BUSINESS POLICY & ANALYSIS

Business Policy & Analysis



Business Policy & Analysis

Introduction

This analysis of the case study has been conducted based on Pest analysis, Swot analysis, Michael Porter's Five Forces Model, and focuses primarily focused on global car market. The global automotive industry is a huge facet of the economy, with a historical average of 20% of global automotive resources tied to automotive manufacturing, supplies, and logistics. While these three corporate giants have been the traditional backbone of the global automotive market, globalization has blurred the line between what may be considered foreign and domestic companies. The analysis here will demonstrate how intense rivalry, competition, barriers to market entry, and the influence of power or buyers and sellers all impact this dynamic global automotive industry (Grant, 2010, p.12)

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PEST analysis of automobile industry

Political factors:

Government changing regulations effect automobile industry because automobile industry relate with huge capital, vast labour forces etc.

Special tax on automobile industry by different governments will prevent industry growth in particular country.

Some governments are strict about environmental pollution so, different laws will affect the industry. E.g. automobile manufacturing companies use different raw material, gas, chemical etc.

Frequently changes in tax law system will increase company total cost for each unit of production.

High tax on export-import of automobile product will increase the price in domestic market.

Political stability is helpful for any automobile company to get long-run profit while they started from green field investment.

Through lobbying activities with political persons many companies will get extra benefit to get distribution channels or market their product in a particular country.

Patented products to avoid piracy and duplicated about automobile products. E.g. different parts of automobile.

Economical factors:

Countries with high GDP will be main target for automobile companies. E.g.: Japan, USA etc are biggest market for automobile industry.

Per-capita income will affect the automobile consumption in each country.

If interest rate is high people less buy automobile through bank money.

Higher inflation rate will decrease the demand for automobile. E.g.: In Bangladesh and India inflation rate is higher so individual automobile demand is less in those countries.

Because of unemployment, people will less buy automobile in different country.

If individual expenditure is less, people will use public transport rather than buy automobile.

Higher and medium levels of consumer are the main targets of automobile companies in every country.

Automobile demand is more in higher disposable income country. Eg: In Europe, Canada, USA etc people disposable income is higher.

Social factors:

Higher Per capita income in society will increase the automobile consumption.

Due to avoid traffic congestion people will use automobile rather than public transport.

In some countries life style implement with automobile. For that in those countries automobile demand is more. E.g.: Western countries.

In energy conservation countries like Middles east where, people use more automobile due to cheap fuel, gas etc.

Automobile industry relates with recycle processes for that, through recycle processes companies can decrease their total cost.

In different society, automobile demands depends family size, age, culture etc.

Technology factors:

Automobile industry depends on technology for new innovation.

Advance- technology countries will help automobile companies to manufacture their product with ...