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The business environment can be divided into two areas;
- The micro-environment
- The macro-environment
This involves individuals or an organisation that a firm deals with on a regular basis micro environment therefore plays a critical role in the success and behaviour of a business, this can be analysed suing 'SWOT' analysis.
Involves factors outside of the direct control of the business this can be analysed using 'PESTEL' analysis
Organisations may use different strategies to passively react to their environment, and proactively seek to shape and influence their environment
In relation to 'Fiat' the strategic approach used within the business had been 'SWOT' analysis.
SWOT Analysis of 'Fiat'
Sergio Marchionne CEO
- General Motors cheque for $2 billion allowed freedom to run the business properly.
- Removing a large number of leaders represented an operating style, and flattening out the structure gave some relatively young people, experience, and a huge amount of scope.
- 'Fiat' Adopted an Importance of Styling Giving young people both age and experiences a huge scope of the business.
- It gathered all the group's styling divisions together and focused on speed of its development through computer simulations. It was a faster more cost effective way of testing, and validating hundreds of different solutions and configurations.
- By cutting time to market it gave 'Fiat' a critical source of competitive advantage.
- 'Fiat' Italian factories were notoriously inflexible due to intransigent unions, and by lack of Investment.
- Net debt had risen to £4.4 billion, a £3 billion convertible bond had fallen, and the issue of 'Fiat' ill starred partnership with General Motors was becoming increasingly dangerous.
- Sharing platforms, engines and purchasing had not produced the expected economies of scale, further more expected economies of scale had not been produced.
- Fiat expects to lower average emissions and focus on fuel efficiency than any competitor. It is the first carmaker to offer diesel engines that comply with so-called Euro 5 fuel standards, now has adopted a new generation of petrol engines, called Multiair.
- Standardizing parts and platforms across model ranges.
- Design of cars sold only 2000 sales in Germany 2006.
- Low cost bandwagon but not with existing models.
How has the Transition of SWOT analysis developed in the 21st Century?
Since the central SWOT Framework, additional Strategic areas have been implemented to enhance SWOT analysis, this is The 'TOWS' Matrix. Another new concept has also developed is the 'PESTEL' Framework.
Factors in the Macro-Environment are categorised best in organisations through the use of the Following Framework:
Political factors: These refer to different types of government policies, such as the degree of intervention in the economy
Economic factors: Are those that affect interest rates, taxation changes, economic growth, inflation and exchange rates.
Social factors: Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work.
Technological factors: New technologies create new products and new processes. Technology can reduce costs, improve quality and lead to innovation
Environmental factors: The growing desire to protect the environment is having an impact on many industries. Factors such as Climate change, and the move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities.
Legal factors: Legal changes can affect a firm's costs and demand. (See figure 1.3)
Over the years additional elements have been added, these are as Follows:
- Indicated action, is an Action that should be performed or considered.
- When the indicated actions have been completed then the assessment for the level of resources required are implemented.
The thought of spending money in one area can be benefited through the development of opportunity of cost.
Since 1899 'Fiat' has held its leading role, despites its fallbacks before the Innovation, and development of its new hierarchical structure, and Strategic Management by Sergio Marchionne and today the products are beyond the expectations of the automobiles. Developed and superior recognition of its cars the logo has become the symbol of the characteristics and design structure success.
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(April 26, 2008): "Rebirth of a carmaker." Economist 387, no. 8577 87-89. Business Source Premier, EBSCOhost (accessed December 08, 2009).
(August 2007): "SWOT Analysis." Tata Motors Limited SWOT 5. Business Source Premier, EBSCOhost (accessed December 10, 2009).
Four European OEMs
Warranty Accrual Rates, 2002-2008
(as a percentage of auto sales)