Analyzing Lexus SUV's Expansion into the Austrian Market

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BUSINESS ORGANISATIONS AND
ENVIRONMENTS IN A GLOBAL
CONTEXT
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Table of Contents
Introduction.................................................................................................................................................3
Information of business organization...........................................................................................................4
Discussion of allocated business environment.............................................................................................5
Application of an appropriate analytical approach......................................................................................7
Conclusion.................................................................................................................................................10
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Introduction
The business environment is the combination of the international and external environment
within an organization thus management can easy to recognize the benefits and drawbacks of the
plan in the company. Along with this, globalization is the processes which allow an organization
in interacting with all over the world by providing them effective services or products and keep
in mind not to hurt other person sentiments (Farndale, 2015). The report is based on Lexus SUV
Company which tries to expand its business operations and its functions in Austria. Before
entering the market place, an organization needs to analyze their customers’ needs and wants. At
the time of going global, there is an opportunity for international growth; moreover, an
organization can expand the sales with the current process and products are a move to a new
market in Austria. The main purpose of this report is to provide the business information, discuss
the business environment condition of the nation and PESTLE analyses which identify issues
which directly effect on the company.
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Information of business organization
The select company, Lexus SUV is the luxury vehicle division of Japanese automaker in Toyota.
The Lexus brand is marketed in more than around 70 nations and territories all over the world. It
is becoming Japan largest selling developing premium cars. This has getting 10th ranked in the
Japanese global brands in the market value (Huggins, 2018). The company headquarter is
situated in Nagoya, Japan, and operational center are located in Brussels, US and Belgium.
Lexus is operated and originated from the corporate project in developing new premium sedan
which named as F1 which stated in 1983 and it culminates in the launch of Lexus LS in 1989.
Lexus vehicles are mainly produced and manufactured in the Japan nation along with the
production in the Chubu and Kyushu regions and especially at Toyota’s Tahara, Aichi, Chubu,
and Miyata.
The company sale is increasing outside the largest market in the United States. The Lexus
organization started in the year 1983 when the Japanese team of engineers, technicians, and
designers were assigned a secret project which required them to reimage luxury automotive.
They are setting a new standard of the production and manufacturing of SUV cars in order to
build an ambitious new vehicle that would outshine the world’s best. The performance standard
of Lexus SUV has to be matched by the prestige of its interior (Coe, 2018). They can gauge the
limits of luxury before pushing them, Lexus designing and manufacturing team skipped the
engineering store and also develop around the world to immerse themselves in most effective
settings.
Lexus is the leading automotive organization which takes brilliant design, abandoned
performance, and persistent innovation and they are passionate about their designs of SUV cars.
Lexus international is regulated and operated by managing director Tokuo Fukuichi, which
coordinate the worldwide operations and functions of the different division. In the year of 1998,
Lexus introduced the luxury category with the launch of Lexus RX (Kagermann, 2016). The
luxury hybrid sales manager and team leader deliver the world first luxury hybrid and also sold
around 1 million vehicles in the large market place. Lexus SUV tries to expand its business
operations and its functions in the Austria nation in order to gain high income and revenue. They
are entering in the large market place where they can easily establish their business functions and
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operations in an effective manner. The company carries out business along with the innovative
design of SUV cars and other vehicles.
Discussion of allocated business environment
The business environment is the process of combining both internal and external factors which
are directly influence a company’s operations situations. The business environment includes
different factors such as suppliers, customers, competitors, owners and improvement in
technology, social trends. Such factors affect the activities and functions of an organization and
how an organization works directly and indirectly (Laleman, 2015). There are various factors
which are influence firm or business concerns of the business environment and its current
situation. It will assist in identifying business opportunities, chance, and profitability. Austria is
industrialized and it is a developed country with a large service sector.
In this, Lexus SUV company seek to explore and expand their business operations in the Austria
market place, the firm requires to focus on specific factors which include types and nature of
Austria market. The main factors which are prevailing in the market structure of Austria, in this
considerations and issues directly effect on business environment of the country. For Lexus
Company, they need to understand their business environment of the Austria country while
entering into the new market place. Austria is one of the 14 richest countries in all over the world
in terms of GDP per capita, it is well developed social market economy and it has a high
standard of living. Germany is one of the main trading partners of Austria which make it
vulnerable to rapid changes in the German economy (Geppert, 2016).
Thus, it is an efficient opportunity for the firm which is an easy way to the market of Austria
through online marketing. The market size of Austria is an important factor which is required to
analyze by the firm as the market size of Austria which affect the market environment. It has
around 31 largest consumer markets in the world by household final consumption expenditure.
Austria has a strong economic condition with machinery, textiles and metallurgical products
which is important. The nation is one of the most essential industries. Austria is a well-developed
economy and high standard of living which is closely tied up with other EU economies (Mangan
and Lalwani, 2016). There are various factors where firm needs to seek the data and information
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which are related to business income tax in Austria country and it directly impacts on business
environment of the specific nation market area. The income tax of Austria helps in developing
both foreign and local organization. Lexus company had the advantage to expand their business
operations in the market of Austria as people of this country mainly prefer expensive vehicles
with new design and features.
Austria is the country which is highly qualified driving forces of automotive development and
innovative mobility concepts. It can be analyzed that every year, Austria produces and
manufacture more than 400,000 cars. In the year of 2010, the turnover rate of the total EUR is
11,648 million. The major players of Austria are BMW, Fiat, Magna, General Motors and MAN.
These are the main competitors of the Lexus Company while entering into the new market place.
Lexus can adopt a strategy that includes lowering their price of vehicles which enhancing its
share in the Austria country and also expand its base in this respective nation.
Along with this, real estate costs and availability are the main factors which Lexus firm requires
considering in order to establish business operations in the Austria country. In establishing the
business, an organization needs to examine and analyze the real state cost which directly effects
on whole market plans and strategies (Murray, 2017). Austria provides low rates for establishing
offices and rate of rental and buying property in Austria is in favor of setting up a new company
in the market. In Austria, Lexus SUV Company offers its international clients various services in
different fields such as electronics, engine and chassis construction. They can develop and
formulate the innovative vehicles which are attracting a large number of customers. It is the best
suitable market place for Lexus Company where they can easily set up their business operations
and functions in the Austria nation.
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Application of an appropriate analytical approach
The application of appropriate analytical approaches involves an explanation of analytical
methods which is relevant to the firm. Lexus SUV main motive is to expand its business
operations in the Austria nation.
PESTLE analysis:
A PESTLE analysis is a framework and method which can be used to analyze the macro-
environmental factors which may a profound impact on company performance. The tool is
especially useful when there are start a new business in another country and entering the
international market for reaching with desired goals and targets (Parrilli and Heras, 2016). It
plays an important role in establishing business operations and its functions in the international
market place. PESTLE analysis assists Lexus SUV Company in order to understand the whole
market place which directly impacts on company activities and in reaching with potential goals
and targets. PESTLE analysis helps Lexus Company to evaluate internal and external factors of
Austria market area.
Political factor – The government of Austria is highly motivated to set up and development of
the international company in the Austria market place and this statement help with estimation of
low business tax on the newly entering firm. Thus, all the factors of Austria country are favor of
the company of Lexus for establishment in Austria country (Heisig, 2016).
Economic factor – The economic factor is an essential factor where Lexus firm need to consider
as the Austria market. In this, they are facing a crisis which is related to interest, inflation, and
fiscal policy issues. The economic factor is mainly acting as a threat to the organization as the
market of Austria which faces economic crisis and economic recession which had adversely
impact on the firm structure. Austria is a famous and well-developed market economic place
along with a high standard of living of people. It is isolated with the other EU economies
especially Germany’s. The economic features of this nation are a large service sector, a sound
industrial sector and small but it is a highly developed agricultural field (Strange and Zucchella,
2017). The company needs to analyze the whole economic condition of Austria as per this they
can start their business operations and its functions in a better manner. This includes interest rate,
taxation changes such as insurance tax, economical progress, inflation, and tax incentives. The
tax needs to pay by car user who owns a car. The economy is another major impact to virtually
all the nation about the world. The users are selecting the hybrid cars which are based on giving
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advantages of the fuel-saving facility. The country provides a bank loan which includes some
examples nationalization which prevents the insolvency and possible regional contagion.
Social factors – This factor will undertake all the consideration with all events which directly
effect on market and community of the country. Thus, benefit and drawbacks to the people of the
area where the project is taking place which needs to be required. It includes culture, norms,
population dynamics, career attitude, and global warming. In Austria, social and cultural factors
are important for their people and they are always following their norms. Austria is the big
consumer market and it is directly influenced by the concept of social class, however, the
population is multicultural (Teubner, 2019).
In this, Lexus has manufactured a different and unique type of vehicles which attract a large
number of people especially high-class individuals. In this market, there are various social
factors which include culture, norms, expectations and behavior towards specific service and
product of an organization of the user.
Technological factor – In this, new technology develops new products and new procedures.
Technology can reduce the cost, improvement in quality and lead towards innovation. With the
help of this, they are adopting advanced technology which helps them in increasing business
operations and its functions. The technological factor of Austria also favors Lexus company
which is settling down business operations in Austria country. Most of the people in this nation
are developing a connection with technology and generally with online shopping that provides
the firm major opportunity of entering in the market place through online marketing and e-
commerce.
Legal factor – In Austria, the legal factor includes rules and regulations while entering and
establish business operations of the foreign organization in the Austria market. Lexus needs to
adopt all the country rules and regulations in a better manner.
Environmental factor – The environmental factor of Austria consider as the cultural difference
of the nation along with such factor of the global warming that acts as a barrier in the procedure
of establishing Lexus firm in the market of Austria (Wood and Logsdon, 2017).
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Porters five force analysis
Porters five analysis is the process which includes five major industry methods and tools which
directly impact on the business establishment in the country. The Porters five force analysis
include five major components which include the threat of entry, threat from substitutes, industry
rivalry, and bargaining power of both buyer and supplier.
The threat of new entrants – In this, Lexus company face threat while entry in the new market
place while setting up their business in Austria. There are various automotive companies which
are also engaged in expanding their market share in the international nation. Thus Lexus requires
providing the best products in the international market such as Austria country.
Bargaining power of supplier – Lexus SUV is trying to set up their business operations and its
functions in the Austria country which need to increase the prices of their vehicles in the Austria
market place. This is easily provided at an expensive price which is mainly purchased by
standard class people.
Bargaining power of buyers – Lexus Company require to consider the bargaining power of
buyers of Austria country which is directly impacting on the business development of an
organization (Aseri, 2015). Austria people have the power to switch towards other suppliers
which provide the best offers in cars with a low rate and buyers can find out substitute item of
the Lexus SUV Company and they need to focus on buyers of Austria.
The threat of substitute – Lexus SUV need to concentrate on the threat of substitute at the time
of establishing business operations in the Austria country as the availability of substitutes at this
market which is mainly affect the buyers of Lexus firm.
Rivalry among existing competitors – Lexus SUV also faces major rivalry among the existing
competitors in the Austria market place. The company faces main competitors from Austria local
marketers who are already establishing their business for gaining the attention of a large number
of clients.
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Conclusion
On the basis of the mentioned report, it can be concluded that the business environment is the
combination of both internal and external factors which can directly or indirectly impact on
business operations and its functions. This will help in identifying major factors which create a
bad impact on company functioning and activities. Business environment includes internal and
external factors which mainly focus on the current situation of an organization. Along with this,
Pestle analysis is used for analyzing the situation of different factors in the Austria country
where Lexus SUV enter for reach and fulfill all the business goals. This includes political,
economic, social, technology, legal and environmental factors of the business concern. The firm
needs to understand and identify different external factors which are necessary to be updated in a
better manner. As per the current condition, the company needs to perform its work that manages
and maintain its operations.
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