Industry Specific Research Paper

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Industry Specific

My industry of choice is the auto industry, and I will analyze it using the PESTEL framework. The political environment is critical to the auto industry for a couple of reasons. In most countries, the auto industry is significant, and therefore becomes politicized. The bailouts of GM and Chrysler are just two examples -- albeit extreme ones -- of the intense government involvement in the shape and size of the automotive industry. Another good example is NAFTA, which has resulted in production shifts to Canada and Mexico, but also the opening of the Mexican market. The current climate holds that the governments of the U.S. And Canada are divesting some of their control over GM and Chrysler, but will remain heavily involved in the industry, with the objective of supporting the Big Three, as well as major foreign automakers. The political environment also shapes demand conditions.

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For example, high taxes on gasoline in Europe have that market geared towards smaller vehicles. Government support for ethanol vehicles, or emissions restrictions implemented by states, all form part of the political environment. Currently, there is a move among governments for cleaner vehicles, but otherwise the political environment is generally favorable.

The economic environment is generally unfavorable for the automobile industry. Europe faces significant economic struggles, the U.S. is only having a slow recovery, and while Asian markets are driving growth in the industry even their growth is starting to slow. The price of gasoline falls under the macroeconomic variables, and is generally unfavorable with a rising trend lately. Thus, there is little optimism for a large-scale increase in auto sales in the coming years.

The social environment remains favorable, however. This environment measures how people respond to the product, and there are few….....

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