Aston Martin's External Forces and CSR: A Business Management Report

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BUSINESS CONTEMPORARY DEVELOPMENTS and
BUSINESS MANAGEMENT
3992 WORDS
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Table of Contents
Introduction................................................................................................................. 3
Findings and analysis..................................................................................................4
Task 1: Analysis of external forces that influence Aston Martin and importance of
each force................................................................................................................... 4
Task 2: Analysis of Corporate social responsibility and sustainability of Aston Martin
.................................................................................................................................. 12
Conclusion................................................................................................................ 20
Recommendation......................................................................................................21
Reference List...........................................................................................................22
Appendix................................................................................................................... 25
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Introduction
In modern world, decisions and policies of an organization is influenced by
moderation and changes in the external factors associated with an organization.
However, these external factors are more concentrated with the immediate
environment and not the potential environment that an organization would be
subjected to in the near future. For the execution of this report, Aston Martin has
been chosen as preferred organization in the segment of manufacturers of motor
vehicles and in sourcing of trailers and semi trailers for its high end KUVs and TUVs.
The aim of this report lies in the evaluation of the external factors that influences and
would influence Aston Martin in the UK segment and in a generalized international
business operation. It additionally includes a critical analysis of the Corporate Social
Responsibility and Sustainability of the organization against influence in decision-
making, effective response and identification of areas of improvement based on CSR
activities. The scope of this report however lies in the understanding of the
importance of each of the identified external factor. In the analytical segment of CSR,
a two domain approach would be taken into consideration. This would be in the order
of CSR in terms of society and CSR in terms of environment.
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Findings and analysis
Task 1: Analysis of external forces that influence Aston Martin and importance
of each force
Analysis of PESTEL environment
In the segment of Political force, the major force that has and will influence the
organization is Brexit. The occurrence of Brexit has influence the build-up and sale of
the luxury carmaker in a negative aspect. The organization already has been
operating in a no deal scenario between London and Brussels (CNBC, 2019). This
major change in the political structure of the nation coupled with changes in
international political relationship has resulted in the alteration of the sales figures
and the delay in the handover of the ordered card beyond the 12-week tenure.
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Figure 1: Car volumes post Brexit
(Source: CAR Magazine, 2019)
From the above figure, the importance of the Brexit in the form of political force could
be identified. It is evident that post the announcement of Brexit and nearing of the
date of the event the net car volume production has decreased. However, for a
luxury car maker like Aston Martin, Brexit would provide a minor importance in the
political segment as the organization concentrates on quality than volume for its
products which are made to order.
In the economic segment, two major forces effects and would affect the
organization. These would be in the form of exchange rates of Sterling pounds and
the GDP of UK (Alvarez-Diez et al., 2019).
Figure 2: Variation of GBP with USD over the year
(Source: X-rates.com, 2019)
From the above figure, the influence of the exchange rates has resulted in the
alteration of the on road market prices in the international market of the organization.
This would be because; a poor GBP and strong USD would compel the organization
to alter the offer prices as custom rates and prices rates would differ across multiple
borders across EU and US.
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Figure 3: Variation of GDP post Brexit announcement
(Source: Ft.com, 2019)
From the above figure, it is evident that Brexit has caused high inflation rates. This
would reduce the sales figures of the organization, as UK individuals would prefer
meeting basic needs than spending on luxury vehicles that would take 12 weeks to
hit the road (Pan et al., 2019). The importance of the economic forces would be
identified as the directly influencing forces for the organization. However, in relative
to luxury carmaker, the variation in exchange rate would be larger factor than the
GDP of the nation itself.
In the segment of the social aspect, the major force would be the policies and
undertaken by the organization relative to customer experience. This force has been
and will influence the organization by modulating the demand of the product against
the presence of stiff competition in the luxury car market and extensive marketing
push relative to the James Bond Franchise that has streamlined the automobile
sales (Ft.com, 2019). The importance of the same would be in the identification of
the emerging upper middle class individuals that has been increasing forming the
new destination for luxury carmakers all over the global consumer market.
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In the technological segment, the major force has been the development of the
driverless cars coupled with the revolution in the streamlined design of the cars to
reduce the drag at high speeds. For the luxury brand, these two forces have
positively influenced the organization. This would be because, the DB11 model of
the organization essentially houses the most advanced and efficient aerodynamic
design while the organization has been targeting the new demand of the driverless
cars among the high end and blue chip clients (Essamri et al., 2019)
Figure 4: Consumers that prefer organizations for driverless cars
(Source: Deloitte Insights, 2019)
The above figure represents the importance of the mentioned force for the
organization. Aston Martin being a traditional automobile manufacturer would house
the 53% preference of providing driverless cars which would boost its sales in the
near futuristic market. This would additionally increase the net operating profit of the
organization that had showed a drastic decrease from 2017 to 2018 financial year.
In the environmental segment, major forces would be reduction of landfill waste
and reduction in use of electricity and gas by the automobiles.
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Figure 5: Environmental efficiencies of Aston Martin
(Source: Amlcorp.blob.core.windows.net, 2019)
From the above figure, it is evident the meeting of environmental standards and
projecting a sustainable development positively effects the organization. The 100%
reduction in waste landfills caters to the positive impact on environment for the
organization. This force enables the organization to reduce the operational
expenditures while developing sustainable approaches towards the future of
automobiles and environment.
The importance of the same includes the following:
 Projects the organization as a preferred partner in terms of sustainable
manufacturing
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 Increases the performances of the cars in the segment of brake thermal
efficiency and undedicated thermal efficiency
 Reduces the brands general specific fuel consumption ratio thereby
increasing the economic nature of the vehicle and increase resale value
In the legal segment, major issues have been the commercial contracting and
operations risks post the introduction of Brexit. Post Brexit, major legislation that
would influence the organization would include the following:
 Public policy and Vehicle legislation
 Automated and Electric Vehicles Act, 2018
 Motor Car Act of 1903
 Driving Laws of UK 2019
The above mentioned legislation influences the organization in a positive aspect as
adherence to each would result in effect sales in UK. However, due to Brexit, these
laws may not be accepted elsewhere in the EU market (Legislation.gov.uk, 2019).
The importance of the same would be in the identification of the additional
requirements by the government and international standards. Adherence to the
same would result in increase of production cost as standards would have to be
maintained first then customer specifications would be adhered.
Analysis of Porter’s five forces
In the segment of luxury automobiles, the porter’s five forces would be essentially
based on the existing forces.
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Figure 6: Porter’s five forces
(Source: CGMA, 2013)
Force Analysis of influence Analysis of importance
Threat of a
new entrant
This would be weakest force
that would influence the
organization. This would be
because 53% of customers
would prefer the branded and
existing players in the
automobile segment (Lüttgens
and Diener, 2016).
However, this would be the most
important factor. This would be
because, poor impact in entry of
new players would mean that
Aston Martin have dedicated
customer base.
The
bargaining
power of the
buyers
Since major of the customers
are high end and affluent, the
buyer bargaining power would
be nonexistent.
As a result, this force would
enable the maintenance of
standard operating profit while
conducting market expansion
and entry into more international
markets.
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The threat
associated
with substitute
products
This force would be the most
significant one. This is because
the organization in sources
trailers and semi trailers. Local
organizations and SUV and TUV
manufactures that provide these
additional features would reduce
the requirement of the product in
terms of power and comfort.
This would be the most important
aspect as this would influence
the sales volume of the
organization in the long end
(Vernon, 2017). Additionally, this
force would enable Aston Martin
to conceptualize the
development of trailers and semi
trailers for the trucks produced by
the company.
The force of
bargaining
power of the
suppliers
Post Brexit, this would be one of
the major forces. This would be
because, the organization would
not be able to able to produce
high quality cars in the event
high quality materials are not
available to them.
However, the importance of the
same would be limited, as the
influencing quantum would
depend on customer demand
and supplier relationships.
Competition in
the market
This is the most influencing
factor as multiple luxury brands
like Jaguar that operates in the
UK market. This force influences
sales volume, customer service
and supplier relationships and
innovation in a dynamic form
(Macneill and Jeannerat, 2016).
The importance of the same
includes the development of
dynamicity in the organization
across all its operational process.
In the near future, this may result
in the development of the own
trailers and semi trailers in the
event the organization develops
luxurious vanities for high profile
clients.
Table 1: Analysis of porter’s five force
(Source: Created by author)
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Task 2: Analysis of Corporate social responsibility and sustainability of Aston
Martin
2.i Relevance to theme relative to organization and its influence on decision
making and policies
Corporate social responsibility and sustainability is a relevant theme for Aston
Martin as the company religiously follows its CSR initiatives through its 'Second
Century Plan'. Aston Martin has planned their CSR initiatives in relation with the
ideals enshrined by the UN in their Global Compact and Global Reporting
Initiative’s G4 guidelines. Ecological sustainability, community engagement,
health & well-being and sustainable supply chain are four major core areas where
Aston Martin focuses its CSR activities in. Further, the company's CSR initiatives
are inclusive of ecological, end of life vehicles along with battery recycling plans.
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