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Impact of the Business Operations

University: University of Wales

  • Unit No: 1
  • Level: Undergraduate/College
  • Pages 10 / Words 2500
  • Paper Type: Assignment
  • Course Code: MGT530
  • Downloads: 3
Question :

The global business environment consists of internal as well as external factors that impact the business operations of an organization operating at the global level. The global automobile industry is one of the largest industries that contribution maximum towards the growth of GDP. The unit aims learner to understand the complexities exist in the business environment for a business organization operating at the global level.

  • Identify the factors that drive the global business environment and understand the changes in a global business environment.
  • Application of business models in the context of global environmental analysis.
  • Examine the rationale why organizations involved in global trade.
Answer :

INTRODUCTION

European auto mobile industry is one of the largest industries in the world. The turnover generated by this automotive sector represents 6.8% of EU GDP. The present report is giving brief discussion about Auto mobile industry of eastern Europe. It is clearly depicting the auto mobile industry which has ripple effects throughout the economy, supporting a vast supply chain and generating an array of business services. In the same series it is depicting environment of global Auto mobile industry.

The European auto industry is a global player which is delivering quality service and products around the world. Present report will focus on “Car Production Surges in Eastern Europe” and its impact on the auto mobile industry. It will discuss about external factors, which affects them by studying PESTLE analysis and also evaluates competitive analysis by implementing Porter’s Five Forces model.

TASK

a) Assessing environment of the Global Auto mobile industry using PESTEL analysis

PESTLE analysis is a process, which is used to analyse the external environmental factors, which can affect the entire organization to a large extent. Factors that are included in this analysis include political, economic, social culture, technological, environmental and legal factors respectively (PESTEL Analysis for Automobile Industry in Europe, 2018).

Political Factors

This includes the political factors related to governmental policies for auto mobile industry. Some political factors, which can affect the Eastern European auto mobile industry are as follows:

  • There are many rules and regulations, which can influence this industry. For example, during economic and financial crisis, there were different government norms that helped this industry.
  • There are different incentive schemes, which were also launched by the government (Belton, 2017).
  • Implications of different government foreign policies and taxes also play a crucial role in auto mobile industry.
  • Government subsidies are other political factors which have to manage by this industry to work effectively in the market.
  • The markets like EU and UK are providing government subsidy for the low emission vehicles which can help them in improving their services.
  • The import and export laws that vary across nations can also be a headache for auto makers in case of the nations where import laws are stiff (Belton, 2017).

Economic Factors

There are various factors, which are included in this economic factor that can affect this industry such as,

  • The main factor, which affects the auto mobile industry, is fluctuation in the economy, for example financial crisis.
  • High gas prices in the West have also encouraged consumers to start shifting from big cars and S.U.V.'s to compact cars that have become a specialty in Eastern Europe.
  • Inflation rate is also a factor, which affects the entire auto mobile industry (Brinkman, Navarro and Harper, 2014).
  • Excess car production increases marketing revenue as well as designing new products.
  • The size of the economy and the economic conditions globally, have a major impact on the profitability of the auto industry in various markets.

Social Culture Factors

These factors include customers taste and preferences in selecting vehicles for them such as,

  • There is a huge change in buying behavior of the consumers, for example, customers prefer more luxurious cars as compared to basic one.
  • Sudden change in the buying pattern of their customers has also affected their production rate (Checchinato and Hu, 2018).
  • Different laws and regulations related to the government are also impacting them.
  • Customers concern related to high fuel efficiency and reduced emission has also affected their business.
  • Social trends also keep changing continuously affecting the popularity of brands and models (Damijan, Kostevc and Rojec, 2018).

Technological Factors

These are those factors which have a huge impact on the auto mobile industry as it is very important for them to update their system with the latest tools and technologies, which can help them to increase their business.

To deal with these situations, they have implemented different strategies in their industry such as,

  • The auto mobile industry in Eastern Europe is producing vehicles which are energy efficient by using modern technologies.
  • They are also ensuring safety parameters of the vehicle, which they are manufacturing for their customers. This will help them to increase their production rate (Frynas and Mellahi, 2015).
  • Introducing vehicles with the latest technology has huge positive impact on the overall performance of the industry.
  • There is a huge increase in the purchasing of fuel efficient and high mileage factors which attracts customers.

Environmental Factors

These factors are those which are related to safety of the environment. For this they have applied various steps, for example,

  • Eastern European auto mobile industry has enhanced awareness related to global warming, green house effect etc.
  • They have introduced variety of different vehicles in their production system such as, hybrid cars, fuel cells cars and environmental friendly cars, which helped them to attract more customers (PESTEL Analysis for Automobile Industry in Europe, 2018).
  • Due to the implementation of strict application of EURO norms in curbing pollution in few countries has also affected this industry.
  • The pollution tests have grown stricter and the vehicles passing these tests only are allowed.

Legal Factors

One of the most important legal factors which is affecting the auto mobile industry is the restrictions and laws that are aimed at curbing pollution. This has also affected the overall performance of

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