Aston Martin's Business Expansion in Sweden: A Strategic Analysis

This coursework project examines Aston Martin's strategic plan for business expansion into the Swedish market. The report begins with an introduction to Foreign Direct Investment (FDI) and its relevance to Aston Martin's goals. It then analyzes the business environment of Sweden using a PESTLE analysis, evaluating political, economic, social, technological, environmental, and legal factors. The project further utilizes Porter's Five Forces model to assess competitive dynamics within the Swedish automotive market, considering supplier power, buyer power, competitive rivalry, and the threat of substitution. The analysis provides a comprehensive overview of the opportunities and challenges Aston Martin faces in expanding its operations in Sweden, considering the country's economic, social, and technological landscape.

Coursework Project

Table of Contents
INTRODUCTION 1
Q1Expansion of business ........................................................................................................ 1
Q2 Expansion of business........................................................................................................ 4
Methods of entering into foreign market 1
CONCLUSION....................................................................................................................... 2
REFERENCES 3

·INTRODUCTION
Foreign direct investment (FDI) is an investment made by way of a company in one
country into enterprise interests located in another country. Generally, FDI adopted when an
investor establishes foreign commercial enterprise operations or acquires foreign business
belongings, including organizing possession or acquiring interest in an overseas organization.
Further, this report will highlight about the Sweden country and the Aston Martin who want to
expand its business in Sweden country (Zhao, Zuo, and Zillante.2016). Moreover, this report
will highlight the pestle analysis of Sweden and on the flip side the project will outline the
porters five force model.
l壱Q1Expansion of business
Sweden is a country positioned in Northern Europe on the boundary line of the Baltic
Sea, Gulf of Bothnia, Kattegat, and Skagerrak and its neighbouring nations consist of Finland
and Norway. Further, it bravado a strategic region alongside Danish Straits that is linked to
Baltic and North Seas. Moreover, the geography of Sweden is flat with mountains within the
west. However, the government structure of Sweden is a constitutional autocracy and the head of
country is the king, and the principal of government is the top minister. Further, Sweden has a
mixed financial system wherein there is a diffusion of personal freedom, combined with
centralized financial making plans and government standards. Further, Sweden is a member of
the ECU (European Currency Unit) Union (eu).
Aston Martin Lagonda worldwide Holdings p.c is a British impartial producer of luxury
cars and grand touring car. Moreover, it was established in 1913 via Lionel Martin and Robert
Bamford. Further, prompt from 1947 by means of David Brown, it have become related to
steeply-priced grand visiting vehicles inside the 1950's & 60's, and with the fictitious man James
Bond following his use of a DB5 version inside the 1964 film Gold-finger (Mathooko, and
Ogutu.2015).
Moreover, their sports activities vehicles are seemed as a British cultural symbol. Further,
Aston Martin has held a Royal Warrant as supplier of motorized vehicles to the Prince of Wales
from 1982. Furthermore, it has over 150 car franchises in over 50 nations on six continents,
making them a worldwide vehicle brand.

PESTLE analysis:
Aston Martin is planning to expand its business in Sweden, thus, the business
environment of Sweden is examined through pestle analysis of Sweden through which company
will be able to know the profitability opportunities for expanding in Sweden.
A PESTEL evaluation is a model used to examine and display the macro-environmental
factors which could have a fundamental effect on the company's overall performance. This
structure is especially beneficial while starting a brand new business or entering a overseas
marketplace.
Political: These factors Of Sweden are related to how and to what level a central
authority intervenes in the financial system or a certain industry, this is inclusive of government
policy, political balance or unreliability, putridness, foreign alternate coverage, tax policy, labour
regulation, environmental law and trade regulations. However, Sweden is normally a totally safe
nation with political balance and the country has various regulations against corruption and they
are fully implemented by the citizen and various corporations within the country. Therefore, it is
an opportunity for Aston martin as it can expand its business as the country has proper political
environment. On the other hand, it the political condition in not stable then it will threat for
Sweden to carry out its business operations.
Economic: These elements are determinants of an economy’s condition. These elements
consist of monetary increase, change quotes, inflation costs, interest costs, disposable earnings of
customers and unemployment costs. Thus, these elements may additionally have a direct or
oblique long time impact on an organization, since it influences the purchasing strength of
consumers and will also change demand models inside the financial system.
However, the Swedish economy shrunk for the duration of the global financial disaster
and Eurozone disaster which is a threat for Aston martin to carry its business operations. Thus,
its economic system has conjugated considering that then as their will be strong growth among
2016 and 2018, sustained with the aid of increasing public expenses, foreign demand and
exports. However, GDP of the country have grown by means of 2.4% in 2018 which will be an
opportunity for Aston martin to expand its business but the economy of the country is predicted
to sluggish somewhat in 2019 on the returned of decrease housing investment and softening

local intake. Thus, keeping in mind these economic factors the company should carefully expand
in Sweden by considering its economic condition(Harding, 2017).
Social: This dimension of pestle analysis describes the demographic traits, standards,
traditions and values of the populace within which the business enterprise operates. Thus, these
includes population tendencies including the population boom rate, age distribution, revenue
distribution, profession attitudes, safety importance, health awareness, style attitudes and cultural
limitations. However, these elements are especially important for entrepreneurs who want to
focus on particular patrons.
However, the social environment of Sweden is strong as in Sweden around 20% of the
population of the country earn 4X and further, the country provides education and training to
children of around 7-12 which is an opportunity for Aston martin to conduct its business
activities. Moreover, the country also offers free education fees for the college going millennials.
Thus, the company can expand in Sweden as the economy of the country follows controlled
lifestyle and values that will help company to gain good reputation in overall market of the
Sweden. On the other hand, if the social environment of country is not stable and every other
person have different culture and lifestyle then it will be a threat for the company to carry its
business operations.

Technological: These elements of pestle analysis concerns with the advancements in
technology which could affect the operations of the industry and the marketplace positively or
negatively. Thus, this includes technology inducement, innovation, mechanisation, research and
improvement (R&D) activity, and the amount of technological consciousness that the economy
of the country posses.
However, Sweden positions 1st according to the worldwide information generation record
of 2009-2010. Thus, Sweden leads in technology advancements and inventions. Therefore, this
is an opportunity for the company to expand in Sweden as its environment is completely based
on digitalized era and with the help of which the company can use various technologies to
expand its business. On the flip side, if the technological advancement is frequently changing
than it will be a threat for the company as it will increases their cost of operations.
Environment: Environmental element have grown to be vital due to the increasing
inadequacy of raw materials, impureness targets and carbon footprint goals set with the aid of
governments. Further, these elements encompass environmental factors including atmospheric

condition, climate, environmental offsets and climate alternate which can also especially affect
industries which include touristy, cultivation, agriculture and insurance policy. Moreover,
growing consciousness of the potential impacts of climate change is affecting how businesses
will operate and the products they provide.
However, Sweden is considered as the highest sustainable country as its prime focus is on
environmental protection by introducing around 50% of renewable resources that don not affect
the health of the public and the ecological environment as well which will be an opportunity for
the company to expand their business operations as it will enhance their reputation. Further, they
produce low carbon dioxide emissions that affects the environment. Thus, the company can
positively expand in the country as it focuses on the environmental guidelines which eventually
benefits the company's operational activities. On the other hand, if the environment condition of
the country is not good then it will be a threat for the company to expand its business operation
as it will reduce their reputation.
Legal: Legitimate factors encompass of health and protection, same opportunities,
marketing standards, consumer rights and guidelines ,merchandise labelling and product
protection. Further, the company’s need to realize what is and what is not legitimate in an effort
to operate business successfully.
However, the legal environment of the Sweden is legitimate and fair, as the country
follows Swedish law act 1992 which depicts that the other international companies that operates
within the market of Sweden have to follow strict guidelines of the government authority.
Therefore, this will be an opportunity for the company to expand their business operations.
Moreover, the companies need register under the registration offices of the company in Sweden.
However, the government authorities of the Sweden offer various inducements for operating
within their market like low rent areas to operate their business activities, loans to run their
business expenses etc. Thus, the company can expand its business activities in the market of
Sweden as it offers legitimate environment for operating their business. On the other hand, if the
legal environment of the country is not fair then it may affect the operations and activities of
business which will a threat for the company.

Illustration 1: Numbers of cars sold
l壱Q2 Expansion of business
Porter's Five Forces Model
Porter's five forces model is used by every organisation to analyse operations of company
with its competitors. Porter's five forces model is used by Aston Martin company for analysing
all the competitive forces which affects its operation and company’s growth. Comp-any uses this
model for finding its weakness and strengths and helps the company to win over its competitor's.
This model helps the company in comparing its strategies with its competitors and why its
competitors is offering better services than Aston Martin. Aston Martin analyses & evaluate five
forces which make according to this model which are discussed below-

Supplier's Power- They are also an important factor through which prices can are drive.
It refers to the number of suppliers that are involved with company in supplying of products or
services. Also, how much a cost is required for company to switch from one supplier to other.
More number of suppliers, less power they possess to drive the prices. For Example- Aston
Martin is having limited number of suppliers. Thus, supplier holds more power of driving
prices. Therefore, in Sweden Company will have to depend on suppliers to sell cars. If suppliers
demand high prices than company is not able to sell products in market and vice versa. So,
supplier will hold more power to drive prices. Hence, it will not be favourable for company as it
will impact in negative way.
Buyers Power- Bargaining power of buyers of company is a factor which affects prices
of product & services of Aston Martin. It defines as what price is expected by customers more
the customers stronger bargaining power of company’s customers. It affects pricing strategy of
Aston Martin company because it has high customer base and this leads to demand of law prices
which in turn affects prices of products & services of company(Mathooko and Ogutu, 2015).
For Example- To retain customers loyalty Aston Martin is required to offer its products
and services at a lower price or at a price demanded by customers. If company is unable to sell
its cars at a price demanded than that will reduces customer base of company. Further, customers
will shift to another brand that is a threat for company and for which it is require to sale products
at a demanded price.
Competitive Rivalry- Rivalry between all the companies operating under auto-mobile
sectors affects operations of Aston Martin. For Example- If there is an Increase in competition
among the competitors of Aston Martin than that will reduces brand image and growth of the
company. Thus, there is a threat of reduction in market share of company. More competitors lead
to decline in the profitability & goodwill of company and there are many auto mobile companies
operating in the Sweden market which affects business of company in negative manner.
Threat of Substitution- Substitutes of the rival company of Aston Martin that may be
used in region of a business enterprise's products or services poses a risk for the company. For
example, if customers of Aston Martin depend on a company to offer a product or carrier that
may be substituted with every other device or carrier or with the aid of performing the project
manually, and if this substitution is fairly clean and of low fee, then it is not good for company.

Threat of New Entry- Aston Martin is also suffering from the pressure of latest entrants
into its marketplace. Further, more money and time it requires for a competitor to go into Auto-
mobile industry and be an effective competitor and more companies position may be drastically
weakened. Aston Marting has no limitation of new entrants many new auto mobile companies
are entering into the market which affects business of company negatively. For Example- A new
auto mobile company is entering in to market of Sweden that that in turn reduces customer base
and profitability of company. Further, company is required to change its business strategies in
accordance with strategies used by competitors Aston Martin(Junqueira and Gonzaga, 2017)
Methods of entering into foreign market
For business expansion Aston Martin can enter into Sweden market through vast range of
entry methods. However, each of the method has certain risks as well as benefits. The analysis of
these entry options for Aston Martin is as follows:
Exporting:
Aston Martin can exports its cars to Sweden for the business expansion. With this approach
organisation will be able to save the additional complexity and cost of manufacturing operations
in Sweden. However, establishing a distribution channel can be a great challenge for the
company to achieve success. The existing market for sports cars in Sweden is well flourished by
the services of companies like Volvo and Scania AB. In such situations for promoting the
products and services Aston Martin must have in depth knowledge of potential buyers in the
Sweden market. As compare to other market entry methods with this approach organisation will
have limited control over the market and consumers (Kaputa, Paluš and Vlosky, 2016). As
compare to heavy vehicles Sweden has lower shipping cost for cars. Thus, if Aston Martin will
export its cars to Sweden it will not cost higher to organisation. However, organisation will
require developing suitable strategies for its FDI region. For instance the investment and
establishment in the nearest port will help to reduce the ground cost of exporting vehicles. The
stable Swedish economy and economical feasible investment in exporting can be a good option
for Aston Martin to FDI.

Franchising:
Currently the Aston Franchising mehtod of FDI is very successful in Sweden. There have been
around 800 franhcising chains are operating in Sweden. Thus, Aston Martin can also use this
approach for its investment. Martin can use give franchisee of its products to locally successful
and established organisations. This FDI strategy is able to quickly capture the Sweden market
through local support. It also involves lower risk of failure as compare to export method
(Ozturk, Joiner and Cavusgil, 2015). However, with this entry method Aston Martin must assure
that it is well aware with the legal aspects of Sweden and has regular supervision of the quality
of products. As all operational and decision making powers are in hand of franchisee Aston
Martin will have less control on business and this can influence its brand value and overall
performance.
Acquisition:

Aston Martin can mark its entry in Sweden market by capturing or purchasing the control or
stock of any local private firm. In terms of output this FDI strategy is very effective but it can be
expensive deal for the Aston Martin. It also includes great risk. Like in 2010 when Spyker
acquired Saab auto-mobile the deal leads to failure and bankruptcy. Sweden has quite strict
regulation for the foreign companies in terms of direct selling price and functional regulations.
Acquisition through FDI may not be considered as an easy task for the Aston Martin. Along with
the high acquisition prices the company will also have to bear the strict trade regulations in
Sweden. However, this method will give a deep and quick method to capture the Sweden
market(Adjei, 2015).
Greenfield venture:
Aston Martin can launch a completely new subsidiary which is completely owned by the
organisation. It can be considered as an impressive move by the organisation as it will represent

organisation as local company so that wide knowledge and support can be easily gained. In terms
of operational and market control Greenfield direct investmetn is assumed to be best for Aston
Martin but company may require longer time for set up. The high cost along with optimum risk
can also be critical parameter in choosing this technique for entering into Sweden.
Partnership and strategic alliance:
As compared to other method partnership and alliance can help Aston Martin to share the risk
and investment with locally established and successful organisations. Along with the cost
benefits partnership can also help company to explore locally without facing difficulty due to its
foreign label (Chetty, Ojala and Leppäaho, 2015). However due to differences in corporate
culture of UK and Sweden the conflicts can occur which may cause issues in partnership. From
the cost perspective also it involves higher investment than franchising or export. This FDI
strategy can be an effective option. For instance the partnership between General motors and
Saab automobile helped both the organisation to capture the Swedish market thus Aston Martin
can also make partnership with companies like Start-up Uniti Sweden which are working on
innovative electric cars(Pereira, 2016).
Illustration 2: GDP Growth

·CONCLUSION
The report has highlighted about the Aston martin who want to expand its business in
Sweden country. Further the report has highlighted about the pestle analysis of the Sweden
country through which the company will be able to analyze the profitability of expanding its
business activities in the marketplace of Sweden. On the other hand, the project has outlined the
porter's five forces of model of Sweden with the help of which the Aston Martin would be able
to observe the various forces that can be considered as a threat to the business activities of the
company like new entrance, substitute products, rivalry etc. Further, the assignment has framed
about the modes of entrance in foreign market through which the company will be able to know
various methods like exports, partnership, greenfield venture, acquisition and franchising etc.
that will help company to know various benefits of these methods and accordingly the company
will expand its business in Sweden.
l壱REFLECTION
From this report I learned so many things and it was a great experience. From the
feedback received from my tutor I get to know that expansion enhances profitability, market
share and brand mage of a business firm. Further, my teacher told me that if a company expand
its business in new market than business operations of that company gets affected by different
factors located in outside business environment. Thus, a business organisation is required to
expand its business after considering changes made in all these factors. I also get to known that
PESTLE Analysis is a model which is helpful in evaluating impact of various macro
environmental factors.
My tutor also asked by to compare business performance of Aston Martin with its
competitors and for that I applied Porter's five forces model and according to my teacher this
model play a significant role in identifying threats faced by company. Feedback of my tutor

concludes that my work is good and it includes all the necessary details required by a company
to expand its business in new geographical area or in an existing area.
My knowledge about business expansion is improved after preparing this report. I
learned about different sources (acquisition, merger, amalgamation and takeover) through which
a company can expand its business in new market. Feedback of choosing one auto-mobile
company from Sweden was helpful for me in identifying financial and corporate information
pertaining to company. Further, with this report I get to know that expansion is necessary for a
business firm to survive in market for long run.
This report is also helpful for me in future as with this I am able establish my own
business in future and It is also beneficial for me in my exams. I can advise other business firm
related to expansion & diversification in the future.

·REFERENCES
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Management Education. 39(5). pp.650-669.
Chetty, S., Ojala, A. and Leppäaho, T., 2015. Effectuation and foreign market entry of
entrepreneurial firms. European Journal of Marketing. 49(9/10). pp.1436-1459.
Harding, S., 2017. MBA management models. Routledge.
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systems on organizational performance. Revista Contabilidade & Finanças. 27(72).
pp.334-348.
Kaputa, V., Paluš, H. and Vlosky, R., 2016. Barriers for wood processing companies to enter
foreign markets: a case study in Slovakia. European journal of wood and wood
products. 74(1). pp.109-122.
Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management. 29(3). pp.334-354.
Morden, T., 2016. Principles of strategic management. Routledge.
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pp.119-141.
Pereira, G.G., 2016. Grayscale lattice Boltzmann model for multiphase heterogeneous flow
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Zhao, Z.Y., Zuo, J. and Zillante, G., 2016. Competitiveness assessment of the biomass power
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