Environmental Analysis of Car Manufacturing: Forces and Changes

This report provides an environmental analysis of the car manufacturing industry, focusing on the forces that shape its business environment, particularly in the context of electric vehicles in Europe. It utilizes PESTLE analysis to examine the political, economic, social, technological, environmental, and legal factors influencing the industry. The report also applies Porter's Five Forces model to assess the competitive landscape. Furthermore, it critically assesses organizational changes and future trends, emphasizing the shift towards electric vehicles driven by consumer preferences, technological advancements, and environmental regulations. The analysis highlights how these factors are reshaping the industry's strategies and operations, emphasizing the importance of sustainability and technological innovation for future growth.

ENVIRONMENTAL ANALYSIS
OF INDUSTRY

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
a. Description on the forces that shapes the business environment of car manufacturing..........3
b. Critical assessment of the organisational and other changes in future and reason for such
changes........................................................................................................................................6
CONCLUSION................................................................................................................................7
REFRENCES ..................................................................................................................................8

INTRODUCTION
Environment business analysis termed out as systematic process that aids to investigate
the all external and internal elements that affects the performance of organisation (Oleynik, 2020
Yuhui, Tian and Xinxiong, 2020). This analysis also aids to evaluate the level of threat and
opportunities exist in the environment. In addition to this, the purpose of the strategy
development is to keep decision makes informed about the external environment. It is inclusive
of changing political parties, enhancement in regulation to reduce the pollution and to shifting
the demographics.
The present report is based on case such as Electric vehicles in Europe. Furthermore, the
present assignment will be based on major forces that shaping the business environment of the
car manufacturing industry. Also, critical assessment will be taken to identify the changes and
reason that drives towards the production of electric cars.
MAIN BODY
a. Description on the forces that shapes the business environment of car manufacturing.
PESTLE analysis termed out as the factor that assist to undertake the environment
analysis with use of political, economical, social, technological and environmental process that
supports to streamline business process efficiently (Oztemel and Gursev, 2020). Henceforth,
these are outlined in following context such as are-:
Political- These are the components that inclusive of the facts that affects the working of auto-
mobile industry in huge context. Henceforth, there are number of the tax regimes that highly
influence the number of exports and imports of auto-mobiles (Idrees and Zheng, 2020). Apart
from it, the complex regulation and environment legislation has significant impact over the
global car industry. In addition to this, the car industry is facing the risk of high operating cost
and decline in investment leads to affect the working of Electrical car industry of Europe. There
are number of the external components such as buses, trains, vehicle sharing programs are
affecting the purchasing of Electric vehicle in Europe (Nie, 2020). Therefore, globalisation has
resulted into the access to open market that results in both opportunities and challenges for
electrical vehicle in Europe.
Economical factors- Electrical car vehicle industry in Europe highly get affected with economic
conditions. There are number of economic crisis that works as to adversely affected the sales of
auto-mobiles within the developed countries. In addition to this, it can be stated that increment in

the level of income also affects positively as this leads to boost in sales of Electrical car vehicles
in Europe. Also, Electrical car vehicles is a type of innovation to the auto-mobile industry that is
assisting to enhancing the productivity and profitability growth of manufacturing car industry
(Yülek, Kim and Park, 2020). Therefore, the another economic factor is that this is decreasing
the cost of the battery. In addition to this, battery is crucial cost factor in total cost of electric car
vehicles. It is term that makes the all things affordable and accessible. It is the components that
will assist the firm to produce affordable electrical vehicle in Europe. Thus, electrical car
vehicles is gaining more competitive advancement in market as this is cost effective.
Social factor- The idea of electrical car vehicle in Europe is fascinating the most of the people as
this is more eco-friendly. In addition to this, this can be stated that electric car is more effective
as this eliminates the uses of fuel and that is better for the environment. Henceforth, this also
stated that electrical car also less expensive than those of traditional cars in relation to
maintenance and running cost (Singh, Kashyap, and Garg, 2020.). Therefore, this can be stated
that electrical car vehicle assist to keep the environment more sustainable. Henceforth auto-
mobile industry has revolutionized the whole society in greater aspect. Additionally, car industry
has player the vital role in progress and growth of economies at the global context.
Technological factor- The technical advancement in the industry affects the process of
innovation of electrical car industry in the huge context. Thus, one of the biggest shift in the car
industry is to advancement in the self driving techniques. Thus, auto-mobile industry is taking
steps towards to change the business strategies in more relevant aspect as this aids to stay
relevant in market for the longer period. Electrical car vehicle assist to undertake the
improvement across the industry with use of underlying techniques. In addition to this, the car
industry has also experienced the enhance in the use of new and lavish design to overcome the
cut margins in the industry. Therefore, this can be stated that legal authorities plays the greater
role in restriction on technology that may cause environment pollution.
Environmental factor- The ecological impact on the car industry have enhanced substantially
over the past years. Electrical car vehicles in Europe has assisted to reduce the emission that
affects the harmful impacts on environmental conditions. Car industry put their major concern on
global warming and greenhouse effects. In order to reduce the environmental impacts, customers
also taking steps towards to shift to use eco-friendly cars and hybrid cars. Henceforth, this can be
stated that Climate change has largely affected the auto-mobile industry. Manufacturers are even

leaning towards undertaking the designing of environmental friendly vehicles. There are now
electric vehicles which use energy saving cells.
Legal factor- The auto-mobile industry are continually under the pressure in terms with
complying the rules, regulations and law. Thus, legal authorities are also taking steps to frame
out the strict regulations to reduce the emission of pollutants and to rapidly innovate the products
that can be cost effective. Also, car manufacture industry are not allows to enhance the prices
without government approval as this makes them typical to operates.
Porters five force model-:
Porters five force is a model which is used to examine attractiveness of an industry. It helps in
analysing five forces of an industry so that competitive intensity of the market can be analysed.
Five forces that are focused on in this model are: The threat of new entrants, The bargaining
power of buyers/customers, The threat of substitute products, bargaining power suppliers and
intensity of the competitive rivalry. Porters five force model of car manufacturing industry are:
The threat of new entrants: Threat of this factor is quite low in car manufacturing industry
because there are various kinds of barriers to entry for new entrants such as requirement of high
capital investment, brand equity, product distributing ability and many kinds of legislation and
government policies (Kibria, Al Amin and Rifat, 2017). Due to all the above barriers it becomes
difficulty for new entrants to enter into this market and compete with already established
manufacturing organizations.
The bargaining power of buyers/customers: Bargaining power of customers is moderate for
car manufacturing industry as it completely depends upon the market in which organization
operates like for UK market this power is high because organizations need to provide various
kinds of offers to the customers in order to attract them and enhance their sales. Even though
most of the buyers buy one car at a time but still organizations need to provide different kinds of
offers to the customers in order to attract them. The threat of substitute products: Threat of this
force is quite high as switching cost for the customers in this industry is quite lower and if
organization in this industry do not provide attractive offers to the customers and higher quality
products with various features then customers can switch to their competitor’s products. Car
manufacturing industry need to continuously focus on finding alternative for new cars and
introduce within the market in order to gain competitive advantage.

Bargaining power suppliers: Effect of this factor upon car manufacturing industry is moderate
to high (Bhatia, 2016). Mostly this factor impact upon car manufacturing industry is moderate as
there are various kinds of suppliers present within the market which can supply material to the
organizations, but in UK union of suppliers who supply parts, tires, components, electronics to
the car manufacturing organization because of which bargaining power of suppliers in UK is
high.
Intensity of the competitive rivalry: Threat of this factor is quite high, this is mainly because
there are many top car manufacturing organizations who have engaged themselves within the
market and are continuously working on introducing new and innovative features to the
customers because of which competition in this industry has increased and many top
manufacturing organizations experience intense rivalry because of which difficulty for car
manufacturers increases in terms of retaining their customer base and attract more customers. In
order to gain competitive advantage, car manufactured need to continuously invest in research
and development in order to attract more buyers and gain competitive advantage.
b. Critical assessment of the organisational and other changes in future and reason for such
changes.
In the present era, the car industry comes with the varied changes that affects the working
of enterprise in positive aspect. They come up with producing electrical car vehicle so that there
can be reduction in the pollutants that is harming the environment in negative aspect. Also, this
can be stated that future car will be the part of eco-system that provides customer the value
through mobility, communication and information. Thus, number of the car manufactures comes
to produce the vehicles that is made up with different processes, product life cycle and consumer
channels (Oleynik, 2020 ). Changes in the car industry will be driven by the consumer and their
new life style partners. Technical advancement is one of the core components as this aids to
enhance the customer satisfaction in wider aspect.
Thus, car industry in Europe taking steps towards to use electric vehicle in which no gas
required. Thus, reason behind this innovation is to reduce the harmful impact of environment.
Also, this is beneficial for customers as this is cost effective. Hence, this can be stated that
electric is much cheaper than gas and the electric car give off no emission. Thus, electric car
vehicles are smooth and fast acceleration. Hence, has geopolitical benefits for everybody
because it reduces our dependence on oil.

Currently, mobile devices can connect drivers to their vehicles and this leads to turn are
connected to auto manufacturers and dealerships. Therefore, connectivity creates huge
opportunities that works as to creates the personalized driving-ownership experience, as well as a
very complicated system of relationships between the technologies (Yuhui, Tian and Xinxiong,
2020). Additionally, this will aids to drive completely new approaches for mobility and car
ownership. In addition to this, this can be stated that regulatory bodies and environmental
constraints are also creating pressure for auto manufactures that must leverage the latest
technology to help them meet new requirements.
Therefore, this can be stated that technological innovation are affecting the working of
the industry in the huge context. Hence, the use of powerful and effective technologies in the
value chain are enhancing and this also positively impact the experience of customers. Thus,
these kind of the changes enhance the sustainability and profitability growth of car industry in
Europe.
CONCLUSION
Hereby, this can be summarized that environment analysis termed out as to identification
all external and internal elements that can affect the performance of organisation. Therefore,
environment analysis can be conducted with use of political, economic, technical and cultural
components in which business operates.
The present report has covered the case such as Electric vehicles in Europe. Furthermore,
the present assignment has outlined the major forces that shaping the business environment of
the car manufacturing industry. Also, critical assessment has been outlined that assist to identify
the changes and reason that drives towards the production of electric cars.

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