The Global Business Environment Analysis for Volvo Car Manufacturing

This report delves into the global business environment of Volvo Cars, examining the external and internal factors influencing its operations. It begins with an introduction to the global business environment, distinguishing between macro and micro environments. The report then focuses on Volvo Cars, a Swedish luxury vehicle brand owned by Geely, and analyzes the major forces shaping its business, utilizing PESTEL analysis to explore political, economic, social, technological, environmental, and legal factors. It also considers the micro-environment forces such as customers, suppliers, and competitors. The report further provides a critical assessment of potential organizational changes in the future, particularly concerning advancements in battery technology, the adoption of artificial intelligence, and the impact of electric vehicles. Furthermore, the report analyzes the company's position using Porter's Five Forces model to assess the competitive landscape, including rivalry among competitors, the bargaining power of customers and suppliers, and the threat of substitutes. The report concludes by highlighting the importance of adapting to changes in the automotive industry and the increasing demand for electric vehicles.

THE GLOBAL BUSINESS
ENVIRONMENT
Contents

INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
(a) Identification of new and emerging business opportunities in production and marketing of
electric cars..................................................................................................................................1
(b) Identification of the business that linked to global automotive sector and not able to offer
profit in the long run to invest in.................................................................................................3
PART 2............................................................................................................................................5
(a) Explanation of the major forces that shaping the business environment of the car
manufacturing industry................................................................................................................5
(b) Critical assessment of the organisational and other changes that may take place in future...8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The global business environment is categorised in to external and internal environment
which is also known as macro and micro business environment. It can an environment in which a
corporation can operate its business at global level and international market in term of fulfilling
the need of international consumers of the venture by offering products and services as per their
demand and necessities (Hamilton and Webster, 2018). This assignment is based on Volvo cars
which are a Swedish luxury vehicles brand and a subsidiary of the Chinese automotive company
Geely. This venture was incorporated in 1927 and is headquartered in Gothenburg, Sweden. This
written report will explain about major process shaping the business environment and assessment
of organisational and other changes that may take place in the future.
PART 2
(a) Explanation of the major forces that shaping the business environment of the car
manufacturing industry
When an organisation operates its business globally then there are different components
and forces that shaping the business atmosphere of the firm which operate its business in a
particular business environment. Volvo is an international firm that operate globally so there is
number of factors that shaping the business of it. To get information about those forces the
venture can use External and internal analysis framework. The explanation of them is as under:
PESTEL analysis
It is a tool and method through which the venture familiar with the factors that influence
the business of company in global business environment. With the help of this analysis, the
management of Volvo can have a clear image of the changes in macro environment. The brief
explanation of this framework is as below:
Political- This factor consist different elements like political stability or instability, foreign
exchange, trade restrictions, taxation policies, foreign trade policy, labour law and many more. In
context of Volvo, the main forces and components that highly influence the business of this firm
are high regulation on the automotive sector, huge taxation on trade and stringent regulations for
the automotive industry (Hudakova and et. al., 2018). Cause of current situation of pandemic the
business of respective sector also influence as the political changes occurred and the national
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authorities frame strict laws regarding trading that influence the business of respective
organisation.
Economical- It is another component of this analysis which include different aspects like
interest rate, currency rate, inflation and deflation, disposal income of customers, economic
growth and many more. In business of automobile firms like Volvo affect by inflation, interest
rate and currency rate (Alshare and Sewailem, 2018). Due to current pandemic situation, the
situation of inflation is arising and changes are occurred in interest rate which negatively
influences the business of company. Because suppliers make changes in the cost of material and
commodities in term of increment and maximisation. Due to which the management also make
changes in their pricing strategies which influence the buying behaviour of customers.
Social- It considers different components like culture, beliefs, population growth, age
distribution, demographics aspect and needs or preferences of consumers. In automobile sector,
the main factor that affects the business of organisations, which operate business in this sector
like Volvo, is changing consumer’s preferences from demand for luxury cars. Now these taste
and preferences of target audiences are changing in term of electric vehicles or electric cars
because now these days’ people are also conscious about environment and prefer these kinds of
vehicles. Electric cars secure atmosphere from pollution so this factor positively affect the
business of Volvo. As, it is brand which manufacturing better quality electric vehicles and they
are highly demanding among its customers.
Technological- It is the next force that shapes the business environment of a company that
operate globally. This component considers different aspects like, advance technology, artificial
intelligence, research and development, technical innovation and many others. In context of
Volvo, the advance technology and technical innovation that positively affect the company in
term of maximising profit, enhancing productivity and increasing customer base because now
these people highly prefer to those vehicles and cars which are advances in materials technology
like lighter weight higher strength materials for structure and cheaper (Rofiq and Pramono,
2019).
Environmental- This factor include weather, climate, environmental laws like pollution
act, carbon emission and air pollution etc. In Volvo, the company manufacture electric cars
which favourably impacted the company because they are highly demanded in UK market due to
no or less pollution as well as positively influence environment. These kinds of vehicles do not
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generate carbon emission so customers prefer them high base. The government of UK also has
taken serious steps to promote hybrid vehicles.
Legal- This force of external environment consist different components like advertising
standards, consumer rights and laws, health and safety laws, employment law and product safety
etc. In automobile sector company like Volvo appropriately follow consumer protection act and
provide safety and security to their personal information (Saura, Palos-Sanchez and Correia,
2019). Apart from it, by following employment it offers effective pay and growth options as well
as equal treatment to its employees. By providing health safety ad security to employees in term
of life and health insurance, the organisation effectively follow health and safety act.
Apart from this micro environment forces also shaping the business environment of car
manufacturing sector. The description of some internal factors is as under in context of Volvo:
Customers- It is the main factor that highly influences the business of respective
organisation because target audiences are the base of running, surviving and sustaining a
business in to business industry. Now these days, taste and preferences of consumers are changed
due to environmental conscious and they prefer electric and hybrid cars. Volvo also manufacture
these kind of vehicles which help in fulfilling their needs and buyers power is maximising that
help in development of the firm.
Suppliers- In current time each business sector suffering from the problem and issue of
COVID19 that affect the business of entire business industries. Cause of it, business ventures of
automobile sector also influenced in negative term. For example, Due to pandemic, suppliers
make changes in prices of raw martial and commodities in term of high that unfavourably
influence the company.
Competitors- It is another force that shape business environment. There are number of
competitors that generate competition regarding Volvo. Toyota and Tesla the firm that are also
manufacture electric cars by using advance technological material to design a light weight and
high strength material electric cars (Nurrachmi, 2018). This unfavourable influence the business
of respective company cause strong competition in business atmosphere.
In last few years there are several changes occurred in automobile sector such as
government make changes in laws and regulations of environment in context of pollution
occurred by vehicles like cars. They charged high tax on those vehicles that generate pollution.
So technical changes are occurred in form of electric and hybrid cars which do not affect or harm
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atmosphere in term of pollution. Due to technical advancement, some vehicles are also designed
in firm of self control and also weight of them converts in form of light weight. Apart from this,
use of intelligent robotics and artificial intelligence also increase in manufacturing and
production which help in minimizing the labour cost, boosting productivity, reducing waste and
costs and respond more effectively to customers’ needs.
(b) Critical assessment of the organisational and other changes that may take place in future
In Future, there can be several kind of several kinds of changes occur in automobile and
electric car industry. These changes can be related to advancement of technologies and high use
of artificial intelligence (Krajnakova, Navickas and Kontautiene, 2018). Advance in battery
technology will be key to the large scale adoption of EVs. The organisations that operate their
business in business industry can also launch cars by using advance technologies like figure lock,
sleeping alarm and others that can be beneficial for the safety and security of individuals as well
as vehicles also. In electric car industry organisations invest more in current automotive
technology to make sure it complies with stricter emissions limits or to invest in electric. Apart
from to fulfil the needs of customers, organisations will also make high use of advance
technology and artificial intelligence in production of cars and electric vehicles.
This future change will be form by the company to fulfil the needs of consumers and
creating favourable impact over environment. Currently, there are different changes are from by
electric vehicle company like Volvo to manufacture a vehicle the able to meet consumers need
favourable influence atmosphere without harming it. But in future the change likes use of
advance technology in batteries of electric cars to enhance the capacity of it. By using advance
technology in material the weight of vehicle can be more light and finger lock and sleeping alarm
can be provide more security to vehicles (Hamlin, 2018). Along with this, to position itself in
competitive environment, the management of respective company can do competitive analysis.
The description of it is as under:
Porter five forces on Volvo cars:
This is the model which aid in describing the external environment as the automotive
industry has to experience different kind of experiments which consist of suppliers, raw material
and many. The electric cars demand has increase as they do not require any kind of fuel to run
also they require less maintenance. In the context of Volvo cars, the management have to focus
on such experiment which tend to manage all the resources effectively to overcome the problems
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in a well define manner. There are some of the forces which are explained briefly down below in
detail manner:
Rivalry among the competitors: In the present business there are different companies which
use to operate in the tough competition, so this is essential for the management to provide better
service in a well defining manner (Aerni, 2018). Volvo cars operate in a highly competitive
market which make difficult for the company to survive for the longer time period. So, this is
essential for the management to focus on innovation such as brining out electric cars as the future
is electric. There is other rivalry such as TESLA which is considers as the top company so the
company to provide better service in order to capture large market share.
Bargaining power of customer: In the recent years the consumer bargaining power has been
increase as this develops difficulty for the company to manage the demand of the customer. In
the context of Volvo cars, the company have to meet the demand of the customer which is more
towards electric cars rather than on petrol or diesel. Due to Covid-19 pandemic the demand of
cars has been slow down which effect the business of the company.
Bargaining power of supplier: The supplier in the automobile industry plays an essential
role as there are different parts which are supplied by the car manufacturing company. For the
company like Volvo cars the management have to focus on the supplier and have diversified
contact with the supplier as this will reduce the demand of supplier and it will also bring down
the cost of raw material. Hence the ultimate customer will be benefited, and company can
competitive effectively in the electric car industry in a well define manner.
Threat of substitute: As due to diversification it can lead to confusion and reduce the sales
of the company. In the case of Volvo cars, the impact of substitute on the automotive industry
effect the business as low stitching cost become the strong forces while entering in the electric
business (Brenkert, 2019). Apart from this the company have to develop robust system for the
provide better services such lifelong battery warranty in cars which help in capturing large
market share.
Threat of new entrants: In the electric care business there are many companies which are
constantly focusing to expand the services. So, this effect the performance of the company like
Volvo cars the people are demanding electric cars rather fuel operated cars. In this scenario the
management have of Volvo cars have to focus on developing and investing more in electric cars
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as there demand are highly increasing. Furthermore, the company have to conduct research as to
figure out the needs of the customer as this help in improving the sales of the company.
CONCLUSION
This has been summarised from the above information that global business environment is a
place and area where organisations can operate and run their business in effective manner in term
of gaining competitive advantages, increasing profit margins and market share, capturing wide
market size, maximising customer base and enhancing productivity by promoting its
commodities. There are different forces like external and internal environmental factor that
shaping the business environment of car manufacturing industry. There are different changes that
are offered competitive advantages to electric business sector. By using Porter’s five forces
analysis these benefits can be determined in effective way.
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REFERENCES
Books & Journals
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enterprises. Springer.
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ethics. Journal of Business Ethics, 155(4), pp.917-930.
Huo, Z., Levchenko, A.A. and Pandalai-Nayar, N., 2019. The global business cycle:
Measurement and transmission (No. w25978). National Bureau of Economic Research.
Brondoni, S.M. ed., 2018. Competitive Business Management: A Global Perspective. Taylor &
Francis.
Kirton, J.J. and Maclaren, V.W., 2018. Linking Trade, Environment, and Social Cohesion:
NAFTA Experiences, Global Challenges. Routledge.
Duca, I. and Gherghina, R., 2018. CSR Initiatives: An Opportunity for the Business
Environment,[in:] Corporate Social Responsibility: Concepts, Methodologies, Tools, and
Applications, Information Resources Management Association.
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Perspective. Routledge.
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The future of Britain’s automotive industry. 2020. [Online]. Available Through: <
https://www.prospectmagazine.co.uk/sponsored/the-future-of-britains-automotive-industry>.
List of the Top Electric Car Business Opportunities. 2020. [Online]. Available Through: <
https://getelectricvehicle.com/electric-car-business-opportunities/>.
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market/>
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