Exams questions answer Assignment Example | Topics and Well Written Essays - 2750 words

Exams questions answer - Assignment Example PEST is one of such mechanism that is used for the analysis of the macro environmental factors. Apart from this the internal analysis of the industry is also important to understand the profitability of the industry and factors impacting it (Graham, 2008). The study also focuses on Porter’s Five Forces analysis of the luxury car market of India. PEST Analysis PEST focuses on four important environmental factors that are to be scanned like political, economic, social and environmental. Each of these parameters are defined via this analysis and it influences the scope and activity of the organization. By having a broad view related to the categories that are studied under PEST the managers will be able to bring out innovative ideas and frame strategies that can fit into the situation most appropriately (Reddi, 2013; Solomon, Marshall and Stuart, 2009). Political The political factors signify the government rules and regulations that are framed and the company needs to work under that rules (Waters, 2006). The Indian automobile industry has been under the strict rules of the Indian government. In 1940 the assembly plant opened by the foreign manufacturers had been closed by the Indian government for not manufacturing car in India. The government even framed regulations regarding what type of car the manufacturers should design to protect themselves from the competition. During the period of 1950s and 1960s the industries along with the support from the government made significant effort towards the manufacturing the components to be supplied to the auto manufacturers. However, owning a car was considered luxury due to the restrictions from the government over granting licence and restricting both production and import that hampered the growth of the industry. The industry at that point of time was facing high sales tax, excise duties and custom duties on imports. In 1980s government policies and regulations were liberalised and further liberalization occurr ed in 1990s that allowed cars to be manufactured without licence but import restrictions remained intact. In the year 2002 new policy reforms were announced, which allowed 100% FDI in the automobile sector. In 2007 the sector emerged as a buoyant industry (Parmar and Thadamalla, 2008). Economic Until early 1980s the growth of the automobile sector was restricted. After that liberalization was initiated by the government. In 1990s economic liberalization took place that initiated growth in the sector. After the liberalization many players entered the Indian automobile market like Honda, Daewoo, Volkswagen, Toyota, Hyundai etc. Apart from the government regulations, availability of retail finance and low interest rate were the major reasons that lead to the development of the automobile industry. During the period of 2001-2006 the Indian automobile sector has shown a growth at CAGR of 18%. In 2006-07 India was at the fifth position in production of commercial vehicles. During the same period the production of passenger