Directions : Assume that your manager has asked you to prepare a short report co

Question

Directions: Assume that your manager has asked you to prepare a short report concerning the external environment of your firm, Target. Target has recently been rocked by several setbacks (exiting the Canadian market, the Christmas hacking incident, and several poor sales/income quarters). In the report, I want you to focus your attention on the U.S. market

PESTEL ANALYSIS Identify five of the most important variables in the external environment that could have an impact on Target’s business. Use the PESTEL Framework from the text as a guide in completing this exercise. In identifying these five highest priority or most important external variables that Target will want to track over time, each must come from a different category of the PESTEL. For the report, you might want to set up a table something like the following (probably using a landscape print setting). The example used below is for the auto industry, whereas your report will be on the auto industry PESTEL environment.

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Answer-

Report on auto industry PESTEL analysis for Target in the US market. Important 5 factors are-

Trump administration (Political)- Since the day Trump administration took office of the US government the condition of the economy has been constantly changing. With the change in the Visa requirement and immigration rules the domestic industry has been promoted but the companies have taken a hit as importing talent has become difficult.

Impact- with such rapid evolving political scenarios it has become difficult for the companies to function and this may lead to a higher manufacturing cost for the auto industry. The fall in consumer income may lead to fall in demand for premium automobiles.

Electric vehicles (Environmental)- the deteriorating environmental condition of the earth has forced the manufacturers to come out with innovative electric vehicles and vehicles working on renewable source of energy.

Impact- the impact of the above can be on the existing line of vehicles as the consumer now preferring more of e-vehicles rather than conventional vehicles and hence impacting demand and profits of conventional automakers.

Cost to the society (Social)- the auto maker has to contribute to the society and with companies like Tesla focusing on societal development has led to the automobiles working not just on increasing profits but also benefitting the society at large.

Impact-Increase in cost of the auto maker on Corporate social expense and product development will have top keep society at heart rather than solely profits or revenues.

Cost of manufacturing (Economic)- There has been a constant innovation in the auto industry and because of which the cost of manufacturing has been going up. The labor supply in the US has fallen and this has led to increase in variable cost. Also due to sanctions and import restrictions the cost of import and export has varied to a vast degree affecting the auto industry.

Impact- Target will have to focus on not importing raw material for the car and exporting cars more to nation that have subsidies and security. The company should closely monitor the labor cost.

Rapid innovation (Technological). Companies like Lexus, Audi, Tesla have been looking at not just innovation in the fuel type but also in engine and design. This has lead to increase or change in market capturing abilities of the companies.

Impact- Target has to be updated with the market development and the change in the market demands. Also the competitor analysis is at core and the technology of the competitors must be followed and innovated in the company.

Ethical duties (Legal) For all the companies it is required that they follow the legal compliances and abide by the code of ethics. We have seen a major case of Volkswagen defaulting on pollution norms hence facing tough times.

Impact- Target need to comply with the law and ethics and thereby should not put itself in any complicated situation and hence saving its reputation and cost.

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