Volvo Car Industry: Environmental Analysis and Business Opportunities

This report provides an environmental analysis of the Volvo car industry, focusing on the shift towards electric vehicles. It begins with an introduction to environmental analysis and then delves into the application of PESTLE analysis to identify political, economic, social, technological, legal, and environmental factors impacting the company. The report then examines the opportunities presented by the production and marketing of electric cars, utilizing Porter's Five Forces model to assess the competitive landscape. Key aspects include the threat of new entrants, the bargaining power of suppliers and customers, and the intensity of competition. The analysis highlights the influence of government regulations, economic conditions, and consumer preferences on Volvo's strategic decisions. The report concludes by emphasizing the importance of identifying and capitalizing on emerging business opportunities within the automotive industry, particularly those related to sustainable practices and technological advancements.

Environmental Analysis
of an industry

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
(a) Forces of business environment for car manufacturing industry...........................................3
(b) Identifying new and emerged business opportunity which production and marketing of
electrical cars can present to entrepreneurs and to business executive.......................................6
CONCLUSION ..............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
The environmental analysis can be defined as a kind of tool which is related to the
identifying and analysing all elements of environment that may effect the performance of
companies (Child, 2012). Eventually, it is important for organisations to evaluate all internal and
external factors of environment so that they can sustain in competitive environment. The project
report is based on the Volvo cars that is a Swedish Multinational manufacturer organisation. As
well as its headquarter is in Sweden. The company's major activities are sales, manufacturing of
transport vehicles such as cars, buses etc. In the project report, trend of electrical vehicles in
Europe and changes in auto mobile industry is mentioned. Apart from it, the report covers about
main forces which can impact to the auto mobile industry and helps in finding new growth
opportunities.
MAIN BODY
(a) Forces of business environment for car manufacturing industry.
The Volvo car company is being consider as a premium car manufacturing company
which is switching in manufacturing of electrical motors. It includes new model of Volvo cars
such as XC90 T8, S90 etc. Eventually, there are a wide range of forces that are impacting to
electrification of car manufacture industry.
PESTLE Analysis- This can be defined as a kind of model that is beneficial for finding and
analysing macro environmental factors (Aldridge, 2013). It is very essential for companies to
evaluate these factors which may effect to business activities and performance. These factors are
mentioned below in broad sense:
 Political factor- This is a kind of factor which includes different kind of elements such as
political condition and relation with other countries. As well as in this various kind of
government rules, regulations regarding to the import and export are included. It is
essential for companies to follow all the rules and regulation set by government if they
want to sustain in competitive environment. Like in the aspect of UK and Europe
government, they provide subsidiary to those car manufacturing companies whose cars
emits lower pollution. This can be very beneficial for Volvo automotive industry, this is

why because their electrical cars are low pollution emitted. It is a rapid change in the car
manufacturing industry done by government of UK and Europe as well as this can lead in
reduction of various kind of taxes, tariffs and other charges which are charged by
government. So overall, it can be useful for the Volvo car company because they are
going to produce electrical cars which may lead to low carbon emission.
 Economical factor- It is a kind of factor which includes market and economical condition
of any nation (Goodman and Watts, 2013). Majorly, this factor determines about the need
and supply of goods in the market along with interest rate, inflation rate etc. This factor
can be important in the context of Volvo car makers. This is why because their electrical
cars can be beneficial in higher sell during the economic crises in UK or Europe. So this
is the main factor of macro environment that forces to the Volvo car makers to adopt new
changes in the car manufacturing so that their sell may increase even if in typical
marketing condition. In past, the above company decided to launch their cars at high
price to earn higher revenue but due to change in the economic conditions of UK and
Europe, they have decided to manufacture electrical cars.
 Social factor- This is a kind of factor which includes people's like dislike, demand as well
as many other elements. Eventually, it is essential for companies to follow all these
elements before producing any product. Herein, the aspect of Volvo car makers their
electrical cars can be beneficial and revenue generating for them. This is why because
people of UK and Europe need those cars which are lower cost as well low pollution
emitting. As well as the electric cars of Volvo car makers are cost effectively and low
environment harming. Apart from it, if cars will be provided to the customers as per the
need and demand then it can be beneficial for increasing the reputation among customers
and in competitive environment.
 Technological factor- The technology is a kind of factor which changes rapidly and it is
essential for companies to implement new and advanced technologies so that they can
sustain in the competition. This is so because in this competitive environment only those
companies can gain advantage who use new technologies because customers need
advanced products. Same as in the aspect of Volvo car makers, their electrical cars can be
useful for them because these cars are not only cost effective but also new and advanced
which is the need of today's customers. Apart from it, these electrical cars will not only

benefits in higher sells but also in sustainability for long time period and to compete to
competitors at global level.
 Legal factor- In this factor various kind of rules, legislation and laws are included that
makes a activities of companies legal (Heo, Choudhary and Augenbroe, 2012).
Eventually, all these laws and legislation are necessary for companies to implement. The
Volvo car makers use all the laws and rules regarding to the emission of carbon and other
environmental laws which are tend to be followed by the above car manufacturing
company. This is an opportunity for them to increase market share and growth if they
follow complete laws and regulation regarding to the environment and other aspects set
by government of UK and Europe. On the other hand, in the absence of proper
implementation of government laws and regulation can be difficult for above company
run their business activities.
 Environmental factor- In this factor different aspects of environment is included such as
condition of environment, natural climate etc. This is essential for companies to protect
the environment. Same as in the context of Volvo car manufacturing company, their
electrical car can be beneficial according to environment. It is so because electrical cars
will emits low pollution that is important for protecting the environment. Eventually, this
is the main factor that is enhancing to Volvo car makers to produce electrical vehicles.
Along with, it is the demand of customers to buy less environment harmful vehicles so
above respective company' s electrical cars can be beneficial for them.
So these are the main factors which can be reason of changing in the auto mobile sector.
Basically, the customers are demanding for electrical cars which are environmental friendly and
cost effectively (Livermore and Revesz, 2013). Due to this, the Volvo car makers are changing
towards the electrical cars to earn more revenue as well as to beat the competitors of industry.
Along with these are the current trends that are forcing to the Volvo car manufacturing company
to divert their manufacture process towards electric cars so that they can satisfy the need and
demand of customers. Eventually, in aspect of environment the electrical cars can important for
emitting less pollution and as per the context of new technology , these cars meeting the criteria.
So if above respective company will change to produce the electrical cars then it can be useful
for them in not only getting the higher profit but also to sustain in competitive environment
effectively.

(b) Identifying new and emerged business opportunity which production and marketing of
electrical cars can present to entrepreneurs and to business executive.
It is important for companies to find out new and emerged opportunities on time so that
they can sustain in the competitive business environment. This identification of opportunities can
be done with the help of proper market analysis (Su and Ang, 2014). Herein, the aspect of Volvo
car makers it is important to grab the right opportunity on time and it can be done with help of
proper analysis of environment and industry. In this context, the Porter's five force model can be
beneficial which is mentioned below in broad sense.
Porter's five force model- This can be defined as a kind of strategic tool that provides a
framework to evaluate the competition level for a company. Eventually, it is beneficial for
assessing the analysing the competition which is important in getting benefit over rivalry firms.
This is why because if companies will aware about competition then it can be useful in making
effective plans and policies.
The auto mobile industry is a larger and bigger industry so it is uncertain that whether the
electrical cars will be profitable or not for above respective company. Below, the five forces of
porter's model are discussed in detail which are as follows:
 Threat of new entrants- It is a kind of factor which is related to the analyse threat of new
entrants (Wu, Ding and Chen, 2012). In other words, this threat is for those industries in
which is entry and exit is free of new entrants. Due to this new companies can enter and
can give tough competition to others. Same as in the context of auto mobile industry there
is not specific barrier for entry and exit of new entrants. This can be a threat for the
Volvo car because if there will be more new entrants of same field then competition will
be high. Due to this there can be possibility of those new companies who may provide
similar products with less prices and this can impact to above respective company in a
negative manner. Though, it is a grand opportunity for new entrants to enter in auto
mobile industry and give tough competition to existed companies but for Volvo car
makers it can an issue. So they should identify the level of competition in their specific
industry that is arising due to new entrants.

 Bargaining power of suppliers- The suppliers are very crucial for companies because they
provide needed material and other needed things for production (Hsu and Zomer, 2014).
In this aspect, their bargaining power can impact to company's purchasing. This is so
because if there are more numbers of suppliers then it can easy for companies because
they will have maximum option to chose a suppliers. As well as suppliers bargaining
power will also low. On the other hand, if there is less number of suppliers then their
bargaining power will high because companies will be tend to purchase at higher prices.
In the context of Volvo car manufacturing company, they need different material to
produce electrical cars. Such as electrical motor, car body etc. and there is less number of
suppliers who offer all these materials. Due to this their bargaining power is high.
 Bargaining power of customers- The buyers are being considered as king of market
because they purchase the products and services offered by different companies (Ekekwe,
2013). In this aspect, the bargaining power of customers depend on the number of option
of purchasing. Like if there are large number of companies then customers bargaining
power will high. While on the other hand, if there are less number of companies then
their bargaining power will also low. Herein, the aspect of auto mobile industry there are
lot of companies but there are few companies who sell electrical cars. So it can beneficial
for the Volvo car makers to gain the competitive advantage over rivalry firms because
their electrical cars are demanded by customers. As well as their customers bargaining
power is low due to lack of purchasing options.
 Intensity of competition inside firm- This is a kind of model of porter's five model which
defines about level of competition inside the firm or industry (Wiegmann and Shappell,
2017). Eventually, it is not under control by companies. Same as in the context of auto
mobile industry of UK and Europe the Volvo car makers face tough competition. This is
why because some competitors companies such as Nissan, BMW, Jaguar and some other
are diverting their strategies towards the electrical car manufacturing. It is resulting in
tough competition for companies because due to this above respective company is putting
extra effort to sustain in competition. So it is important for Volvo car manufacturing
company to make effective strategies and policies so that they can sustain under
competition inside industry.

 Threat of substitute product- The substitute product can be defined as a kind of product
which is similar in the feature but different in price (Gil, Moya and Domínguez, 2013).
In the context of auto mobile industry, there are too many companies who offers
substitute products. As well as due to this companies face competition. Same as in the
aspect of Volvo car makers there are lot of other companies who are providing similar
electrical cars that is just like a substitute product.
So as per the above analysis of industry, this can be evaluated that there are higher competition
in the auto mobile industry (Barrett, 2013). For Volvo car maker company, they have tough
competition in the competitive environment. This is so because each model of porter defines it.
Like their suppliers have strong bargaining power due to less number. As well as there is free
entry and exit of new entrants and it shows the higher level of competition inside the industry. In
addition, there are some other business entities that are aligned to the worldwide auto mobile
industry and can lead to more revenue in long time period. Along with there are large number of
companies that are linked in the process of designing, developing, production, marketing and
selling of electrical cars. It can also impact to business entities to influence their profits in the
long time period. So as per the industrial analysis of auto mobile industry it may be concluded
that all businesses regarding to electrical auto mobile industry can gain more revenue as other
small businesses can act as co interrelation with others companies.
CONCLUSION
As per the above project report it has been concluded that this is very crucial for
companies to analysis the external environment in an effective manner so that they can assess the
demand of customers. Apart from it, it will allow to companies to manage the level of
sustainability globally. To assess various factors of macro environment, PESTLE analysis model
is concluded which may help in adopting the changes. Same as for above respective company of
auto mobile industry, this analysis can be beneficial in implementing change in manufacturing of
cars towards the electrical cars. Apart from, to analyse the level of competition Porter's five
forces are concluded which are helping to above company in finding the errors and opportunities
in competitive environment. Along with this analysis can help to entrepreneurs to finding the
competition level in environment.

REFERENCES
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