Impact of Business Environment on the Automobile Industry

This report provides a comprehensive analysis of the business environment within the automobile industry. It begins with an introduction to the business environment and its influence on organizations, followed by an in-depth examination of key issues affecting the sector, such as sustainability and globalization. The report then applies a PESTLE analysis to identify political, economic, social, technological, legal, and environmental factors impacting the industry. Furthermore, it explores the positive and negative impacts of these factors on organizations, using Range Rover as a case study. The report concludes with a reflection on the learning experience and insights gained during the research process.

BUSINESS ENVIRONMENT

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
INTRODUCTION...........................................................................................................................1
Issues affecting the automobile industry.....................................................................................1
PESTLE analysis of issues..........................................................................................................2
Positive and negative impact on organization.............................................................................4
REFLECTION.................................................................................................................................4
REFERENCES................................................................................................................................6

INTRODUCTION
Business environment refers to collection of of entities, individuals and different other
factors. Some of the factors are within control while some are not within control of organisation
but are having influence over the profitability, performance and growth of company. Every
business operated in a diverse environment and these environment have influence over the
business and affects its activities. Business environment is dynamic, complex, uncertain and has
far reaching impact. Report will reveal about auto-mobiles sector and will give an critical
understanding about business environment and impact on organisations. Study will give an
understanding of interrelationship of businesses between and general environment within which
company are operating. Business environment is to be understood effectively for growing
without any hurdle in market. Overall study will enrich with the understanding of market
environment and it impact on the business.
Issues affecting the automobile industry.
Auto-mobile industry is growing very fast in present times. There are many issues that
are faced by industries. The dynamic environment of business affect the businesses and it is
important for industry to consider the forces that driving the industry. These forces can drive the
industry towards if positive than up and if negative than down. Company for maintaining its
efficiency and growth in market has to make changes in it policies with change in environment.
Analysing the issues faced by industry it has been identified that sustainability and globalisation
issues are majorly affecting organisation (Prajogo, 2016).
Sustainability
Sustainability refer to ability of industry to maintain the rates at which renewable
resources are harvested, pollution is created and non renewable resources that are being depleted
continuously. Over the current period it has been seen that automobile industry are growing at
fast rate ignoring the sustainability issues. Consumers are becoming aware of the sustainability
issues and showing their active concerns to the related issues. The strive of the consumers is
increasing towards cars that are more eco friendly and the industry is required to become
efficient in production. Automotive dealers and manufacturers are collaborating their effort for
environmental performance of industry. Industry is facing issues of excessive emission of carbon
dioxide, waste disposal and dependence on fossil fuels. People are moving towards cars that
make less harm to the nature and this has became an issue of concern for entire industry.
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Environmental exploitation caused by industry is affecting the business and their
performance. These issues are affecting the revenues of company and also the growth of
company as profits cannot be generated at cost of environment environment depletion is to be
avoided if industry wants to grow in the present world. Resources are depleting at very rapid
speed and it is the responsibility of manufacturers to ensure that the resources are having
optimum utilisation. Companies have to take measure ensuring that environment is harmed least
and resources depletion is also slowed down by using more environmental technology.
Increasing fuel charges and its depletion, increase in emission of green house gases are becoming
very serious concern which is affecting the auto-mobile industry.
Globalisation
Increasing global competition is lowering the prices of vehicles. Many automotive
companies are having iconic image in country. Globalisation is increasing the demand of
vehicles but the competition is causing companies to manufacture more efficient vehicles
sacrificing their profit margins for maintaining the sales and market share(Georgescu and
Popescul, 2015). It is becoming very serious issue as reduction in profits will affect the
sustainability and growth of businesses. Other factor related to globalisation is that companies
are expanding over the globe. Where the companies that are not able to expand their business in
globalised will be thrown out of competition and market. Companies that have not expanded
their business due to lack of resources will have to suffer and the local market served by them
may also move towards international product (Calabrese and et.al., 2018). Globalisation in terms
of expansion are facing issues increased tariff rates that increase the cost of vehicle. Government
regulation and legislations of different countries give rise to many issues that influence decisions
of the automotive industry.
PESTLE analysis of issues
Automobile industry is facing slumps in demand. Automotive industry is very large that serves a
major part in economy and it is important to analyse the factor that are considered related to the
issues. PESTLE analysis will help to analyse how these factors are affecting the industry.
Political Factors
Governments of nations are coming with new regulations and laws which are influencing
the business decisions of industry. Considering the issues of sustainability governments are
implementing new regulation and imposing heavy fines on non compliance with environmental
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factors. Increase in tariffs are making raw material costly for companies that were importing
parts from cross nations. Political issue related to sustainability and globalisation is affecting the
industry.
Economical Factor
Economy is significant factor related to the issues that are arising in the automobile
industry. Countries with low economy are not able to purchase high cost cars and the shift is
moving towards low costing cars. Economy of countries differ from each other which makes the
business of new entrants difficult. Trade wars between economies is affecting the market of
many automobile industry.
Social Factor
People tends to move with market trends and the awareness about the society at large
cannot be ignored. People due to the sustainability concerns are using public conveyances that
are much cheaper. Competitors of other countries are bale to provide vehicles that are more
efficient because of which local markets have lost their share(Belás and et.al., 2015).
Technological Factor.
Technological factor is the most important in the automobile industry. Technologies are
changing at very high speed and matter of concern for all companies. Consumers are moving
towards technologies that makes least harm to environment. More efficient vehicle are to be
manufactured by industry. Companies are using advanced technologies globally coming with
new feature that is increasing the competition (Bah and Fang, 2015).
Legal Factor
Legal factor includes rules and regulation that are laid by the government of different
countries. Pressure for society and seeing the verge the environment is being impacted by these
manufacturing high taxes are imposed over resources. It is difficult for companies to comply
with regulatory framework of different countries in which they are operating.
Environmental Factor
Environment is most important aspect that is affecting the performance of company. For
protection of environment licences are imposed by regulatory authorities. Depletion of fuels and
increase in green house gases is forcing companies to develop environment friendly
technologies.
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Positive and negative impact on organization
Positive impact on Range Rover: Company when expanding their market in new areas can have
positive impact of Globalization. Being global can help Range Rover in increasing their market
share. As a responsible business, Range Rover have put in place a long term goal of using
sustainable materials such as natural rubber, recycled aluminium and plastics. This has made
their products and service more sustainable. It has helped company in attracting more consumers
towards them. Company has also been engaged in following corporate social responsibility in
which Range Rover is giving 2% of their profit to charitable activities. This has increased the
goodwill of firm in market. Company has also been engaged in making their engine better so that
the car consumes less of full. They are making use of hybrid and electric solutions that can help
in utilising the resources better. It can also help firm in growing and creating more employee
opportunities for people. Range Rover is also being engage in putting less weight on materials
attached in car, so that the motor can provide better and efficient service to travellers. It can help
company in putting positive image on the mind of travellers.
Negative impact on Range Rover- The negative impact on company is that when Range Rover is
expanding globally they need to follow rules, regulations and policies of different countries in
which they are expanding. This can lead to rise in operational cost of company. It can hamper the
profitability aspects of Range Rover and company. The sustainable manufacturing in which
Range Rover is been engage in has increased the operational cost of company. The sustainable
products while making use also require lots of complex processes and structure. This can lay
negative impact as it can increase the cost of training and development. This can increase the
operational cost of company(Akhtar and Sushil, 2018). This aspect can also reduce the
sustainable aspects of company. It can also reduce the productivity of Range Rover the company.
It can make firm liable of those things which they are not. When company is engaged in
protecting the environment, they can not focus on more important aspects of increasing the
creativity and innovation of products which they are offering to consumers. This can help
company in growing and achieving their objectives and market share.
REFLECTION
The project report has helped me in having the knowledge about the issues that
automobile industry is facing in recent times. It has helped me in having deep analysis about the
topic. I have faced several challenges while doing the project report. Firstly, I was unable to do
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the adequate searching for the topic. Then my mentor supported me in having an idea about the
problems like sustainability which is being faced in automobile sector. They taught me what
does sustainability means. When in starting I was unaware about sustainability, I Really felt that
this topic is really difficult for me to understand, but after having proper support I was able to
concentrate. I was scared of these heavy professional words like sustainability. I was feeling like,
I will lose my grades but with my supervisor support my problem of not understanding the topic
was being solved. I really wished like throughout my life I have this kind of supervisor who
understand me and provide me support. I have also analyzed that automobile sector is laying
huge impact on economy. In order to understand this, I have done lots and lots of research. This
has made me a proficient in this study. I was able to improve my grades by laying full focus and
emphasis on identifying the challenges faced by automobile sector. When my tenure was starting
I was really depressed that How will I be able to concentrate on my studies but with the support
of my mentor I was able to understand such a difficult topic. Also I was able to have deep
knowledge about different subjects like the benefits automobile sector is giving to economy. This
has helped me in outshining my career. It also helps me in becoming more efficient and
effective. This has supported me in growing. I have also faced problem during writing of report
as I have no idea about the PESTLE analysis, so it was very difficult for me to understand about
it. But again in this my mentor has helped me in having full knowledge about the external factors
that can affect automobile business.
It has also helped me in making goal clear. Now I feel like I will also make my career in
automobile industry. This will also make my parents proud and also my teachers will be proud of
it. It will also solve my financial problem which I am facing in my personal life. These topic has
also helped me in setting my career objectives. During group work, the time dedicated to this
will increase. Usually, each person wants to have control over the idea or methodology of the
work and do things in his/her way. Here is my second piece of advice: in order to achieve a
consensus, the best thing you can do is to listen to the others and express your opinion
respectfully, without impositions. By learning in group I have also increased by learning
efficiency and skills. This has helped me in growing. It has also help me in improving my
knowledge.
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REFERENCES
Books and Journals
Akhtar, M. and Sushil, S., 2018. Strategic performance management system in uncertain
business environment. Business Process Management Journal.
Bah, E.H. and Fang, L., 2015. Impact of the business environment on output and productivity in
Africa. Journal of Development Economics.114. pp.159-171.
Belás, J. and et.al., 2015. The business environment of small and medium-sized enterprises in
selected regions of the Czech Republic and Slovakia. E+ M Ekonomie a Management.
Calabrese, M. and et.al., 2018. From mechanical to cognitive view: The changes of decision
making in business environment. In Social Dynamics in a Systems Perspective (pp. 223-
240). Springer, Cham.
Clarke, G., Li, Y. and Xu, L.C., 2016. Business environment, economic agglomeration and job
creation around the world. Applied Economics.48(33). pp.3088-3103.
Georgescu, M. and Popescul, D., 2015. Social Media–the new paradigm of collaboration and
communication for business environment. Procedia Economics and Finance.20. pp.277-
282.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics, 171,
pp.241-249.
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