Analysis of McLaren's Business Environment & Global Trade Challenges

This report provides an environmental analysis of McLaren, a leading auto-mobile company in the UK, examining the challenges within its internal and external business environments and the difficulties it encounters in global trade. The analysis utilizes SWOT, PESTLE, and Porter's Five Forces frameworks to evaluate McLaren's strengths, weaknesses, opportunities, threats, political, economic, social, technological, legal, and environmental factors, as well as the competitive forces it faces. The report also explores McLaren's value chain, highlighting primary and support activities, and discusses how the company can gain competitive benefits through sustainability initiatives. Furthermore, it reflects on the challenges McLaren faces in trading across the globe, including political and economic barriers, and concludes that both internal and external factors significantly influence the organization's success in the automotive industry. The report emphasizes the importance of building trustworthy relationships to thrive in a competitive market.

1 ENVIRONMENTAL
ANALYSIS OF AUTO-MOBILE
INDUSTRY

Table of Contents
INTRODUCTION...........................................................................................................................2
TASK ..............................................................................................................................................2
Critically examine the challenges of their internal & external business environments...............2
Reflecting on challenges McLaren encounter in trading across the globe..................................9
CONCLUSION..............................................................................................................................10
REFERENCES .............................................................................................................................11

INTRODUCTION
Environmental analysis is defined as procedure of determining and analysing different
types of factors that put direct impact on current and in the future management practices. This
process contributes to identify factors and aware organizations to develop plan that helps to deal
with those forces that can impact negatively. The current assignment will be based on McLaren,
which falls under the category of leading auto-mobile companies in the UK. The study will
explain challenges of chosen firm external and internal business environment and encounter
while leading across the world. It will also define the reasons behind engage in global trade.
TASK
Critically examine the challenges of their internal & external business environments
Swot analysis-
Strengths-
Skilled workforce, strong financial background, experience team of HR and strategic
plans are included in category of organizational strengths that affect positively in term of
increasing productivity and enhancing consumer satisfaction (SWOT Analysis, 2020). Firm may
utilize it's each strength in appropriate and systematic manner to gain competitive advantages
and give tough competition to others that is essential.
Weaknesses-
Inappropriate organizational structure is one of the biggest McLaren weakness that put
negative impact on its productivity and effectiveness. It may lead to decrease candidates
efficiency because they are unable to understand their responsibilities and roles. Lack of human
resource development tactics is another weakness of company that may affect in same manner as
above weakness.
Opportunities-
Technology advancement, CSR and existence of talented candidates are considered as
one of those chances that McLaren and its management may grab in term of developing plan to
hire skilled and diverse workforce (Phadermrod, Crowder and Wills, 2019). They may also gain
benefit in form of using and implementing advance technologies that contribute to enhance
operational efficiency and effectiveness in varied terms.

Threats-
Intense competition in the auto-mobile industry may put negative impact on company in
form of increase work stress that drive management attention toward developing strategic plans
that help in term of gaining competitive benefit. Furthermore, trade policy change is another
threat that affect firm current practices.
Pestle analysis-
Political factor-
Changes related to political factors such as trade policy, tax rate, political stability and
more may affect the way firms are running their ventures. In case of chosen company, increasing
trade charges may put negative impact on trading process (Christodoulou and Cullinane, 2019).
It may lead to decrease its trading operation but not for too long, until when management and
high authority take decision to pay amount according to new trade policy or charge.
Economic factor-
Fluctuations regarding any economic factor may put direct impact on organizational
activities such as primary and support. For instance, in case of McLaren, due to pandemic
economic growth in the UK and other nation has been affected as it lead to decreased
continually, which may put negative impact on firm sales.
Illustration 1: SWOT Analysis
(Source: SWOT Analysis, 2021)

Social factor-
Changes related to consumer buying behaviour, market trend, lifestyle and their
preferences may affect directly on management strategies, practices and decision-making of
companies. In regard to McLaren, changing market trend and enhancing preferences of target
market may put negative impact of company sales, as it may drive its attention toward
considering people needs and making possible change that is a lengthy procedure.
Technology factor-
It may affect positively in the context of enhancing operational efficiency of McLaren
production and marketing operations (What is PESTLE Analysis? Everything you need to know
about it, 2021). For example, technology advancement may enable marketer and manufactures to
develop the plan in term of adding value in existing things by using advanced technologies.
Marketer may generate brand awareness globally without conducting too much efforts. While
production section may manufacture a vehicle by using AI technology.
Legal factor-
Any form of change related to business laws and regulations may put negative impact on
a company. In case of McLaren, fluctuation related to employment, consumers and data privacy
may affect negatively. It may lead to increase work pressure on management to reform existing
policies along with consideration of current changes that helps to run business and sustain it for
longer in corporate world.
Environmental factor-
This factor may address via other concept such as value chain analysis, in term of
defining current practices of company to be a sustainable brand in the auto-mobile sector. This
factor may put positive impact on McLaren as it may follow CSR concept and attempt to reduce
its carbon foot print, which may give its venture competitive power.
Porter's five forces-
Bargaining power of suppliers-
The bargaining power of a supplier is low because there are number of suppliers in the
sector accessible who are capable to manage and build their relationship with top auto-mobile
brands like McLaren. It may give firm capability to enter into new market and take pleasure of
excellent workforce productiveness while running business from national to international level.
Bargaining power of customers-

The degree of this force is high, because customers are price sensitive, and they may take
approach to lower the high costs of vehicles that may put negative impact on McLaren success
and profitability. They may hold power to switch to another company that offer a better item at
lower price. It may lead to create varied challenges for organization.
Threat of substitute products and services-
The degree of this force is low to moderate because those substitute or alternative modes
that are accessible in the world as transportation sources may do not provide that kind of
Illustration 3: Porter's Five Forces Model
(Source: Understanding Porter's Five Forces Model, 2021)

convenience to individuals that they may obtain via McLaren products. As management may
design each vehicle after considering customers expectations, needs and requirement as well as
health concern.
Threat of new entrance-
The extent of this factor is low because it is complex and quite challenging for new
companies to enter into auto-mobile sector where top existing brand are accessible and builds
their great image, which is not possible to replace by any new firm. At the beginning phase, a
huge investment may be required to set up production facilities for new entrances that is
impossible.
Competitive rivalry between existing companies-
The extent of this factor is high because each brand in auto-mobile industry give tough
competition to each other, in order to hold top position in the market and to reach desire
outcomes. It is fact that all the brands compete on certain basis such as quality, price, technology,
design, consumer safety, value added features and other points that is quite essential for them to
consider.
Value chain-
Primary activities-
Inbound logistic-
In McLaren, effective management is able to run inbound logistic activity along with
outbound, in term of collecting raw materials and auto-mobile parts from trustable and
sustainable suppliers (Value Chain Analysis, 2021). It may give firm power to hold them and
other stakeholders for longer time who are able to make venture survive or grow excellently as
good as its rivals that are accessible in the same market and run ventures into similar industry.
Operations-
It may run its venture and product manufacturing operation in effective way, which allow
organization chance to deliver vehicles on time to specific store or outlet where people may
easily reach and chose the best car model for themselves or other also, like family. By running
each operating successfully it may enter into new geographic area.
Outbound logistics-
Through this activity, McLaren may take initiative to implicate massive implications for
people, assets and supply structure in these areas. It may enable firm to obtain benefit of

conducting outbound activities in effective and systematic manner, which in return enhance
operational effectiveness and power to sustain during competitive business environment. It may
use its warehouse to keep final products at own place and then deliver outside or in domestic
area on demand.
Marketing & Sales-
Organization is able to gain the attention of potential customers, in term of using strength
such as investment capabilities. It may invest a lot of money regarding TV advertising, which is
quite essential for McLaren do to so as it may give them chance to generate excellent brand and
high technology vehicles awareness worldwide. It may utilize AdSmart as marketing channel to
gain benefits in bulk.
Service-
In order to enhance customers satisfaction level and to gain competitive benefits, firm
may take approach to offer after sales services to consumers. It may have skilled and
knowledgable candidates who are able to work in customer service department to solve the
queries and answers all the questions of target market about products and other things related to
that.
Illustration 4: Value Chain Analysis
(Source: What is Porter’s Value Chain Model, 2020)

Support activities-
Firm's infrastructure-
Utilization of matrix organizational structure may put negative impact on its further
growth as it may consider its one of the biggest weaknesses. For example, it may lead to create
complications as team roles may not be clearly defined which in turn decrease operational
effectiveness and candidates performance level. It is quite essential for company to overcome
this weakness and focus about future growth.
Human resource development-
HRM in the organization take initiative to retain and acquire skilled candidates at
workplace in term of developing strategic plans and using effective methods such as learning &
development, performance appraisal and more. It is one of those strengths that McLaren, may
utilize to be productive and stand competitive in the whole industry for longer time, which is
quite essential for its venture rapid growth.
Technology development-
Another activity that organization conduct or use in term of strength is technological
development in the workplace, in order to manufacture up-grated version vehicles that individual
person in this world prefer to buy. Furthermore, marketing department of McLaren, may also
gain benefits of this activity in term of promoting venture and its goods worldwide by using
advanced digital marketing channels.
Procurement-
With this support activity, firm is able to produce the best quality of goods such as
vehicles that people prefer to purchase and obtain proper satisfaction. In term of procurement,
McLaren, may able to build strong relation with sustainable suppliers. Its further procurements
may concentrate on semiconductors, smart sensors, batter batteries and more. It is one of those
strengths that organization may utilize to gain competitive advantages.
Competitive benefits concern organization core value on sustainability-
McLaren may gain competitive benefits by conducting its operations management
practices in term of following CSR concept. It may take approach to reduce its carbon footprint
and eliminate single utilize of plastic. With this motive, firm may enter into new market place or
a nation, where growth chances are accessible in bulk (Corporate Social Responsibility, 2021).
In this manner, it may address environmental factor as concern of government and customers

who expect to retain with those companies or brands in auto-mobile sector that are following
corporate social responsibility concept and taking initiatives to conduct practice accordingly.
Reflecting on challenges McLaren encounter in trading across the globe
Organization tend to engage in global trade, because it may give them chance to be a top
auto-mobile brand in the overall sector and also to gain competitive advantages more than the
expectation of stakeholders. Despite these things, firm may encounter varied challenges in
trading across the globe. For example, it may deal with political challenge in term of paying
heavy tax charge, for purpose of continuing trading procedure across national boundaries in
those nations where it may have established its outlet or run venture operations. It also faces
another barrier and that is low economic growth that means many people's are unable to buy an
expensive car, due to loosing income source. It may put negative impact on competitive
effectiveness of chosen brand.
CONCLUSION
From above analysis, it has been concluded that political, economic, social and other
types of external along with internal factors put direct influenced on organizational success in the
world of business. It has survived in auto-mobile industry by building trustworthy relationship
with suppliers, by setting good pricing strategy, improving products quality, adding valuable
features and via building sustainable business image in the market. Furthermore, by summing up
above discussion, it has been concluded that company has gained competitive advantages in bulk
in term of utilizing its key strengths such as skilled candidates, better inbound activities and more
things.

REFERENCES
Book and Journals
Christodoulou, A. and Cullinane, K., 2019. Identifying the main opportunities and challenges
from the implementation of a port energy management system: A SWOT/PESTLE
analysis. Sustainability. 11(21). p.6046.
Phadermrod, B., Crowder, R. M. and Wills, G. B., 2019. Importance-performance analysis based
SWOT analysis. International Journal of Information Management. 44. pp.194-203.
Online
Corporate Social Responsibility. 2021. [Online]. Available Through:
<https://www.mclaren.com/group/about/corporate-social-responsibility/>
SWOT Analysis. 2021. [Online]. Available Through:
<https://corporatefinanceinstitute.com/resources/knowledge/strategy/swot-analysis/>
SWOT Analysis. 2021. [Online]. Available Through: <https://www.educba.com/swot-analysis/>
Understanding Porter's Five Forces Model. 2021. [Online]. Available Through:
<https://www.semrush.com/blog/understanding-porters-five-forces-model/>
Value Chain Analysis. 2021. [Online]. Available Through:
<https://strategicmanagementinsight.com/tools/value-chain-analysis/>
What is PESTLE Analysis? Everything you need to know about it. 2021. [Online]. Available
Through: <https://www.analyticssteps.com/blogs/what-pestle-analysis>
What is Porter’s Value Chain Model. 2020. [Online]. Available Through:
<https://fourweekmba.com/porters-value-chain-model/>