Audit of Automobile industry Essay

AUTOMOBILE INDUSTRY IN UKUnited Kingdom has been a colossal manufacturer of gondolas in last 10 years. Producing more that 8 million vehicles and engines and exporting more than 80% of these, UK simple machinemobile pains stands as a driving force of its economy. The simple machine industry generates a per annum turnover of round 55 Billion Pounds and largest value from exports. Nevertheless, the country that has automobile players like, Alexander Davis, Aston Martin, Bentley, BMW, Ford, Honda, Jaguar, etc., is still said to be under a broad influence of dwindling write out chain and its dependence on foreign market. Let us scrutinize the situation of UK automobile industry by doing an internecine and external environmental audit.INTERNAL AUDITInternal environmental audit is performed to understand the position of industry with respect to its own environment. trick up is one of the tools exampled to perform internal audit which is employed for perusing the strengths, w eaknesses, 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 construct by UK automobile industry represent from various premium and sports railway machines to commercial message vehicles and engines. Around 80% of this is exported, yearly.3. Chief employment 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 austere disparity between its manufacturers, which stands out to be a major weakness of this industry.2. Depleted come out ChainSupply 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 foreign investment. Extensive 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 put on the line of getting cipherly dependent on economic crisis of other markets. UK aim industry should localize on reaching as some(prenominal) markets as possible to ease risk.OPPORTUNITIES1. Providing eco-friendly vehiclesUKs automotive industry has been constantly active agent in innovating new products to provide a safe and eco-friendly environment, hence hypothesis up string of opportunities.2. Investments by Global OEMsIn the year 2013 many global equipment manufacturers shake up announced investments in United Kingdom. with these strategical alliance UK auto industry is believed to benefit significantly.THREATS1. Soaring cost of tippy MaterialThe cost of raw material has been ever rising hence, the manufacturers move over more for procuring raw material every year. This eventually raises the price of automobiles.2. change magnitude competitionWith new companies coming in UK along with foreign direct investment the competition is bound to soar, ultimately add-on threat for active 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. outside(a) ENVIRONMENTAL ANALYSISThe automobile industry in UK has been tactically working(a) towards creating new opportunities and enhancing technology. It has extensively 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 ii major models discussed here argon PESTLE depth psychology and Porters Five Forces Model.PESTEL ANALYSISPoliticalTo ensure on th at point is no monopoly created in the industry, certain policies restricting firms from forming cartels and fixing price have been implemented. They in like manner control the size of automobile companies.EconomicWith the advent of increasing inflation across the world, it is predicted that the purchase of automobiles shall increment in coming years. Also, globalization has opened doors for foreign investors in UK.SocialRecent searches show that offspring 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 people are getting more witting and concerned about a healthy environme nt, it is imperative to create 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 enforce by UK government like compulsory fitment of Electronic Stability retard and Tyre Pressure Monitoring Systems in all the cars produced.PORTERS FIVE FORCES MODEL1. Threat from new entrantsAutomobile industry cosmos 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 acquiesce only on large scale.2. Bargaining Power of SuppliersDue to increase in globalisation the industry has suppliers not only from UK but also from across the world. Hence, the bargaining power of suppliers is limited. As some manufacturers have joined hands with OEMs from China and India others source materials from UK itself.3. Bargaining Power of BuyersThis model brings forward the fact that purcha sers have a power to regulate the market and increase competition. As consumers have access to extensive information and choice of many brands across the globe they definitely stand to have a advance 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 pack 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. by from the local car manufacturers like GM, Ford, etc, the foreign manufacturers are also grown a lot of competition.The external influences play a major exercise 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 Ki ngdom offers an array of car models in a highly competitive market. Nonetheless, it is still facing a lot of issues in recovering from the past downfall. Market experts predict that the industry shall still be able to cater to the new more demanding market.