Environmental Analysis of UK Automobile Industry - Impacts of Pandemic, Mega-trends, Survival and Success Factors

This report analyses the critical and relevant practices of UK automobile industry with a focus on McLaren. It examines the impacts of pandemic, mega-trends, and survival and success factors.

2 Environmental Analysis of
an industry

TABLE OF CONTENT
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Impacts of the pandemic on UK auto-mobile..............................................................................3
Mega-trends in Auto-mobile industry..........................................................................................4
Survival and success factors in Automobile industry..................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Environmental analysis is the description of the process which examines all the different
components, internal or external which influences the performance of the organization. The
chosen industry in this report is auto-mobile industry of UK. The chosen brand from this industry
is McLaren which is UK based organization. This report will analyse the critical and relevant
practices of this industry. It will help in understanding the impacts of pandemic on the industry.
MAIN BODY
Impacts of the pandemic on UK auto-mobile
The Covid-19 pandemic was one of the most devastating disaster that hit humanity and
impacted the global economy. In UK the impact was not different and in the attempt of
controlling this pandemic the government of UK had to take some preventive measures. These
measure included nationwide lock-down. This was implemented for the limitation of the spread
of the disease, however it results in brutally affecting the country. It was quite unsettling for
competing in the value chain for most important industries (Fonseca and Azevedo, 2020). This
had a very negative impact on the auto-mobile industry. Manufacturers like McLaren had to
completely close their industries or according to the law passed by local government run the
organization with the least staff. Over the last 12 months this industry went into a significant
delay due to the structural modification in the different types of taxes. Due to being completely
idle for so many years the company had to experience an extended demand from the customers
due to Lock-down which was observed drastically. Companies like McLaren suffered in the
Research & Development side of their functions. This resulted in lack of new products and
technology introduction in their overall production. Due to this the company got affected due to
the competitors gaining a competitive advantage through the introduction of new technologies.
This pandemic also affected the stock market for all the industries. This also included UK
auto-mobile industry were there was a lot of distress. The as per the SEM-Logit model which is a
hybrid model the pandemic had an impact on the consumer decision-making and also those
factors which impacted the purchase of auto-mobile during the pandemic (Cheval and et.al.,
2020). This model was used for the investigation of the effect of social-demographics, epidemic-
related and psychological latent variables on the purchase decision-making process of the auto-
mobile. The customers during this period would refrain from purchasing the products as they
believed in spending on the necessities and cars of McLaren are costly and more often a luxury

item rather than necessity. Other factors such as the household income, travel vulnerabilities and
epidemic severity in the local regions also influenced the purchased decision-making of the
customers. All these factors were impacted negatively during the pandemic. The effects on the
sale of the cars was very severe fir this company. The total revenue of McLaren decreased from
284 million to 109 million in the first quarter of 2020 due to the impacts of the Covid-19
pandemic. Sales of this car also decreased from 953 to 307 units over the first three months of
the pandemic. These figures dropped even more in the next quarter. Such a great loss impacted
the business of McLaren negatively. Apart from all these negatives the company also used this
pandemic for some benefits (Zhang and Hayashi, 2020). This organization by providing the
ventilator support to the health care system in UK used this opportunity for the development of
its CSR activities. This increased the goodwill of the company and as a result of this activity by
the organization.
Mega-trends in Auto-mobile industry
Following are the mega-trends which this industry has been experiences in the recent
years,
ADAS modification into autonomous :
ADAS is the advanced driving support system which is very big concept that are present
in the cars of this decade in which is a driving support function. This is function which is used
for supporting the car on avoiding accidents and making it a comfortable experience to reach the
destination. In this system the driver is the one which is operating the car and as a system it is
only partially automated for other perks. The latest trend is to convert this new system of ADAS
into completely autonomous, hence the introduction of artificial intelligence into the Automotive
industry.
Connected cars and people :
As the cars in this trend are more and more computerized with the implementation of new
technology time after time. This helps the company in connecting cars with the smart phones of
the people. It can be said as the way in which the customer is able to manage the car abilities
with the help of the smart phone application. This can be said as the strategy which help the
customers to develop strong influence of the customer interface. This is the strategy which help
the business in becoming effective in the management of the organizational practices (Maturana
and et.al., 2021).

Driving green cars :
As the impacts of the emission created by cars where impacting the environment the new
trend has now more towards the development of cars which do not consume fuel and are mostly
electric cars. This can be said as the way in which new technology of electronic car is being
implemented in this industry. This is the best way of reducing the greenhouse effect created from
the gases which are released by the vehicles (Gatzert and Osterrieder, 2020). Utilization of this
trend has now become a way of improving the technology which is behind the use of cars.
Survival and success factors in Automobile industry
There are some factors which are able to be the reason of success and survival of the
Automobile industry,
Quality :
The survival and success of the Automobile industry is considered to be the impacted due
to the quality of the product of the company. McLaren as a company has been known for the
supreme quality of its product over the years which has been the reason for its success. Trends
such as autonomous technology, connected cars with smartphones and also the electronic cars
are now very important for the organization as they help the in the development of the quality as
per the current trend (How to succeed in the automotive industry?, 2020). Cars of McLaren can
survive in the tough competition in the UK industry only if it is able ensure the quality of the
products.
Innovation :
Innovation in business is considered to be the process which introduces new ideas in the
workflow, methodologies, services and products. This can be said as that part of business
innovation which is able to improve the existing products and services. In this industry
innovation is the key to success and survival. As the history of this industry suggests that those
companies which did not bring innovation through research and development were not able to
survive in the market for long enough. Thus, it is essential for McLaren to bring cars which have
new and better technology and design with the consideration of the trends.
Reliability :
Just like any other industry the customers demand reliability from the company of the
product they purchase. McLaren which is premium car company are known to have the products
which very costly (Miyata, 2018). Thus, along with having good technology in the cars it is also

important for the car companies to make their products more reliable. This means the products of
the company needs to perform its intended functions adequately for a give period without
experiencing any kind of failure. This relatability needs to present with new technologies and
trends as the focus of the customer are high on these factors. Non-refillable products of a
company is able to diminish the value of the organization goodwill and decrease the customer
loyalty which a company like McLaren has build over the years.
Performance :
Better the performance of the car more are the chances of its success in the market. Thus,
it is essential for McLaren to ensure about the performance of the cars and the technologies
implemented into it for measuring the success (Musa and et.al., 2018). It can be said that the
measurement of performance can be done by the auto mobile company through methods like
bench marking, comparing the performance with other competitors, taking feedbacks from users
and running different tests. Implementation of new technology is vague if it does not meet the
performance of the other competitors.
Cost :
As far as the success of the company goes, cost of production of the cars is very
important factor which is able to measure its success. The success of this organization is
determined by the profit it is able to make. Since the downfall of the Covid-19 pandemic the
focus of this company needs to be on increasing its profit which has been very poor in the last
few years. Thus, the organization needs to focus on bringing efficiency in the new technologies
and trends which it has introduced in the organization. In addition to that the business also needs
to provide leverage of in the organizational operations. Reducing the cost of production is
considered to be one of the best way in which the company will be able to gain competitive
advantage.
Time to full production :
Full production means to use the employees and resources towards the maximum
satisfaction of their economic wants. It is important for the McLaren to ensure that they are able
to make the full of their resources for the purpose of production and be able to provide the
business with efficiency in their practices (Al-Tit, Omri and Euchi, 2019). The time this business
takes for completing the full production is also one way in which the business is able to achieve
their total production. Faster the business is able to do this it saves more costs, time and

resources. This is the reason why the time to full production is essential for an organization.
Time management is very helpful in increasing the ways in which the business is able to utilize it
for its development.
Hiring talent :
In an organization it is important to hire talented individual which would help the
business in the creation of the sustainable development. Hiring of talented employees is very
helpful for the business which would help in the development of capacity of business.
Development of talent is known for the increase of talent management which is a very efficient
way through which the organization is able to provide the business with growth opportunities.
McLaren needs to keep hire talented employees as that is the way through which the business is
able to experience the growth it has been desiring (Oláh, J.,and et.al., 2018). Losing in on
talented employee basically results in give the competitors advantages. The business is able to
develop a strong understanding of the ways in which it will introduce the new trends of the
industry with help of hiring talented individuals.
Expansion :
Expanding the business is a way in which the organization is able to increase its market
share. The survival of the business is too much dependent on the market expansion which helps
the organization in the growth. It can be said that through the application of the different
methods of expansion which can be through the entry in new country or with the use of new
product in the business. Business can expand itself with the help of identification of the trends
which will result in the growth of opportunities. It can be said that expansion of the business
results in having new opportunities of success and survival for McLaren.
CONCLUSION
With the help of this project it can be concluded that McLaren needs to use the mega-
trends successfully in the organization for reaching success with its auto-mobile products. This
project was able to identify the impacts which Covid-19 pandemic had on the business of
McLaren. In this project the different mega-trends which can impact the business of McLaren
has been discussed. This project was able to identify the factors which are influencing the
business of organization and also the ways in which they are able to adapt with the mega-trends
for ensuring the success and survival of the business.

REFERENCES
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Fonseca, L.M. and Azevedo, A.L., 2020. COVID-19: outcomes for Global Supply Chains.
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Gatzert, N. and Osterrieder, K., 2020. The future of mobility and its impact on the automobile
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How to succeed in the automotive industry?, 2020[Online]. Available through:
<https://www.orcanos.com/compliance/2020/01/19/whys-succeeding-automotive-
industry/>