Global Automobile Industry: PESTEL and Porter's Five Forces Analysis

This report provides a comprehensive analysis of the global automobile industry, focusing on its external and internal environments. The analysis begins with an introduction to the global business environment and its relevance to the automotive sector. The main body of the report comprises a PESTEL analysis, evaluating the political, economic, social, technological, environmental, and legal factors impacting the industry. This includes examining government regulations, economic conditions, consumer trends, technological innovations, environmental concerns, and legal frameworks. Following the PESTEL analysis, the report applies Porter's Five Forces model to assess the industry's competitive landscape, considering the threat of new entrants, the threat of substitutes, the bargaining power of suppliers, the bargaining power of buyers, and competitive rivalry. The report highlights key findings, such as the impact of government incentives, economic crises, changing consumer preferences, technological advancements, and legal challenges on the industry's operations and profitability. The analysis also emphasizes the importance of strategic adaptation to maintain competitiveness. The conclusion summarizes the key insights from both analyses, offering a holistic view of the global auto industry's environment and its strategic implications.

Global
Business
Environment

Table of content
MAIN BODY ..................................................................................................................................3
a)Environment of the Global Auto mobile industry by PESTEL analysis..................................3
b) Environment of Global Auto mobile industry through Porter’s Five Forces analysis............3
CONCLUSION ...............................................................................................................................5
REFRENCES...................................................................................................................................6

INTRODUCTION
Global business environment describe situation in that shows trading at international
level. By this an organization able to expand and operate their business operations and functions
at international level by enhancing their technology, customers base, understanding of culture,
profitability ratio, shareholders and many more. Global business environment refers can be
classified into two portions that are external environment and internal environment. By this an
organization able to develop their presence in various different countries in order to expand their
operational areas (Bartlett and Beamish, 2013). For expanding business at global level an
organization manager needs to conduct or develop various strategies as well as activities.
Through which a company able to expand business in appropriate and effective manner. This
assignment is based on auto mobile industries in has wide ranges of companies which conduct
activities like designing, developing, manufacturing, marketing and selling products in respective
market in appropriate manner. For which they will conduct various analysis such as PESTEL
analysis to evaluate external factors and Porter's five forces analysis for evaluating internal
environment.
MAIN BODY
a)Environment of the Global Auto mobile industry by PESTEL analysis
Auto mobile industry is a one of the huge industry which involves wider ranges of
organization or companies which conduct various functions related to manufacturing auto
mobile. This will include designing of products according to customers, developing it,
manufacturing, marketing so that potential customers get aware about it in proper manner and at
last sales it so that customers can enjoy its feature. In United Kingdom it is consider as one of the
largest sector which generate huge amount of revenue. In respective company there is best
known premium and sports car such as Jaguar, Daimler, Bentley, Aston Martin, Land Rover,
Lagonda, Lotus, MG, Mini and many more (Daniels, Radebaugh and Sulliv, 2017). Along with
this there are other companies which manufacture volume car that are Honda, Nissan, Toyota
and Vauxhall Motors. According to survey in year 2018 there are approx 1, 80,000 employees
directly working in respective industry and in that year they earn nearby £52.5 billion. United
Kingdom is considered as second largest country which manufactures cars across the world. To
know more about the auto mobile research conduct PESTEL analysis.

PESTEL Analysis: It is defined as a tool or technique which is adopted by an organisation in
order to evaluate and determine external factors or macro environmental factors which can affect
an organization which are operating their business in respective industry. The letters stands
external environment that are political, economical, social, technological, environmental and
legal ( Deresky, 2014). Evaluation of PESTEL analysis in respect of Auto mobile industry is
given below: Political: It is one of the important factors that will directly and directly impact on
business operations as well as profitability of auto mobile industry. Government of
worldwide countries are more favouring and attracted towards cars with low emissions.
Such as market of EU and UK are providing subsidies of government for car of low
emission. Along with this demand of eco friendly vehicles or cars is high on global basis.
In respect of given case study East European governments offers incentives which is
related to financing some investments for offering a low flat and simple tax on the wage
of employees and corporate staffs. In Slovakia country all tax are simple 19 percent. Due
to political factor production of cars get affected in France, there production get drop to
1.49 million from 1.77 million in year 2005. Due to which management of respective
company has to develop strategies accordingly in order to enhance their production in
effective and appropriate manner. Economical: This factor will badly affect business of an organisation at auto mobile
industry. The respective sector gravely get affected by current or recent economic crisis,
this is so because when economic condition of country is not good it will directly impact
on sales of car and that will decrease. Demand of luxury car get decrease when country is
facing poor economic situation. According to the given case study of car production
surges in Eastern Europe, Central Europe which is established in European Union has
stable economy that is consider as major advantage for them in order to operate business
in auto mobile sector (Ferraro and Briody, 2013). Due to which they also able to create
numbers of manufacturing job in four major countries of Central Europe. Socio- culture: Market of auto mobile sector gets influenced deeply through social
factor. Along with this it is getting affected when there is change occur in culture, trends
and demand of customers or peoples. So accordingly respective industry has to consider
these forces and they develop almost every year a new design or model. According to
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research in some market SUV s are higher in demand and in other market sedans are
considering more preferences (A PESTEL Analysis of the automotive/auto mobile
industry, 2019). In respect of given case study in Slovakia’s country approx 2.3 millions
peoples get unionized or work. Along with this peoples are enjoying and conducting their
work in effective manner which is one of the major social benefits in the case given.
Along with this car manufacturers of respective company conduct analysis and then
develop products according to need and demand of target or potential customer. Technological: In respective industry, the more innovative company is they able to
attract more customers and have higher share at marketplace. In United Kingdom market
there are some major company who are developing products which attract more and more
market share and customers. Such as Toyota, Hyundai and Ford have inventing cars with
low emission with eco friendly practices. Moreover now Toyota is planning to launch
driverless cars which are attracting customers on high rate and amount. In respect of
given case study, according to Stephane Lemperier Europe is consider as price market
which means customers buy products and services at low price. In that time Ford
introduce their succession of its products The Ka, that was assembled in Valencia, Spain.
The peoples of Europe get attracted and want to buy that product which manufacturing is
done at Ford factor. Environmental: This factor is also known as ecological factor of respective analysis.
This include regulation develop by government related to eco friendly cars and
manufacturing process. Along with this it also include regulation develop by government
in order to develop low emission products at global level. The government of EU and UK
get strict on pollution test and those vehicles which will not pass these test they will get
punishment or have to pay fine. According to given case study of car production surges in
Eastern Europe management of big car manufacturing companies decide to build new big
plans which produce less pollution or harmful elements that affect environment of Europe
(Guay, 2014). Such companies are General Motors, Toyota, Volkswagen, Peugeot, Fiat,
Suzuki, Hyundai and Kia which announced to build big plants.
 Legal: It is also major factor which will affect business operations and profitability of an
auto mobile industry. Cars or vehicles are selling at an international level due to which
each and every auto mobile company need to take care of rules and regulation develop by
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those countries (Automotive Industry PESTE. 2019). By this they able to conduct
business operations and functions in effective as well as appropriate manner. Such as in
respect of given case study recently Toyota had to get back their cars due to faulty
airbags. This may cause accident or any misshaping situation while driving. Due to this
profitability of respective company get affected in European marketplace.
b) Environment of Global Auto mobile industry through Porter’s Five Forces analysis
Auto mobile industry is a huge sector in which companies operate their functions at
global level. When a company start or operating business in respective industry they have to
conduct analysis of internal factors so that to know their strength and opportunities. Then
accordingly they able to develop strategies and plans in order to gain more and more profits,
market shares and customers base. There are almost each and every country's company or
organisations are operating its business at respective industry or sector. This is so because it is
one of the profit earning or revenue generation industries. In respective industry different level
companies develop products accordingly by which this sector are offering services and products
for all level customers. For understanding effectiveness of auto mobile industry and its internal
factor researcher conduct analysis through porter's five forces model.
Porter's Five Forces Model: It refers to technique or tool through which an organization
analysis all five internal factor which will affect their business operation and functions. These
five forces factors help industry in determining their strength and weakness and then they will
develop plans as well as policies to grab opportunities, use strength in effective manner and
overcome weakness (Peng, 2014). By this company able to expand and sustain business for a
long time at marketplace in appropriate manner. Threat of new entrants: There are high barrier at the entry of a new company in auto
mobile sector. Due to which there is very low chance of entering a new Entreprenurship
or company in respective sector. Along with this automobile sector required huge amount
of funds in order to run or established a new business (FIVE FORCES ANALYSIS AND UK
AUTOMOBILE INDUSTRY, 2019). In this industry there is already very big company are
represent due to which new companies not able to develop their presence at marketplace
of United Kingdom. According to given case study there are various types of barriers
which are developed by government due to which much big auto mobile company has to
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close their production and selling in some particular places. Due to which it is very
difficult for new small companies to enter into such a big as well as huge market. Threat of Substitutes: According to auto mobile industry there is high threat of
substitutes. This is so because there are various alternatives are available in respective
sector such as if price of fuel get increased, an individual can select other alternatives like
urban cabs, sharing cabs, motorbikes and many more. Due to this situation companies’
management has to conduct research and develop products with new and latest
innovation so that they attract customers. For example Ford is going to launch nine new
engines ranges and six new speed transmissions. In respect of given case study, according
to Auto motive new Europe auto mobile companies are adopting technology in effective
and appropriate manner and developing product which can be affordable by everyone in
order to satisfy need and demand. Bargaining power of suppliers: In respective industry bargaining power of supplier is
low or weak. This is so because in United Kingdom marketplace almost all the suppliers
are small players, very few are of significant or big size (A Five Forces Analysis of the
Automotive Industry, 2019). Auto mobile organization or company take raw material
from local supplier or export from other countries where they get good quality products
in low rate. In respect of given case study big auto mobile company manufacture their
products or parts and if they want any products they buy it from other companies with
whom they develop contract. This is essential for both the companies in Easter European
marketplace. Bargaining power of buyers: In auto mobile sector bargaining power of buyers is
moderately strong. According to analysis large part of buyers are those individual who
mainly own one products or car in respective industry. Due to which there is chance that
they switch form one company to another for getting more facilities in low rate. Along
with this in auto mobile industry there are some customers who are brand loyal and
always buy new design cars or vehicles of particular company. According to the case
study many companies develop various small and big cars so that they can attract more
and more (Sassen, 2016). Such as Europe is consider as price market where peoples like
to buy products at low price so companies like Ford design products according in order to
attract customers.
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 Rivalry among competitors: In auto mobile industry there are various companies who are
operating their business in order to earn more profit, market share and customers based.
Hence, rivalry among competitors is very strong in respective industry and if a company
want to exit they have to face very bad losses. In this industry or sector compete of brand
is based on various factors such as price, design, facilities, technology, customers safety
and many more. In United Kingdom there are varieties of auto mobile companies are
available such as Jaguar, Daimler, Bentley, Aston Martin, Land Rover, Lagonda, Lotus,
MG, Mini and many others (Five Forces Of The Automotive Industry Marketing Essay,
2019). In respect of given case study there are various companies who are conducting
their business at auto mobile sector in effective and appropriate manner. Such as General
Motors, Toyota, Volkswagen, Peugeot, Fiat, Suzuki, Hyundai and Kia who are operating
there business in Eastern Europe marketplace.
CONCLUSION
Form the above discussed point it can be conclude and evaluate that now a day’s demand if
auto mobile is increased by change in time. In United Kingdom market respective sector or
industry help country to gain high revenue and this sector is also consider as second largest in the
world wide level. Auto mobile sector is conduct their business at global environment and if a
company want to conduct business at global market they have to conduct various things like
market analysis for identifying appropriate as well as potential customers. Along with this must
have to do essential promotional and advertisings so that they can attract customers in huge
basis. For conducting market analysis an organization can adopt various techniques such as
PESTEL analysis and porter’s five forces by these they know about internal and external
environment. That will help manager of a company in developing strategies, plans and policies in
effective and appropriate manner.
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REFRENCES
Books and journals
Online
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