Overview Of Global Business Environment’s Impact On Automotive Industry

Changes in the Automotive Industry Since September 2017

The business environment of any given industry is essential to the stakeholders and shareholders in the industry. The reason behind it is because the environment helps the organizations to know if they will invest in the industry or not. In the last one year, the business environment in the automotive industry has significantly changed, and that has affected the organizations in the industry as well as the customers. The paper will be looking into some of the changes that have been experienced and the effects that the changes have on the organizations in the industry.

The United States and China are the dominating organizations in the automotive industry. Last year was one of the best years for the manufacturers of cars globally, and this is because the demand was high. Statistics show that the global sales of passenger cars increased to 78.6 million (Eilert, Jayachandran, Kalaignanam, and Swartz, 2017). The beginning of 2018 also came with a lot of surprises, and this was because more new models were released to the market. Some of the new models were 2018 Peugeot 508, 2018 Toyota Auris, 2018 Audi A6, 2018 Ford Focus, and many others. The release of the new models is a sign that the business environment in the industry was favorable to the shareholders.

The environment has affected the organizations in the industry in different ways. The first way is associated with fostering change especially when it comes to technology and innovations. The release of new models has pushed some of the organizations to the edge and for them to maintain their competitive edge; they have decided to come up with new models as well. The second effect is associated with profits and growth (Froggatt, 2017). When the sales in an industry increase, it is no doubt that the profits margins of the organizations in the industry are affected. To meet the increasing demand, the organizations have been forced to increase the production (Law, 2017). As a result, it has been easier for organizations to experience growths.

The underlying drivers of these changes are three. The first is associated with the need to meet the demands of the customers. In this respect, the organizations have been forced to increase production to meet the needs of the customers (Bloomfield, 2017). The second is advancements in technology. Most of the changes that have taken place are technologically advanced, and that means that the need to put up with the new technology has driven the change. The third driver is the need to maintain the competitive edge. When organizations see their competitors advancing, they follow the same path with the aim of making sure that they are competitive in the market.

Organizations have responded by advancing. A good example can be seen from two models of cars that have been released in 2018. 2018 Volvo V60 and 2018 Mercedes C-Class are two models that have been released as a result of competition. Volvo and Mercedes Benz have reacted by advancing in technology and releasing new models in the market.

References

Bloomfield, G.T., 2017. The world automotive industry in transition. In Restructuring the global automobile industry (pp. 19-60). Routledge.

Eilert, M., Jayachandran, S., Kalaignanam, K. and Swartz, T.A., 2017. Does it pay to recall your product early? An empirical investigation in the automobile industry. Journal of Marketing, 81(3), pp.111-129.

Froggatt, D., 2017. Motor components: locational issues in an international industry. In Restructuring the global automobile industry (pp. 156-168). Routledge.

Law, C.M., 2017. Restructuring the global automobile industry. London: Routledge.