PESTLE analysis is a tool usedby businesses to analyse and observe the macro-environmental factors that mayhave an impact on their organisation by reducing threats and by gaining valuableadvantages.
These advantages aid with the interpretation phase, productdevelopment product launching, content marketingstrategies, and other factors, to increase success. PESTLE is a mnemonic whichbroadened out denotes, P for political, E for environmental, S for social, Tfor technological, L for legal and E for economic. (Anon., n.
d.) PoliticalFactors:Volkswagen merelydoes not operate in two or three countries but in more than in an excess of 150countries. Therefore, this depicts that VW is facing different politicalsituations in those countries. Political situations vary country to country,and sometimes these situations can vary in the locations of where thesecountries are based. For example; political situations are unsimilar in Europethan in Asia. To overcome this, VW has to come up with strategiescorrespondingly to meet these factors. By operating inthe car industry, policies are closely respondent to the government of acountry. Furthermore, industries like the banking and financial sectors of acountry/nation have a massive impact on the sales of cars as these industrieslend things like loans.
Loans often than none come with interest rates, whichare determined appropriately to the government policies. Emerging economies, suchas China and India are eager to advance into the automobile industry and VW istaking advantage of this situation. The major task in front of Volkswagen is torecognise the different political pressures. For example Chinese government hasdifferent policies than the Brazilian government. (OxbridgeWriters 2012). Economic Factors:The automobileindustry is a vital industry in the progress of any country as it contributesto the GDP of the nation. In the countries VW operates in, it aids in the GDPof the countries, helping their economic growth. In light of this manydeveloping economies/countries help in the development of automobile industrywhich is an advantage for Volkswagen.
Industries like steel and glass arehugely benefited by the automotive industry and are able to develop. Theexpansion and progress of industries like glass and steel are beneficial foremerging economies such as China and India. As these economies develop,citizens will tend to have a higher disposable income, allowing them to purchase’luxury’ products. As a result, VW can benefit from this and their sales wouldincrease from the inflow of extra customers.However, economicconditions are mostly uncertain and cannot always be predicted. The Europeandebt crisis was a huge problem in the industry of automobiles, people wereuncertain about the economy hence were cautious to spend, or plainly just didnot have enough money for the purchase of a car.
This would have an impact onVW as they may see sales decrease, hence revenue falling incorrespondence. Vehicle sales in SouthAmerica rose substantially in 2011, going beyond the previous all-time highrecorded in 2010. However, a rise in inflation and high interest rates saw adecline in sales in the second half of the year.
Volkswagen has avariety of makes for different segment markets depending on things like, priceand quality. For example; Volkswagen Polo is a small car ideal for city usewith an affordable price, whereas the Jetta is of lower quality, less featuresand good for a family. If a countries economic conditions are bad, for example;disposable income may be low or interest rates are high then Volkswagen caninject different makes of cars in order to help increase their sales. Sales ofcars can be affected by the cost of fuel which is correlated to the economiccondition of a nation. To deal with this trouble Volkswagen can concentrate onsubstitutes of diesel and petrol (Papers4You 2009).Social Factors:The progression of the automobile industry is affected bysociety, therefore this is of paramount importance to Volkswagen alongsideother factors. Volkswagen employs over 626,715 people.
The advancement oftechnology such as cars, helps in the progression of society and alters the waypeople go about their life. Even with this great advancement, companies likeVolkswagen have to be careful how they portray themselves through their staffto their promotions/advertising. In January 2013 a Volkswagen commercial aired during theSuper Bowl whereby it got heavily criticised for being racist as it depicted the use of a Jamaican accent from awhite actor, with a critic commenting ‘it’s like blackface with voices’. The advert cost$8million to produce but was viewed as derogatory as it was suggestingCaribbean people are stress-free and calm. (Reporter, 2013).
When it comes to social factors, companies such asVolkswagen have to be careful as not to offend people whether it may be peopleof different races, religion or colour etc. High performance, fast cars are of thenorm now, but having these cars with high speeds increases the risk of anaccident, which in turn generates a negative feeling in society. Other problems for society may includepreservation and space vital to a car. Therefore, Volkswagen needs to take careof all these social complications (Oxford UniversityPress 2007). When it came to lightthat that Volkswagen purposely programmed turbocharged direct injection (TDI) diesel engines to activatesome emissions controls onlyduring laboratory emissions testing, the company received severe backlash.