Audit of Automobile industry Essay

AUTOMOBILE INDUSTRY IN UKUnited Kingdom has been a colossal producer of gondolas in last 10 stratums. Producing to a greater extent that 8 million vehicles and engines and exporting more than 80% of these, UK railroad rail gondola car industriousness stands as a driving force of its economy. The political machinemobile industry generates a yearly turnover rate of around 55 one million million million Pounds and largest value from exports. N ever sotheless, the country that has railway car players like, Alexander Davis, Aston Martin, Bentley, BMW, Ford, Honda, Jaguar, etc., is still said to be under a vast influence of dwindling confer chain and its dependence on exotic market. Let us scrutinize the situation of UK automobile industry by doing an internal and outside(a) environmental audit.INTERNAL AUDITInternal environmental audit is performed to understand the position of industry with respect to its get environment. SWOT is one of the tools used to perform internal audit which is employed for studying the strengths, weaknesses, opportunities and threats of the subject.STRENGTHSThe strengths of UKs automobile industry1. Largest Revenue generating sectorUKs auto industry yearly contributes around 12 Billion Pounds to the economy of UK by generating revenue of more than 55 Billion Pounds, annually.2. Diversity in productsProducts manu itemured by UK automobile industry run from various premium and sports cars to commercial vehicles and engines. Around 80% of this is exported, yearly.3. Chief trading generatorThe automobile industry in UK is a major employment generating sector, offering wide range of employment opportunities in manufacturing and R&D.WEAKNESSES1. Disparity between manufacturersUKs automobile industry is known for having an ascetic disparity between its manufacturers, which stands out to be a major weakness of this industry.2. Depleted Supply kitchen rangeSupply chain of UK automobile industry is going through an appalling phase. A potent supply chain and its capacity is an important factor in determining market expansion and international investment. all-embracing improvement, in the supply chain of UK automobile industry, is essential.3. Dependence on foreign marketsAs the UK car industry exports around 80% of its produce to foreign markets, it is under the risk of getting directly dependent on economic crisis of other markets. UK motor industry should focus on reaching as many markets as possible to ease risk.OPPORTUNITIES1. Providing eco-friendly vehiclesUKs automotive industry has been constantly active in innovating parvenu products to stomach a safe and eco-friendly environment, hence opening up string of opportunities.2. Investments by Global OEMsIn the year 2013 many global equipment manufacturers have announced investments in United Kingdom. Through these strategic alliance UK auto industry is believed to benefit significantly.THREATS1. Soaring cost of Raw MaterialThe cost of raw material has bee n ever rising hence, the manufacturers pay more for procuring raw material every year. This eventually raises the price of automobiles.2. Increasing contentionWith new companies coming in UK along with foreign direct investment the competition is bound to soar, in conclusion increasing threat for existing companies.Bottom-line is that in spite of challenges faced by automobile industry in last decade, it is resurging from its downfall and looking forward to producing more number of vehicles this year.EXTERNAL ENVIRONMENTAL ANALYSISThe automobile industry in UK has been tactically working towards creating new opportunities and enhancing technology. It has drawn-outly slogged to make UK more attractive for foreign investors. Through automotive industrys external analysis, we shall study influence of external factors on the industry. The two major models discussed here ar PESTLE Analysis and Porters Five Forces Model.PESTEL ANALYSIS governmentalTo ensure there is no monopoly create d in the industry, certain policies restricting firms from forming cartels and fixing price have been implemented. They withal control the size of automobile companies.EconomicWith the advent of increasing inflation across the world, it is predicted that the purchase of automobiles shall amplification in coming years. Also, globalization has opened doors for foreign investors in UK.SocialRecent researches show that upstart population in UK is declining and older population is rising. Hence, it is advisable that companies focus on creating more products catering to smaller families and older population.TechnologyIncreased focus on providing eco-friendly vehicles has encouraged industry to continually invest in research and development. With popularity of new designing softwares, Global Positioning Systems for navigation, etc, technology has advanced two folds.EnvironmentalAs tidy sum are getting more aware and concerned about a healthy environment, it is self-asserting to creat e products that are eco-friendly. Hence, it has created a pressure on the industry to focus on environmental issues as well.LegalA few legal policies have been imposed by UK government like irresponsible fitment of Electronic Stability Control and Tyre Pressure Monitoring Systems in all the cars produced.PORTERS FIVE FORCES MODEL1. Threat from new entrantsAutomobile industry being capital extensive demands a lot of money to venture and uphold. In order to sustain, present automobile companies have augmented their production, enforcing new entrants to enter only on large scale.2. Bargaining Power of SuppliersDue to increase in globalisation the industry has suppliers not only from UK but similarly from across the world. Hence, the bargaining power of suppliers is limited. As any(prenominal) manufacturers have joined hands with OEMs from China and India others source materials from UK itself.3. Bargaining Power of BuyersThis model brings forth the fact that purchasers have a power to regulate the market and increase competition. As consumers have access to extensive information and choice of numerous brands across the globe they definitely stand to have a fail bargaining power.4. Competition from SubstitutesSubstitute products are those that can be consumed in place of any product. For instance, people of UK can as well use public transport instead of private cars. They may also consider the option of using rented cars.5. Existing CompetitionAs UK is home to around 50 car manufacturers selling 200 models, the internal competition among the companies is inevitable. Apart from the local car manufacturers like GM, Ford, etc, the foreign manufacturers are also giving a lot of competition.The external influences play a major role in casting future of automobile industry in UK. Analysing the internal as well as the external environment of UKs car industry helps identifying how it has been performing and what is the scope for improvement.United Kingdom offers an ar ray of car models in a highly competitive market. Nonetheless, it is still facing a lot of issues in regain from the past downfall. Market experts predict that the industry shall still be able to cater to the new more demanding market.