0An analysis of Internal and External Environmental Factors in the context of UK Automobile Industry
Introduction:
UK automobile industry is well known for world famous sports car manufacturing companies such as Bentley, Jaguar, Rolls-Royce, Land Rover, Aston Martin, Toyota, honda and many more. Socio-economical, Plolitical and other factors make a immense impact on the aumobile industry for this purpose we will scrutize the internal and external enviornmetal factors in respect to their impact on it.
Automobile Industry at glance:
In 2015 UK automotive industries shows a turnover of 71.6 billon Dollar out of which 77% exported which accounted 12% of UK export (Largest one).
100+ countries importing UK Vehicles in 2015.
8,1400 people employed in Industry in 2015.
Over 32 million car manufactured in UK in 2015.
2.25 billon UK dollar invested in R&D in 2015.
A new car in 2015 is typically 18.4% more fuel-efficient than one bought in 2010 in UK.
The following table shows the number of cars and commercial vehicles manufacturers in the UK. (wikipedia)
| Year | Number of cars | Number of Commercial Vehicles | Total number of vehicles |
| 2010 | 1,270 | 123 | 1,393 |
| 2011 | 1,344 | 121 | 1,465 |
| 2012 | 1,465 | 112 | 1,577 |
| 2013 | 1,510 | 88 | 1,597 |
| 2014 | 1,528 | 71 | 1,599 |
| 2015 | 1,588 | 94 | 1,682 |
| 2016 | 1,722 | 94 | 1,817 |
As per the SMMT report 2016 UK car production hits 16-year high, related data are given below:
Internal Environmental Analysis:
Internal audit is executed to understand the generic competitive strategies of the industry. internal audit will be done by SWOT analysis tool through focusing on the different automobile brands, technologies, markets, people related to this industry and.
Strength:
- Stable economic and political system.
- Comparatively low tax regime.
- Less labour laws and rules compared to most other EU countries.
- Strong history of automotive design, and leading position in luxury vehicle production.
- Strong motorsport engineering and low-volume motorsport vehicle production sector, with potential for rapid technology transfer to mainstream vehicle engineering.
- Full vehicle and engine development capability, especially at Jaguar Land Rover, Bentley and Ford.
- Strong industry-university collaboration.
Weakness:
- An over-dependence on a limited number of companies for full vehicle and engine development capability.
- Key decisions regarding investment, R&D and sourcing by some vehicle companies and most Tier-1 suppliers located outside UK.
- Industry concerns over a lack of skilled labour, for both existing manufacturing environments and the factories of the future.
Opportunities:
- The potential for the UK to act as a proving ground for autonomous vehicles.
- Continued technology transfer from motorsport into production vehicles.
- Scope for the innovative Ecofriendly Vehicles and passanger car vehicle.
Threats:
- The threat to the sector and its potential growth that would flow from an EU exit.
- Restrictions on work permits for highly skilled workers from outside the EU; the potential inability of overseas investors to bring key workers to the UK could deter or limit investment in R&D, and limit long-term job creation potential.l
- The threat to existing and even future jobs from continued automation, unless the industry plans ahead.
External Environmental Analysis:
Through the External analysis we can understand how the external environment factors influence the industry.
PESTEL Analysis:
In this model we analyze the impact of Political , Economical, Social, Technological,Environmental,Legal factors on UK automobile industry.
Political Influence:
Political influences include competition policies, laws and legislation related to environmental issues, policies and legislations related to automobile Industry, taxations etc. UK goverment are stable and very supportive to the sector. UK government help the industries weaker players through AAP(Autimotive Assistance Programme) programme. The UK automotive industry is highly globalised and integrated within the EU .Recent issue of Brexit Vote made negative impact on UK automobile industry because 60% of parts supplied for cars built in the UK are imported, mainly from the continent. The UK government has introduced financial measures to favor cars with lower CO2 emissions, If the automobile has a high CO2 emission rate there will be high TAX charges.UK government help the industries weaker players through AAP(Autimotive Assistance Programme) programme.
Social Influence:
Socio-cultural influences include different demographics of population, households, transportation, environmental issues etc. Recent research shows that most of the population of UK are above the age of 45.It is advisable to the companies to produce more vehicle for small and nuclear family. The sales figure shows that 80% sales comes from corporate bodies and 20% from retail so companies must be foucs on corporate customers more.
Economical Influence:
Economic influences are related to growth and inflations, trade, labor force, income distribution, wealth etc. Positive Economic growth in the UK economy creates the opportunity of more sales and it’s related job sector.
Technological Influence:
As per the data given in the starting UK auto industry is one of the most innovative producer of car and engine. UK car manufacturers are heavily using the technology to embrace the CO2 technology. Also, a lot of focus is put on developing the hydrogen propelled cars. A new team has been formulated called NAIGT (New Automotive Innovation Growth Team) with a twenty year vision for the automotive industry, which focuses on creating a transformed business environment, formulating technology road maps for CO2 emission free vehicles and hydrogen propelled cars, it also focuses on the research and development agenda of the UK car industry (BIS 2012).
Environmental Influence:
Environmental influence related to co2 emmision, petrol and gasoline usage etc. The UK government has introduced financial measures to favor cars with lower CO2 emissions, If the automobile has a high CO2 emission rate there will be high TAX charges.
Legal:
A few legal policies have been imposed by UK government like compulsory fitment of electronic stability control and tyre Pressure monitoring systems in all the cars produced.
Porter's 5 Forces:
P5F or Porter's Five Forces is a tool for analyzing the opportunities in an industry by considering its attractiveness in the global marketplace.
For the UK automobile industry, the forces are hereby:
- The barriers for new entrants
There is low threat of new entrants in UK market because cost advantage and brand loyality towards exixting auto players.
- The bargaining power of buyers
As Buyers have access to extensive information and choice of numerous brands across the globe they definitely stand to have a better bargaining power.
- The bargaining power of suppliers
The bargaining power of supplies of raw material, auto parts etc. are higher in the UK because most of the raw material are inported from out side.
- 4. Availability of substitute products
There are a number of companies in the market. The products are all similar. Customers have lots of options.
- Intense competition and rivalry
This industry is highly competitive in nature in the UK or possibly in all countries of the world.
Conclusion:
All the factors discussed above are having significance influence on the trillion dollar UK automotive industry. The relative importance of the economic, environmental and legal factors has grown by the time . More and more Players of industry are now focusing upon low emission, high mileage and low cost vehicles. The socio-cultural factors and consumer preferences also have a major and direct impact on the auto industry. However, above all it is the emergence of the new markets that has affected the intensity of competition in this sector. Every major player is investing in technology and innovation to grab a larger share of the market.
Reference:
- SMMT MOTOR INDUSTRY FACTS 2016
- Automotive industry in United Kingdom-wikipedia
An analysis of Internal and External Environmental Factors in the context of UK Automobile Industry
Introduction:
UKautomobile industry is well known for world famous sports car manufacturing companies such as Bentley, Jaguar, Rolls-Royce, Land Rover, Aston Martin, Toyota, honda and many more. Socio-economical, Plolitical and other factors make a immense impact on the aumobile industry for this purpose we will scrutize the internal and external enviornmetal factors in respect to their impact on it.
Automobile Industry at glance:
In 2015 UK automotive industries shows a turnover of 71.6 billon Dollar out of which 77% exported which accounted 12% of UK export (Largest one).
100+ countries importing UK Vehicles in 2015.
8,1400 people employed in Industry in 2015.
Over 32 million car manufactured in UK in 2015.
2.25 billon UK dollar invested in R&D in 2015.
A new car in 2015 is typically 18.4% more fuel-efficient than one bought in 2010 in UK.
The following table shows the number of cars and commercial vehicles manufacturers in the UK. (wikipedia)
Year
Number of cars
Number of Commercial Vehicles
Total number of vehicles
2010
1,270
123
1,393
2011
1,344
121
1,465
2012
1,465
112
1,577
2013
1,510
88
1,597
2014
1,528
71
1,599
2015
1,588
94
1,682
2016
1,722
94
1,817
As per the SMMT report 2016 UK car production hits 16-year high, related data are given below:
Internal Environmental Analysis:
Internal audit is executed to understand the generic competitive strategies of the industry. internal audit will be done by SWOT analysis tool through focusing on the different automobile brands, technologies, markets, people related to this industry and.
Strength:
- Stable economic and political system.
- Comparatively low tax regime.
- Less labour laws and rules compared to most other EU countries.
- Strong history of automotive design, and leading position in luxury vehicle production.
- Strong motorsport engineering and low-volume motorsport vehicle production sector, with potential for rapid technology transfer to mainstream vehicle engineering.
- Full vehicle and engine development capability, especially at Jaguar Land Rover, Bentley and Ford.
- Strong industry-university collaboration.
Weakness:
- An over-dependence on a limited number of companies for full vehicle and engine development capability.
- Key decisions regarding investment, R&D and sourcing by some vehicle companies and most Tier-1 suppliers located outside UK.
- Industry concerns over a lack of skilled labour, for both existing manufacturing environments and the factories of the future.
Opportunities:
- The potential for the UK to act as a proving ground for autonomous vehicles.
- Continued technology transfer from motorsport into production vehicles.
- Scope for the innovative Ecofriendly Vehicles and passanger car vehicle.
Threats:
- The threat to the sector and its potential growth that would flow from an EU exit.
- Restrictions on work permits for highly skilled workers from outside the EU; the potential inability of overseas investors to bring key workers to the UK could deter or limit investment in R&D, and limit long-term job creation potential.l
- The threat to existing and even future jobs from continued automation, unless the industry plans ahead.
External Environmental Analysis:
Through the External analysis we can understand how the external environment factors influence the industry.
PESTEL Analysis:
In this model we analyze the impact of Political , Economical, Social, Technological,Environmental,Legal factors on UK automobile industry.
Political Influence:
Political influences include competition policies, laws and legislation related to environmental issues, policies and legislations related to automobile Industry, taxations etc. UK goverment are stable and very supportive to the sector. UK government help the industries weaker players through AAP(Autimotive Assistance Programme) programme. The UK automotive industry is highly globalised and integrated within the EU .Recent issue of Brexit Vote made negative impact on UK automobile industry because 60% of parts supplied for cars built in the UK are imported, mainly from the continent. The UK government has introduced financial measures to favor cars with lower CO2 emissions, If the automobile has a high CO2 emission rate there will be high TAX charges.UK government help the
