Business Environment Report: UK Auto Sector Challenges and Analysis

This report delves into the UK business environment, with a particular focus on the automobile sector and the challenges faced by companies like Aston Martin. It begins by identifying and describing key issues affecting the sub-sector, such as unemployment, government regulations, and the rise of self-driving cars. The report then employs the PESTLE model to analyze the macro-environment, examining the political, economic, social, technological, legal, and environmental factors influencing the industry. The impact of these issues, both positive and negative, on businesses like Aston Martin is evaluated, highlighting how factors like unemployment can influence employee retention and wages, while technological advancements present both opportunities and financial burdens. Finally, the report acknowledges the challenges encountered during its preparation, such as information management and communication, and suggests ways to overcome them, providing a comprehensive analysis of the UK auto sector's business environment.

Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Identify and describe issues affecting the sub sector...............................................................1
b.) Sufficient details.....................................................................................................................3
2. PESTLE model .......................................................................................................................4
3. Impact of such issues...............................................................................................................5
4. Challenges which are faced to overcome during preparing report.........................................7
CONCLUSION................................................................................................................................7
REFERENCE...................................................................................................................................8

INTRODUCTION
Business environment comprises with internal and external factors like customer needs
and wants, management, demand and supply, clients, government activities, social trends,
innovation in technology, economic changes and market trends which attracts to run a business.
Such factor affects operating situation of company in business market (Kljucnikov and et. al.,
2016). Internal factors are those which can be control where as external not. According to
Industry classification Benchmark (ICB) sub sectors are divided in 173 sub sectors who are
running their business. For better understanding Auto mobiles sub sector has been chosen. Aston
Marting is selected that is manufacturer of sports cars and tourers. Such organisation was
founded by Lionel Martin and Robert Bamford in 1913. It faced a trouble history while running a
business after the third quarter of 20th century and then enjoyed succuess and stability for long
period in business environment or market. Different topics covered in report such as issues
within business environment in UK, PEST analysis and its impact on business organisation and
challenges that helps to understand how a business gain higher profitability after facing all
challenges.
1. Identify and describe issues affecting the sub sector
a.) Issues that affect business environment
Sub sectors are the classification of sectors which is based on transparent research helps
to face the all issues (Decock and Spiessens, 2017). Auto mobile sector is one of them which is
facing different types of issue which running their business. Some issues are as defined:
Unemployment – This is a major issue which is arising in UK's business environment
such as many people are unemployment which are affecting the businesses as well as UK's
economy. The main reason is recession which is falling the GDP. As business organisation are
producing products less, so there is demand of less workers which is creating unemployment and
increasing the poverty. People are losing their jobs due to this issue and the affect the business
environment of UK. It is affecting the sub sector as if Auto mobile sector is manufacturing low
number of cars then it recruits only limited people and rest are the unemployment which are
affecting negatively on environment (Crick and Chew 2017).
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Illustration 1: Unemployment in UK, 2018
Source: Unemployment in UK, 2018
This is major issue which shows through above graph as per this the rate of
unemployment in UK is decreased compare to past years. Many people are not having job
opportunities which is impacting negatively on economy. According to this 4.1 % people were
unemployment in UK which is less than 2017 as it was 4.4%. From 2000 to 2008 the financial
crash states that rate of unemployment in UK fluctuated between 4.8 to 5.7%. and suddenly it
rose in 2009 to 7.6% and then reducing.
Government rules and regulation – Government are playing an major role which is
effecting the auto mobile sector. It formulate different types of rules and policies on for Auto
mobile sector which is important to follow to run their business. Every Auto mobile company
import the part of car from suppliers and sell their products out of country by following the
government policies. Many policies and regulations are established by government that guides
businesses and influence indirectly (Fabuš, 2017). Such as taxation policy which are set by
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government on businesses in order to collect money which is reducing the productivity and
profitability of company and effect the business environment directly.
Self driving cars - This issue is related with Auto mobile sector that are arising now a
days. The technology is increasing rapidly so people are demanding self driving cars which is
issue for Auto mobile sector. To deal with this issue the this sector has to develop a new
technology where human control is not needed in drives. This is a major issue for auto mobile
sector as well as manufacturer company to manufacture self control cars where people do not
need to give their efforts (Lee and Shin, 2018).
Therefore, regulations and unemployment are consider as major issue which are affecting
the business environment of UK and need to focus on them for the purpose of running a business
successfully.
b.) Sufficient details
Unemployment and government regulation are major issue for environment which are
affecting the business in Auto mobile sector. In UK, there are number of people unemployment
and many are terminated due to lack of production and tight government policy. Recession
involves causing cyclical demand deficient, fast changing nature of economy etc. are increasing
unemployment in UK (Graphs and stats of UK unemployment, 2019). The graphs of UK
unemployment and stats are as detailed:
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Illustration 2: UK unemployment, 2019
Source: UK unemployment, 2019
2. PESTLE model
Business environment is related with internal and external factors which are important for
business sector to focus on them and maintain the profitability. There are various factors which
can affect the business environment. PESTLE Model is a framework that is used to analysis the
macro environment such as:
Political: This is related with rules and regulation, tax rates etc. which is important to
follow by business organisation. Rules and regulation issues in UK environment is related with
this factors which is affecting the businesses environment (Linder and Williander, 2017). For
example, Aston Martin is dealing in Auto mobile industry by following the government rules and
regulations that is impacting on business environment. If there is any changes in tax rate and
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import or export duty then organisation has to pay the high charges due to changes which is
reducing the organisation productivity as well as GDP rate of UK.
Economical: This factor is related with interest rate, inflation rate, laws and
unemployment which are impacting on UK's business environment. This factor is related with
unemployment issue which is discussed as above (Badzińska, 2016). For example, UK's
economy is becoming more service based due to which people are losing manufacturing jobs . It
become difficult for workers to get jobs in high technology firm because not having relevant
skills which is creati9ng unemployment and impacting on economy negatively.
Social: This is related with changing demand of people, population growth, age
distribution, career attitudes, health consciousness, lifestyle attitudes and income distribution.
This factor revolutionised the Auto mobile sub sector by understanding the changing demand of
customers and manufacture products accordingly (Sheikh, Shahzad and Ishaq, 2017).
Technological: This factor is related with technological advancement that involves
innovation in technology, automation, research and development and technological changes
which affects the sector as well as businesses. This is related with self driving cars in Auto
mobile sector where people are demanding new changes in technology. It can be a issue such as
there is need to invest the high investment in order to deal with new technology and research &
development which affect the business environment (Roy and Singh, 2017).
Legal: This factor is related particular laws which are important for business industries
and country such as discrimination laws, employment laws, consumer protection laws, health
and safety laws which can affect the Auto mobile sector by following such laws.
Environmental: This is consider as important factor which is important due to increasing
pollution targets, increasing scarcity of raw material, carbon footprint etc. are set by government
authority. This is affecting Auto mobile sub sector such as this sector has to follow such laws
which can reduce the carbon emission and pollution effect (Holubekova and Fordosova, 2017).
3. Impact of such issues
a.) Positive impact of key issues:
It has be identified that Aston Martin in Auto mobile sub sector is facing with issues such
as regulations, unemployment and self driving cars that has some positive impacts. For example,
by following tax rates and other regulation it can run its business successfully and will be able to
maintain a strong relationship with other country. By paying tax rate it can improve the
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economical situation of company due to which production will be increase. It is important for
any business organisation to follow the business rules and regulation which helps to deal with
changes and increase the popularity by creating a relationship.
Unemployment is the issue for UK's environment where people are losing their jobs, is
impacting positively on business organisation such as employees will be under control of
organisation and they do not think to switch the organisation which is advantageous for Aston
Martin. It can retain employees as their condition. Moreover, organisation can recruit the peopl;e
at low wages or salary which they want due to unemployment. (Wirtz and Daiser, 2017).
Employers of any organisation get benefits from unemployment because it keeps
employees under situation. Employees are less inclined to strike, leave their jobs and look better
one which helps to reduce the cost and increase the profitability.
Moreover, self driving cars is an opportunity for Aston Marting company such as it will
help to attract the people and reduce the accidental risk which increases the number of
customers. As people will feel good by getting self driving cars which can satisfy the wants of
customers and increase organisational profits. Moreover, it helps to increase the employment rate
in order to accept new technology and manufacture such products which helps to improve the
economical situation of company.
b.) Negative impacts
There are many negative impacts of such issues which are impacting negatively on
Bentley motors organisation which is also in Auto mobile sector. For example, due to changes in
regulation Bentley motors followed the new regulation as government of UK is not stable that
can reduce the production level of organisation. It has to follow the new regulation as per new
government which can reduce the GDP rate.
Unemployment issue can increase the stress level of workers, low self esteem and also
become a reason of mental health issues. For instance, if there is unemployment in UK then
Bentley motors could not hire skilled and experienced employees for their production which can
reduced the production of cars (Agrawal, 2016). People cannot fill their needs and wants due to
having unemployment which can impacts on UK's economy negatively. Moreover, lower wages
and unemployment impacts badly on organisation such as sale of business organisation does not
increase due to not having money to customers for spending so organisation cannot sale their
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products as per their target which reduces profits. So this is negative impact of unemployment
which affect the business organisation negatively.
Technological issues are becoming important factor which is impacting on Bentley
motors negatively such as it cannot meet with customer changing demand and expectation
because it creates high cost. Organisation has to bear high cost in order to design the self driving
cars which is wants of customers. Bentley motors has to spend the high investment in order to
adopt new technology and providing training to its employees which can reduced the profit
percentage of company that impacts negatively (APurnama and Subroto, 2016).
4. Challenges which are faced to overcome during preparing report
During preparing this report I faced some challenges such as:
Managing information: As I was preparing this report I was confused to collect the data
and managing them properly. At the time of using PESTLE model I faced that there are many
issues which can face by Aston Martin in order to running their business. I also faced that I was
not able to communicate properly as lack of communication skills due to which collection of
data became more difficult for me.
Way of overcoming: To overcome the lack of management and communication skills I
need to focus on priority and communication. I need to communicate will all and give suggestion
which I have to improve reduce the negative impacts (Huang and Lin, 2017).
Relevancy and authenticity: This is another challenge which I faced while preparing
this report as I was confused that which information is relevant and authentic for me to know
about the business environment and Auto mobile sector.
Way of overcoming: There is need to build relationship with other people and get
information from them that will help to gather the relevant and appropriate information. There
should have knowledge about strong relation which can help to find out the relevant and
authentic information. By having such skills I can overcome the challenges which I faced at the
time of preparing report. Moreover, there is need to have mathematical and statics knowledge
that can help to understand the data and graphs while understanding about unemployment rate
(Valero-Gil and et. al., 2017).
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CONCLUSION
Business organisation are operates in different environment as it cannot exist in isolation,
so it is important to focus on environment and maintain the profitability. It is the collection of
individual, groups, firms and other factors which are focused by organisation in order to control.
Such factors can affect the performance, growth, profitability and stability of a sub sector.
PESTLE analysis is used to know the impacts of factors which can impact on sub sector as well
as business environment. There are many issues which are faced by organisation due to running a
business. A business organisation should focus on emerging factors in order to deal with
challenges and get support to develop the business effectively.
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REFERENCE
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Graphs and stats of UK unemployment. 2019. [Online]. Available through:
<https://www.economicshelp.org/blog/5695/alevel/unemployment-stats-and-graphs/>
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