO analysis, PESTEL analysis, and Porter's five forces model. It also discusses the importance of innovation in gaining a competitive advantage in the market.
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Strategy, Enterprise
and Innovation
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Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
Analysis of internal environment................................................................................................3
Analysis of external environment...............................................................................................4
Analysis of competitive forces within industry..........................................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................9
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INTRODUCTION
Strategy refers to action which are designed for purpose of attainment of long term goals of
company. An organisation prepare various strategy which helps them to overcome of problems
arise in their organisation. Innovation refers to introduction of new ideas, thoughts, technology,
products and service in market (Guangrui and Chun, 2021). It provide benefits of differentiation
and allow company attract more and more customers towards their business. This project report
analyse Aston Martin which is a UK based organisation providing luxury sports car as well as
grands tourers. It is introduced by Lionel Martin as well as Robert Bamford in the year 1913.
This project report aims at analysation of internal environment which evaluate internal resources
as well as capability which provide competitive advantage to an organisation. It analyse external
environment which identify factors present outside business environment and create impact over
operation of company. Moreover, it consist analysation of competitive forces present in industry
which create impact over profit and market share of company.
TASK
Analysis of internal environment
VRIO analysis:
VRIO analysis refers to analytical techniques which helps to evaluate resources of company and
provide competitive advantage to them. It consist different dimensions like values, rare,
imitability and organisation (Jin-sheng and Tian-qi, 2021). This model is introduced by Jay B
Barnet which helps to evaluate different resources of company like financial, human resource,
material resources, non material resources. This model is focuses on strategic tool of company
and helps them to get competitive advantage with better understanding of resources in
organisation. There are different resources to be posses by a company like human resource,
financial resources, patent rights and distribution networks. This resources provide competitive
advantage to company and allow them to get success in market.
Resources Value Rare Imitation Organisation
Human resources Yes Yes Yes Yes
Financial
Resources
Yes Yes Yes -
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Distribution Yes Yes - -
Patents Yes - - -
Valuable: Aston Martin is an organisation which has valuable resources in their organisation
which create competitive advantage for company. They has valuable financial resources as it is a
company with high reputation in market as they can easily get investment from different
investors (Juhong, Ruijun and Yaqi, 2020). They also has valuable human resource with diverse
skills and knowledge. It allow managers of company to get competitive advantage in
organisation and also provide them opportunity to satisfy needs of customers. This organisation
also has strong distribution system which increase reach of their products to consumers.
Managers of company also has patent for their new designs and technologies.
Rare: Rare resources are those which does not posses by others and has limited reach to other
organisation. Aston Martin is an organisation which has some resources which does not available
to other organisation. This organisation has rate distribution network as it can easily reach to
their customers for offering their products and service. It also has strong human and financial
resources which provide them competitive advantage and rare in market.
Costly to imitate: Imitate of resources are those which cannot be easily copied by another
organisation (LI and LI, 2021). Aston Martin is an organisation which has some resources which
are costly to imitate like strong human and financial resources which cannot be available to other
organisation and can be costlier for company to imitate.
Organisation capability and competence: It consist resources which is getting support from
existing arrangement and cane be used in organisation properly. Aston Marting has values, rare
as well as imitate human resources which helps company to operate effectively for success of
their organisation.
Analysis of external environment
PESTEL analysis
PESTEL analysis refers to a external environment analysis which helps business to identify
factors present outside business (Santos‐Jaén, Madrid‐Guijarro and García‐Pérez‐de‐Lema,
2021). These factors helps business to overcome of problems and also allow them to develop
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different strategies to overcome of these problems. Different factors to be includes in this
analysis in context of Aston Martin is mentioned below:
Political Factors: Political factors are most important factors which play important role in
taking decision related to investment in Aston Martin. Political factors create impact over
sustainability of company and cost of conducting business (Shuangzhe, 2020). There are various
rules and regulation made by government of UK which to be consider by Aston Martin while
operating in that country. There is uncertainty in political environment of UK due to Brexit
which create impact over operation of company. Due to this, government is making changes in
their rules and regulation as they are not allow employee and workers from EU in their
organisation which create shortage of skilled labours in that country.
Economic factors: Economic factors of a country is another important factors which create
impact over business that directly create impact over attractiveness of a market. These factors
consider by Managers of Aston martin includes Disposable income level, GDP rate, inflation
rate. There is huge impact over global economic condition on Aston Martin as economy of
different country is facing crisis. It create negative impact of company as due to this, there are
different problem arise in a country. There is also increase in risk related to market and credit
that occur due to fluctuation in foreign exchange rates. There is fluctuation in currency rates
which create problems for Aston Martin as it is an international organisation which is getting
different currency for exchange of their products and service.
Social Factors: Social factors are those factors which are related to culture, values, feelings and
also consist other demographic factors. It create impact over talent of workforce, their ability as
well as level of demand of consumers (Yew, 2021). There is shift in preferences of consumers
which create positive impact over business of Aston martin. Disposable income of people of UK
is increasing which allow them to spent money on luxury vehicle offering. It increase numbers of
customers for company and increase chances of rise in sales and profit. Used market car in UK is
also growing which create threat for Aston Martin as people are less interested for buying their
luxury cars.
Technological Factors: Technological factors are those factors which create opportunity for
company as it consist technology advancement, up gradation and innovation. It provide
competitive advantage for firm as on basis of technological advancement, comp[any can reduce
their cost and also offer differentiation to their customers. There is rise in prices of fuel and due
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to these interest of people is shifted to electric cars which create threat for company as it is
increasing competition in this market. There is increasing digitalisation and advancement of
technology which allow them to reduce prices of their car.
Environmental Factors: Aston Martin is providing their service in Auto mobile industry which
create negative impact over environment. Environmental factor are those factors which consist
factors like pollution, climate condition, changes in weather condition and many more (YI and
CHENG, 2018). Auto mobile industry is including in creating more and more pollution and
increasing carbon footprints. It create problems for company in UK as there is increasing
awareness in people of UK for environment awareness. But at same time, company is also
focusing on environmental sustainability which create positive impact over image of Aston
Martin.
Legal Factors: Legal factors are those factors which are related to rules and regulation. There
are various legal consist for a company to enter in market, operation in market and solving
problems in organisation with different stakeholders. There are different laws in UK related to
health and safety, consumer protection, employee benefits and many more which is to be
consider by managers of Aston Martin.
Analysis of competitive forces within industry
Porters five forces model refers to a business analysis tool which helps business to explain
different components of business essential for earning profit. This tool of industry analysis is
introduced by Michael E. Porter in the year 1980. It is used by companies for purpose of analyse
structure of industry of company and also helps to develop corporate strategy. Explanation of
this tool in context of Aston Martin is mentioned below:
Competition: Competition is one of serious factor which create impact over profitability and
marketing share of an organisation (Zhang and Tian, 2021). There are various marketing players
which are providing their products and service to consumers. Competition in industry reduce
marketing share and profitability margins of company. There is limited marketing share for
Aston Martin as they are only providing products to high income consumer group which is
dominated by different marketing players but still, this organisation is considered as top brands
of Luxury cars in UK.
Bargaining power of supplier: Automotive industry of UK is divided among manufacturer as
well as component segment. It is estimated by government of UK that 2600 component
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manufacturers are present in UK which are range from small size business to global market
players. There is contribution of around £ 4.5 billion which added values and also employing
different people in this industry. It increase competition in market of suppliers which reduce their
bargaining power. So, managers of Aston Martin has less threat from this factors as company can
bargain with suppliers for reducing their prices.
Bargaining power of customers: Bargaining power of customers can increase threat for an
organisation as it is one of important factors in porter's five forces model. Customers are
important for an organisation to earn profit and without them business is not possible. Aston
Martin is providing their products and service in luxury market where there is variety of options
are available to customers in economic down form. In this situation, ultimate power is lies with
customers which increase power of customers. Business of Aston Martin has moderate threat
from this facts as customers has bargaining power.
Threat of new entrants: Auto Mobile industry is one which require huge investment in market
and also proper expertise (Zhou, 2021). There are less numbers of new players to enter in firm as
any market player with lack of experience cannot enter in this market. Aston Martin is one of
organisation which has less threat from this factor.
Threat of substitute: Luxury cars is not a necessity of customers instead they are buying it in
order to fulfil their luxury needs. This segment of auto mobile industry can be differentiated their
products on basis of perception of customers about their products. There are various marketing
players like Lamborghini Gallardo which are also satisfying these needs of customers. There are
various threats available to customers which increase threat of substitute for company. Aston
Martin has high threat from this factor in market.
CONCLUSION
From above mentioned project report, it can be concluded that business faces various challenges
while operating in market. In order to overcome of these factors, it is important for managers of
company to develop different strategies. Business also adopt innovation in their organisation
which allow them to gain competitive advantage in market and to attract more and more
customers. In order to analyse internal environment of company, managers can adopt value
based model as well as vrio analysis. Values based model helps managers of analyse different
resources of company. VRIO analysis is another model which helps an organisation to analyse
its resources and provide them competitive advantage. In order to analyse external environment,
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business managers are identify factors present outside business. It helps them to overcome of
these problems occur in external environment of business and allow them to develop strategies.
Managers also analyse industry in which they conduct their operation which can be done through
Porter's five forces model.
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REFERENCES
Books and Journals
Guangrui, S. and Chun, M., 2021. A study of the transmission path of enterprise innovation
investment behavior under the peer effect. Science Research Management, 42(7), p.179.
Jin-sheng, Z.H.U. and Tian-qi, D.O.N.G., 2021. “Create” or “Destroy”: Employment Effect of
Enterprise Innovation# br#—Threshold Model Test Based on Categorization of
Returnee Executives# br. Journal of Beijing University of Posts and
Telecommunications (Social Sciences Edition), 23(1), p.90.
Juhong, C., Ruijun, Z. and Yaqi, Z., 2020. The effect of servitization strategy on enterprise
performance: Based on the mediating of business model innovation. Science Research
Management, 41(4), p.131.
LI, E.J. and LI, Q., 2021. Local Government Innovation Competition and Enterprise
Innovation. Contemporary Finance & Economics, (4), p.16.
Santos‐Jaén, J.M., Madrid‐Guijarro, A. and García‐Pérez‐de‐Lema, D., 2021. The impact of
corporate social responsibility on innovation in small and medium‐sized enterprise s:
The mediating role of debt terms and human capital. Corporate Social Responsibility
and Environmental Management.
Shuangzhe, L., 2020, December. Analysis of Enterprise Technological Innovation in the Era of
Big Data Based on Mathematical Models. In 2020 16th Dahe Fortune China Forum
and Chinese High-educational Management Annual Academic Conference
(DFHMC) (pp. 348-351). IEEE.
Yew, J.L.K., 2021. Family Firms, Enterprise Development and Tacit Knowledge
Transformation: Small and Medium Enterprises (SMEs) Innovation in Malaysia. Global
Business Review, p.09721509211047648.
YI, M. and CHENG, X.M., 2018. Study on the Green Innovation Strategy of Enterprise from the
Perspective of Carbon Pricing Policies. Soft Science, p.07.
Zhang, Y. and Tian, S., 2021, June. The Development of Innovating Enterprise Management
Mode by Using Computer Information Technology Under the Background of Internet.
In International Conference on Applications and Techniques in Cyber Security and
Intelligence (pp. 771-775). Springer, Cham.
Zhou, G., 2021, March. The Application of Computer in Enterprise Economic Management
Under the Background of Internet of Things. In The International Conference on Cyber
Security Intelligence and Analytics (pp. 281-289). Springer, Cham.
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