Comprehensive Environmental Analysis: Volvo Cars Industry Report

This report presents a detailed environmental analysis of Volvo Cars, a Swedish luxury car manufacturer. It begins with an introduction to the business environment, emphasizing the importance of both internal and external elements. The main body of the report focuses on a PESTLE analysis, examining the political, economic, social, technological, environmental, and legal factors influencing Volvo's performance, particularly in the European market. The report also applies Porter's Five Forces model to assess the competitive landscape of the automotive industry, evaluating the threat of new entrants, the bargaining power of suppliers and buyers, the threat of substitutes, and the rivalry among existing organizations. Furthermore, the report discusses organizational changes within Volvo, driven by market dynamics and technological advancements, such as the launch of the XC40 Recharge electric car. The conclusion summarizes the impact of macro-environmental elements and highlights the utility of the analytical tools employed. Overall, the report provides a comprehensive overview of Volvo's business environment and its adaptation to industry changes.

Environmental
Analysis of a industry
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Contents
INTRODUCTION...........................................................................................................................3
Main body........................................................................................................................................3
Explain the major elements shaping business environment...................................................3
Critical assess organisational as well as other changes which takes place in near future and the
reasons for such changes........................................................................................................5
Organization Changes............................................................................................................7
Reason or purpose for organizational change........................................................................8
Conclusion.......................................................................................................................................8
REFERENCES................................................................................................................................9
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INTRODUCTION
Business environment refersto a combination of various elements, individuals, entities &
many morewhich highly influence the overall growth and performance of an organization or
industry. It consist of both internal & external elementswhich consist of social factors,
technology, customers, economy, staff members, suppliers & manymore. It is very essential for
higher authorities of an organization to consider each and every internal as well as external
elementsas they highly affects the growth and success of a business. In the present report, Volvo
cars are chosen as the base organization which is a Swedish luxury businessentity founded in
1927. Headquarters of the company is situated at Gothenburg, Swedenas well as at currentstate
company offer their products in around 12 countries acrossthe world. Volvo mainly
manufactures SUVs (sport utility vehicles) & make sure that the quality & safety arehigh which
satisfy the requirements of customers. On the basis of continuous change in customers
preferences, top management team of the company launch new electric car which is XC 40
Recharge.The current report includesdiscussion about PESTLE analysis asit help in identifying
the influence of external factors on theperformance of Volvo. Alongwith this, Porter’s five
forces arealso going to be discussed which help in examining the level of competition available
at the marketplace.
Main body
Explain the major elements shaping business environment
PESTEL analysis is oneof the most effective tool usedby every business organisation in order to
examine and evaluate the external factors which highly influence the company in different
manner. In reference to the present scenario of an automobile industry, it is said that the sector
face high level of competition whichaffects their overall functionality and performance in an
adverse manner. In relation to an automobile organisation which is Volvo cars atthe marketplace
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of Europe, managers need to examine the external environment which are going to be discussed
as follows:
Political Factors–It issaid that there are different political factors which have the
capability to influence overall performance of the company such as rules and regulations
implemented by government, restrictions on import and export, taxes, control over trade policies
and so on. In reference to Volvo cars, it has been identified that there are various types of
political issues within Europe which influencesthe business functions.It is said that Volvo
business functions are highly affected by the high tax rates aswell as variations in taxrates. Apart
from this, another political issue for the company is government implement new norms for
insurance and safety measures which influences the working environment of electric cars within
the marketplace of Europe.
Economic Factor – Itis said that the economic factors mainly based on the overall
performance of the business organization and the profitability of the company. There are
different types of economic factors which influences the business of electric cars in Europe.
Majorissuefaced by the organisation in Europe is that the rate of inflation is high which
influences the buying power of consumers. Along with this, ithas also been identified that
variations ormodifications in interest rates highly influence the sales and profitability of Volvo
car. Furthermore, income level of customers alter the behaviour of consumer which as a result
affect the overallfunctionality of Volvo electric cars within Europe.
Social Factors – Social factors includesage distribution, growth in population, health
awareness and many more. These are the factors mainly emphasize on the safety and health of
people, lifestyle, habits and preference of an individual person. Major issue faced by Volvo cars
while working within Europe is that the needs and wants of consumer are changing on a
continuous basis which influence the overall functionality of the electric cars organization in a
negative manner.
Technology Factors – In the present environment, technology is changing in a fastest
manner which creates everything digital and high tech. In relation to Volvo cars, because of
rapid change in the technology, it becomes hard for the management team to adopt such changes
in a limited time period. By innovating new things and replacing old ones, management team of
Volvo cars face high level of adverse effects. Therefore, it is necessary for them to adopt all the
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technological advancements in an effective manner so that they can gain positive response from
customers within the marketplace of Europe.
Environmental Factors – This elementconsist of all the factors related to pollution,
environment, energy and many more. In reference to the present organization, it has been
identified that Volvo cars manufacture fuel free vehicles which reduces pollution from the
environment but at the same time due to scarcity of resources, company faces issues which
influences their overall performance in a negative way. .
Legal Factor – It is one of the most essential element as small changes in laws and
regulations affects the overall functionality of an organization. In reference to Volvo cars it has
been identified that, managers of the company need to take care of the environment while
performing business functions at the marketplace of Europe. Thereare some laws related to
health and safety, pollution acts, factory acts which needs to be adopted by the management team
so that they perform all the functionsin a positive manner.
Critical assess organisational as well as other changes which takes place in near future and the
reasons for such changes.
. It refers to a framework whichis commonly adopted by business organisations for
determining the level of competition presentin a specific industry or sector. This is a framework
which assist management team of a business entity to identify the potential profitability as well
as attractiveness of the industry. Porters five force model consist of five main elements which
helps in analysing the strength and weakness of the particular sector. It has been identified that in
a automobile sector, competition is high as large number of organizations introduce new and
innovative features in their products which attracts customers towards them. In reference to beat
the competition level, it has been identified that the higher authorities of Volvo is going to
launch XC 40 Recharge at the marketplace which is fully electric car.This model is used by the
company in order to grab opportunities available at the market.
Threat of new entrants: Inan automobile industry, threat of new entrant is low, as this is
the sector which needs huge amount of funds and is not easy to perform operations at the
competitive marketplace. This is one of the biggest advantage for Volvo asthey gain
opportunities to retain their customers and create positive market image. Along with this, it has
also been analysed that attaining economies of scale withinthe automobilesector is quite difficult
asit assist businessorganization to grab cost advantageas well as earn higher revenueat the
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competitive environment. Apart from this, it has also been said that because of high government
policies within automobile sector, it becomes difficult for new entrants to operate their functions
at the marketplace. Therefore, it is necessary for Volvo to focuses on innovation sothat there
products can easily be differentiate byothers in an effective manner.
Bargaining power of suppliers: In the automobile industry, it is said that company have
large number of suppliers availablein the sector which says that bargaining power of supplier is
quite weak. In reference to thepresent organization Volvo, the managers ofcompany have
largenumber of options to switch from one supplier to another as if the cost of switching is low.
It has also been said that the profitability of the company is highly based on the cost charged
bysuppliersin order to provide raw materials. For the higher authorities it is necessary to develop
strong relationship with their suppliers so they can providethem raw material in low cost so it
produces high amount of profitability to the company.
Bargaining power of buyers: Thisis the sector, where buyers have low bargaining power
as there are limited organisations who provide electric cars to their customers. Therefore, it is
very important for the managers of Volvo in order to introduce new changes and innovation as
well as provide high quality products within reasonable price. This as a result, grab attention of
large number of customers towards the company and increases overall sales and profitability.
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Threat of substitutes: Inrelation to automobile sector, substitute available for the
customers are less which means that threat of substitute forthe organisation is quite low or
medium. In context of substitute companies, it has been identified that such organisation offer
similar products at low cost therefore it is necessary for the higher authorities of Volvo to
maintain the quality of their products. This as a result aid them in attracting large number of
customers towards the products offered by companies.
Rivalry among existing organizations:It has been said that there are variousrivalry
organisations withinautomobile sector where Volvo deal. Some of the rivalry company includes
Tesla, Ford and soon who spend large number of funds in order to attract individuals towards
their organization. For competing with such organisations, it is essential for the management
team of Volvo to introducenew and unique featuresin their products so they can retain their
customer by fulfilling theirrequirements.
Withthe assistance of above discussion, it hasbeen identified that it is very essential for a
business entity to maintain or develop strong relationship with their customers so they can retain
them for a longer period of time. Along with this, it has also been determined that there are very
limited organisations who provide electric vehicles which is one of the advantage for the
company which leads towards the attainment of organizational goals and objectives at the
marketplace.
Organization Changes
It is said that organizational changes mainly take place only when any sort of
modifications take place among the external marketplace. It consists of alterations in the
technology, policies,structure as well as in culture of a business entity. It has been identified that
due to changes arise in political, economic and social factors an organization faces ample
number of issues and required to modify their strategies according to the changing environment.
In the present context of Volvo, company bring new and innovative electric car at the
marketplace which requireschanges in organizational structureand because of innovation taken
place, competition arise at the environment. Therefore, in order to beat the level of competition
and for smooth running of business functions it is required by the management team to bring
organisational changes.
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Reason or purpose for organizational change
One of the mostessential reason for modificationsor alteration is to grow and succeed at the
marketplace in a fasted manner. Change arealso very essential as it assist in attracting large
number of customers and help in retaining themfor a longer period of time. In reference to
Volvo, companylaunch their first electric car within the marketplace of Europe which as a result
bring effective change in the automobile industry. This is the major step by which business
organisation changes their organization policies, strategies as well as different technological
modifications. The main reason behind launching electric car atthe marketplace as it reduces the
use of fuel and cost and attracts large number of customers towards the company.
Conclusion
Withthe help of above mentioned report, it issaid that macro environmental elements create
positive aswell as negative influenceon the overall performance of the business entity.
Furthermore, it has also been said that with the help of PESTLE analysis higher authority of the
company easily examine all the uncontrollable elements which highly influence the productivity
and performance of an organization. Along with this, by implementing Porter’s five forces
model, manager of the company identify the level of competition present at the sector which
affects the business functions.
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