Aston Martin: Environmental & Strategic Analysis of Auto Industry

This report provides an environmental analysis of the automobile industry, focusing on Aston Martin. It uses several strategic tools, including PESTLE, SWOT, Porter's Five Forces, value chain analysis, and Porter's generic strategies, to assess the internal and external factors impacting the company. The PESTLE analysis covers political, economic, social, technological, legal, and environmental factors, highlighting the impact of Brexit, skilled labor availability, changing customer preferences, technological advancements, and environmental regulations. The SWOT analysis identifies Aston Martin's strengths, weaknesses, opportunities, and threats. Porter’s Five Forces model examines the threat of new entrants, bargaining power of suppliers and customers, the threat of substitutes, and competitive rivalry. The value chain analysis breaks down primary and support activities, and Porter's generic strategies explores cost leadership, differentiation, and focus strategies. The report aims to provide insights into the challenges and opportunities facing Aston Martin in the current business environment.

Environmental
Analysis of Automobile
Industry

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
PESTLE analysis....................................................................................................................1
SWOT analysis.......................................................................................................................1
Porter’s Five Forces................................................................................................................2
Value chain analysis...............................................................................................................3
Porters generic strategies........................................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Environmental analysis referred as the strategic tool that undertake several activities like
analysis of both internal and external factors of environment that has power to impact business
functionality and performance. Effective analysis of suitable factors leads to enable business to
take the prominent decisions and formulate strategies which are helpful for business to achieve
suitable goals and objectives in given period of time with proper efficiency. Automobile sector
comprises the several organisations that undertake the proper designing, marketing and
manufacturing and selling motor vehicles (Valentini and Kruckeberg, 2018). For this report,
Aston Martin is considered which is a British automobile company deals in sports car which is
established in 1913 by Lionel Martin and Robert Bamford situated in England, UK. The report
leads to cover suitable challenges which are being faced by company from internal and external
business environment. Moreover, PESTLE analysis, SWOT analysis, Porter’s five forces,
generic model and value chain analysis is being explained in terms of Aston Martin.
MAIN BODY
PESTLE analysis
This framework is useful for business to identify the factors that can put huge impact on
the performance of company and also present outside business. It also undertakes different
factors like interference of government on business, factors regarding culture and society and so
forth. These external factors are discussed as underneath:
 Political: These factors leads to create huge impact on Aston Martin because of Brexit
that bring uncertainty occurs in political environment in UK also made several changes in
their concerning rules and norms. These changes in rules leads to create issues for
company as they need to consider these factors (TRAN, HOANG and NGUYEN, 2020).
Further, because of the inequality in UK, there are several changes that occur in taxation
policy which create huge impact over the profitability of company.
 Economic: These are factors which are related to exchange rate, interest rate, labour rate
and also leads to impact on the cost of company. For this, the skilled labour in UK are
available in high number that can create effective opportunity for Aston Martin to offer
quality products to their respective customers. There is high risk because of change rate
that can put huge impact in terms of creative and overall investment of company.
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 Social: This factor undertakes the link between culture, values and overall society. It
leads to put huge impact over the business of Aston Martin as there is suitable changes in
the preferences of customers. It also leads to increase the disposable income of people for
the living in UK that offer overall opportunity for the business as they can sell their
products to their customers. Further, there is huge growth in used car market that can
become threat for Aston Martin as it does not permit people to live in their market.
 Technological: It include those factors which are concerned with technological
development, advancement and innovation that offer effective growth to business of
Aston Martin. For this, the organisation put emphasis on improving the overall
experience of customers by providing rapid growth and proper access (Sellors, 2020).
There is the suitable use of advance technology in Aston Marin that offer them
opportunity to expand their market share.
 Legal: It include several rules, laws, legislations for the overall business as it is important
that can put negative impact over the growth and survival of business. There are different
types of laws exist in UK which needs to be considered by Aston Martin as it permits
them to organise their overall operations without facing any issue. These laws are
concerned with the environment protection, data protection and employment.
 Environmental: This factor includes climate conditions, pollution, CSR and so on as it
leads to increase the overall awareness among people of UK regarding the overall
environment that can create impact over the performance of business (Meckling and
Nahm, 2019). There are several rules and norms that are concerned with the
environmental conditions in terms of overcoming this, company need to invest more
regarding the operation to eliminate the pollution and carbon footprints that results in
enhancing overall cost of company.
SWOT analysis
It is used to analyse internal factors that are useful for company in terms of strategically
planning and managing things. It is useful to analyse the several factors like strengths,
opportunities, threats and weaknesses. SWOT analysis of Aston Martin is useful to analyse
different factors which are discussed as:
Strengths Weaknesses
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 Company put emphasis on offering the
designing team and overall heavy duty
for producing effective opportunity to
create for company. They also lead to
make sure that develop powerful and
perfect care for each and every
individual and also focusing on
enhancing the overall performance and
quality of products and services
(Oldeman, 2021).
 Further, company is manufacturing
luxury cars and also target affluent
classes that helps them to get profit and
also enhances the overall purchases
values for their customers.
 Aston Martin has low marketing share
as comparison to other organisation as
their primary focus is on the luxury
market and not on trying to expand to
the other target market.
 Aston Martin has small selection range
as they only have limited model which
are available on time. It leads to limit
the choices of customers as company
leads to offer best quality of products
and services to their customers (Kwon
and Ju, 2021).
Opportunities Threats
 There is the increment in the demand of
budgeted automobile and it is also the
high time for company to expand their
market share by offering suitable
products in the whole market.
 Company can also lead to expand their
overall availability in several places.
Aston Martin leads to offer their
products in several countries but in
terms of penetrating their requirements,
businesses should work to expand
them.
 There are hike in the prices of
petroleum offerings that leads to boost
the market of electric care that can
become threat for Aston Martin.
 Enhancement in the overall competition
is another factor that leads to create
threat for company as it does not permit
them to increase their market share
(Mausbach and et. al., 2020). There are
several competitors which are present
for Aston Martin that include Bentley,
Porsche, Jaguar and so forth.
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Porter’s Five Forces
This model is undertaken as one of the effective business analysis model which is helpful
for company to understand several levels of profitability of company. in terms of Aston Martin,
the concerning five factors are discussed as underneath:
 Threat of new entrants: Aston Martin leads to offer their products in luxury market and
their customers are also prime and for this, the huge investment is needed. Therefore, it is
not easy for the new arrivals to enter in the automobile sector or give competition to them
and due to this, threat of new entrants is low (Proença, 2019).
 Bargaining power of suppliers: The automotive sector of UK is classifying among the
different segment like manufacturing and so on. There are approximately 2600
component manufacturing which leads to offer several range that exist in UK. Hence, it
shows that there is high competition in supplier market that leads to eliminate the
bargaining power of suppliers.
 Bargaining power of customers: Customers are undertaken as the important aspect for
the business and the respective company leads to offer services according to the
preferences and needs of customers that are available in the market area (Vadiraj,
Abraham and Bharadwaj, 2019). As per this situation, the power of customer is high for
Aston Martin as the customers has variety of options and choices that are available for
their customers in market area.
 Threat of substitute: Luxury car segment is undertaken as the effective and profitable
segment in which the products are purchased by the customers for their luxury and to
maintain status as these are not required. For this, the basic need of customers can be
satisfied by organisation and businesses that can differentiate their offering in regard of
their services. This threat is moderate in nature as the different brands leads to offer same
services as the same time.
 Competitive rivalry: Competition in the automotive sector is high as there are several
producers of sports car. The competitors lead to offer high quality of products and
services to their customer base and also earn effective profitability. For this, Aston Martin
is competing in market in an effective manner and also undertake the top manufacturing
cars in their consideration (Haşmet, 2020). Hence, they have moderate threat from this
factor and also leads to create overall impact regarding the operations of company.
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Value chain analysis
It is considered as the effective process that include several activities which are concerned
with the changing input into the output that have suitable value for the customers. Aston Martin
undertake value chain analysis by properly examining each and every step of production process
which is needed to develop products and also analyse the methods enable company to develop
their overall efficiency of chain. There are several primary and secondary activities which are
undertaken in the value chain analysis that are discussed as underneath:
Primary activities:
 Inbound activities: It is the primary activity of Aston Martin which is concerned with
receiving, keeping and circulating the inputs of products. In terms of Aston Martin, they
outsource several inbound logistics activities including material handling, warehousing,
receiving or storing the information of customers from various digital media channels or
organisations (Messana and et. al., 2021).
 Operations: This element undertake different activities which are concerned with the
transformation of unfinished goods into the finished goods that have value for the
customer base. Aston Martin produces cars as per the needs and demands of their
potential customers.
 Marketing and Sales: Aston Martin undertake different sales and marketing activities in
order to attract their buyers and also impact them to purchase concerning products. In
context of Aston Martin, they organise several promotions, advertisements and pricing
activities in order to achieve high customer base.
 Outbound logistics: It is concerned with disturbing the finished products and services to
customers by the effective channel of partners. Aston Martin tends to develop distribution
network and also schedule to offer products to their customers on time.
Supportive activities:
 Firm infrastructure: It is undertaken as the supportive activity of Aston Martin as it is
concerned with the managing legal services, accounting and financing, quality
management and further planning. These activities lead to enable the business to run all
other operations in an efficient manner (Liu, Rouse and Hanawalt, 2017).
 Human resource management: Here, human resource is undertaken as the key for the
success of business. In terms of Aston Martin, they organise several activities to hire
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skilled candidates, training and development and also offer the effective compensation to
their employees.
 Technology development: By undertaking the present competitive environment, it is
important for the company to develop overall technology in terms of gaining the
competitive edge. In regard of Aston Martin, they lead to effectively use overall
technologies like field testing, component designing, process engineering and so forth.
Porters generic strategies
Porter’s generic strategies are useful as it focuses on how organisations can get competitive
advantage in market. There are basically three strategies which were included in this model
considering cost leadership, differentiation and focus strategy. The following strategies are
discussed in context of Aston Martin:
 Cost leadership: In this strategy, an organisation can get competitive advantage by
eliminating their prices and become the low cost producer in market (TRAN, HOANG
and NGUYEN, 2020). This factor need proper adoption of new technology that permit
them to eliminate their cost of manufacturing and enhancing the number of products
which are to be sell by respective company in market.
 Differentiation: It is another strategy that permit company to differentiate their offerings
or products to their competitors or other rival organisations. Aston Martin is developing
their own unique image in the mind of customers by producing and offering different
product range as per the needs of customers.
 Focus strategy: This strategy is depending on the competitive scope within the sector as
Aston Martin permit this strategy by focusing on the cost or by differentiating the
products (Sellors, 2020).
Hence, it has been analysed that differentiation is best suitable for company in terms of
attracting or retaining their potential customer base. With the help of this strategy, company can
develop or maintain their brand image in market area as it is beneficial for the sales and
revenues.
CONCLUSION
From the preceding discussion, it has been summarised that the environmental analysis is
essential for each and every company as it is helpful to analyse different factors that can create
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impact over the operations of company. The suitable factors are present in both internal and
external environments. To analyse these factors, company usually perform environmental
screening with the help of PESTLE, SWOT, Value chain and so on. PESTLE is used to identify
the external factors that are helpful for business to identify the factors including government
stability, laws and regulations, economy growth, technological development and so forth. Hence,
managers of organisation conduct Porter’s five forces as it is helpful to identify the overall sector
and different elements of industry.
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REFERENCES
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International Conference on Ecological Vehicles and Renewable Energies (EVER) (pp.
1-9). IEEE.
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Industry (Doctoral dissertation).
Proença, R.A.S.D.S.A., 2019. The future of vehicle fuel technology and how it will reshape the
automobile industry (Doctoral dissertation).
Sellors, J., 2020. The new international standard for automotive lightweighting. Aluminium
International Today, 33(1), pp.37-38.
TRAN, N.H., HOANG, T.H. and NGUYEN, T.T.H., 2020. Environmental Management
Accounting Perception and Implementation in the Automobile Industry in Vietnam. The
Journal of Asian Finance, Economics, and Business, 7(12), pp.941-949.
Vadiraj, A., Abraham, M. and Bharadwaj, A.S., 2019. Trends in automotive light weighting.
In Light Weighting for Defense, Aerospace, and Transportation (pp. 89-102). Springer,
Singapore.
Valentini, C. and Kruckeberg, D., 2018. “Walking the environmental responsibility talk” in the
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