Environmental Analysis of Volvo Cars: Business Opportunities Report

This report provides a comprehensive environmental analysis of Volvo Cars, focusing on the external and internal factors influencing its performance. The analysis begins with a PESTLE analysis, examining political, economic, social, technological, environmental, and legal factors affecting Volvo's business operations, particularly in the context of its transition to electric vehicles. The report then delves into organizational changes needed to implement new technologies, such as those required for electric vehicle production, and discusses the application of the Kurt Lewin change management model. Furthermore, the report utilizes Porter's Five Forces model to identify new and emerging business opportunities, assessing the bargaining power of buyers and suppliers, the threat of new entrants, and the competitive rivalry within the automotive industry, to determine Volvo's competitive advantages and potential for profit generation. The report aims to provide strategic insights into Volvo's business environment and future prospects.

Environmental analysis of
Volvo Cars

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
a) Describing some major forces that shape the business environment......................................1
Changes in organization..............................................................................................................3
b) Describing new and emerging business opportunities that creates profit for the firm...........4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Environmental analysis is the strategic tool which is used to determine the external as
well as internal environment of the company that affect the performance of the company in
positive as well as negative way. The entire report is based upon the environment analysis of
Volvo Car, in which the report will describe the external environment by using PESTLE analysis
and further it also explain new and emerging business opportunities by using Porter five force
model to determine the competitive advantages.
TASK 1
a) Describing some major forces that shape the business environment
In order to determine the external factor that affect the business in both positive as well as
negative way. For that, it is beneficial for the firm to use PESTLE analysis. It is the strategic
management tool that helps to explain the micro environment factor that affect the business of
Volvo cars in positive way. These are as mention below:
Political Factors
Political factors includes different decision and new policies that are made by
government of country. To keep the business organization under certain limitation government
make different rules and regulations. In European continent there organization have to follow
decision of both United kingdom and European union. This could be difficult for Volvo to follow
rules of both EU and Unitrd Kingdom. Business of organization is depended on different policies
of government. For example foreign policy, global trade policy and taxation policy made by
government (Fleisher and Bensoussan, 2015). Foreign policies are important for relationship
between nations and it leads the international trade for country. Foreign policy of country
directly affects the business of company because good relations between countries are required
frequent business transaction. Taxation policy implemented by government can force the
organization to completely renew its prising policy that is compatible with international trade.
Volvo company has planned to start business as 100% electrical car producing company by 2019
and environment policy of government can support organization to implement business
efficiently.
Economic Factors
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Economical factors are mainly related to the financial condition of country and
international market. Because business and profit goal of company are connected with economy
of country and international market. As Volvo need to conduct business on the international level
they need to study the financial condition of the international market. The conditions like
economic crisis, recession, inflation and taxation in global trade. Economical crisis can majorly
affects the business of company because in crisis condition t is difficult for company to maintain
its operation efficiently. Financial and made organization to lose all the capital it has in terms
and money and resources (Akhtar and Sushil, 2018). The condition of recession and inflation can
reduce the sales and profit of company in market of particular continent or country. Economic
crisis conditions are also not good for internal condition of Volvo. The major factor in business
process are related to the taxation policy on both national and international financial authorities.
Tax policies made by these authorities force the organization to change its business policies to
earn maximum possible profit through business.
Social Factor
Social factor for business organization are also known as socio-economic factors. This
factor is majorly related to the personal and religious values of people who are related to the
organization by mutual interests. This factors can be divided into various criteria like population
of area, education level of people, average income of people. Diversity based on age, gender,
religious and culture views are also part of socio-economic factor. Population of target area and
average income of people is most important for Volvo because all the decision organization need
to take for business purpose should be according to these factors to manage the profitable
business in market. The average income force the organization to decide the particular price
range of product and quality for target market. Population of local area influence the company to
decide its target market and level of infrastructure top build. Education level of people need to be
high to meet the technical and educational qualification which is required for workforce of
Volvo. The diversity of different aspect influence the work place environment of company. This
is how socio-culture factor affects the business of Volvo cars (Fleisher and Bensoussan, 2015).
Technological Factor
Volvo is an automotive organization and technology is major factor for company.
Technology used by organization and provided to customer through product is important for
accurate and quality standards of company. Consumer satisfaction is depended on quality of
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product and technology used in it. Technological factor can be divided in three sections which
are technology used in organization, technology used by competitors and upcoming technology
for car industry. The limitations of current technology can affect the quality of product and it can
cause failure to company in form of capital or market share. The technology used by competitor
can reduce the market share of company. To attract more customer technology used in Volvo
should be advanced and latest. Last but not the least upcoming changes in technology are going
to decide future of automotive industry (Burke, 2017). So, it is important for Volvo to implement
technology in organization by considering future possible changes in organization.
Environmental Factors
Environment factors are related to location of manufacturing plant of Volvo,
transportation possibility, weather condition of local place and availability of resources. Impact
of each environmental factor is different for organization. Global location and diversity of Volvo
can help to meet demand and business goals in European continent. Transportation facility need
to be high because it is required to meet the supply chain goals of company. Extreme weather
condition like rainy and winter can reduce the efficiency of the company. Availability of
resources is important for company. For electrical fuel cell technology company need respective
electrical raw material for continuous production. It could be positive and negative both. Better
positioning and location can help the organization to gain market place advantage and in adverse
condition it can affect sales and productivity of Volvo Cars.
Legal factor
To conduct business in European country Volvo cars need to work according to laws of
both United Kingdom and European union. This make the business process difficult for
organization. Also there are different laws related to employee rights and labour law can
influence the working of organization and if company don't follow these laws then authorities
can take legal action against the company. That is how organization could be affected by legal
factors.
Changes in organization
To implement new technology in organization at new place is a complex procedure and it
need some changes in organization to make business success at new place. Types of changes that
are required in organization are- technical changes, changes in business procedure and
management changes (Graham, 2018). Technical changes in organization are based on the future
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and current product goals of company. For example to start production of electrical vehicle by
2019 company need to change its technology that is designed for e-vehicles. Such that to achieve
these type of changes, company also have to provide effective training session to their employees
so that they will realize that new changes are made for the company's welfare. In order to
implement the changes into the firm, it is advised to the firm to use Kurt Lewin change
Management model which is based upon three stages such that:
Unfreeze Stage: In this stage, people realize something is change and thus, the
employees have to deal with strong emotions such as denial, impatience and unceratinity.
Further, firm should involve all the employees in their constructive approach so that the change
is accepted (Kochan, 2019). Even the Volvo car should also make clear communication with the
employees in order to make employees aware with the change.
Change Stage: It is the second stage in which employees are ready to accept the change
and it is also known as Move stage which cause the ripple effect in a firm. Through this, the firm
is implement the change for a short period and accept the changes in more quickly.
Refreeze: The stage state about solidifying the changes and when Volvo Car implement
the change then employees are inclined to revert all their old habits. That is why, it is quite
essential for the firm to make proper arrangement as well as carry out effective adjustments as
well. Further, through regular monitoring, company will stable the situation and then make
changes accordingly (Kihlstrom, 2019).
Therefore, the organization will easily accept the change and they should also use clear
and effective communication so that the changes are implemented in better way and helps a to
use all the technological changes in order to introduce electric cars.
b) Describing new and emerging business opportunities that creates profit for the firm
There are different business opportunities which may creates positive impact upon the
business performance. That is why it is beneficial for the business to use Porter five force model
that helps to identify the competitive advantages. These are as mention below:
Bargaining power of Buyers (Moderate): Company faces moderate bargaining power
of customers and it is so because the influence of customers on the firm is average. Such that for
them price sensitivity is another important which may affect the business profit. Like with an
increasing range of electric car from all brand will affect the purchasing power of the customers
(Mathooko and Ogutu, 2015). Therefore, this additional range of factor also affect the bargaining
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power of Volvo cars and this also include the buyer's ability in order to go for the substitute
products as well. Moreover, this price variation affect the business overall performance in
negative way. As there are different top brands who also provide the same product in different
ranges and that is why, customer prefer those who provide low rate of goods. That is why, it is
quite essential for the firm to manage the range of product that helps to attract wide range of
customers.
Bargaining Power of Suppliers (Moderate): It is analysed that Volvo Cars are highly
depends on the reliability of suppliers and this shows that it shape the industry environment
which influence the material which are needed by the firm. For instance, there are some suppliers
who use third party in order to sell the material while on the other side some directly sell within a
firm (Hanafizadeh, Hatami and Bohlin, 2019). As there are different ways through which the
suppliers my provide material to the company and that is why, the bargaining power of suppliers
is quite moderate. Moreover, it is also observed that due to moderate rate of bargaining power of
suppliers, the company sometimes did not match the requirement of the customers. Thus, most of
the suppliers are moderately sized and they are also have the limited influence on the automotive
industry environment. Thus, it also affects the overall performance of the company in negative
way.
Threat of New Entrants (Weak): The company face weak threat of new entrants
because different company also offer the electric car in cheap rate. As if when the new company
wants to enter into automotive industry, then it has to invest high amount to attract wide range of
customers and there is a no surety whether the business is in success of not. Even the customers
are also prefer brand firm and as a result, the new entrants faces issue of finance. Moreover, a
new entrant also require high cost of brand development as well as high cost of doing business,
as a result, it shows that there is a weak threat of new entrants and on the other side, the existing
business are increases their economies of scale. Thus, the established market players get benefit
due to having weak threat of new entrants (Cordell and Thompson, 2019). While on the other
side, If the Volvo Cars forgo its patent rights and make the process as well as innovation an open
source for others, then it increases the threat of new entrants.
Threat of new Substitute (Moderate ): Volvo Cars also faces low rate of threat of
substitute and there is a strong force of low switching cost and moderate substitute availability
which enable the competition. Even the customers also have moderate level of substitute in
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market and with relation to this, all the substitute also keep satisfying the customer needs. Such
that for the customer, public transport is not as versatile as private car. Thus, it shows people
have different option in market and among all, introducing new electric car is more suitable for
the firm which save time as well as extra cost.
Rivalry among existing firm (Strong): There is a strong competition in the market such
that GM, BMW which also announces different plans for committing different mass market of
electric cars, the only variation is related to price. It is also observe that the extent of competition
in the energy storage products and the solar energy system is quite intensifying. Thus, to stay
competitive in the competition, it is quite necessary for the firm to develop the best variety of
products with low rates. So that it will help a business to raise the brand image. Moreover, it is
also analysed that due to small number of firms and strong force of low switching cost will
definitely affect the business in positive way (Ge and Li, 2019). Such that top brand automotive
companies have strong marketing campaigns which strengthen the effects of competitor against a
business,
From the above, it has been realized that there is a wide scope in the competition and by
introducing new variety of products and services will help a business to raise its brand. For that
Volvo Car should introduce new electric cars so that it will help to stay competitive in market
and fulfil the needs of the customers as well. On the other side, it is critically evaluated that other
business rivals such as BMW and Toyota are also provide same electric car to their customers
but the only thing varies that is Price (Gautam and et.al., 2019). Therefore, introducing new
electric vehicles in the market will help a business to leads towards a success. Using Porter Five
force model which help Volvo Car to determine the competitive advantage and also try to
position itself into better.
CONCLUSION
By summing up above report, it has been concluded that the electric car provide the best
opportunities to the customers and it also helps to prevent the environment from getting polluted.
Further, the report concluded that by using PESTLE analysis the company will easily determine
the external factor that affect the business. Such that technology factor creates positive impact
upon the business performance and it helps to shape the industry in positive mode. In addition to
this, report also concluded that Porter five force model helps to determine the competitive
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advantages and determine this introducing electric car in automotive industry will be more
profitable for the firm and leads to further level of success.
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REFERENCES
Books and Journals
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Burke, W. W., 2017. Organization change: Theory and practice. Sage Publications.
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Fleisher, C. S. and Bensoussan, B. E., 2015. Business and competitive analysis: effective
application of new and classic methods. FT Press.
Fleisher, C.S. and Bensoussan, B.E., 2015. Business and competitive analysis: effective
application of new and classic methods. FT Press.
Gautam, S. and et.al., 2019. Strategic Analysis Models and Strategic Analysis for Edible Oil
Industry. International Journal of Research and Analytical Reviews E-ISSN, pp.2348-
1269.
Ge, L. and Li, C., 2019, April. Analysis of competitive Power of Chinese Sports Apparel Brand
based on Porter's five Force Model. In Proceedings of the 2019 3rd International
Conference on Information System and Data Mining (pp. 54-58). ACM.
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Hanafizadeh, P., Hatami, P. and Bohlin, E., 2019. Business models of Internet service
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Kihlstrom, J. F., 2019. Lewin, Kurt.
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of change: Lessons from Kurt Lewin and the Harwood Studies’. Human Relations,
p.0018726719830313.
Mathooko, F. M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
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