Analyze and describes macro-environmental factors such as Political, Economic, Social and Technological
Analyze and describes macro-environmental factors such as Political, Economic, Social and Technological
Pest Analysis – Audi R8 in the UAE
Introduction
PEST analysis describes macro-environmental factors such as Political, Economic, Social and Technological. It is used to evaluate environmental forces acting on an organization. It is a tool to understand market growth or decline, potential, direction for operations and business positions of the company.
When looking at the Audi R8 there are political, economic, social and technological factors that take place when launching and marketing a new product in a new place. We are launching and marketing the Audi R8 in the UAE and our goal is to make the R8 the new hot supercar of the UAE.
Political
When looking at the UAE and the automobile industry there are some factors that can affect Audi in their process of being successful. Governments around the world are favoring low emission vehicles and are creating certain standards for companies to stand by (Pratap, 2018). This will be an issue for Audi because the R8 is not a fuel-efficient car. On a positive side, each of the seven Emirates finds themselves to have separate governmental organizations, allowing for flexible management across the country (Bush, 2016).
The UAE is a reliable auto market because of low import tariffs and a range of tax incentives (United Arab Emirates – Automotive, 2018). Therefore, the entry of the Audi R8 will not face an excessive threshold. The UAE is heavily dependent on imports in the automotive industry, and almost all cars and light vehicles are imported (United Arab Emirates – Automotive, 2018). Since the target market does not have automotive severe manufacturing activities, this is an opportunity for Audi R8. The UAE’s trade policy is in line with the obligations of WTO, with few trade barriers, which facilitates the entry of automotive products into the local market (United Arab Emirates – Automotive, 2018).
Economic
High rates of roadway accidents have been also an issue in the UAE. From researching the past few year’s yearly accidents, on average there was about one fatality due to motor vehicle crashes every eight hours, and more than 25 injuries per day (Hawes, 2009). This affects the economics of the UAE because injuries related to car crashes is 2.5% of the UAE’s GDP. The overall economic loss due to fatalities and injuries reaches a total of $6 billion every year. Each fatality costs about $1.92 million while each severe injury costs around 2.2 million (Amer, 2005). The Audi R8 currently has no safety ratings because the car is too expensive to test crash. Having a car that can reach extreme speeds and has no proven safety ratings can contribute to raising these statistics.
The high GDP rate in the UAE is from their main exports are oil and natural gas. Another contributing factor to the high GDP is tourism and foreign investments this offers the government foreign ownership with no taxes. However, there are other contributors to the GDP. For example, manufacturing contributes about 13%, hotels 11%, real estate 9%, construction 9%, transportation 7%, and finance and insurance 6%. According to the UAE government report, the unemployment rate is very low and is currently at 1.78% (The World Factbook, 2018). The UAE exchange rate is stable and highly competitive. This contributes to the international purchasing power of the UAE (Waheed, 2015)
Social
The UAE has wealthy culture, since having such a high GDP and low unemployment rate, the residents of the UAE typically live comfortable lifestyles where they can afford supercars like the Audi R8 (Bush 2016).
This region includes residents and immigrants with high disposable incomes. People are interested in luxury models and have a significant demand for exceptional performance and appearance products (United Arab Emirates – Automotive, 2018). The introduction of the Audi R8 is in line with local people’s preference.
Tourism is also a major factor for the Audi, many people come all over the world to visit cities like Dubai and to experience the wealthy lifestyle. The UAE as well holds many car events in this region. Formula 1, one of the biggest racing events in the world, is held in Abu Dhabi. These events are great for showcasing cars and connecting with other car enthusiasts around the world (Abu Dhabi, 2018). The UAE is also a hotspot for tradeshows and launches for new technology and cars, having this reputation can be beneficial to Audi. Many different nationalities live in this area and travel to this area so seeing the R8 being used in the area could increase sales in other countries as well as increasing popularity in its own area (Auto Events in UAE, 2019).
The market for the automobile industry is on the rise in the UAE, it currently has the highest per capita spending on luxury vehicles than any other region in the world. In the UAE, one in six cars is sold from the premium brand with Audi, BMW, and Mercedes in the highest demand (Dubai’s Auto Industry Is On The Rise, 2019). With this growing car culture, Audi should continue to put a strong focus on this region. Different styles of cars are preferred in different cultures, fortunately, UAE prefers the higher end, luxury cars over trucks and SUV’s like other countries (Pratap, 2018). The Audi R8 falls in the category of what is socially acceptable in the UAE.
Technological
In today’s society, technology is more prominent than ever. With the UAE’s wealth to purchase the highest-grade technology and young population who knows how to use it, this country is thriving with technological factors that are important to the inhabitants of the country (Bush, 2016). Technology and innovation have become an important determining factor of market share and sales in the automotive industry (Pratap, 2018). Audi’s technology includes the Quattro all-wheel drive smart technology, green technology, LED technology, and driver assistance, cameras, sport-tuned fix suspension, Audi MMI System, Bang & Olufsen sound system, sleek exterior design, along with TFSI (Audi, 2019). These are the few of the valuable feature that will attract a customer in the UAE.
Due to the government’s encouragement of intelligent and environmental protection technology, driverless cars, hybrid cars, Hydrogen vehicles and so on are the mainstream trends (The Future of the UAE Automobile Market, 2019). Audi R8 has a high technology content, but it could not fully follow the future development trend.
Requirement :
There are TWO (2) requirements:
1) An individual contribution;
2) The TEAM contribution as per the RUBRIC.
Here is the detail on the TEAM contribution for Milestone 4:
Milestone Four: Intrapreneurial and Entrepreneurial Opportunities
On April 9th, you will submit the last portion of your draft business development plan for your company, covering the specific opportunity assessment along with the trends and discussion on sustainability. This plan will be based on the results of Milestones One and Two in that it will consider that past forces of market change and the current capabilities and limitations of the company. This plan will align the company’s efforts to exploiting intrapreneurial opportunities as well as entrepreneurial opportunities, depending on the company’s capabilities. The plan should reflect consideration of potential future impacts on these plans such as changes in the economy, market position, technology innovation, or sociopolitical factors.
The INDIVIDUAL CONTRIBUTION is a 2 page summary with a Reference page.
For this contribution, EACH team member will identify 5 valid sources that focus on the potential future impacts on these plans such as changes in the economy, market position, technology innovation, or sociopolitical factors.
VALID sources should be those you get through the Library website.
They (SOURCES) should be properly cited using APA Style format.
Leader asked for :
Entrepreneurial opportunities/assessment and the relationship between market domain, and PEST analysis
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