Pest analysis involves the analysis of the car industry in France and South Korea by investigating key elements in the countries such as political, economic, social and technological environment that the industry thrive in. as a matter of fact, these are the micro environmental factors used to used in strategic management of a given industry. It is therefore part of external analysis used for conducting market research and will provides the general overview of the environment that the car industry operates and therefore very important in explaining the market growth, the position of the business, opportunities and the directions the industry players should take (Harbour, 2001).
The South Korean auto mobile industry has invested in huge changes to make it a force in the industry. The industry has been able to produce much optimized products for its customers around the world. Some of the vehicles exported from South Korea include trucks, two wheelers, multi utility vehicles, luxury and commercial vehicles. The South Korean Giant is in fact providing immerse competition for Japanese autos that include Suzuki and Honda.
Car industry is therefore considered to be a very lucrative industry that has attracted stiff completion between traditional manufactures like France and the emerging industrial power house like South Korea and other Asian Tigers. Just like in SWOT analysis, five forces model is very useful in business strategy. They include threat to new entrant, threat of substitute, threat of completive rivalry, bargaining power of buyer and suppliers.
In the automobile industry which is considered to be very labor and capital intensive, some of the main cost of manufacturing and selling automobiles includes: the labor cost needed in the engineering and redesigning of the motor vehicles although much of the manufacturing is done on with machine and robots. The labor cost in Europe and France in particular is has risen in the recent past. This had consequences on the final pricing of the products.
The France automobile industry which is a pioneer in the field is currently the 10th largest in the world when it comes to the unit vehicles produced and sold. It is ranked third in Europe. This is way below the automotive industry in South Korea which is currently raked fifth in terms of production unit and the sixth in terms of volumes of automobile exported. The industry which stared as an assembly of the auto parts imported from other parts of the world has grown to be among the most advanced in the world in terms of automobile produced. The Korea auto mobile industry has also grown significantly de to the use of technology to develop more energy efficient cars that responds to the needs of the times.
The economic reforms and deregulation that that is cu in South Korea has transformed the scene to make the Korean cars very competitive. The industry revitalized the industry by manufacturing some in house models which attracted customers to the vehicles unique designs and capabilities. Currently, South Korea has become one of the fastest growing industries in the automobile markets. Some of the changes that need to happen in the
The social cultural element has seen the vehicle manufactures in the two countries accommodate particular elements such as demographic parameters that influence consumer behavior. In most parts of France, the manufactures have to accommodate issues of lifestyle and social status while making the personal cars. The governments’ policy that relate to issues of social cultural phenomena has a major impact on their purchasing power.
The concern of the global warming faced by the automobile industry in the in France is another big treat to the growth of the industry. His has made the industry to research in the development of alternative fuel vehicles. Although I the beginning they were not keen on such costly ventures, the government legislation made it a requirement for the auto makers industries to adopt a technology that make more fuel efficient cars (Greenber, 2003).
According to the five forces completion model in the automotive industry between France and South Korea, the traditional markets that were initially a reserve for the France lucrative cars are now the target of South Korean made cars. As a matter of fact, the Renault brand of cars which is France buy s more than 70% of the Korean Samsung motors and currently owns more about 80% of the firm based in south Korea. The statics show that the automobile industry in France is not doing so well as that of South Korea.
Going forward it is important for the auto manufacturers in South Korea to move the industry forward by coming up with more cars in the luxury market. It is also imperative that he industry players like Hyundai and Samsung takes care of the concern of the environmentalist and develop more cars that will be sustainable the producer and the final consumer of the cars. The South Korean auto industry has benefited so much form the globalization and liberalization of the world economy. This has seen all the major players like Renault of France shift base and invest in the auto companies in South Korea.
Greenber, Karl. Jan 6, 2003, Automakers steering drivers into evolution revolution. Brandweek. v44 i1 p6(1). G.M. plans 10,000 Temporary Layoffs. The New York Times, (Oct 29, 2004) pC4(L).
Harbour, Ron. Jan 2001,Small-Car profit strategies. Automotive Industries, v181 i1 p13.