Report: Global Business Environment and Car Manufacturing Industry

This report provides a detailed analysis of the global business environment, specifically focusing on the car manufacturing industry, with a case study on Volvo. The introduction defines the global business environment and highlights its dynamic nature, emphasizing the impact of external forces on business operations. The report employs PESTLE and Porter's Five Forces frameworks to assess the political, economic, social, technological, legal, and environmental factors influencing the industry. The report identifies opportunities in the electric vehicle market, driven by societal shifts towards environmental sustainability and technological advancements. It also examines the competitive landscape, including supplier and buyer power, the threat of new entrants and substitutes, and the level of competition within the industry. The report emphasizes the increasing importance of electric vehicles and the need for car manufacturers to adapt to changing consumer preferences and government regulations. The report concludes with a discussion of the implications for Volvo and the broader automotive industry, highlighting the need for strategic investments in technology and adaptation to remain competitive in the evolving global market.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
A) Major forces shaping the business environment of the car manufacturing industry.............1
B) Identification of new business opportunities ........................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Global business environment can be explained as several types of external forces by
which an organisation is surrounded. This forces directly or indirectly impacts on the business
operations and decisions as they are dynamic in nature and beyond the control of the
management. Majority of the organisation faces an new changes in short term period which
generates risk as well as opportunities for them. Moreover external business environment is
defined as an uncertainty phase that undertakes different surprise which creates discontinuity in
their operations. This report emphasis on the study of evolution of electric vehicles in Europe for
formulating a new phase in automotive industry. Moreover to understand business environment
PESTLE and Porter will be discuss in this report (Biresselioglu, Kaplan and Yilmaz, 2018).
A) Major forces shaping the business environment of the car manufacturing industry
Their are various forces are present in the business environment such as political,
economical, legal etc. that creates impacts on the organisation through affecting their supplier,
investor, customers and all other stakeholders. Their are specifically five types of business forces
which is economical, social, legal, technological and political. Where as another is environment
of an country. Combination of all above forces formulates a business environment by which an
organisation such as Volvo is surrounded. In order to retain in the industry for a longer period
administration of Volvo cars started to analysis business environment that helps them to analysis
the opportunities and risk that impacts on them in future. PESTLE is executed in this assignment
that ensures business environment will not create negative impact on Volvo.
PESTLE is considered as a major tool by which organisation analysis different
perspective of external environment. The first perspective for understanding business
environment is Political this factors consists of the political conditions of a particular country.
Volvo is operating their business in most of the developed countries such as UK, USA, France
etc. This determines that political condition of that country are good due to which they are low
changes in the rules, regualations and policy of the industry (Brannestam and Josefsson, 2018).
In context of UK the political conditions of the environment is not constant after the Brexit. But
due to the foresight of ruling party and its perspective towards the business industries helps
organisation to overcome from such complex conditions which show that they helps to boost
their business. Economical environment is the another factor that is related with organisation and

impacts on monetary policy. Like the inflation rate, demand and supply, economic policies etc.
which is a essential factor for organisation. In context of Volvo cars Sweden is the first place
where organisation started to manufacture their cars. Further they started to control their
operations and production facility in different organisation. Like in US, Russia, India, Malaysia
and China etc. all of this places are beneficial as this places provides economical benefits to
Volvo. Like labours with low charges, raw materials at cheap rate etc. This all assist them to
make their cars at low production cost with inferior quality as per their benchmark standards.
Third factor which is beneficial for the Volvo cars is related with society aspects. Socio-culture
of the UK creates different opportunities in the business environment as it is a developed country
with a flat rate of population growth. Bulks of car are moved from one place to another in order
to reach their work. In recent years population of UK is more sensitive towards the pollution that
is increases day by day. Therefore they are more focused towards environmental safety. This
factor generates a new opportunity for Volvo due to which they emphasis their production
system towards the electric cars (Chodakowska, 2018). Apart from this individuals also shows
keen interest in electric cars because they are environmental friendly and does not create
negative impacts on the organisation.
The rapid change in the whole society and as well as in industry is happen due to the
implementing of technological factors in most of the activities. Whereas it is also mandatory for
large each and every organisation to adopt this changes. So it is easy for them to satisfy the needs
of customers through predicting the alteration that take place in society. Modern cars
manufactures such as Volkswagen, Toyota, CMC etc. are adopting new technology that
generates more value in their auto-vehicles by adding safety features, less pollution technique,
increasing their engine powers that boost their sales. Therefore it is also essential for Volvo to
adopt technological changes that helps them to increase the productivity of their organisation. On
the other hand UK is a hub of technology which determines that their its residents are
technological friendly (Fang and Chimenson, 2017). Further UK is the hub of technology and
many researches that are related with auto-mobiles and other electronic that means that its
citizens are well informed about latest or update technological advancements. Volvo is a
multinational organisation as they are operating their business in different countries. Each
country formulates some rules and regulation in order to protect their country form unethical
business issue. Moreover it is also beneficial for them as it helps to protect the interest of local

industries that are operating their business in similar industry. Volkswagen faces a lot of
different challenges because of their cars as they exceed pollution limits. The legal environment
passes several laws that are passed by government as they need to follow decisions that are
related with various commissions and agencies that present at every level or within every
department of the organisation. If management of Volvo does not obey the rules than it results in
the legal trouble for the business. In order to overcome from this management of Volvo
implement companies act 2006, consumer protection act 1987, employee welfare act 1996,
motor car act 1903, etc. So it is easy for them to operate their business smoothly in a particular
country (Huse and Lucinda, 2013). Environmental factor is also an essential aspect that impacts
on organisation and its operations. In recent years consumer as well as customers both are more
concerned about the environmental factors such as pollution, climate changes, negative impact of
gases on climate etc. While another element is that all of the auto-mobile organisation are
developing new methods and ways which lead them to adopt green technologies. However
changes in organisation is related with market sector that helps to manufacture cars according to
the specific climate. For instance Europe and North America are two countries which are the
biggest buyers of the electronic cars. It represents a clear perspective that Volvo cars are best and
effective cars that satisfy need of customers. For considering this factor in appropriate manner
Volvo delivers similar power and comfort in their electric cars due to which there sale is more
boosted among overall world.
Some of the factors that are used by organisation to retain their organisation in auto-mobile
industry is accompanying of Porter five forces model in its operations. This works as a relative
strength that undertakes supplier power, buyer power, threat of new entrants, competition and
threat of new entry (Kokotilo, Derian and Graf 2018). Auto-motive industry is going through a
phase which is changing with rapid speed it represent that needs or demands of customers is
going to change as they are governing with factors such as environmental safety that convince
consumers to purchase electronic cars.
B) Identification of new business opportunities
In context of auto-manufacturing industry this force generates a low threat as they
include barriers to enter in such a capital required by new organisation is at a bulk level. This is
difficult for new organisation to invest such a huge amount of capital in a new industry.
Example- cost to manufacture a diesel car is more than cost to make an electric car. In the early

90 organisation need to make products that generates stability in their cars as it is not a system to
create deal between manufacture and customer. But to sale a car dealer such as Volvo need to
build a specific channel which is operates to maintain business goals this is a strong competitive
advantage for Volvo. As they have enough resources such as fund along with strong supply
chain. So they have opportunities to enter into new markets where potential customer are present.
The market condition of UK is very competitive it determines that they are operating their
business barging force of buyers is high. Moreover the competition exist between auto-
manufacturing organisation is related with price. But in context of Volvo cars they are a brand of
luxury which signifies that sale their auto-mobiles at a premium price its signifies that their cars
work as a status symbol (Tongur and Engwall, 2014).
The threat of substitute product is very high in the auto-mobile industry like buyer has option to
purchase similar product from rivalry firms at a similar price. This factors signifies that it is easy
for customers to switch on other organisation. This is a threat for Volvo because it creates issue
for customers and organisation to deal with in different phases. Like Upper class individuals has
purchasing power to spend lot of money to purchase Volvo cars which negatively impact on
organisation. Suppliers are the major part for an organisation as they provide raw-materials to
organisation for completing their production process this creates outcome of finished goods in
the organisation. While this force is moderated in the industry as they both are a part of
oligopoly market and holds similar power in the organisation.
It is clearly stated that in most of the countries all of the car makers are engaged in ferocious
competition. Like the price slashes, campaigns, CSR actions are part of their marketing activities
are a part of their marketing activities due to which they give tough competition to each other.
On the other hand all of the major car producing nation are rivalry of each other at global level.
In present scenario majority of the countries government gives more importance to
electric car manufactures. Various types of degrees are present in environment such as CO2,
NOX etc. This all are present because of consumption of petrol or diesel cars. In Europe as well
as North America government is supporting to electronic cars manufactures. For this they
provides subsidies, low tax rates and rent free land to assist them successful production plants in
their nation. This shows that this industry is growing with rapid speed. Survey, research, studies
are some of the arguments that show consumers are more attracted towards their cars (Sprei and
Karlsson, 2013).

Awareness about electronic cars is first developed in the year 2004 because governments in
around all of the countries are setting ambitious targets that creates vehicle for which releases
lower CO2 and other emission gases. Strict regulations put pressure on most of the organisation
to manufactures auto-mobiles that fulfil the gap between current emission and in the year 2020
(Berggren and Magnusson, 2012). Due to exact policy of the government reduction of this gases
will be down with 28% but to increase it more electronic cars are effective ways to sustain this
for a longer period in the environment. In the upcoming future all cars need to be modified with
electronic features for organisation. Like the ICE power train is dominant today and it is primary
source of manufacturing electronic cars. While in the long term adoption of new technology like
EV, new transmission and effective quality terminals that consume electricity are some of the
parts that effectively develops an electric car. In order to purchase this effectively administration
of Volvo needs to invest good amount in this. Whereas it is also mandatory for them because
without this they are not able to manufactures their electronic cars as per their benchmark.
Large number of business are inter-related with auto-manufacturing industry which includes
mobile car service, mobile wash business, service station, tyre business etc. But administration of
Volvo need to focus on those other business houses also that creates positive results for
organisation through generating more revenue for their business. In context of this battery
business is the major revenue source as it is directly related with all of the business operations
that relates with electronic cars. Electronic cars represent the future of auto-manufacturing
industry (Firnkorn and Müller, 2012). So in order to run them successfully organisation need to
input a battery in their cars. These helps them to run their cars with electricity power. Therefore
this is a suitable business for Volvo or any other organisation to deal or operate business of
battery power in upcoming future. Further this business is a power tool for electronic cars and
with this to open the service station of battery that undertakes several charge points are included
for this business. Moreover this business is also recognise as “ Green business” along with this it
is a cost effective process to establish this business in upcoming future. Future is uncertain but
the business of battery is a good opportunity to start. While to operate them in future Volvo need
to calculate the risk because calculated risk helps an organisation to manage their business within
minimum time period. Employees who are engage in Volvo are more enthusiastic, energetic and
skilled as they are hired through effective process of HRM management. It represent that have
potential to develop new alternative ways to operate their both business successfully. In the last it

is identified that Volvo initial step to boost their cars is a positive factor for organisation and
society. This factor impacts that technology is upgrading day by day therefore organisation need
to update themselves according to society trends.
CONCLUSION
By combing all the above points it is concluded that an electronic cars are the future of
upcoming auto-mobile industry. Volvo cars introduce a new and dynamic change in the industry
to make phase in society. PESTLE analysis has been used which will helps organisation to
understand business environment. Along with this Porter's five force is implemented that helps to
interpret the industrial analysis of the organisation. All this model helps an organisation in
achievement of competitive advantages within given time period. In addition to this new and
emerging business opportunities are covered in this report that increases the goodwill as well as
revenue for the organisation.

REFERENCES
Books and Journals
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Bergek, A., Berggren, C. and KITE Research Group, 2014. The impact of environmental policy
instruments on innovation: A review of energy and automotive industry
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combustion engine technologies and the power of policy. Energy Policy. 41. pp.636-
643.
Biresselioglu, M.E., Kaplan, M.D. and Yilmaz, B.K., 2018. Electric mobility in Europe: A
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Equipment of New Technologies A Case Study of Volvo Cars Corporation (Master's
thesis).
Chodakowska, A., 2018. The mobility revolution in the automobile industry. Electric cars and
battery management.
Fang, T. and Chimenson, D., 2017. The internationalization of Chinese firms and negative media
coverage: The case of Geely's acquisition of Volvo cars. Thunderbird International
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Firnkorn, J. and Müller, M., 2012. Selling mobility instead of cars: new business strategies of
automakers and the impact on private vehicle holding. Business Strategy and the
environment. 21(4). pp.264-280.
Huse, C. and Lucinda, C., 2013. The market impact and the cost of environmental policy:
evidence from the Swedish green car rebate. The Economic Journal. 124(578). pp.F393-
F419.
Kokotilo, C., Derian, E. and Graf, S., 2018. UberECO: sustainable ridesharing.
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cars. Journal of systems architecture. 77. pp.83-100.
Sierzchula and et. al., 2012. The competitive environment of electric vehicles: An analysis of
prototype and production models. Environmental Innovation and Societal
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Sprei, F. and Karlsson, S., 2013. Energy efficiency versus gains in consumer amenities—An
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Online
Battery reconditioning, 2014.[Online]. Available Through: <https://99businessideas.com/start-a-
profitable-battery-reconditioning-business/>
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