The Global Business Environment - (Case Study)

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The Global BusinessEnvironment
Table of ContentsINTRODUCTION.......................................................................................................................................4TASK 1.......................................................................................................................................................4(A)Assessment of global automobile industry using PESTEL analysis...................................................4(B)Assessment of global automobile industry using Porter’s five force model...........................................6CONCLUSION...........................................................................................................................................8REFRENCES..............................................................................................................................................8
INTRODUCTIONGlobal automobile industrystands for varied series of businessandorganizationsinvolved inthedesigning, development,manufacturing,marketing, andsellingofmotor vehicles(Miroshnychenko,Barontini and Testa, 2017).This industry contributes hugely in the economic sectors by generating largeamount of employment and revenues. Culture of using car has evolved by leaps and bound on a global level.There are consistent changes happening every year in the industry with increasing competition in the market,shifting customer preferences and advanced technology. Following report comprises of detailed informationabout this industry and the environment in which it operates. Research on this will be helpful on gaining in-depth knowledge about the subject matter. Based on the case study called production surges in eastern Europe,the two main models which has been used for the purpose of study are PESTEL and Porter’s five force. Theseframeworks are being applied to understand the different factors that are affecting the global automobileindustry and the competitive forces prevailing in the market(Bentley, 2017).Through this report it has alsobeen analyzed that where the automobile industry is heading, to be specific the current and future position ofthe major players in the market.TASK 1(A)Assessment of global automobile industry using PESTEL analysisTheoretical frameworkThe global automatic industry has grown significantly after the 19thcentury. Various establishedbrands have entered and are fighting to acquire large market share. Due to the vast size of this industry, thereare many factors that are impacting it. From past couple of years more focus has been shifted to the Asianmarket due to its attractiveness(Losonci and Demeter, 2013).More and more initiatives are being taken bythe major players to bring change. New innovation in terms of technology and fuel efficiency have becomeimportant part of companies operating in this industry, these were the few reason because of which sales areincreasing and this sector is growing day by day. Through PESTEL analysis impacts of different factors havebeen discussed below:Application and analysis of PESTEL framework:Political factor-This is one of the factor that affects the automobile sector, it is related to policies andrules made by the government which is in power. with changes in the ruling party after election new norms arebeing formed to regulate the activities of the company. This causes fluctuations in the market. Government inthe Europe are regulating this industry and ensuring that low emission vehicles are being developed by thecompanies. Taxation policy differs from country to country, at one place they are higher while at others theyare lower. This factor affects the profitability of the industry. Communism in many countries was the mainroadblock in the growth of this sector. After the end of this political ideology in 1989 many foreign companieshave acquired the local markets and build factories in countries like Slovakia, Hungary, Romania, Poland andCzech Republic, this is the reason China and Russia are being considered as lucrative market. From this it canbe understood that the companies have to manage their working as per the instruction ofgovernment(Berry,2014).Economical factor-This is concerned with the economic changes in the countries, it comprises ofinterest rates, employment rates, inflation, fluctuations in the demand and supply. Automobile industry had toface financial crises recently though it ended and companies are again started growing. Sales of the industryare directly impacted due to changing economy. Countries having higher employment rates leads to highpurchasing power amongst the customer in the same way increased in demand is also another example thataffects the automobile industry in positive manner. Inflation rate impacts the prices of car as result cost of
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