centercenterAssesment parcitce 1

centercenterAssesment parcitce 1.2
Assessor Mr. Gichuhi
8820090900Assesment parcitce 1.2
Assessor Mr. Gichuhi

SUMMARY
Table of Contents
TOC o “1-3” h z u Introduction PAGEREF _Toc505256744 h 3C.P4 Discuss the internal, external and competitive environment on a given business. PAGEREF _Toc505256745 h 4External Environment PAGEREF _Toc505256746 h 4Internal environment PAGEREF _Toc505256747 h 6Competitive environment PAGEREF _Toc505256748 h 8C.P5 Select a variety of techniques to undertake a situational analysis of a given business PAGEREF _Toc505256749 h 11Pestle PAGEREF _Toc505256750 h 11SWOT PAGEREF _Toc505256751 h 125C’s Analysis PAGEREF _Toc505256752 h 14Porters Five Forces PAGEREF _Toc505256753 h 16D.P6 Explore how the market structure and influences on supply and demand affect the pricing and output decisions for a given business. PAGEREF _Toc505256754 h 17Asses the effects of the business environment on Audi. C.M3 PAGEREF _Toc505256755 h 19Assess how Audi has responded to changes in the market. D.M4 PAGEREF _Toc505256756 h 20C.D2 D.D3 Evaluate the extent to which the business environment affects a given business, using a variety of situational analysis techniques. Evaluate how changes in the market have impacted on a given business and how this business may react to future changes. PAGEREF _Toc505256757 h 21Appendences PAGEREF _Toc505256758 h 22
IntroductionI am continuing with my work placement in the Economic Development Unit (EDU) at my local council working with the officers who are responsible for publications, brochures and guides.
I have been asked to select and investigate a large business that trades in the European Union (EU) and use this research to write a report that evaluates the effects of the environment on that business. The business that I have chosen is going to be Audi Automobile manufacturer.
C.P4 Discuss the internal, external and competitive environment on a given business.External EnvironmentPolitical
The political factors affecting business are often given a lot of importance. Several aspects of government policy can affect business. All firms must follow the law. Managers must find how upcoming legislations can affect their activities. The political environment can impact business organizations in many ways. It could add a risk factor and lead to a major loss. You should understand that the political factors have the power to change results. It can also affect government policies at local to federal level. Companies should be ready to deal with the local and international outcomes of politics.

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Changes in the government policy make up the political factors. The change can be economic, legal or social. It could also be a mix of these factors. Increase or decrease in tax could be an example of a political element. Your government might increase taxes for some companies and lower it for others. The decision will have a direct effect on your businesses. So, you must always stay up-to-date with such political factors. Government interventions like shifts in interest rate can have an effect on the demand patterns of company.

Economic
The economic reasons for a business usually depend on monetary reasons, such as taxation exchange rates and government policies. For other business inflation and tax will have a big impact on the business. Businesses pay a tax called cooperation tax, which is currently at 20%. This means that business have to pay 20% of their revenue to the government. Another economic discussion is that today, the economy around the world remains fragile, even after three years of slow recovery from its bottom in year 2009. In UK particularly, the unemployment rate remains high, and consumers are commented to be cautious and prudent in their spending habits.
Social
Overall, the living standards of people are rising around the globe. Today, consumers are becoming more demanding. People simply have higher expectations on the level of services provided by businesses. Overall, for businesses this will mean that they have to up their standards and supply more for the people. Banks and the government rely on people to save money. The money saved is used to boost the economy as it is borrowed by businesses and householders for mortgages etc. Also, people are leaving their houses to live by themselves at a much younger age than before, this means that people are getting a mortgage at a younger age and getting into a debt a lot quicker. Furthermore, there has been a change in demographic trends this can have a significant influence on businesses. For example, in one place there may be more ethnicity than another.
Technological
Many different technologies are affecting the business nature of airline in the past decades. One of the main issues are internet services, such as trivago, expedia, travel supermarket, go compare and many more. Apart from that, as technologies improve, people may be expecting improvement of services provided by operators. For examples, the ability to adopt new technologies fast and to enable customers to access to high speed internet connectivity may strengthen competitive positions of certain operators. New businesses are increasing rapidly and some innovative ideas may even operate from a ‘back bedroom’ – these are sometimes based on a new craze, such as the aluminium scooter in the mid-1990s. However, unless business owners know how to sustain their business idea, and can cope with changes in demand, they can be short lived. One recent ‘back bedroom’ innovation is that of Marc, ‘inventor’ of Sublime Science children’s parties.

Environmental
Today, global warming is a serious issue affecting people and the next generation. People started to aware on the harms brought forward by short term oriented and self-fish business entities. The public are increasingly demanding that businesses should practice Corporate Social Responsibility in the development and growth of the businesses. On other businesses global warming can be an issue as they may have to use certain resources and materials to be sustainable. Environmental factors can also have a big effect on a business as if they do not meet a goal of reducing their CO2 emissions then this could show a bad face for the business. This could bring their brand loyalty down and then have less customers for the future. Businesses also have to focus on waste such as household rubbish or rubbish within their factories or warehouses which the council will then collect. Also businesses must recycle, they must comply with the governments green policies which ultimately have an impact on our lives.

Legislative
In different country, and depending on the changes in legal and regulations of the airline industry, different issues may affect the industry. For different businesses their legal factors may be that they have to follow the minimum wage act. The National Minimum Wage (NMW) is the minimum wage per hour a worker is entitled to in the United Kingdom. These rates are reviewed yearly by the government. Every business has to follow this act. Certain legislations must be complied with inn businesses otherwise heavy fines are imposed and even imprisonment may be a possibility. There are many laws and regulations which a business has to follow however, certain laws only apply to certain businesses such as the partnership act will only apply to businesses which are partnerships and the charities act will only apply to organisations which are registered charities or non-for-profit.
Internal environmentCorporate Culture.

Corporate culture is usually how the business is structured, also whether there is a blame culture or not. More importantly, whether the managers and employees have a good working atmosphere and share the same views. For example, a law firm is most likely to be very illiberal and unyielding. On the other hand, a sports club is most likely to be entertaining and exciting. The business that I am studying is Audi the Automobile manufacturing company, you can only inspire others if you are inspired by what you do yourself. Audi’s corporate philosophy is geared to creating a work environment that allows each employee to fully develop his or her ideas. At Audi, this calls for a culture marked by transparency, communication and open and fair treatment of fellow employees at all levels of the hierarchy.

At Audi, leading and supporting employees in an atmosphere of respect and trust is a defiant for Audi. Furthermore, clearly defining goals are a huge matter of course as having goals is extremely important not just for a business but for everyone. Their efforts improve and support their employees on their pathways is to hold regular goal-setting meetings. The Audi brand stands for change and technical innovation. Having the courage to change the way it thinks and question the status quo is a precondition that is critical to enabling a company to make permanent progress. Whether you are just starting at Audi or you have been working at another company Audi is a great place to start or excel your career.
Blame culture is a description given to an organisation in which people are blamed for mistakes. This contrasts with those in which the problem leading to a mistake is identified and improvements are made. A good way of detecting a blame culture is to see what happens when a senior person detects the mistake. If they ask “Who” (rather than “What” or “How”) you may be seeing evidence of a blame culture. The difficulty with blame cultures is that people often begin to fear being blamed. They stop taking risks, making suggestions or trying things new. When that happens, the pace of change and improvement slows down and the organisation ceases to offer anything new to its customers.

A strong ethical culture within your business is important in safeguarding your assets. Employees who abide by your workplace ethics would be able to protect and respect your business’s assets. Ensure that your workers perform in an environment with integrity and strong ethics.

Corporate Social Responsibility (CSR)
Corporate social responsibility, often abbreviated “CSR,” is a corporation’s initiatives to assess and take responsibility for the company’s effects on environmental and social wellbeing. The term generally applies to efforts that go beyond what may be required by regulators or environmental p6rotection groups.

CSR may also be referred to as “corporate citizenship” and can involve incurring short-term costs that do not provide an immediate financial benefit to the company, but instead promote positive social and environmental change.

As Audi UK, they understand their responsibility to maintain sustainable and ethical business practice. Their cars are renowned for their ever-increasing efficiency without compromising on quality or performance. It’s this philosophy they strive for across the brand as a whole. While their colleagues in Germany work towards the goal of carbon-neutral car production, here in the UK they are focusing on reducing wasted energy and resources and improving the experience of their staff, customers and the communities in which we operate.

Like most car companies in the modern world, Audi has been confronted by a major issue in the automobile industry: how does one make a car that is both safe for the environment while still maintaining performance and style? This seems to the main problem for car companies like Audi. One could say they could lower the price range of their cars so more people could buy them, therefore allowing everyone to enjoy the class and style of an Audi, but then the cars would just become like every other car, and would lose the value and prestige of its name. Therefore, the best way for a company like Audi to exhibit their understanding and value of “social responsibility” is to reduce their carbon footprint on the world. In these reports that they release, they state their main goals in relation to the environment and keeping it safe and healthy.

Ethics
what is ethics? A code of ethics is a guide of principles designed to help professionals conduct business honestly and with integrity. A code of ethics document may outline the mission and values of the business or organization, how professionals are supposed to approach problems, the ethical principles based on the organization core values and the standards to which the professional is held. 7 There are many ways to look at ethics. However, most people think that it is the right thing to do. Most businesses/ organisations have some sort of code of ethics that its staff and members have to follow.

Businesses need policies and procedures in place to make sure that their staff and employees behave in an orderly manner. One example of this is when the BBC were accused of discrimination as salaries releveled that men got payed higher than the women. This is very unethical as they didn’t follow the equal pay act which every business/organisation has to follow.

Audi embraces diversity. They believe in creating an inclusive environment and it’s an essential part of their culture. They are committed to implementing their Diversity Policy and they expect all of their employees to treat each other equally, honestly and with respect. they want to nurture a culture where diverse perspectives can help drive their company forward around the globe.

They strive to provide a fair and supportive work environment for all their employees, regardless of their age, sex, marital status, sexual orientation, disability, race, colour, nationality, ethnic or national origin, religion, or affiliation to any political party or trade union. They aim to employ people who reflect the diverse nature of society and they value each of their employees for the contribution they make, both individually, and as part of the Virgin Atlantic team. Treating every employee equally is really ethical and important for the business as this can be another factor for their success or their failure. No business should treat another employee differently because of their skin colour, ethnicity etc. Their policy applies to recruitment and selection, terms and conditions of employment including pay, promotion, training, references and every other aspect of employment.

Competitive environmentAudi’s competition is very apparent it is most likely going to be other car manufacturing companies such as; Mercedes, BMW, ford, Volkswagen and many more. What is competition? Competition in this case, is mostly regarded to the rivalry amongst sellers trying to achieve such goals as increasing profits, market share, and sales volume by varying the elements of price, product, place and promotion.

There are three different types of competitive environments such as, local, national and international. Local is things like your county, Kent. National is your country such as, England. International is usually the world. There are many factors influencing a competitive advantage such as, differentiation, pricing policies, market leadership, reputation, market share and cost control.
Local Competition. What does local competition consist of? Local competition consists of the competitive environment locally such as the factors that could affect the business near you. Some of these may include smaller businesses. Your probably how do small business affect large business? Well, they really do affect them in many ways say for instance you are a large business and see a really nice plot of land where you and your business can buy and settle down, but then you find out that it is owned by a smaller business and they are not willing to sell you the land this could then cause a lot of controversy. Another reason could be another car manufacturing company but a small one, this could have an effect on Audi as they will be already selling cars within the local environment so this could cause a lack in sales for Audi as people may prefer to buy of another manufacturer. It may be hard to believe, but competition is good for you. It drives innovation, inspires perseverance and builds team spirit. And that’s not all. Many times, the presence of competition increases the market for everyone. For instance, when a Wal-Mart goes up on the edge of a small town, not all local businesses get hurt. Nearby restaurants, gas stations, jewellers and personal service providers such as hair salons benefit from added traffic and, often, higher sales than before.

National Competition. What is national competition? National competition is the competition that you have within your country such as, the competition in England. For Audi there, competition nationally would be Aston Martin, Bentley, Caterham Cars, Daimler, Jaguar, Lagonda, Land Rover, Lister Cars, Lotus, McLaren, MG, Mini, Morgan and Rolls-Royce as these are the most well-known car manufacturing companies in the UK. How can national competition affect Audi? They can affect them in many ways such as most business would want to expand out of their country and become and international business to achieve their aims and objectives. Therefore, this will have an effect on Audi as it will make the car manufacturing market a lot tighter and harder to achieve in. how will Audi overcome this? Audi, already being an international business, they can carry on being successful within this sector and overcoming the other businesses.
International Competition. What is international competition? Global competition is the services or products provided by competing companies that serve international customers. Think about how you can have a pie-eating contest or a race. These are examples of competition on a local scale where people are competing against one another for one common goal – the best in their core competency. Core competency is what a company does best. Global competition has allowed companies to buy and sell their services internationally, which opens the door to increased profits and flattens the playing field in business. {Appendix 1}
Differentiation. What is differentiation? Differentiation is when you/ the business come with a different approach to the market than other businesses. Some of this includes innovation. The German automaker sold more than 200,000 cars in the US for the first time in its history reaching this milestone three years ahead of schedule. Audi’s surging sales were led by the strong performance of its A3 compact sedan, as well as the Q3 and Q5 crossover SUVs. Leading the charge for the company is Audi of America president Scott Keogh.

Secondly, I will talk about their pricing policies. There are many different pricing strategies that businesses can use some of them are, psychological, destroyer and many more. Audi have a good pricing policy you can tell this because their sales are good by their sales being good this means that people are purchasing their goods or services this means that their revenue is good and making sufficient profits.
Market leadership. What is market leadership? Market leadership is when a business owns the majority of the market of is the main leader of the market, by being this they will control the prices and mains services within that market. This graph shows the monthly United Kingdom (UK) market share values for Audi between January 2014 and December 2017. The company’s market share had a range between 4.82 and 8.66 percent, meaning it consistently controlled a relatively high portion of the UK car market. Audi had the fifth biggest market share in the UK in 2015 and is a subsidiary of Volkswagen, which had the third biggest market share. The market share of Audi in the UK was 7 percent in December 2017. The highest market share of cars manufactured by Audi was recorded in October 2017, when Audi reached a market share of 8.66 percent in the UK. Although this may not seem like a lot we have to take in consideration the amount of car manufacturing companies that there are in this certain market such as, Mercedes, BMW, Volkswagen and many more.

The new Audi A4 was also launched in the overseas markets in 2016, its global sales expanded year-on-year. In Europe, where the model was already available throughout the full year, the A4 took the number one spot in its premium segment, up 25.7 percent to around 164,600 units sold.
The update of Audi’s mid-size class is set to continue this year in international markets with the new A5, following on from its European market introduction at the end of 2016. Moreover, 2017 will see the global launch of the new A5 Sport back, with the model also going on sale in the United States for the very first time.

Reputation. As we all know being a German car retailer Audis main competition would be BMW and Mercedes. Having a good reputation within the car sector is extremely important as this could give you a huge advantage to success. What is Audis reputation? Today, Audi is known for a few things: Luxurious interiors: with perfectly judged soft-touch plastics and a sense of unfussy style, Audi’s interiors have long been considered up there with the best.
Audi is also known for making technologically advanced and intuitive driver controls, from its clever ‘virtual cockpit’ digital dashboard dials to the chunky automatic gear selector found in higher-end models. Audi owners appreciate the sense of quality and attention to detail their cars feature inside, and it’s a particular brand highlight.

Cost control is the practice of identifying and reducing business expenses to increase profits, and it starts with the budgeting process. Some of the ways that a business can reduce its costs is by reducing supply expenses, cut production costs, lower financial expenditures, modernise producing efforts, use efficient time strategies, harness virtual technology, narrow their focus and make the most of their space.
It is very important to control costs as bloated expense accounts can eat up profits quickly. A cost reduction plan is one that focuses on lowering costs in every business activity. The importance of cost reduction plans is related to the most common reasons why expenses must be cut in a business.

Overall, Audis competition is stable and they are at good stage within the market. Owning 7.5% of the market leaves Audi in a good stage and not venerable. This means that they can carry on making their cars at a good pace without being disrupted and owning their percentage of the market.
C.P5 Select a variety of techniques to undertake a situational analysis of a given businessPestlePolitical
Since the last century, Germany is famous for making cars, such as, Mercedes, Audi and BMW; Porsche and Volkswagen. German government also encourages these motor producers showing the Germany made car to the customers from all over the world. Audi set the headquarters in Ingolstadt and have a strong human resource with over 60,000 staff from different nationality. With the Audi’s global strategy implementation, this German auto manufacturer has established several large plants in different countries. Hungary and China are good examples. Furthermore, ion the uk we are currently going through Brexit. What is this? Well, Brexit is the premovement of the uk from the EU. This could affect the Audi in the uk as they may not be able to carry out certain activities which they are usually normal and allowed to do.

Economic
According to the Audi statistics, sales of new car have increased sharply from 2009 to 2010 in the European and North American markets. What is more, Middle East and China are still the large demand group; For example, Audi has delivered 108,000 cars to China in the first three months, compared with the total sells 705,000 cars at the same period. The economy can also have an affect on interest rates this meaning it will have an effect on Audis business as they also sell shares. Furthermore, in 2008 we went through a recession luckily we are now currently going out of it however, some countries are still in a credit crunch therefore they are less likely to spend money on cars etc.

Social
The social effect that it will have on Audi is pretty self-explanatory, staff. Audi have over 60,000 staff this meaning that these staff also have families and sop forth. Therefore, they provide for their family, the social effect by this is that if they then lose their job somehow, they are affect their family this could cause a social issue as some may think it could be morally wrong. Audi has been improving the workshop condition to satisfy employees, and Audi also offer successes of creating exceptional cars when employees join the group. Manufacturing perfect cars needs large quantity qualified material, Audi have established several partnerships with suppliers. Due to the economy recession, consumers are willing to choose the fuel efficiency car instead of buying the big engine SUV; Audi remained the price for customer, but added more technology into the car.

Technological
Technology development is the key feature of Audi Company; Audi is best known of its permanent four-wheel drive system, called QUATTRO. Today, Quattro is widely used in most Audi model, and offering drivers more safety and pleasure in any situations. Audi also cooperated with Italian super car Lamborghini to achieve sport value. For example, the S8 and RS model are equipped with Lamborghini’s engine and transmission system. What I mean here is that Audi can now use the technology from other cars and put them into their Audis. This will be good for the business as it shows that all their cars and models relate in one way or another showing innovation.

Environmental
Audi paid more attention in corporate social responsibility. It is inevitable for Audi not polluting the environment, because it is a manufacturer. Audi promises to minimize the environmental impacts. In these 20 years, Audi spent billions in researching the efficiency engine; the new generation engine means more horsepower but little emissions. For example, their new engine has already met 5 of the new emission standards which shows that they do care about the environment and are having a good impact. Audi announced car emissions will be cut further 20% by 2012. That is how this German maker leads the environmental car market.

Legal
Germany government set a group of legislation in order to protect road user’s safety and environment. Crash standard and European car emission limits are good examples. Legal factors can decide whether or not there is a business behind selling a certain product (perhaps drugs, or sharp objects), and can also affect the mechanisms through which a company stocks their inventory or interacts with the customer.

SWOTOpportunities
Without a doubt the new emerging markets of China and India are huge opportunities for Audi. New car sales are growing in both countries as consumers are getting wealthier and more discerning, they need status brands such as Audi. By 2015, the Indian car market is going to be huge, with estimated sales reaching more than $40 billion. In China figures indicate that sales will be in excess of 250,000 million vehicles in a similar period of time. Hopefully in the coming years, the global car market will begin to recover and car sales and production will increase. There are a number of drivers. Government programs which offer incentives to consumers to ditch their old petrol guzzler to replace it with a modern hybrid car for example, mean an increase in sales. The problems associated with raising credit will hopefully disappear and consumers will begin to take loans to finance their car again. Audi has become a leaner business by increasing its profit per vehicle and reducing its inventory.

Weaknesses
Although from having many strengths businesses also have their weaknesses. In this example Audi have a couple such as, there is severe competition within their market which could mean that they couldn’t reach their full potential and it limits market growth. This is not good for a business as it limit’s their growth and this means that they couldn’t reach their full potential. Another weakness of Audi is they have limited global presence in emerging economies. This means that they don’t have the knowledge of the people within that country pausing their success. One interesting problem for the business is that whilst it is a very large vehicle manufacturer, it doesn’t operate on the same huge scale as some of its close competitors, including Ford and Toyota. A simple revenue analysis based upon units produced shows that its competitors can make equivalent vehicles more cheaply, simply because of economies of scale. That is to say relative unit costs are higher.

Strengths
Audi’s reputation is undoubtedly based upon a very strong brand. In fact, the four rings of Audi are one of the most identifiable logos and images globally. The brand is very innovative and the range is continually developed and extended.

Being a German technology product, obviously Audi has a reputation for operations management and its production approaches. The company manufactures in excess of 1 million autos a year. Interestingly, more than 1000 of these cars are Lamborghinis, Audi’s premium supercar brand. The company manufactures cars in the German cities.

Threats
Like any business which operates in a global economic environment, Audi has to deal with local business environments. For example, regulations by local governments in relation to emissions or safety, or even strategic alliances with local companies in order to enter a market, such as China. All please add to the bottom line and reduce margins potentially
Trading in a global market means that the business is essentially exposed to commodity price fluctuations. Steel prices have been on a helter-skelter. Commodity prices vary, and it makes it difficult for Audi to keep costs steady.

In the car industry, generally, the largest threat relates to the nature and level of competition in what is a mature industry. There are a number of similar brands including BMW and Mercedes. Car production globally tends to move where the high dependence on labour cannot impact its cost base, so over years to come more manufacturing will move to India and China, where costs of labour are lower. The German worker is comparatively expensive.

5C’s AnalysisCustomers
These are an important part to a business. Without customers there would be no business and it wouldn’t succeed. First, the value of the customers is important as if you treat your customers with the up-most respect then there is more of a chance that they will come back and you will get repeat custom. Audis customers desire the service of their company because they provide a desired service. Customer value models are based on assessments of the costs and benefits of a given market offering in a customer application. Depending on circumstances, such as availability of data and a customer’s cooperation, a supplier might build a value model for an individual customer or for a market segment, drawing on data gathered from several customers in that segment. A company could have all the materials in the world, however it truly depends on the people who are selling it and the customers within. Therefore, Audi have good customer value. {Appendix 3} The customer feedback that Audi have received is very good this shows that the customers have liked their service or their products this is a good sign for the business and showing that they have good result’s.
Competitors
These have a really important role in a business’s success as they can decide on their failure or success. Say for instance, its only you and another business in one market then there is 13 more of a chance of succeeding as you will have more market share. However, say there is a lot of businesses in one market then you are less likely to be as big as all businesses are fighting for the same thing, the share of the market. Competitors in a market can offer a lot of threat. They can do this because if they bring out the same sort of product as you then you have the threat of thinking if it will succeed or not. However, in this case I have chosen Audi therefore their competition within the car market is going to be very hard and tight as there are a lot of car manufacturing companies. How would you stand out? The way to stand out is to be innovative, to show something new to the people what they have not yet seen before.
Climate
Political. The political views in Audi right now are going to be different to usual as we are going through Brexit. This is going to change the views in Audi as in a period of 2 years between the Brexit decision and the actual exit of the UK from the EU, the UK must negotiate free trade agreements with the EU and other countries globally. Economists estimate that Britain will be at a loss equating £75 billion, if they are excluded from the single market. Even though the UK won’t have to pay £9 billion toward the European Union budget each year, economists say that the costs would outweigh the aforementioned benefit to the UK.

Economic. Economic factors are connected with goods, services, and money. Despite directly affecting businesses, these variables refer to financial state of the economy on a greater level — whether that be local or global. The reason for this is that the state of the economy can decide many of the important details that come up in an operating company, including topics such as consumer demand, taxes and asset value.

Social. The younger generation prefers to use digital technology to shop online. Older people will perhaps stick to their traditional methods. The effect of changing society is an often discussed. You must also understand that these changing factors have a toll on businesses too. Changes in the social factors can impact a firm in many different ways.

Technological. The automation of many unskilled tasks can allow companies to replace human production lines with entirely machine ones. This can reduce costs for manufacturers, distributors, supermarkets, and many other different businesses. On the flip side, the gradual increase in job automation might not be such a great thing for job search firms.

Environmental. From the sound of it, it may seem that environmental factors have very little to do with business. On the contrary, though, environmental factors can affect many different important aspects of business. Examples include customer willingness to buy a product (who needs heaters in a hotter climate?), employee efficiency, and crop/resource availability.

Legislative. Legal factors can decide whether or not there is a business behind selling a certain product (perhaps drugs, or sharp objects), and can also affect the mechanisms through which a company stocks their inventory or interacts with the customer.

Collaborators
Audi are also thinking of collaborating with Porsche. Volkswagen’s luxury car unit Audi has agreed to deepen collaboration with Chinese internet technology groups to offer more digital services in the world’s largest car market. This shows that Audi are improving on their technology and are trying to beat all of their competitors such as Mercedes and BMW. Parent Volkswagen has been hobbled by a scandal over the rigging of emissions tests, distracting it in a race with global carmakers to develop computer-aided services for drivers.

Company
Objectives. These are an important part for a business’s success. Most successful businesses would have set themselves objectives in first place. They set themselves objectives as they find it easier to know what their long-term goals is going to be. In this case, I have chosen to study the business Audi implemented a strong marketing strategy consisting of digital and television advertising in order to hit their target sales. According to the journal ‘Audi all-time sales record driven by strong digital advertising’, it stated that Audi’s TV advertising helping it top 100,000 vehicles sold.

Porters Five ForcesCompetition in the industry
Within the automobile industry there is a huge amount of competition. Let’s break it down we all know as Audi as a really big German car company right. However, yet they still only own 7.5% of the market this may not seem a lot but is regarded a lot as the market is so big it’s hard to get a share. The research also found that the increasing pressure placed on manufacturers to reduce carbon emissions is shifting the focus of research and development initiatives towards finding innovative energy solutions. Furthermore, the current focus on developing safe, cost-effective vehicle electronics is expected to intensify further as vehicles have become more reliant on electronics and less reliant on mechanics over the past ten years.
Potential of new entrants
The luxury car industry is protected by significant barriers to entry. One of the most significant consists in the brand equity the most established brands can enjoy. The reputation of the brand is extremely important to customers; luxury brands such as Mercedes-Benz and Audi have a long and glorious history to boast, and the companies work hard to preserve the association between them and other symbols of exclusivity and of superior quality and performance.

Power of suppliers
The balance of power between supplier and car manufacturer in the car industry is generally tilted in favour of the latter, since the suppliers are numerous and often of small-medium size, whereas car companies are much larger and globalized. Many suppliers are dependent on a single car manufacturer, which in turn has several suppliers. There is no threat of forward integration by a supplier.

Power of buyers
Customers have substantial power, mainly because of the large variety of luxury brands and product to choose from, and because of the presence of substitutes. The market offers customers many different brands and car models, with widely differing performance, quality, appearance, pricing, additional features. The customer can freely choose the product that best fits its preferences, status and lifestyle among many. The Internet has improved customers’ access to information about the characteristics of car models, and to the experience and reviews of past users and experts.

Threat of substitute products
As for the first need, there is a variety of other products to fulfil it, such as other types of cars, motorbikes, bicycles, public transportation systems, planes. The most obvious substitutes for the mid-luxury cars of Audi, BMW and Mercedes-Benz are either higher-end cars from ultra-luxury brands (such as Ferrari, Lamborghini, Rolls Royce, Bentley), or at the other end of the spectrum, less expensive cars from non-luxury brands.

D.P6 Explore how the market structure and influences on supply and demand affect the pricing and output decisions for a given business.What is supply and demand?
A market is any place where buyers and sellers meet to trade products. The market price is the amount customers are charged for items and depends on demand and supply. Demand is the amount of a product customers are prepared to buy at different prices. Supply is the amount of a product businesses are prepared to sell at different prices. People queueing along a street Some products are in such high demand that customers are prepared to queue for them There are many different types of market. The goods market is where everyday products such as DVDs are traded. The commodities market is where raw materials such as wheat are traded. Market prices change when supply and demand patterns change.
What effect does supply and demand have on a business?
The law of supply and demand is an economic theory that explains how supply and demand are related to each other and how the relationship affects the price of goods and services. A fundamental economic principle that states that when there is an oversupply of a good or service, prices fall. When there is high demand, prices tend to rise. There is an inverse relationship between the supply and prices of goods and services when demand is unchanged. If there is an increase in supply for goods and services while demand remains the same, prices tend to fall to a lower equilibrium price and a higher quantity of goods and services. If there is a decrease in supply for goods and services while demand remains the same, prices tend to rise to a higher equilibrium price and a lower quantity of goods and services.
Supply and demand can have many effects on a business such as; competition, suppliers, general issues, quality, reputation, price, social trends, natural disasters, advertisement, location and income. However, in this case we are going to see how supply and demand has an effect on pricing. Image result for supply and demand affect in pricing If demand increases (decreases) and supply is changed, then it leads to a higher (lower) equilibrium price and quantity. If supply increases (decreases) and demand is unchanged, then it leads to a lower (higher) equilibrium price and higher (lower) quantity. {Appendix 3}
Supply can affect many other output decisions such as reputation. In this case reputation can be affected because as a business if you supply more there is more of a chance that you will sell more, therefore you will be more recognized as a business and get better reputation. Furthermore, Demand can have an effect on reputation because people are demand for their product or service, this must mean that their products are good and the business is doing well.

Another influence on supply and demand could be natural disasters. A natural disaster is a natural event such as a flood, earthquake, or hurricane that causes great damage or loss of life. This can influence supply and demand as if the worst does happen then people will demand aid and people are going to supply them.
Advertisement can influence supply and demand. As If the advertisement is really good then people are more likely to go and buy the product and if more go buy it then there will be more demand and the business is going to have to supply more.

If businesses are struggling to make sufficient profit to remain operating, they will seek alternative products or suppliers to keep their costs down and profits up. A business may resort to a substitute which is inferior or superior or seek out alternative and more competitively priced suppliers. Therefore, alternatives depend on supply and demand from all sides of the operation.
The GDP is one of the most important indicators used by economists to calculate the state of the economy. The ONS (office for national statistics) produces these figures. {Appendix 4} Preliminary, second and final estimates of GDP released over a quarter as more data becomes available. The final estimate is published in the Quarterly National Accounts. GDP is the main measure of UK economic growth based on the value of goods and services produced during a given period.
Gross domestic product is the best way to measure a country; economy. GDP is the total value of everything produced by all the people and companies in the country. It doesn’t matter if they are citizens or foreign-owned companies. If they are located within the country& boundaries, the government counts their production as GDP. 17
There are many different ways to measure a country GDP. It’s important to know all the different types and how they are used. Nominal GDP: This is the raw measurement that includes price increases. The Bureau of Economic Analysis measures nominal GDP quarterly. It revises the quarterly estimate each month as it receives updated data. In 2016, the nominal U.S. GDP was $18.625 trillion. Real GDP: To compare economic output from one year to another, you must account for the effects of inflation. To do this, the BEA calculates real GDP. It does this by using a price deflator. It tells you how much prices have changed since a base year.
The growth rate measures whether the economy is growing more quickly or more slowly than the quarter before. If it produces less than the quarter before, it contracts and the growth rate is negative. This signals a recession. If it stays negative long enough, the recession turns into a depression. As bad as a recession is, you also don’t want the growth rate to be too high.
The market structure can have an effect on pricing as there are two different types, perfect and imperfect. As perfect is when all firms sell the same product and are price takers. However, imperfect is when there is a monopolistic competition, people sell different products. In an imperfect market they are likely to make less revenue. On the other hand, in a perfect market there is more of a chance to make a greater profit.

Asses the effects of the business environment on Audi. C.M3What is business environment?
The definition of business environment means all of the internal and external factors that affect how the company functions including employees, customers, management, supply and demand and business regulations. An example of a part of a business environment is how well customers' expectations are met.
What affects can the environment have on a business?
Emissions. Manufacturing processes often generate air and/or water emissions, which include particle or chemical-filled smoke, ash and particles and chemicals that seep into ground water through run-off. Environmental protection laws require businesses to protect the environment from exposure to these emissions. Remedial process includes placing screens of specified gauges over smoke stacks, filtration of waste water and lining of retention ponds with clay and poly liners. New regulations are implemented frequently that require retrofitting of manufacturing facilities with increased protections, such as screens of even finer gauges and pond liners of newer and safer materials. All of these measures are costly to business and affect businesses first by decreasing profit margins.
Waste
Businesses that manufacture products create, at some point in the manufacturing process, manufacturing waste. Environmental laws and good environmental citizenship prohibit the indiscriminate dumping of manufacturing by-product, so businesses must decide how best to dispense with it. Many implement recycling programs, others sell what they can of the waste to other manufacturers who use it in their own manufacturing processes as raw material. Either way, the effect is additional cost to the business in man hours, procedures, equipment and handling all specific to moving the waste products out of the businesses manufacturing process and facilities.
Sustainable Development of Raw Materials
All manufacturers use raw materials to put together their goods. When these raw materials are natural, such as wood, laws and good environmental citizenship require that the business take measures to replace what it uses. Christmas tree farms are a prime example, as sellers buy from growers who harvest and replant in order to keep from depleting entire forests of naturally occurring pine trees. Again, the effect on business is cost in terms of higher raw materials costs, which usually include the supplier cost to the natural raw materials.
Assess how Audi has responded to changes in the market. D.M4Businesses with a perfect competition structure are too small to influence changes to prices as they hold a small share of the market. Imperfect competitive structures can influence pricing by forcing suppliers to reduce costs when demand increases or the cost of raw materials decreases. Factors which contribute to their ability to influence output decisions include the cost of production, environment and market power.

My business Audi has responded to changes in the market through Brexit. What is Brexit? Brexit is a term for the potential or hypothetical departure of the United Kingdom from the European Union. How does this affect a business? Brexit could affect a business as they trade within the EU and the trade deal with the UK could change for businesses. Brexit has many impacts on businesses some of them include; the increase in manufacturing, transport, alcohol, food, petrol and many more. I think this is going to have a negative impact as it will impact their trading within the EU.

For my business the most important one out of the list would be petrol. It will be petrol as most cars use petrol and this is what they will run off. How will this affect the business that they cannot use petrol? This will affect the business as most cars run on petrol therefore, if it becomes scarce the price will increase and people will then have to pay more for it and that means that people are less likely to buy it and the sale of cars will go down.
Marketing is the process which involves identifying existing customer needs and requirements and with anticipating future changes. It is therefore a dynamic discipline. The marketing environment for most, if not all, products changes regularly. Another way in which Audi have responded to a change in the market is demographically. What I mean by this Is that the earth is rapidly gaining more and more people therefore, they will grow up get older and drive cars. Then Audi will have to create these cars to provide to the people.
Government regulations regularly change. For example, in recent years UK and European regulations increasingly require engines to be cleaner and to help to create a cleaner environment. The world is becoming wealthier, and increasingly modern consumers require more sophisticated motoring products. More and more consumers are buying more luxurious and sophisticated vehicles. To complement this purchase, they require the best quality oils.

Another reason how Audi have responded to a change in the market would be by the innovation that all of the other companies have set. What I mean by this is that companies now days have to be innovative to succeed. Therefore, to keep up Audi also have to be innovative.
C.D2 Evaluate the extent to which the business environment affects a given business, using a variety of situational analysis techniques.
External environment. What is the external environment and to what extent does it affect a business? The external environment consists of 6 factors which are political, economic, social, technological, legislative, and environmental each of which affects a different business in different ways. I think that the external environment has a huge effect on Audi as well as every other business. I think this because each of the 6 factors that I listen effects Audi in its own way therefore there is constantly something that will bother them. Furthermore, a business cannot control what happens outside of their business such as the political and environmental factors. However, on the other hand it doesn’t have a big effect as being a large business they should be able to tackle these big decisions and get over them. An environmental issue would be Co2 emissions released from the factories a business cannot control this however, they should be able to find a way to tackle this such as release less from their factories and become more environmental friendly. Overall, I think that an external environment does have a big effect on a business as they cannot control what happens outside such as they cannot control their politics that is up to the government.
Internal environment. What is the internal environment? The internal environment is the environment inside of the business such as corporate culture and corporate social responsibility. I think that internal environment does affect a business extremely as it shows what happens inside of the business. This could cause a lot of problems inside of the business as if two employees did not get along then this could cause Havok within the business. However, there is also an argument that is does not affect a business as the manager say for instance, could control what happens inside of the business and makes sure nothing does go wrong and everything runs smoothly. Overall, the internal environment does affect the business as it controls what goes on inside of the business and say that a business has a large hierarchy that means that they have a lot of staff therefore, there is a higher chance of there being some sort of feud and people having an argument.
Competitive environment. What is the competitive environment? The competitive environment is local, national and international competition. Market competition is like war, and the goal is complete domination. Calvin wants to capture the entire market. The only problem is that all of his competitors want the same thing. And just like modern warfare, there are some clearly established rules of engagement. I think that competitive environment has a big effect on businesses as they also cannot control what their competitors do. However, you can argue that they do not have a big affect as they can stay on top of their competitors. Overall, I think that they do have a big affect on a business as a business as they can control what they want to do and another business may not be able to keep up with their success and may find themselves lacking behind.
D.D3 Evaluate how changes in the market have impacted on a given business and how this business may react to future changes.

British drivers’ love of performance means 11% of A6 and A7 models are S and RS versions, compared with 7% across Europe, mentioned Stadler in an aside. It all explains why Audi is so keen for Britain to remain open for business, although that importance will surely dwindle if the economy starts tanking or high import tariffs are unavoidable.

British drivers love Audi in general and are really pleased with the service they provide therefore, they will be not as affected by Brexit as other business will. Most large car manufacturing companies will not be as affected by Brexit as other companies will as everyone needs a car to drive and most people want to drive.
In September, new registrations fell by 9% compared with the same period the year before, according to the Society for Motor Manufacturers and Traders (SMMT). It continued a downward trend that has been visible for the past six months.

And this week, Pendragon, one of the country’s biggest car dealers, issued a surprise profits warning. It said waning demand for new cars and a consequent fall in the price of older vehicles would take a heavy toll on its earnings. {Appendix 4}
In fact, most analysts had expected sales to tail off this year, if not by the levels we’ve actually seen. That’s partly because the market is very cyclical. Once people have a car, they tend to keep it for a number of years, and rapid growth is difficult to sustain. But changes in the market have also had an impact.
One of the main factors driving the market has been the growth of so-called Personal Contract Purchase plans, or PCPs, for private buyers. These are essentially leasing agreements, with an option to buy at the end of the contract, typically after three years.

How will Audi react to this in the future? The way that Audi may have to react to this is that of people are not buying cars that means Audi are not making a sufficient enough revenue. Therefore, there is a possibility that they may have to increase the price of their goods and start charging their customers and higher price for their cars. This may then mean the customers are less likely to purchase their products and this is then very bad for the business.
Another way in which they could react is by shocking the market and releasing a different model and giving the customers something new to drive. Such as creating a hybrid or full electric car. Appendences0-63500{Appendix 1}
left53784500{Appendix 2}
right41783000center-70485000{Appendix 3}
{Appendix 4}

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