Essay
M3
- Module
- Unit 1 - Exploring Business
- Institution
- PEARSON (PEARSON)
Complete Unit 1 2016 course Got Distinction overall
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By: Ahmed101 • 4 year ago
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M3Political
Political factors are those factors that business has to be more careful and influence the business more
than other factors. Volkswagen Group closely coordinates technology and product planning with its
brands so as to avoid breaches of emission limits, which would entail severe sanctions again.
However, politics can increase Volkswagen’s risk factors, because governments can quickly change
business rules that negatively affect Volkswagen’s business. Brexit has thrown the European car
market into disarray. Sterling has fallen 5% against the euro. While in the US, sales were already
running at a record high in the country, much depends on a new trade deal replacing Britain’s
membership of the European Union. Deutsche Bank estimates that a plunge in UK sales and the
pound will together knock 7% off Volkswagen’s profits next year, this will affect badly Volkswagen as
the politics have decided to leave the EU by doing a referendum and a great major of the people in
UK has voted to leave the EU. Falling sales and rising costs are the most likely outcomes for
automakers, and Volkswagen will probably affected the most. If the EU imposes tariffs they will have
to move elsewhere to produce their products. General Motors' plant in Ellesmere Port is considered
most at risk because of the high imported content of the Astra’s made there.
Economic
Economic factors have major impact on how business operates and how it takes decisions; this
therefore means that these factors affect the purchasing power of potential customers and the firm's
cost of capital. GDP Rate is 0.5% at the moment, so this means that England has a better economy
and therefore this is good as people are more likely to have a higher disposable income, which means
that people might save up for a new car (hopefully for Volkswagen).
However, the Brexit vote has led to sharp fall in the value of the Pound, at a stage falling over 15%.
This will have a significant impact on British firms, consumers and also those outside Europe. This
will not benefit Volkswagen as they will have lower UK drivers wanting to buy Volkswagen cars.
Sterling has fallen 5% against the euro.
Apart from Europe, Volkswagen will try to increase their revenue and profits by entering to other
country economies such as United States, China and India. They will try to sell more units across
these countries and impose themselves in front of other brands such as Toyota, BMW and Tesla. A lot
of other companies have made big investments in China because of its fast economic growth and
strong middle class companies are having such a good success investing in the economy of these
countries. This therefore means that it will be difficult for Volkswagen to make a big impact as other
companies are investing as well as them and with the scandal it will be even harder for people to trust
them.
Social
Social factors are related with the society. How the society behaves and thinks about any things.
Volkswagen is one of the top car producers in the world, the quality of their cars is really good and
they all have a really reasonable price so all kind of people can afford to buy them. Volkswagen
creates cars for all kind of people and it owns many other brands all around the world. They have
different models, such as the Volkswagen Tiguan which is suitable for a family or the Volkswagen
Caddy which is suitable for businesses. Volkswagen has a really good image in the market as they
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