Jaguar Land Rover Plans To Build Electric Cars In UK: A PESTEL Analysis

Read the given case study and complete the task.

Assess the usefulness of a macro- environmental analysis, such as PESTEL, in influencing JLR’s strategic decision about whether to manufacture electric cars in the UK.

PESTEL Analysis

Talking about UK’s environment for automobile industry (Electric cars) is very suitable and stable environment as cars out there are efficient, smaller, lighter and greener and can be used for their future transportation. In today’s era technology is upgrading and people are adapting such technology with speed (Docherty & Shaw, 2008). So invention of such cars is beneficial to company as people are willing to adopt such products which is convenient and also is not a cause of environmental degradation. Other manufacturers like tesla, BMW, Nissan are competitors of JLR, as the market has a demand of impressive cars therefore UK has become the biggest exporter of cars (PTI, 2016).

Pestel analysis refers to a strategic tool which determines the external market and monitors the macro environmental factors which affects the organization’s decisions (Yüksel, 2012). The result of this analysis gives an idea to the company that whether the product they are willing to launch is fit for that environment or not. Macro-economic environment refers to the environmental conditions which affects the strategic decision making process of the company. The environmental analysis includes influential factors like policies of government, inflation, labor rates, capital structure etc.

This fragment of PESTEL identifies the impacts of government policies on the business decisions. In case of JLR the factors that affected the decision of the company in launching new electric car in UK market are that the company provides strong incentive on the inbound investors, efficient tax cut in the automobiles so that people wish to buy their product. As the JLR company has a strong image in the market which politically motivates others for the process of globalization (Campbell, 2016). The company has already adopted legislative framework so that they don’t face any problem in future. The government supports the JLR as they lower down the fleets’ average tailpipe emission, making electric vehicle imperative for jaguar-non specialist fuel efficient car. As this car is new in the market and it has compete with already existing strong competitors so this amendment will support the company.

Economic stability works as an opportunity for the company to launch a new product, as the company already maintains an image which helps them to introduce and promote new product. Decreasing in the battery use and manufacturing of all the spare parts in their company itself also helps the company to make authentic products.

 As the company is launching new electric product which would add value to the product if they use renewable energy cost. The performance of the company grows rapidly as the environment of the company is suitable for the automobile industry. Hence, results in making the product earn an optimum profit in short span of time (Cadle Paul & Turner, 2010). US economy is also upgrading day by day which helps the companies in the economic growth as well which will work as an opportunity for JLR to introduce their product and earn good revenue. This dimension is the main factor which influences the growth of the company. As it is said the UK is the global center of excellence, any product introduced there with government support and proper infrastructure and testing shall generate a good income.

Political Factors

The social factors such as preference of customer in the market, increasing distribution of wealth in the economy, interest of customer and popularity of low-carbon lifestyles re the macro environmental factor which affects the company’s decision. . It is the corporate social responsibility of the company to comply with the provision made by the government, with compliance of such rules the company shall create a good image and be safe from the superfluous tax penalties (????????, & Elena, 2016).

The growth of company is based on the reputation which it has maintained over throughout the years with their existing products. Adding to it, the company has now also introduced fuel efficient electric vehicle which is compose in shape and provides a better batter, due to these reasons the product has an opportunity to shape the automobile market according their way. Widening wealth can somehow act as threat to the company as there is a wide variety of electric cars existing in the market which would result in confusion in the mind of customer, this might make them choose a different product from the market. Talking about the opportunities of the company includes that as the JLR is a hybrid company and is introducing company electric vehicle with an eye-catchy model which will create an image in the mind of the consumer and they shall buy the product (Doufene, Dauron, & Krob, 2014).

The automobile business is totally based on technology and improvisation, so this factor impacts on JLR workings also. The model analysis the technological changes and trends and determines the influence made by them on the company. Technology includes rise of ecommerce trade and handheld technology in the market. With the increase in ecommerce, people easily get to know about the new product launched in the market, its specifications, uses, whether that product is useful to the consumer or not.

They can also compare it with other product for better decision making, the company can also promote their product online which is a cost efficient process, so this ultimately results in increment of the sales (Rothaermel, 2015). So, in this way technology acts as an opportunity for the company. The ecommerce feedback and customer support services also helps the customer to be in touch with the company and the company will be easily able to resolve the customer’s issue, also with the help of this the company will be able to know about the interest of the customers and the sector which they have to target o the basis of preference.

But with improved technology, one can also misuse it and act a cybercrime as well which can act as a threat for the company. So therefore the company needs to use the technology carefully and efficiently so that no price sensitive information is revealed or misused. And a positive image of the company is maintained.

Ecological or environmental concerns like climate change, declining global oil reserves, change in business plan of competitors; extinction of raw material etc. also affects the company’s strategic decisions.

Economic Factors

With the introduction of electric cars by jaguar, the problem of depleting oil reserve and global warming might take a positive turn. The sources from where raw material is availed gets extinct might occur as a threat to the company. With the increasing emphasis on business sustainability, the focus of business would be to use products efficiently and use alternative methods to save the scarce resources (Collins, 2010).

As the company is providing eco-friendly products so this will add value to the product and will create goodwill in the market. It shows that the electric vehicle has a scope of growth in the market as it has created environment friendly product which will use the resources carefully and will help in up gradation of the environment. Environmental factors can include both internal as well as external factors which govern the company. Like workplace efficiency, existence of biological factors, use of these factors, compliance with environment related laws (such as corporate social responsibility) are some of the environmental factors which affect the company.

The legal factors affecting the strategic decision making of a company are like, regulation related to the automobile industry, dealerships, patent protection acts, tax rates, compliance of rules made by forum etc. these are some of the legal factor which might affect the working of the company. The company needs to look after the legal factors in order to expand its business (Crawford, 2016). Like they need to employ qualified people to work on the new technology, the company also needs to comply with the provisions of import, export, sale etc. to save themselves from regulatory bodies. This factor also includes the customer’s faith; the company shall disclose all the information about the product to the consumer in order to avoid confusion and shall not betrayal the faith of the customer (Kaplan & Norton, 2008). With compliance of all the regulations of patent act, the JLR has also a scope of expansion of business within countries

Conclusion

The PESTEL Analysis of Jaguar Land Rover determines that the analysis mainly paves way for opportunities for the company. So, the company can easily focus to the launching to the new product. The company can utilize the economic factors and legal factors as the government is promising to support the new product (Tutor & Soares, 2014). Adding to it the company shall also try to use the natural resources efficiently and shall train their employees as well as general public that how to make use of technology properly without misusing it.

References

Yüksel, I, 2012. Developing a multi-criteria decision making model for PESTEL analysis. International Journal of Business and Management, 7(24).

Campbell, P, November, 2016. Jaguar’s first electric car shines light on strategy, Financial Times. Accessed on 12 May, 2017, from < https://www.ft.com/content/b8c4fc76-aa45-11e6-809d-c9f98a0cf216 >

Doufene, A, Dauron, A. & Krob, D, 2014, July.  Model?Based operational analysis for complex systems?A case study for electric vehicles. INCOSE International Symposium Vol. 24, No. 1.

Collins, R, 2010. A graphical method for exploring the business environment (Vol. 956). Oxford University Working Paper.

Kaplan, R.S. & Norton, D.P., 2008. The execution premium. Barcelona: Deusto.

Cadle, J, Paul, D. & Turner, P., 2010. Business analysis techniques: 72 essential tools for success. BCS, The Chartered Institute.

Docherty, I. & Shaw, J., 2008. Traffic jam: ten years of'sustainable'transport in the UK. Policy Press.

Rothaermel, F.T., 2015. Strategic management. New York, NY: McGraw-Hill.

Tutor, M. & Soares, A., 2014. European Tour Operators analysis.

????????, ?.?. & Elena, K., 2016. Marketing strategy of Jaguar Land Rover in the Russian market.

Crawford, M.J., 2016. An Analysis of Operating Environment & Strategy: A Case Study of Tata Motor.

PTI. Novmber 15, 2016. Tata Motors' Jaguar drives new electric car concept. The Economic Times. Retrieved from <https://economictimes.indiatimes.com/industry/auto/news/passenger-vehicle/cars/tata-motors-jaguar-drives-new-electric-car-concept/articleshow/55441092.cms >