Introduction

Just like an infant, who gets affected by it’s environment and social norms while growing
up, an organisation is often profoundly impacted and shaped by the environmental
conditions prevailing in the ambient where it functions and these forces form its
character. The company ambient is the accumulated sum of all the elements or
conditions that crucially impact a company’s activities (Brinkman, Navarro, and Harper,
2016). All corporations must acknowledge and consider the future effect that can be
brought to the organisation by the factors of the company environment. This assignment
scrutinises the critical elements that form ambient the UK automotive industry,
significant change trends that have emerged during past couple of years in the car
industry, the opportunities and risks that might come from these changing trends, how
car companies such as Bentley Motors Ltd. could place their strategies through using
ideas from Five-Forces model of Porter to attain competitive edge.
Part A: Discussing the Key Variables Forming the
Environment of the Automotive Industry in the UK

Defining Business Environment and Its Key Elements

Both the outside and inside forces that affect a firm's actions are integrated into the
business ambient of the company. The broad macro-environment comprises of
unmanageable external forces such as demographic, technological, political, legal,
economic etc., which have a critical effect on a company's decisions and activities. The
variables of macro-environment can not be regulated by businesses. For instance, the
UK government's tax policies cannot be regulated by car brands such as Bentley Motors
Ltd., and they can only assess the probable effects on revenue and prices and
implement measures like cost management, performance etc. to address it.

Figure 1: Logo of Bentley Motors Ltd.

Source: (Bentleymotors.com, 2020)

Bentley Motors Ltd is a famous luxury car manufacturing company founded in 1919 by
H. M. Bentley and W. O. Bentley and headquartered in Crewe, England
(Bentleymotors.com, 2020). It operates in the UK automotive industry and gets
impacted by the prevailing environmental factors of the industry. Here, PESTEL can be
of great aid to demonstrate and understand the environment of the UK automotive
industry.
Figure: Elements of PESTEL

Source: (Author Design)

Political: This entails how the government affects corporations via imposing corporate
tax, import-export regulations, special tariffs, trade restrictions, competition regulation,
political stability, etc. (Shatskaya, Samarina, and Nekhorosheva, 2018)

Economic: Key forces under this component can be GDP growth, bank rate, inflation,
foreign exchange rates, unemployment rate, etc. that can affect a firm for a long period.

Social: Here, demographic characteristics such as norms, customs, beliefs, and values
of the customers by a company is addressed. Instances can be religious views,
preferences, tastes, population growth, life expectancy, spending trends, education,
social class, etcetera (Issa and Chang, 2015).

Technological: This entails technological revolution in production, marketing, and other

Environmental: Variables such as pollution regulations, carbon footprint, triple bottom-

Discussing the Micro-Environment and the Internal Environment

The microenvironment comprises of the forces that are in the company's immediate
ambient such as vendors, clients, competitors, public, media, etc. that may directly
influence the actions of a firm. An organisation's internal environment comprises of
various components within the corporation such as staff, management, corporate
culture, etc which might impact the company or be impacted by the firm's decisions.
These factors can be directly regulated by the corporation (Brinkman, Navarro, and
Harper, 2016).

Application of PESTEL to the UK Automotive Industry

Bentley Motors Ltd and other companies operating in the UK car industry can take great
insights from PESTEL analysis for recognising and addressing critical macro forces
prevailing in the industry.

Figure: PESTEL Analysis of the Car Industry in the UK

Political: Major political variables affecting the UK car industry are emission targets,
safety regulations, unfavourable trade deals etcetera (Shatskaya, Samarina, and
Nekhorosheva, 2018). Emission targets and safety laws require Bentley Motors Ltd and
other car companies to become more efficient and also invest a huge amount of capital
in R&D increasing the spending of these car companies.

Economic: The GDP of the UK grew by a record 16% percent in the Q3 of 2020 and
car demand in the country increased by 14.5% which proves to be a great opportunity
for Bentley Motors Ltd to focus extensively on home market (Jones, 2020).

Social: The key social factors of the UK car industry can be luxury car show off,
demand for comfortable ride, popularity of driving, etc. The green planet revolution also
influence consumers to change taste and buy electric cars that are environment-
friendly.

Technological: Bentley Motors Ltd and other car companies operating in the UK
automotive industry must address technological trends like self-driving cars, heavy R&D
investment, improved safety, continuous innovation, etc. to sustain competitive edge.

Environmental: Bentley Motors Ltd and other leading car companies that are operating
in the UK car industry must focus on meeting carbon-footprint targets, triple bottom line,
manufacture energy efficient cars, more CSR activities, and strictly follow existing
environmental laws and policies set by the UK government (Issa and Chang, 2015).

Legal: Patent laws, car purchase limitation, quality and safer policies, etc impacts car
companies such as Bentley Motors Ltd and other companies in the UK automotive
industry since they must endure increased expenses in providing quality and abiding by
other laws and also car sales are decreased because of purchase restrictions.
How the UK Car Industry Changed During the Last Few Years

The UK car industry is suffering from the coronavirus crisis as exports to the UK and EU
countries are hampered and only 114,732 cars were made in September 2020 which is
five percent fewer than 2019 (bbc.com, 2020). The automotive sector has been a great
player in the economy of the UK delivering a turnover of about £78.9 billion and adding
£15.3 billion directly to the UK economy. This sector is currently developing self-driving
and energy efficient cars that can operate entirely on the basis of electricity. Car firms
are also emphasising extensively on CSR operations and addressing environmental
concerns since they aim to follow customer values to create a green world. Diesel-run
automobiles are decreasing year after year, down from 46.1 percent in 2010 to just 25.7
percent in the year 2019. The purchase of environmentally friendly cars that use
alternative fuels is growing and totalled to 9.1 percent in the previous year. Trends that
are transforming the UK car industry are the green world, electric cars, self-driving
automobiles, energy-saving cars, triple bottom line etc.
Part B: Assessment of the Opportunities and Obstacles and
the Competitive Benefits of Bentley
To sustain in this competitive market place, every company has to identify its opportunities and
obstacles. The opportunities can be to be profitable and avoiding the obstacles it can save itself
from failure and thus it can gain competitive advantages. In this section, the opportunities and
obstacles are identified and the competitive advantages of Bentley are also discussed.

Opportunities and Obstacles

In this section, the opportunities and obstacles of the firms in automotive industries are
assessed which will be useful for the firms as well as for the business leaders of automotive
industry and can be used for obtaining competitive advantages

Opportunities: At first, the opportunities are discussed which helps to increase firm's
profitability.

Continuous Innovation: Focusing on the changing demand of customers, all the companies in
automotive industry want to bring innovation in their products. The Bentley Motors thinks about
future need and demand. So it continuously trying to bring innocation using new skill,
technology and materials (Bentleymotors.com,2020). This continuous improvement attracts
more people for buying its cars and helps to have more customers. Thus, this factor becomes
an opportunity for it.

Steps towards Social Benefits : The automotive firms don’t only tries to have innovative
products, these also take various steps towards the benefits of general mass. Almost all the
automotive firm now manufacture cars which reduce carbon pollution (Michaux, Cadiat and
Probert, 2019). Beside making environment friendly cars, in this pandemic Bentley Motors has
take some steps to ensure safety such as donating PPE to local communities and food to the
local communities. Thus this steps helps to gain more customers by increasing awareness.

Customer service: now firms want to attract customer not only offering quality product but also
by offering quality services. Bentley always wants to offer quality service to its customers.
Customers can always communicate with Bentley for their quarries and Bentley always
suggests solutions in accordance with the problem. This quality service is an opportunity for the
Bentley Motors.

Challenges: Some obstacles are also there which hinders the profitability of the business.

Less Demand: The luxurious car companies target the higher class people. Bentley's target
customers are the people who have net investible asset more than 3million dollar. These class
of people are scarce. The less number of customers result in having less demand for the
luxurious car. This less demand can be a obstacle for automotive company.

Higher cost : At the initial stage of automotive companies, every company have to bear a huge
amount of cost. For these higher cost, anyone can’t easily expand busienss in this sector (Ball
and Ball, 2018). Beside this, for making environmental friendly cars and innovative cars,
companies have to bear huge amount of cost. These higher cost is a obstacle for automotive
companies like Bentley motors.

Description of How Bentley Motors can achieve Competitive

Using mentioned forces, Bentley can easily achieve competitive advantages which are
described here evaluating Porter's five forces model.
Figure : Porter's Five Forces Model

Source: (Michaux, Cadiat and Probert, 2019)

Bargaining Power of Customers: Customers have higher bargaining power when they can’t
easily switch to other companies. Offering quality customer service and stylish cars, Bentley
gain a huge number of loyal customers and thus its customers can’t easily switch to other
companies (Ball and Ball, 2018).

Bargaining Power of Suppliers: For operating business worldwide over 100 years, Bentley
has good communication with severe suppliers and thus it can easily switch to another supplier
(Bentleymotors.com,2020). So Bentley's suppliers has less bargaining power.

Threat of Substitute: Bentley’s substitutes can be other transpiration such as bicycle, bus etc.
The need of having a personal car is increasing day by day and the elegance of Bentley cars
can’t easily get from other vehicles so Bentley face less threat of substitute.

Threat of New Entrants: For higher regulation and higher set up cost, entering into the
automotive industry is quite difficult (Michaux, Cadiat and Probert, 2019). Operating a luxurious
automotive brand is quite costly which discourage most companies to enter in this sector.

Rivalry among Existing Companies: In the UK there is many luxurious car manufacturer in

the UK such as Jaguar Land Rover Limited, Tesla, Mercedes-Benz, BMW Group etc.
(Owler.com, 2020). So, Bentley Motors has to face higher competition but Bentley always tries
to keep good relationship with all of its competitors.

Conclusion
For sustaining in a competitive environment analysising different theories is crucial. By
evaluating PESTEL analysis, it has been found that the external macroeconomic factors are
quite favourable for Bentley Motors. The micro environments are favourable as well.
Continuous innovation, steps towards social benefits and customer service are opportunities for
the Bentley Motors which help it to increase its portability. It should reduce the higher cost and
less demand as these are the obstacles. Moreover evaluating the Porter's five forces analysis
using these opportunities and obstacles, Bentley Motors can take competitive advantage.
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