Analyzing External Influences on Aston Martin's Business Strategies

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Contemporary developments in
business and management

Table of Contents
Introduction......................................................................................................................................1
Task 1...............................................................................................................................................2
Primary external influences.........................................................................................................2
Task 2...............................................................................................................................................6
Analyze relevance to organization and how it influences policies and decision-making within
organization or industry-sector....................................................................................................6
Effectiveness of the organization’s response...............................................................................7
Area of improvement...................................................................................................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

Introduction
Management is the most significant part of the business function because it defines the strategic
directions and controls the operations through optimized mapping of the resources, goals and
assets. However, the business environment needs changes with time to incorporate the new
features and functions for the durability and stability. Contemporary developments impact the
business and management.
The presented report has discussion of the external factors including micro and macro factors
those can impact the business functions and strategic decisions for the growth and management.
It has discussed the areas within economic factors and political legal aspects along with other
factors to present the business environment. Also, the report has significant discussion of the
micro factors and their influence and importance for the business. It has explanation how the
understanding with business environment can help to achieve reliability in the decision making.
Also, the report has discussion of the technology disruption and disruptive innovation for the
business. The influence on the policies and decision making is part of the report. The business
responses and potential improvements and recommendations for the technology are included in
discussion.
The report provides significant discussion and analysis around the business and management of
Aston Martin which is a leading London based luxury sports car manufacturer. The organization
is well-known for premium quality products. The organization is also known for the luxury
sports cars and the engine supply those are equipped into sports cars of other manufacturer to
boost their performance.
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Task 1
Primary external influences
The business has significant impact of the external environment to define the strategies and to
attain the competitive advantages. The organization, Aston Martin is the leading luxury sports
car and tour motor manufacturer based in London. The external environment of the organization
can be classified into two categories to understand the influence of the each factor and values of
each influence for the business (Gupta, 2013).
Micro environmental influences
It defines the influences those are directly connected to the business. Therefore, changes in the
micro external environment directly influence the business performance, quality, productivity
and market position.
Suppliers: The organization has significance of the suppliers to get the raw materials for the
operations. For example, each luxury motor vehicle from the organization is the composition of
the leather seats, teen sheets and other equipments those are composited to present the product to
the customers (Grant, 2016). Therefore, suppliers influence the business operations directly for
the continuous on the raw material or specially designed equipment.
Customers: The business has influence of the customers on the profitability. They are significant
to drive to generate the revenue and to define the sustainability and continuance of the business.
Therefore, higher demands of the existing products can lead high profitability whereas sudden
changes in the expectations and lack of satisfaction with business products and services can
impact the business stability in term of the financial revenue, market position and continuance.
Financiers: Aston Martin is a public limited business which means that there are inventors and
shareholders those finances the products and operations to generate the profitability. For
example, they support the business marketing, production and other activities through their
financial capabilities and seek profitability over their investment (Gollay et al., 2016). If there is
lack of the financers then the business might face the issues to continue the operations.
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Marketing intermediaries: These are the supporting agencies and businesses such as
distributors, wholesaler and authorized dealers. Aston Martin has influence of the marketing
intermediaries to reach the customers and to provide reliable services. They are also significant
to expand the business products and services to the target customer market whereas they locally
represent the business to establish the communication and coordination with market segment
(Lisowska, 2015). Distributors help to attain the timely delivery of the products to the customers
and other dealers connected to the business and supports supply chain whereas dealers help the
business to sale the product to the end customers with high satisfaction and quality interactions.
Public perceptions: The micro environmental factor such as public perception also has influence
on the business. Public perception might be from the customers or the people willing,
researching or measuring the products and services with respect to the market situations.
Therefore, the reputation of the business and loyalty among the people influence the business
operations directly (Navarro-García et al., 2014). Currently, the most of the businesses are
seeking to improve brand values and equity so that the people can be attracted in business
operations to generate desired profitability.
Macro external influences and their importance
It defines the factors those are indirectly connected to the business to influence the operations,
growth and profitability. For example, there are mainly six factors those the organization is
subject and the understanding and alignment to the factors has importance for the organization:
Economic forces: The variations of economic environment have impact on the business to
forecast the demands and supply with accuracy. It is important for the organization to monitor
and measure the economic factors to drive the business success. These are the major influences
due to the economic forces:
Income: It means to the financial capabilities of the individual or a family to purchase a product.
The products of the business are costly because of the luxurious and premium experience and
features. The increasing dual income families are boosting the income and so that the customers
are being more oriented and capable to purchase the products they desire (Maylor et al., 2016).
Therefore, high income helps to increase the sales while managing the brand values and position
at same time.
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Inflation: It means to the situations in which the product price increases but there is no change in
the wages. It makes the customers incapable to purchase the products. Therefore, there is less
number of the sales in luxury sports cars when the wage is unchanged and products are costlier
than before. In reverse situations when inflation rate in lower and people has high wage, the
organization has potential to increase the price to generate high profitability (Eggoh and Khan,
2014).
Recession: It can be defined as the economic period in which employment, production and
income goes down and so that the demands of the products reduce in the market. It is essential to
understand for the business because it helps to manage the working hours, waste and material
cost to reduce product prices. It also helps to make the marketing process attractive for the
customers whereas the organization also can focus on the improvement of the maintenance and
repairing services (Townsend and Champion, 2014). It also help the business to understand the
potential causes of the recessions whereas guide for the marketing in which the organization can
integrate the marketing of the top-line products and features with demonstration of the durability,
quality and capability to make the products attractive for the customers.
Interest and exchange rate: The higher interest rate drives the business toward borrowing and
constraint the business for the profitability. The long repayment period also influences the
business for the profitability and product pricing (Cooper, 2014). Higher exchange rates allow
managing the profitability during the international operations but the organization has lack of the
profit when it is low and constraint the business during the importing and exporting.
Technological influences: The organization has influence of the technology for the nation,
products and services and business models. The national technological capabilities determine the
business efforts and practices to drive the outcome whereas the technology associated to
manufacture, test and validate the product also impacts for the competitive advantages. The
technological availabilities can reduce the operational cost and can increase the automation and
cost effectiveness for the business (André Cavalcante, 2013). The business model such as
digitalization, marketing techniques and technical assets for the internal operational efficiency
impacts the business for the practices and outcomes. Therefore, it is significant to ensure that the
business has enough capabilities to achieve desired goals and to achieve efficiency in the
management and operations.
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Socio-culture factors: It defines the business products the customer wants to purchase, the price
they want to pay and marketing approach they love the most to get engaged in the business.
Therefore, the socio-cultural factors are important to understand the customer values to make a
purchase and to explore and examine the time starved customers (Aithal, 2017). The lifestyle
differences and changing structure of the family also defines the demands and supply of the
products in the market.
Demographic factors: The organization has to understand the demographic characteristics such
as age, profession and lifestyle of the people to define the potential market. For example, the
luxury sports cars are preferences of the youth whereas the most of them are passionate for the
driving and race events (Ho, 2014). The increasing income and changing lifestyle is also
attracting the people to add luxury motor vehicles in their collection.
Political legal environment: The organization has impact of the political stabilities, constitutional
provisions, government’s interventions, foreign policies, political structure and government attitude.
Therefore, the understanding with the contemporary political and legal environment associated with
the business help to explore the business capabilities and possibilities.
Natural environment: Aston Martin has influence of the natural environment such as climate
differences, seasonal variations and natural disasters on the business continuance and
profitability. The availability of the raw material from the nature and waste management is
essential to ensure the sustainability.
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Task 2
Analyze relevance to organization and how it influences policies and decision-making within
organization or industry-sector
Technology disruption means to the new technology which has potentials to replace the existing
market and value network. However, it is not necessary that each new technology is disruptive
and similarly each innovation is not capable to change the market. Therefore, disruptive
technology and innovation means to the replacement of the existing market and value market so
that the new market can be established with to lead the businesses, develop the alliances and to
market and manufacture the products (Koski et al., 2016).
Aston Martin has importance of the disruptive technology and innovation. For example, the first
ever motor vehicle engine was a new technology and innovation in the transportation but it was
not disruptive because of the price. Due to high price and out of the reach of the common people,
it ensured that the horse drawn vehicle remains in the market. Therefore, the organization has to
ensure that the new technology in any of the business function is required to be disruptive to
support the business growth and operations (Christensen et al., 2015). For example, a cost
effectiveness, easy to use functions and durability to manage the knowledge and to optimize the
use are some of the factors those are required to consider.
The organization has relevancy of disruptive technology in the operations because the disruptive
technology can help the organization to create the new market and to attract the customers
toward the products. For example, the technology of the electric car is disruptive for the fuel-
powered vehicle and it has potentials to attract the customers to lead the profitability and to
create new market for sustainability. Therefore, technology disruption has values for the business
to define the new scope, mold the market expectations and to lead the change with high
profitability. It is also required because it ensures that the business process model and products
and services are aligned to the customer expectations or have features and functions to attract the
customers (King and Baatartogtokh, 2015). Also, the disruptive innovations are required to
create new market to ensure that the individual including businesses associated with Aston
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Martin has values for the deal. For example, the business products and services are expected to
be long term in the values to ensure high satisfaction.
Aston Martin has influence of the disruptive technology and innovation on the business policies
and decisions making. The organizational policies are aligned to the future directed goals and
capabilities in the technological improvements. For example, the organization wants to introduce
electric vehicle in the sports range where safety is supported through the digital sensors.
Therefore, the business policies are being prepared according to the goals and visions. For
example, the policies are being changes to improve the internal management, communication,
data sharing and leadership. The policies for the work culture execution, human resource
management and role delegation are changing to meet the disruption (Sultan and van de Bunt-
Kokhuis, 2012). Besides to it, the organizational policies are influenced for the consideration of
the competitive advantages through the technology and innovation. The management and
leadership is fostering the creativity and empowering the experiments and risk taking behavior in
employees to ensure that they can easily contribute to generate the disruptive technology through
disruptive innovation.
Similarly, there is also impact on the decision making. The managing board of the directors
analyzes the market demands and expectations and according to the changes in the market for the
production differentiation, the decisions are taken for the disruptive innovation. There I influence
on the decisions making because the knowledge and potentials of the business for the disruptive
innovation define the strategic path for the growth and operational excellence (Fan and Suh,
2014). Aston Martin considers the implementation of the technology in the production and
quality assurance departments to ensure that the products are services are capable to achieve the
customer satisfaction whereas can lead the development of the new market to drive the
profitability. Therefore, the decision making approaches are aligned to the organizational vision
and objectives for the disruptive technology and innovation.
Effectiveness of the organization’s response
It becomes essential to understand Christensen’s theory for the disruptive technology and
innovation to understand the effectiveness of the organization’s response. According to
Christensen, disruptive technology emerges with time because initially it does not create values
for the customers and the existing technologies dominant into market. Also, the core component
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is the cost, complexity, convenience and size of the products to reach the large number of the
new customers from the initial set of the small group of the customers. The businesses also need
to consider that the disruptive technology has irregular investments because it has influence of
the changes in the corresponding market, competitors and supporting environment (Christensen
et al., 2015). Therefore, the organizational responses are bounded on the investment strategies
and capabilities to respond to the disruptive technologies. The disruptive innovation develops the
products those are distinct and meet performance standards to replace the existing products from
the market. Therefore, the business responses to the disruptive innovation have consideration of
the new entrants and scope for the business.
Aston Martin has effective response to the disruptive technology and innovation. The
organization has skilled and capable resources to examine the potential impacts of the
technology on the business activities and functions. The organization is also strategic to meet the
goals because it is believed that it is not enough to harness the single business function but there
is need of the simultaneous changes in the connected functions to drive the benefits (Crockett et
al., 2013). Therefore, the organization sets the agenda and goals for the small group of the
employees those are enthusiast and dedicated to achieve the excellence through the
improvements over the existing efforts.
The organization has consideration of the strategic responses to achieve the desired outcome. For
example, the organization aligns the decisions and responses to the business culture and
characteristics so that creativity as well as alignment to the goals can be achieved. There are
mainly three stages Aston Martin prefers to use during strategic responses to the disruption in the
technology and innovation. First, the organization identifies the developments and time. The
business identifies the significance of the development and potential applications and benefits
associated with it in current and future time. The right time for the introduction of the technology
also matters (Markides, 2012). Second, the organization analyzes the potential impacts on the
operations, performance and quality. The organization identifies the need of additional customer
facilities and services to establish the innovation into practices. Third and most significant stage
of the response for the business is to determine the factors and impacts those can prevent the
business for the commercialization of the technology. It is required so that the organization can
define the path to lead the market and to expand the business.
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Therefore, during the first response which is termed as the back-scratcher approach, the
organization provides better support to the customers and ensured that the business has gained
effective market share for the profitability. The organizational second response is termed as
extreme makeover in which the core focus on the business is to make market attractive for the
low end customers. For example, the organization has effective pricing according to the features
and functions so that enthusiast customers can afford the products (Tongur and Engwall, 2014).
The last strategy for the response is to become bottle-neck buster in which the organization has
significant improvements in the approaches and assets so that the constraints for the business
growth can be resolved. For example, the organization includes the customers in the marketing
and production functions regardless of the expertise field. The organization can consider the use
of the improved technological assets at workplace so interact with customers.
The organizational responses through the three strategies and stages are significant to improve
the profitability and to lead the easy and effective implementation of the disruptive technology or
innovation. The organizational response is effective for collaboration and data sharing with
others whereas the organization has focus on the development and management of the corporate
communities and groups. It also improved the product development cycle and enables customer
self-services to optimize the cost and efforts (Zortea-Johnston et al., 2012). Therefore, the
organizational responses to the disruptive technology or innovation are good to drive the positive
influence whereas the business has effective consideration of the capabilities and constraints to
meet the defined goals. The responses are validated on the ‘business-fit’ architecture in which
the capabilities, constraints and expectations are mapped to each other to examine the outcome.
Area of improvement
On the discussion of the organizational response to the disruptive technology or innovation, it is
determined that there is need of some improvements in the responses so that the business can
optimize the services to the customers and more effective reach to the customer market can be
planned. For example, the organization has lack of the centralized data sharing and exchange
protocol which is powered from management to achieve the contemporary developments. For
example, the organization has to establish the digital channels and approaches those can help to
achieve effective communication and coordination among the employees and customers
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(Christensen et al., 2015). It can help to reshape the business model, workplace culture and
operations with effective integration of the technology.
The overall response to the disruptive technology in the motor vehicle engine type has several
opportunities and challenges for the organization. The organization can consider the
improvement in the backend management and leadership to motivate the resources so that the
complexities and difficulties in the internal management can be reduced. It can help the
organization to drive the workforce toward the competitive arrangement of the capable and
skilled resources. Also, the organization cannot respond effectively if there is no effective
reading and analysis on the market expectations and demands (Massa and Tucci, 2013). The
organization has to assure that there is enough information about customers to develop better
solutions to the problems and to gain the market competitive position for the business growth.
There is need of the improvement in the strategic response where the organization can consider
the analysis of the multiple dimensions to adopt the most suitable solution for the business.
The strategic response in the extreme makeover is not significant if the products and services are
not complete to engage the customers and they are easily substituted within the industry through
competition. Therefore, the major improvement is to ensure that the organization delivers the
products in the form of luxury sports cars so that the business can achieve high profitability and
customer base. Customer relationship is required for the accurate and reliable responses to the
technology because the customer satisfaction is at core of the business functions to drive the
business sales and profitability (King and Baatartogtokh, 2015). Therefore, the business
responses are required to improve through the proper integration of the digital tools for the
improvement in the communication, team work and customer-centered services. It is
recommended to engage the customers for long term and to ensure high profitability from the
business practices.
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