Business Strategy Report: VAUXHALL External and Internal Analysis

This report provides a detailed business strategy analysis of VAUXHALL, a British car company. It begins with an executive summary and introduction to business strategy and its importance. The report conducts an external environment analysis using PESTLE and Porter's Five Forces, followed by an internal environment analysis using SWOT, VRIO, and value chain models. Strategic planning is also included, with an application of the Ansoff Matrix to determine market strategies. The analysis covers political, economic, social, technological, legal, and environmental factors, as well as competitive forces within the automotive industry. The internal analysis assesses VAUXHALL's strengths, weaknesses, opportunities, and threats, along with its strategic capabilities. The value chain model is applied to analyze primary and support activities. Finally, the report concludes with strategic recommendations based on the analysis.

BUSINESS STRATEGY
1

Executive Summary
This report included business strategy which refers to business planning that contribute and
guide business activities towards achievement of business objectives, and the factors which are
required to be analysed before designing and developing business strategies. This report included
PESTLE analysis and Porters' five forces for analysis of external business environment. SWOT
analysis and VRIO and Value chain analysis for internal business environment analysis. Later
strategic planning have also been included in this report and for that Ansoff Metrix have been
included for deciding strategy of the market.
2

Table of Contents
BUSINESS STRATEGY.................................................................................................................1
Executive Summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................4
External Environment Analysis.......................................................................................................4
Internal Environment Analysis........................................................................................................7
Strategic Planning Process.............................................................................................................11
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16
3

INTRODUCTION
Business strategy refers to specific plans which are designed and developed by organisations
so that they can achieve their objectives in most efficient manner. For designing and developing
business strategy company needs to ensure its external and internal environment and their effect
on its operations and functions. This report includes internal and external analysis of
VAUXHALL. This is a British Car company headquartered in Chalton, Bedfordshire England.
This company was founded in 1837 and is subsidiary Group PAS. The area served by the
company is limited to England. The company manufactures automobile and commercial
vehicles. This company have been included in this report for external analysis through PESTLE
for Macro analysis and Porters' five forces model for micro environment analysis . Internal
Analysis of VAUXHALL will be analysed through VRIO model for resources and SWOT
analysis. Later this report also includes strategic direction available for VAUXHALL and which
are suitable and can be adopted by VAUXHALL.
External Environment Analysis
This refers to external factors which affect the operation of VAUXHALL. This environment is
divided in two parts one is Macro and other one is Micro.
Macro Factors are those which cannot be controlled by the company and affect the whole
industry at a time. On the other hand Micro factors are those which can be controlled by the
company but only partially (Perera, 2017). This includes that factors which are related with
company but are not part of the company's internal environment. Macro Environment can be
evaluated through PESTLE framework.
Political
This includes political factors of a company which affect operations of a firm. Political
ideologies their values which affect operations of firm are included in this factor. VAUXHALL
operates in UK and this is why political environment of the UK affects the operations of
VAUXHALL. The political factor which affect VAUXHALL are Promotion of Public Transport.
This is a factor as use of public transport will reduce demand of the cars of VAUXHALL. This is
not in favour of VAUXHALL.
4

Political stability and political alliances and political rivalries are among top factors which can
affect the operations of VAUXHALL (Policy, 2016). In this promotion of using home country
products is a positive factor for VAUXHALL.
Economical
These are related with economic condition of the country. VAUXHALL is a car and automotive
company which requires that people of the country and economic condition of the country is
positive and stable so that it can have a good business in the country. High growth rate of GDP,
economic stability of the country and people of that country. UK's economic condition is
favourable and this can make a positive impact on the VAUXHALL. The positive impact for
VAUXHALL is that when economic condition of people is favourable than they are more able to
buy and have their own vehicles this will positively influence demand of the product.
Social
This refers to social and cultural factor. This is a good and positive factor for VAUXHALL as
this is a British Company and operates in UK only. This is the reason this company known taste
and preferences of the people of the country (Fozer and et.al., 2017). This includes changing
taste and preference of the people and what they demand. In this increasing demand for electric
vehicles and self-driving vehicles is opportunities for VAUXHALL and this should develop
strategies and prepare itself so that it can utilize the opportunities. Demand of self driving car is
increasing and VAUXHALL can increase demand of its products when it can develop self
driving cars.
Technological
This is most affecting and important factor for an automotive company. In this factor
technological advancement of the competitors and technology available for the company are
major concern. This technology includes both technology being used in the products and
technology through which company manufactures its products and how cost and quality effective
the technology is comparing to its competitors. The company can utilize the opportunities in this
factor by designing and developing self-driving and electric vehicles. These are in demand and
are at the initial time and VAUXHALL can use these opportunities and provide quality products
to the customers in this category. This will contribute in increasing market share of
VAUXHALL and its profitability.
Legal
5

This factor analyses factor analyse affect of legal factors on the operations of the company. Legal
factor includes rules and regulation which govern operations of a company. Increasing regulation
on safety of automobile is an opportunity for the company (Fozer and et.al., 2017). Company can
follow these rules and increase sale of its products. If VAUXHALL is able to provide cars with
increased safety demand of its cars will increase and this will positively affect profit of the
company.
Environmental
This factor includes effect of natural environment on the operations of the firm. Nowadays effect
of firms operation on natural environment has also become important factor for consideration.
This is why electric cars are an opportunity for VAUXHALL. The reason is that these have less
negative impact on the environment and also able to solve the problem of the fuel. The rising
concern for air quality is also an opportunity for the company that it can develop cars and
vehicles which have less or no effect on quality of air. This will positively affect the goodwill
and reputation of the company and at the same will also avoid any legal and regulatory issue.
Analysis of Micro Environment
This can be analysed through the Model of Porter's five forces.
This model analyses the impact of every factor which is outside the business but is important for
its operations.
In this five forces are-
 Competition in the industry
 Potential of new entry into the industry
 Power of Suppliers
 Power of Customers Threat of Substitute Product
Competition in the Industry-
In this level of competition in the industry is analysed and evaluated. Capacity of the firm to
undercut the competitive firms (Moreno-Izquierdo, Ramón-Rodríguez and Perles-Ribes, 2016).
Their ability to perform better than the firm. In this larger number of competitors is a negative
and can have unfavourable impact on the company. VAUXHALL is a car company and this is
why there are many competitors for this firm. This firm not only have to compete with the
6

national firms but have to compete with international firms as well. Company have to make
strategy that it can maintain strong company in the country.
Potential of New entry
There are factors like money and resources required for entering into the firm. VAUXHALL is a
car company and which is why the cost and resources required to enter this industry are high.
This is a favourable situation for VAUXHALL. This industry has strong barriers to entry and
VAUXHALL need not to consider this factor much before its strategies. High barriers of entry
are ideal for the companies which already exist in the industry.
Power of Suppliers
This refers to power and bargaining power of suppliers (Moreno-Izquierdo, Ramón-Rodríguez
and Perles-Ribes, 2016). This power of suppliers is high when there are fewer suppliers and
resources are rare and valuable. In this suppliers power is strong and they can charge higher
prices and which can increase the cost of input for the car. This will either increase the price or
will reduce the profit of the company and both of these are not ideal for the company. But in case
the resources are easily available then power of suppliers remain weak as company can get
resources from other suppliers as well. The resources required for VAUXHALL are easily
available as there are many car companies and all of them requires resources there are various
suppliers in the market which can supply resources to VAUXHALL. This is an ideal situation for
the company. In this competitive force power of VAUXHALL is high.
Power of Customers
There are two situations in which power of customers in high. In case customers for the product
are limited like there are few customers to buy the products of the company and in case there are
various sellers in the market and customers can easily switch to other seller and cost of switching
is less (Lewis, 2017). Customers available are high but at the same time sellers of the car are also
numerous and this requires that VAUXHALL applies adequate strategy for the company so that
it can attract customers towards it. In this competitive force customers are strong than
VAUXHALL. this make negative impact on operations of the company and at the same time
affect its strategy and they are required to be customer centric.
Threat of Substitute
This means that company have to compete with not only those who are providing same goods
and services but also with those who provide goods and services which can be used as substitute
7

(Zhang, Leng and Zhou, 2020). In this case VAUXHALL is a car company and for this public
transport is a substitute that people can use public transport rather than their car. In this
competitive force VAUXHALL stands at moderate level in terms of competitiveness, which
means that it does not impact the VAUXHALL to much extent but it does have little impact on
its operations.
Internal Environment Analysis
This includes analysing internal environment of the company. This means analysing what are the
strengths and weaknesses of the company and what are the opportunities and threats available to
the company.
For internal analysis strategic capabilities of the firm are analysed. Strategic capabilities refers to
capabilities of the firm to compete in the market (Simatupang, Piboonrungroj and Williams,
2017). These capabilities includes resources of the VAUXHALL and its processes which can
give this an advantage over its competitors.
To analyse its capabilities value chain Model is being applied-
This model includes all hoes activities which are taken by companies who manufacture and
distribute products and services. This includes all the activities of the company from inception of
product to its distribution. In this major nine activities are being categorized and which are
divided in two parts which are primary activities and supportive activities.
Analysis of VAUXHALL's value chain-
Primary Activities
Inbound Logistics
This includes activities which are undertaken by VAUXHALL to receive its resources and raw
material for production of its cars and vehicles (Simatupang, Piboonrungroj and Williams, 2017).
Other function in this are warehouse, inventory management. Analysis of this will enable
company to know its efficiency in this and what are the factors which can be improved by the
company.
Operation
This includes activities for converting raw material into finished goods. VAUXHALL is a car
manufacturer and that is why it needs to analyse its activities through which raw material is
converted into the finished goods. In VAUXHALL this can be divided into several parts reason
being there are various parts of the vehicle which needs to be prepared before finished goods.
8

This gives a scope to the company should it continue making all the parts themselves or they can
hire other firm to do that.
Outbound Activities
This includes those activities through which finished goods are delivered to the dealers of the
goods (Mudambi and Puck, 2016). This is important when company supplies its goods through
dealer rather than selling directly to customers. In case company directly sell to customers this
includes activities for delivering goods to the customers.
Marketing and Sales
This includes marketing and sales activities of the company. This includes promotion and
attracting customers to buy the products of the company. In this VAUXHALL includes
promotion through various traditional and modern platforms. Like Social media and newspaper
advertisement. Sales include activities through which VAUXHALL delivers its cars to customers
and receives payments against the cars.
Services
This has become major factor to attract customers and retain them this includes after sale
services to customers. This is also important for VAUXHALL this is because it is an automobile
company. Services are required to be given after the car has been sold. This includes servicing
and maintenance of vehicles. Effective services of car companies always manages to attract
customers and this is why this is a value activity.
Supportive Activities
These activities are those which are undertaken to support the primary activities. These activities
are-
Procurement
This includes analysis of how VAUXHALL obtain its raw material. This is a important
consideration for automobile manufacturers (Mudambi and Puck, 2016). If VAUXHALL low
cost and good quality material it will be able to produce high quality automobile products.
VAUXHALL procures its materials from various suppliers this is because they can have at low
and reasonable cost. Right way for procurement ensures that the whole final product is available
at reasonable price.
Technology
9

This includes how developed technology do VAUXHALL have for its operations and this is
important at all level from manufacturing to marketing and sales. Effective and advanced
technology can produce and manufacture high quality automobile at low cost. Technology being
used in VAUXHALL is latest and benefits of that make it a value activity for the company.
Human Resources
This refers to the set of talent, skills and experience of the people who are working for
VAUXHALL (Owen and et.al., 2016). Effectiveness of the firm is mainly dependent on this
factor and this is why firm needs to ensure that it has the best human resources. VAUXHALL
employs best talent available in the market and employees add value in functioning of
VAUXHALL and make human resource management a value activity for VAUXHALL.
Infrastructure
This factor is about infrastructure of VAUXHALL which includes its physical set up,
management, finance, structure of the company etc (Owen and et.al., 2016). These factors play a
major role in success of VAUXHALL. infrastructure of VAUXHALL is a value activity because
it ensures that all the operations in VAUXHALL complete easily and effectively. This is more
important as VAUXHALL is a manufacturing company.
Competitive advantage of VAUXHALL are its strong presence in UK market.
Related to its operations that its largest manufacturer of UK.
Its strength is that it has strong employee base which are skilled and competent and contribute in
its competitive advantage.
Its active presence in motorsport whose fame and following is increasing everyday.
VRIO Framework for Analysing strategic Capabilities. VRIO model includes analysis and
evaluation of resources available to firm.
VRIO refers to-
Valuable
This includes that how valuable are resources and do they add any value for customers (Lopes
and et.al., 2018). This also includes that resources add value and enable firm to exploit
opportunities that are available to the firm. Technology and design of the VAUXHALL are its
valuable resource for the company.
10

Rare
These resources refers to those which are rare. These resources cannot be acquired easily by
other company and organisation (Lopes and et.al., 2018). This is very important for
VAUXHALL so that it can specific features in its products through those rare resources.
Temporary competitive advantage and strong competitive force is rare for VAUXHALL.
Inimitable
This refers to resources which are inimitable and costly to imitate otherwise competitors can
easily imitate and these resources add value to the competitive strength of the company. Brand
name and existence of brand in UK market, corporate value and patents of the company are
difficult to imitate.
Organised to capture value
It does not give any advantage to company if the resources are rare, valuable and costly to
imitate if the resources are not organised to capture value (Galpin, 2019). These resources are
required to be properly organised in the system of the company so that they can give the best
result and add value to the company and its customers.
SWOT Analysis for VAUXHALL
Strength
 Strong presence in passenger car segment.
 Contract with police authorities of UK.
 Strong employee base (Zhikang, 2017).
 Its active presence in motorsport along with sponsorship.
 Largest manufacturer of commercial vehicles in UK.
All these are strength of VAUXHALL and through this company can take many advantages in
context of its profitability and productivity. These strengths of company also improve its
operational efficiency and lead it towards competitive and sustainable advantages.
Weaknesses
 Less known brand in emerging economies.
 Intense competition and limited market share.
 Dependent only on UK market.
11

As strength make positive impact on profitability and Productivity Company might face negative
impact on its profitability and productivity.
Opportunities
 Promotion of its electric car model Ampera.
 Growth opportunities in emerging economies.
Through the opportunities available to it VAUXHALL can ensure that it has strong market
presence and competitive strength is also strong in the market.
Treats
 Changes in customer preference.
 Increasing fuel price (Qu and Zu, 2018).
 Preference to public transport.
 Government policies regarding environmental issues.
Threats like change in customer preferences require that company is always ready to deal with
changes and function according to the changing needs. This is difficult to do and this is why
threat are not good for the company.
Strategic Planning Process
Objectives of the Plan
This includes what VAUXHALL want to achieve by implementing this plan in the company.
VAUXHALL is a car and automobile company and through this strategic plan the compant
intends-
 To increase its market share to 10% in UK.
This objective says that through implementing this pan VAUXHALL intends to increase its
market share by 10% in the market of UK. This objective will require that VAUXHALL carry
out the plan efficiently.
 To extend its operations in global market establish its presence in European Countries.
Through this objective of the VAUXHALL company wants to increase its operations in
European market as currently this is operating in UK. This will also provide basis to company
for its global operations in Europe.
Strategic Direction
12