Bentley Motors: Business Environment Analysis and Expansion in Spain

This report provides a comprehensive analysis of Bentley Motors' business environment in Spain. It begins with background information on Bentley, including its history, global performance, market share, financial performance, market structure, mission, and vision. The report then delves into the specific business environment in Spain, utilizing a PESTLE analysis to examine political, economic, social, technological, legal, and environmental factors. This includes assessing the political climate, economic growth, technological advancements, sociocultural trends, and legal frameworks influencing Bentley's operations in Spain. The analysis further explores the opportunities and threats Bentley faces in the Spanish market, followed by an application of Porter's Five Forces to evaluate the competitive landscape. The report concludes with an overview of the key findings and implications for Bentley's expansion strategy in Spain.

BUSINESS
ORGANISATION AND
ENVIRONMENT IN
GLOBAL CONTEXT

Table of Contents
INTRODUCTION...........................................................................................................................1
Background information of Bentley............................................................................................1
Discussion of the business environment of Bentley in Spain.....................................................3
Analysis of the business scenario ...............................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment consist external and internal factors that influences the functions of
an organisation that includes customers, employees, supply and demand, management as well as
regulations and policies of the business. The global organisation environment can be defined as
the environment in various sovereign countries. In this report the business environment will be
evaluate in the global context that bring a lot of difficulties towards existing and new business
operation in that particular country in more efficient and effective manner. The present study is
based on Bentley which is a definitive British luxury car company. It decided to expand its
business operation through opening new branch in Spain. This will require analysing the
business environment through PESTLE analysis, porter's five forces and other analytical tools
are briefly describes under this report.
Background information of Bentley
About Bentley
Bentley Motors Limited is a British company registered in UK, they are mainly into
designing, manufacturing and developing luxury cars under the brand name Bentley. The
company was established on 18th January 1919 by Mr. W.O. Bentley in Cricklewood, North
London. This is a private limited company (Ltd.). Historically this brand has changed couple of
hands in 1931 Rolls Royce Motors bought Bentley from its makers and manufactured it till 80s
but when they become bankrupt they sold out it to Vickers in 1980. After eighteen years in 1998,
Vickers sold the brand to Volkswagen group. Currently it is the subsidiary part of Volkswagen
AG group and headquartered in Crew, England. The brand is defined by elegance, exclusivity
and power. It presented the world's first luxury hybrid vehicle during the reporting year (Cramer,
2017).
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Global performance
The continuous innovation in technology make them able to flourish in global luxury car
market with this differentiating its position. Worldwide Bentleys are sold through different
dealership networks (Geppert and et. al., 2016). The company has a market share of 25% in
super luxury segment. A survey mentioned that one out of four super luxury cars i.e. cars above
$150,000 sold is a Bentley. It is become 100 years to the brand name and currently it is known
across the globe for creating cars with an unrivalled blend of performance and craftsmanship.
The company sells the car models through the franchised dealers all over the world. China has
been a very good market for this company's car. They tries to enter into many emerging markets
scattered across the world.
Market share and financial performance of previous 3 years+ 1 year ahead
In super luxury car market Bentley holds 37% market share in 2017 in terms of total
vehicles sold in the year (Hamilton and Webster, 2018). The estimated annual revenue of the
company is calculated with $2.1 Billion. Bentley recorded sales revenue of €1.8 billion in 2017
and in 2016 it was recorded by €2.0 billion and in 2015 it was recorded by €1.9 billion.
Market structure
The industry is highly fragmented because of independently held dealership. Operating in
markets of both developed and emerging economies presents challenges for Bentley. Their main
target people are high income groups (Kopnina and Blewitt, 2018). The target consumer in
emerging market of the brand are often young, less educated entrepreneurs who share a number
of important commonalities. The brand compete with companies such as Rolls-Royce, Mclaren,
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Illustration 1: Bentley Motors Limited
(Source: )

Aston Martin, Bugatti, Ferrari, Lamborghini and many others. Bentley manufacture and sold
more than 10,000 cars in 2018 globally that did not match the previous year's record level.
Bentley motors seeks to use their uniqueness to provide high quality, sophisticated and
distinctive luxury cars and other products that appeal to its target customers. The company
employs more than 4200 people around the world (Marques, 2016). They offer an exclusive
collection of limited no-monitoring products produced under licence from its equally exclusive
partners. They also teamed up with luxury hospitality brands to enforce its value proposition.
Mission and vision
The mission of Bentley Motors is to produce the best cars in their class that has remained
unchanged since it was expressed by its founder Walter Owen Bentley in 1919 (Maumbe and et.
al., 2016). In line with Volkswagen group's stated vision to become the world's most successful,
sustainable and fascinating car manufacturer by 2020. The vision of the company is to become
successful in the world in diverse and existing ways.
Discussion of the business environment of Bentley in Spain
Business environment is an integral part of efficient and effective management of
business. It determines the types of businesses that will be successful within the country's
environment (Psomas and Jaca, 2016). There are many forces that shape the organisation
segment as well as product line mainly the business environment categorise in two categories;
Micro and Macro environment. Before expanding the business in Spain, there are several factors
to consider before take a plunge.
PESTLE analysis
Political environment
The political environment need to consider the most by the organisation. The legislation
and government rules of Spain can affect the operations of the company (Raghunath and Rose,
2017). The government of the Spain is very cooperative in nature. In 2015, Spain made starting a
business easier by introducing an electronic system linking to several public agencies. This act
simplified business registration in the country that is beneficial for the organisation to operate in
Spain with the cooperation of the country. The top corporate tax rate of the country is 25% and
other taxes include value-added tax that may be impact on the cost margin of the products that
are already on the higher price and can affect the profit level (Cramer, 2017).
Technological environment
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This environment comprises both hard technology i.e. machines and soft technology i.e.
scientific thinking that is mainly the resources and opportunity to grab by the company in expand
globally. This environment also represents the degree of advancement of services and goods that
are prevalent in Spain (Hamilton and Webster, 2018). Digital media of the country has increased
by 12% that is an opportunity for the organisation to implement in their marketing strategy.
Spain has considered as slow in adapting technological advancement in compare to other
European countries. They have well developed ICT sector and infrastructure that allow
organisation to build their technology in the products and operation but allowing on investment
in R&D is low that can be a threat for the company (Business environment in Spain, 2019). It
limits the innovation of the company that is essential to beat the competition and position in the
competitive market.
Socio cultural environment
This factor consist of human relationship and the future development in Spain. Some
essential factors that need to be consider by the organisation are; buying and consumption
behaviour of people, their values and beliefs, customs and trends that will affect the business.
The population of the country is around 46.6 million, where 12% are migrants has had a stable
market size for the last decades. Manager of the company must consider that decision making is
usually slow because each person is given the opportunity to negotiate (Kopnina and Blewitt,
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Illustration 2: Data of business environment in Spain
(Source: Business environment in Spain, 2019)

2018). The cultural difference can affect the operation of the company but they are very capable
to overcome those challenges. Youth should be the target of the company in the specific country.
Legal environment
The legal system in Spain follows a civil structure code that provides separation between
private and public sectors. These reforms made Spain much more competitive in comparison to
costs in other European countries. Spain applies the principle of free establishment and non-
discrimination of foreign investors. Bentley Motors Limited need to understand set of rules and
legislation in Spain. Organisation have patent law, trademark, copyright law that should have
considered by the company (Psomas and Jaca, 2016). The business fall under Commercial law of
1885 of company law. They are also active in labour law such as; constitution of 1998, law of
prevention to work related risks and law of freedom of association that should be consider as it
can impact the legal entity of the company. Consumer right law also should need to consider that
is Royal Legislative Decree 1/2007 on consumer protection. Overall Bentley Motors Limited
products and operation must be in accordance to the legal requirements that relate to safety
standards and measurements.
Economic environment
It is essential to understand the economic policies of the nation. These policies direct
impact on the working and success of business (Raghunath and Rose, 2017). In 2018, the
economy of Spain grew at an estimated rate of 2.7% that is beneficial for the company
expanding plan. The economy of Spain is the world's 13th largest by nominal GDP and it is also
mentioned as one of the largest purchasing power parity in the world. Inflation rate of the
company is calculated at 2.0% in 2018. The economic condition is favourable for Bentley as the
population of the country is capable to spend their money on super luxurious car (Economic
environment in Spain, 2019).
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Illustration 3: The statistics
(Source: Economic environment in Spain, 2019)
The unemployment rate of the country is calculated in 2018 15.6% that decreased from
past two years and it is estimated that it can more decrease up-to 14.7% in 2019 and 14.3% in
2020 but company can take advantage of the remaining unemployment rate by engage in
economic activities and establish business in the country (Cramer, 2017). According to Foreign
direct investment regulatory restrictiveness index of the OECD, Spain is the ninth country
worldwide with more open regulations regarding internation investment with $19.1 billion FDI
Inflow. The country offers opportunity to the company in activities and sectors with high added
value in Spain that give an open environment to Bentley to operate effectively in able to target
the market.
The following information need to be consider by Bentley and should develop their plan
accordingly to effectively target the market and position itself in the competitive market of
Spain.
Analysis of the business scenario
Opportunities and Threats
The PESTLE analysis allow organisation to consider the opportunities and threats in the
expansion plan. The opportunities and threats are as follows;
Company has opportunity to take advantage of the economic environment of the country
as it is cooperative and allowable to invest the money of Bentley in Spain (Hillary, 2017). The
biggest threat to the company is limited investment in R&D that control the growth and success
of the company in Spain. Digital technology is an opportunity to the company that allow them to
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target the market of consumers through internet and other platforms as well. Government of the
country is also well established with the systematic law that make the process easier to registered
in for the country. The environment of the business in the country's context allow organisation to
take advantage of merger and acquisition with other brand as well that is beneficial for high rate
of return. The rate of taxes in the country is a threat for the organisation and affect the profit of
the company. They have opportunity to develop many new strategy to target affluent class from
emerging economies.
Porter's five forces analysis
Supplier's bargaining power
The bargaining power of Bentley is high in the market of Spain. Although it operates in
many countries and are not dependent on one supplier. Supplier of Spain need to follow the code
of conduct prepared by Volkswagen (Kopnina and Blewitt, 2018). Bentley is financially strong
company that has a global supply chain and distribution system. The bargaining power of
supplier is high because they require exclusive material and manufactured parts of high quality
that only a small number of supplier are able to deliver in the selected country.
Bargaining power of Customers
Consumers have substantial power mainly because of the large variety of luxury brand
present and in good position in the market of Spain. The presence of substitute makes the power
of buyer high (Marques, 2016). The power of purchaser in the global context for the company is
medium to high. Consumer are well educated and in the diverse market they can select the best
product that fits best fit in their preferences, pricing, additional features, appearance. Increase in
digital media in Spain has improved consumer's access to information about the characteristics'
status and lifestyle among many. Well the consumer segment of the company is high end and
richest people as the products they deliverer are super luxurious products. But the switching cost
of the customers is low in the competitive market.
Threat of substitutes
The threat of substitute is low to moderate. The innovative and uniqueness reduce the
chances of providing any substitute by the company (Raghunath and Rose, 2017). The only
substitutes are from rolls-royce in Spain. The competition in the country are able to introduce
some similar car models with lower than usual price or special discounts that put pressure on the
company that affect the customer base of the organisation.
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Threat of new entrants
The super luxurious industry are protected by significant barriers to new entry in the
similar market. The reputation, image and value of the brand is high worldwide that makes
difficult for any new company with a big investment and break the history of Bentley. There are
many Spanish firms that have tried to compete with the existing luxury car players in the market
but failed to grab a significant market share (Psomas and Jaca, 2016).
Competitive rivalry
The competition level in the market of Spain is significantly high because there are many
brands that is already established in the market and it can be threat for the company to enter in
the new market but the position that has already achieved by the company in all over the world
increase demand of the consumers (Raghunath and Rose, 2017). The major competitors of
Bentley are; Rolls-Royce, Mclaren, Aston Martin, Bugatti, Ferrari, Lamborghini in the market of
Spain. They need to invest in innovation and Research and development that help them to beat
the competition.
CONCLUSION
From the above study it has been concluded that organisation should evaluate business
environment before expanding globally. Bentley is a super luxurious car industry and planning to
expand its business in Spain. It has been evaluated that the country is capable and responsible for
the growth and success of the company if they consider all the laws and legislation for the
chosen country. It also has been concluded that the company is financially and physically strong
that allow them to overcome any barriers in their expansion plan. The performance of the
company worldwide is very effective and there are limited competitors that can be threat to the
company. The environment of the company is analysed as compatible and flexible that can adopt
the culture and diversity of any country efficiently.
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REFERENCES
Books and Journals
Cramer, J., 2017. Corporate Social Responsibility and Globalisation: an action plan for
business. Routledge.
Geppert, M. and et. al., 2016. Challenges for European management in a global context:
Experiences from Britain and Germany. Springer.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hillary, R., 2017. Small and medium-sized enterprises’ perceptions of the environment: a study
from Spain. In Small and Medium-Sized Enterprises and the Environment. (pp. 61-74).
Routledge.
Kopnina, H. and Blewitt, J., 2018. Sustainable business: Key issues. Routledge.
Marques, A. F. C. M. B., 2016. Exploration on the benefits and applicability of emotional
segmentation for high-end luxury brands: the case of Bentley Motors Ltd. (Doctoral
dissertation).
Maumbe, N. J. and et. al., 2016. The Market Entry Strategy for Japan, South Africa, and Spain.
Psomas, E. L. and Jaca, C., 2016. The impact of total quality management on service company
performance: evidence from Spain. International Journal of Quality & Reliability
Management. 33(3). pp.380-398.
Raghunath, S. and Rose, E. L., 2017. International business in the context of emerging markets.
In International Business Strategy. (pp. 1-14). Palgrave Macmillan, London.
Online
Business environment in Spain. 2019. [Online]. Available Through:
<https://www.expatica.com/es/employment/self-employment/business-environment-
104045/>.
Economic environment in Spain. 2019. [Online]. Available Through:
<https://www.heritage.org/index/country/spain>.
Spain: Legal Environment. 2019. [Online]. Available Through:
<https://en.portal.santandertrade.com/establish-overseas/spain/legal-envi
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