Analyze the External Environment of the Electric Vehicles Industry Using Pestle and Porters Five Forces
In order to be successful, a business must adopt to external forces, failure to study and respond to these forces can result in failure. An organization has to beware of these forces by identifying and analyzing these factors through environmental scanning, a process that involves data collection from a range of sources including internet sites, government statistics, newspapers and magazines, market research etc. One major force that organizations should especially look out for is the technological changes in the business environment. Though technology has the potential to create opportunities, it can also endanger the organization. External factors can range from suppliers, competitors, regulatory agencies and joint venture partners among others. Using PESTLE and Porters Five Forces analysis, this paper undertakes an analysis of the Electric Vehicle Industry, examining the external environment of the Electric Vehicles industry. Though all external forces are important, the macro environmental analysis will pay particular attention to political, economic and environmental issues because they are currently the main trends impacting the EV industry.
ELECTRIC VEHICLES BUSINESS ENVIRONMENT: VOLVO Case Study
Key Learning Outcomes
- Understand the business environment affecting the automobile industry.
- Use Pestle and Porter's Five Forces frameworks in order to understand both the macro and micro factors shaping the automobile industry including major political, economic, and technological factors and the reasons why there is a drive towards the production of electric cars.
- Apply Porter's Value Chain to understand the nature of activities involved in designing and producing EV cars and components to reveal areas of notable value-adding activities within the process of manufacturing electric vehicles that present major opportunities.
The Electric Vehicle industry has experienced steady growth through the years, surpassing one million unit sales in 2017 for the first time, and forecast to grow from 2 million units in 2018, to 4 million in 2020, 12 million in 2025 and 21 million in 2030. This growth will be boosted by declining battery costs, government incentives, improving infrastructure including ubiquity of charging ports, as well as the growing acceptance of EVs in general due to growing climate change issues, including quality of air concern issues among consumers tired of combustion engine cars in many countries (McKinsey 2014).
In part 1, the author examines both the macro and micro environmental environment of the electric vehicle industry. Using Pestle and Porter's Five Forces framework, the report will go through the most critical forces shaping the business environment of the car manufacturing industry, explaining how the industry has changed in the last few years. The analysis will include a critical assessment of the organisational changes that may take place in the automobile industry in the future and the reasons for such changes. Specifically, we answer a key question; why is the automotive industry moving towards electric vehicles?
The report discusses the reasons why there is a drive towards the production of electric cars, taking into account the changes that have already taken place in this industry as automobile firms try to position themselves to gain a competitive advantage in the Electric vehicle space.
In part 2, the report identifies new and emerging business opportunities that the production and marketing of electric cars may present to entrepreneurs and business executives. Even though we know why the automotive future is electric, the drive towards electrification will create major opportunities for many industries including utilities, Battery disposal services, charging companies, etc. But it will also threaten some industries and even cause the demise of others.
Using Porter's Value Chain, the report examines the entire Electric Vehicle value chain in order to assess the nature of activities involved in designing and producing EV cars and components to reveal areas of notable value-adding activities within the process of manufacturing electric vehicles that present major opportunities.
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