Unit 1 Learning Aim C: Examine the environment in which businesses

operate - Situational Analysis

PESTLE and SWOT Analysis

BMW

Environmental PESTLE Factors

Political Factors

The BMW company is affected by many political factors that have been introduced due to
new policies and regulations the company must comply with. One of the impacts that the
company face is the political circumstances in countries such as China, Brazil and Russia.
Due to BMW operating worldwide, tax implications, trade agreements and regulations will
heavily impact the business. The Government has recently set new regulations for change in
emission standards and the safety requirements which will affect the design and overall
production of their vehicles. The new regulations set, is part of the EU emission standards
and have implemented regulations to reduce carbon emissions from vehicles due to the
current environmental issues. This could come as a disadvantage to the company as it may
be more expensive to manufacture low emission vehicles. The regulations could also have a
negative impact on BMW’s sales and revenue as the company demands may differ
depending on the business decision they make regarding these regulations. As customers
become more environmentally conscious, they are most likely to purchase BMW’s electric
models. If the business fails to comply with the Government regulations set, they may have
to face penalties or restrictions that would affect their sales.
https://www.gov.uk/government/news/government-sets-out-path-to-zero-emission-
vehicles-by-2035

Due to Brexit, the process for BMW’s customs have become slower due to Brexit
introducing changes in terms of customs procedures and regulations between the UK and
the EU. For example, Brexit has introduced customs declarations and customs checks on
goods when goods are being moved between the two countries. The new regulations of
customs declarations include businesses needing to provide detailed information regarding
the goods being imported or exported out of the country. The customs checks have changed
where the goods crossing the EU and UK border must be heavily inspected and require a
document of verification to ensure the company is complying with the customs regulations.
These changes can potentially affect BMW’s customers as the processing time may be
longer once they have purchased their vehicles. The company also must adjust their supply
chain and logistics to comply with the new regulations resulting from Brexit. One of which is
ensuring that the customs declarations are completed accurately and on time which can be
very time consuming. By doing this, the company will minimise any further disruptions and
ensure all of BMW’s vehicles and parts are being imported and/or exported on a smooth
running.
https://www.bmw.co.uk/en/footer/contact/find-a-bmw-centre.html

Economic Factors

As BMW operates in the global market, global economic trends can impact the company.
One of the factors include the company’s market demand where fluctuations in that area
can affect the company’s sales and productions strategies. The market demands can
fluctuate on various reasons: consumer preferences, economic conditions and global trends
which can all influence BMW’s decisions. For example, consumers have shifted and have a
growing preference on electric vehicles; BMW need to adapt their products and services to
meet those demands. If the company successfully meets these demands, it will come to an
advantage for the global business as they will be able to maintain their loyal consumers and
stay competitive within the market. In response to these demands of hybrid and electronic
vehicles, BMW have recently expanded their vehicle line-up with plug-in and battery EVs.
However, this can result in the manufacturing and development to be more costly as electric
vehicles require significant research for the right components. In addition, the components
itself can be expensive in comparison to regular engines.
https://www.bmwgroup.com/en/sustainability/electromobility.html#:~:text=As%20of
%202025%2C%20the%20Group,seven%20different%20PHEV%20engine%20variants.

Another economic factor BMW may face is that changes in trade policies, prices on tariffs
and geopolitical tensions may create uncertainty in the international markets. This could
lead to BMW being affected as changes in trade policies could either lead to the increase or
decrease in the cost of importing and exporting goods. If the cost of goods were to increase,
it would negatively impact the company’s supply chain, increase cost of production which
would result in the consumers having to pay more for their vehicles. The current geopolitical
tensions (such as Ukraine war) have recently created uncertainty and a sense of instability in
the market therefore leading to consumers being more cautious when purchasing luxury
vehicles. BMW is then impacted by this decision as people are prioritising essential items or
delaying payments and purchases until the tension is stabilized. Geopolitical tensions can
also affect the consumers perception and confidence on luxury brands depending on the
decisions the company face and how they respond to it. For example, if BMW don’t closely
monitor their geopolitical factors and associate negatively with other countries, it could
negatively influence consumer preference.
https://www.cnbc.com/2022/03/16/bmw-cuts-2022-profit-forecast-for-car-segment-due-
to-ukraine-war.html#:~:text=BMW%20lowered%20its%20profit%20margin,the%20war%27s
%20effects%20on%20production.

Regulations and laws

TRADE LAWS
Interest rates
Employments
tariffs
POLITICAL CONDITIOn

Social Factors
Social factors can impact the business in several ways both negatively and positively. For
example, changes in automotive industry can have a massive impact on the demand for
BMW’s vehicles. This can be as the growing demand for hybrid vehicles are continuously
increasing and consumers would be purchasing BMW’s hybrid cars rather than the others.
The demand for hybrid vehicles is increasing due to consumer’s becoming more socially
conscience towards more sustainable and environmentally friendly vehicles.
https://www.press.bmwgroup.com/global/article/detail/T0374213EN/transformation-and-
responsibility:-bmw-group-steps-up-technological-change-for-sustainable-future?
language=en . As a response to this, BMW will need to change their marketing strategies
and remain updated on the constant changes of social factors. The company needs to
ensure that they keep up to date with the current social factors, so they comply with the
company’s goals and aspirations. They strive to adapt their goods and services to meet their
consumer’s demands.
https://www.bmwgroup.com/en/sustainability/goals.html#:~:text=The%20BMW%20Group
%20aspires%20to,more%2C%20increasingly%20comprehensive%20sustainability
%20solutions.

Changes in social trends can also influence consumer’s preferences such as the constant
changes in technology. There has recently been an increase in demand for digital and smart
features within vehicles as it enables drivers to drive seamlessly whilst having access to
multiple services at a time. Due to this, BMW will need to change the manufacture of their
vehicles as they need to update their features and systems to meet their consumer’s needs.
Alongside with digital features, consumers are shifting towards personalisation and
customisation on their vehicles as they seek uniqueness and individuality.
https://www.brandvm.com/post/bmws-marketing. It is crucial for BMW to keep up with
social trends as it enables the company to stay relevant in the market as they know what’s
currently trending and what’s not. The business needs to ensure that their goods and
services align with their company values and maintain a positive influence on their
consumers. Also, by remaining relevant within the market, BMW will be able to maintain
their competitiveness within the market and continuously attract new customers whilst
keeping their loyal ones. https://paulbarsch.wordpress.com/2011/05/09/how-bmw-is-
designing-a-better-customer-experience/
Technological Factors

Technological factors can impact BMW as consumers expect up-to-date technological

advances and features within the vehicles they purchase. As the development in the
automobile industry increases to abide with the environmental benefits and battery
technology, BMW has researched and developed necessary actions to ensure they are
keeping up to date with these technological changes. The company pays attention to the
vehicles they introduce to the market with intense research and development. They are also
innovating their vehicles by adding more autonomous driving and automatic car parking. In
order to achieve this, the company need to develop their sensor systems and collect the
right data such as necessary traffic maps, navigation systems and vehicle surroundings for
testing the safety and reliability of the vehicles. https://www.bmw.com/en/automotive-
life/autonomous-driving.html. Autonomous driving is efficient when driving due to the
enhanced safety that is included within the sensor systems as it minimises the choice of
human error since it’s AI operated. It also saves a lot of time as there is a built-in system
showing the best routes to take to avoid traffic which will allow the passengers to relax.
https://www.swarco.com/mobility-future/autonomous-driving/autonomous-driving-pros-
cons#:~:text=The%20advantages%20of%20autonomous%20driving,high%20cost

Another technological factor is that the digitalisation in production has taken up a massive
influence in the motor industry. Digitalisation has changed consumer preferences and
influences on them buying more smart vehicles. With this, BMW has used it as an
opportunity to branch out to new customers and change the entirety of their production
system and process. The company announced that “modernisation also benefits our
associates over the long term’ in response to the digitalisation. Digitalisation and innovating
technologies impact BMW as digitalisation makes the BMW’s customers have a more
enjoyable experience as most of the vehicles are equipped with assistance and connectivity
features. Furthermore, the company has used their new digital advances to market their
channels and reach a wider target audience and to promote their social media presence.
https://www.bmwgroup.com/en/innovation/industry-4-0.html#:~:text=Digitalisation%20in
%20production%2C%20also%20referred,associates%20over%20the%20long%20term.

Legal Issues
Environmental (and Ethical) Factors

Environmental factors heavily impact BMW as people become more environmentally

conscience. One of the factors the company face is carbon emissions where the business
need to continuously improve their vehicles to reduce CO2 emissions as much as possible.
Due to the ongoing concerns on carbon emissions, the company is aiming to develop their
vehicles as much as possible such as their hybrid and electric vehicles to implement more
sustainable vehicles. However, the company has decreased the carbon emissions of their
vehicles in recent years within the motor industry by more than 42
Situational Organisational Analysis: SWOT

Strengths

Weaknesses
Opportunities

Threats
Porter’s 5 Forces Model

Competition in the Industry

Potential of new entrants into the industry

Power of Suppliers

Power of Customers

Threat of Substitute Products

Assessment of how the business is affected by the business environment

(1 to 2 pages) and refer to what you have already produced in your SWOT
analysis and PESTEL analysis and develop into researched and backedup
information**delete* Consider the following points/questions to help with
your assessment;

 After conducting your SWOT and PESTLE analysis, what are the
implications for your company potentially adapting their strategy (in
relation to their mission and main aims)?

 How can they reposition themselves against the weaknesses and

threats that you identified in your SWOT analysis?

 How does the strength of branding for your company support

international growth and entry into new foreign markets?

 What level is the threat of competitors and the intensity of

competition. (Also consider the scale of what competitors also offer.)

 Explain any trend you might find where governmental policies (in the
countries your business operates in) either support or diminish the
growth of your company’s business activities.
Evaluate the extent to which the business environment affects a given
organisation, using a variety of situational analysis techniques

You now need to look at each point in your SWOT and PESTLE analysis and
evaluate using extensive research and referencing skills the most influential
factors affecting your business. (Remember to include a ‘References’ section
with title below. (4 pages approx.)

Conclusion

Evaluate the key factors you have identified in your report that most affect
your organisation and then go onto explain how the organisation may need
to adapt its strategy (plan) going forward.