Analyzing the Macro Environment's Impact on Business Operations

Desklib provides solved assignments and past papers to help students succeed.

BUSINESS AND BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
Task B..............................................................................................................................................1
Introduction......................................................................................................................................1
Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples................................................................................2
Apply the PESTLE model appropriately to support a detailed analysis of the macro
environment within your selected organization...........................................................................5
Conduct internal and external analysis of your selected organization in order to identify its
strengths and weaknesses............................................................................................................5
Explain how strengths and weaknesses interrelate with external macro factors of the business
environment it operates................................................................................................................8
Apply SWOT analysis appropriately and justify how they influence decision-making in your
selected organization.................................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

LIST OF TABLES
Table 1: Internal and external (SWOT) analysis of Jaguar and Audi..............................................6

Task B
Introduction
The business environment involves internal and external factors that impact the business
performance, operations and growth. The current task will identify and discuss the various
positive as well as negative impacts of the external macro environmental factors that impact
upon the business operations sustainable business growth. The PESTLE analysis will be
conducted for analysing the macro environment within the organization. The case study of the
Audi will be discussed for understanding the business and business environment that is an
automobile manufacturer and designs, engineers, produces, and distributes luxury vehicles. The
task will also discuss about the interrelation of strengths and weaknesses of the business with the
external macro factors.
1

Identify the positive and negative impacts the macro environment has upon business operations,
supported by specific examples
There are numbers of external factors in the macro business environment that can impact the
business performance and operations in the Audi. These external factors are uncontrollable and
impact the business operations and performance in both positive and negative manners.
Following are given below the macro environmental factors and their positive or negative
impacts upon the business operations of Audi:
Political factors
Political environmental includes factors such as political stability or instability, government
policies, trade restrictions, regulation and policies that can influence the business performance
and operations within the Audi.
Positive and negative impacts: Political stability, favourable government policies, less trade
restriction and favourable trade policies and regulation majorly support the Audi to smoothly
operate its business. But instability in the political environment, strict and inappropriate and
government and trade policies sometimes restrict the effective operations and performance of
Audis (Dragnić, 2014).
Economical factors: This includes numbers of factors related to the economy such as economic
growth rate, inflation rate, exchange rate, taxation rates, employment rates, etc.
Positive and negative impacts: Growing economy, increase in employment rate, and decrease in
inflation increase purchasing power of consumer and enhance the business operations and
growth of the Audi. But in the situation of high unemployment rate and increase in inflation, the
Audi needs to lower the prices of its vehicles that decrease the profitability and business
performance in the market.
Social factors: Social environment includes factors such as different culture, values and beliefs
of people or customers, change in taste and preferences and purchasing behaviour of the
customers in the UK.
2

Positive and negative impacts: Designing, manufacturing and distribution of vehicles as per
preference and expectations of customers mainly support the Audi to generate high profitability.
But rapid changes in the preferences and desires and purchasing behaviour of the customers are
restricting the business growth and performance of Audi (Kinyua, 2014).
Technological factors: This involves rapid changes in the technologies, day-by-day introduction
of new and innovative technologies and tools.
Positive and negative impacts: Introduction of the innovative and new technology has majorly
help the Audi to design its vehicles with innovative technology, boost up its production and
hence make fast and efficient distribution and delivery of vehicles to the customers (Kinyua,
2014). but new and innovative technologies also created major problems as the organization
needs to regular update its production and distribution technology for staying in the market, and
also inability of employees in working on new and innovative technology reduces the business
performance, productivity and growth.
Legal factors: The legal environment includes factors such as consumer protection, employment
protection, health and safety rules and regulations, etc.
Positive and negative impacts: Audi is strictly following the employment legislation and
consumer protection that are ensuring its smooth operations and sustainable business growth. But
sometimes, breach of employment legislation and safety and security regulations reduce the
market value, trust among employees and customers and hence profitability and sustainable
business growth of the Audi.
Environmental factors
This involves factors such as environmental protection laws and legislation, waste management
regulation and laws, changes in climatic condition, etc.
Positive and negative impacts: Proper knowledge and understanding of environmental protection
and waste recycle and control legislation and laws support the Audi in ensuring smooth
operations and sustainable business growth. But lack of awareness of the Audi in environmental
protection and natural resources conservation decreasing the brand value and hence reducing
trust among customers, profitability and growth of the business (Chen et.al, 2014).
3

4

Apply the PESTLE model appropriately to support a detailed analysis of the macro environment
within your selected organization
The PESTLE model has used for analysing the macro environment within the Audi that produce
and distribute vehicles to its customers. As per the pestle analysis, both positive as well as
negative impact of macro or external factors has identified on the business operations and
performance of the Audi. Increase in economic growth rate, employment rate and favourable
exchange rate in the UK helping the Audi to expand and grow its business and ensure effective
operations. But the high inflation rate, interest rate and low disposable income in the hands of
consumers is mainly reducing the sales, profitability and growth of the business.
Apart from various positive impacts, there are also some negative impacts of the macro
environmental factors on the business performance and operations within the Audis. It is
essential for the Audi to develop and formulate appropriate plans and strategies to minimize the
negative impacts of the macro or external factors on the business operations (Dragnić, 2014). For
example, the Audi needs to adopt the new and innovative technologies for boosting the
production and distribution efficiency of the vehicles to customers in the UK. Also, the
organization needs to provide proper training to employees about the use of innovative tools and
technologies that will contribute in increase in productivity and performance of the business.
Audi needs to identify desires, expectations and demand of the customers and then needs to
produce and distribute vehicles accordingly to satisfy demand and desires of customers. Also, it
will be essential for the Audi to properly follow environmental protection and conservation laws,
employment and consumer protection laws and rules for enhancing the trust among employees as
well as customers towards the working environment and products of the organization (Kinyua,
2014). All these will minimize the negative impacts of the macro factors and hence enhance the
business performance, productivity, operations and growth of the business.
Conduct internal and external analysis of your selected organization in order to identify its
strengths and weaknesses
The business environment includes numbers of internal as well as external factors that create
strengths as well as weaknesses for the business. The internal environment or factors includes
organizational plan and policies, market value, financial resources, and relationship between the
5

employees and employer. On the other hand, the external environment or factors involve
competitors, suppliers, customers, society, and political, technical, legal, and economical factors.
These factors can be analyzed by conducting the SWOT analysis that depicts that strengths and
weaknesses for the business organization. Following are given below the internal and external
analysis of the Jaguar and Audi for identifying their strengths and weaknesses:
Table 1: Internal and external (SWOT) analysis of Jaguar and Audi
Analysis/ Organizations Jaguar Audi
Strengths  Jaguar has strong
global brand value and
high product quality
 It has popular image in
the field of luxury
vehicle brand
 It has effective
advertising and
promotional strategies,
tools and techniques
 Audi has huge product
portfolio as its vehicles
are available in both
petrol and diesel
variants
 Has superior features
and technologies in its
vehicles such as LED
illuminated interiors,
parking sensors,
traction control, air
bags and other more
features
 Has well established
brand and high brand
value
 Designing and
manufacturing of
vehicles with latest
technologies
 Has large numbers of
employees i.e. approx
50, 000 employees
worldwide
Weaknesses  It has lack of different  Audi has limited
6

range and variety of
automobile products as
compared to other
competitors
 It has low market share
as compared to other
competitors such as
BMW and Mercedes
 It also has limited
target customers or
audience as it has high
prices of its products
market share as
compared to other
competitors such as
Mercedes, BMW,
Jaguar, etc.
 Handling and
maintenance cost of
cars are too high as
compared to other
competitors
Opportunities  It has big opportunity
of manufacture and
distribute hybrid
models of luxury
vehicles or cars in
unexploited markets
worldwide
 It also has
opportunities to
expand and grow
business in the
emerging economies or
markets such as China,
India and Russia
 It has huge opportunity
of creating new
customers through
brand leveraging
 Has opportunity of
expanding business in
emerging markets such
as India, Russia, etc.
 Increase in product
portfolio by designing
and manufacturing low
cost cars
Threats  It has threat of
decreasing the sales of
vehicles due to
 Rise in the fuel prices
can decrease the sales
of cars
 Tough competitions
7

increase in fuel prices
 Has high dependency
on the government
policies
 Facing huge
competition from
global automobile
brands such as Audi,
Mercedes, BMW, etc.
 Has threat of
decrease in sales of
the premium cars due
to financial instability
from other competitors
can reduce the market
share and customer
base
 Innovation and new
features in competitors
vehicles can reduce the
sale
8

Explain how strengths and weaknesses interrelate with external macro factors of the business
environment it operates
The business environment includes numbers of external and internal factors that impact the
business performance, operations and growth in the market. The business organization such as
Audi has numbers of strengths and weaknesses that closely interrelate to the external macro
business environment. The Pestle and SWOT analysis can be conducted for indentifying internal
as well as external strengths and weaknesses of the business organization. The weaknesses of
the Audi can be overcome and convert into the strengths by effectively analysing the external
macro environment and taking decisions and developing and formulating strategies appropriately
(Ketata et.al, 2015). For example, it will be essential for the Audi to adopt innovative and new
distribution technologies and provide proper training to employees about the use of technologies
and tools to upgrade the technologies in the organization as per current trend.
The main strength of the Audi is its innovative and new features in vehicles or cars that are
supported by the introduction and use of innovative technologies in the production and
distribution process. There is a good political and economical conditions in the UK that are
supporting the Audi to ensure its smooth operations enhance productivity, performance and
growth of the business. There is a favourable taxation and trade policies for the automobile
industry in the UK that are helping the Audi in free flow of trade and generate high sales and
profitability. The high employment rate, disposable income and purchasing power of people or
customers in the UK can enhance the sales and profitability of the business. But also the incident
of Brexit created the big weakness for the Audis as it face difficulty in obtaining sufficient fund
for investment and skilled employees.
The Audi is properly following the employment legislation, safety and security regulations and
consumer protection laws to protect the health, and rights and interest of the customers as well as
employees. This majorly helped that Audi to build trust and good brand image in the mind of
customers that leads to increase in customer base, market share and growth of the business. The
Audi is also aware about the environmental protection and conservation laws and practices that
are enabling it create less environmental pollution and hence ensuring the sustainable business
growth (Paul et.al, 2014). The skilled managerial personnel and employees are also major
strengths for the Audi as they are contributing their skills, knowledge and efforts in achieving the
9