Pestle Analysis for Hybrid Car Industry in the US - Coursework Example

?PESTLE Analysis for Hybrid Car Industry in US During the last few years hybrid car has become a popular of discussion. Today, hybrid cars have their own place in the industry. Environmental concern and growing price of conventional fuel has made industry experts to look for other means of running car. Today, many companies are manufacturing, selling of developing hybrid cars. A PESTLE analysis of the hybrid car industry in US is presented here in brief. The Political Factors: Political developments in the US regarding manufacturing, sales and purchasing of hybrid cars are so far favourable for the industry. Politicians, in as early as 1990, have put emphasis on better environment; and thy showed concern for environmental pollution. The Clean Air Act was revised in 1990 and became tougher on emission norms (Wilson and Dilulio, 2008 p.561). Today, fuel is not only related to environmental issues, but also a concern for national security. In 2007 president Bush showed concern on America’s dependence on foreign petroleum. The present president, President Obama too is concerned. He wants to reduce the America’s ‘Addiction to foreign oil’. In 2009 Obama revised climatic policies and forced car makers to build more fuel efficient and pollution free cars (Tan et al, 2012, p.3). Presently the government provides tax benefits to the buyers of hybrid cars (Boone and Kurtz, 2013, p 75). From the above facts it is clear that political opinions and activities in the USA are very favourable for Hybrid cars. Tougher policy on vehicle emission means increased opportunities for zero or minimum emitting vehicles like hybrid cars. Economic Factors: There are some economic factors that can influence the hybrid car industry in the USA. America is largely dependent upon other countries for petroleum. If domestic fuel consumption is reduced US’s oil import will reduce. This will surely lessen US’s trade deficit (Tan et al, 2012, p.4). Environmental pollution and global warming have their costs. A country must take necessary actions to counter the effects of pollution and warming. This involves cost. Hybrid cars, which are more environment friendly, can reduce those cots (Tan et al, 2012, p.4). Fuel expense is a burden to users of cars. People have to spend a considerable amount of their earnings on fuel. As hybrid cars are more fuel efficient people can save money on fuel (Miller and Stafford, 2020, p.38). However, a hybrid car costs more than a conventional car. Therefore, the initial high purchasing cost might discourage potential buyers of hybrid cars (Miller and Stafford, 2020, p.38). The government has made special budgetary allocations for new generation vehicles. This money is being spent on development of fuel-efficient and low-emission vehicles. This fact is an excellent encouragement for hybrid car industry (Tan et al, 2012, p.4). Therefore, it is clear that most of the economic factors can positively influence the US hybrid car industry. However, high price of hybrid cars might be a deterrent. Social Factors: The hybrid car industry could be influenced by several social factors. The environmental pollution is linked with social issues like health. Conventional cars that emit more harmful gases cause more damage to human health. Hybrid cars emit a negligible amount of these gases. Therefore they are seen as more human health-friendly. Moreover, hybrid cars are silent. Noise has negative impact on health. In this aspect too, hybrid cars promote better health (Tan et al, 2012, pp.4-5). Hybrid cars are now linked with social status. Reports show that US consumers buy greener products to improve social status. Consumers are even ready to ‘sacrifice luxury and performance to benefit from the perceived social status that comes from buying a product with a reduced environmental impact’ (Vaughan, 29 March, 2010). As hybrid cars are greener, owning a hybrid car will improve the owner’s social status (Vaughan, 29 March, 2010). Another social fact worth mentioning here is: women prefer electric cars. As hybrid cars are electric too, they are popular among women (Schiffer, Butts and  Grimm, 1994, p.120). Therefore, it can be safely said that social factors related to hybrid cars are very favourable for the industry. Technological Factors: Hybrid cars combine IC engine technology and electric technology to get the best and most fuel efficient results. IC engines burn more fuel and electric motors cannot generate enough power. But their combination can overcome both. During acceleration more fuel needs to be injected in to the engine. But in case of hybrid engine, the electric motor provides that extra power for acceleration; and thus, save fuel. In time of breaking energy is lost through friction. But in case of hybrid cars this power is converted to electrical energy and gets stored in a battery. During downhill riding too the surplus energy can be stored similarly in a battery. This stored energy could be used to provide extra power that is required to go uphill (Tan et al, 2012, p.5). Though advancements in modern technology have made hybrid cars a reality, it still requires more improvement. Some incidents of hybrid cars getting recalled by the manufacturers for technological faults were seen in recent past (McCurry, February 9, 2010). The hybrid car industry seems to have enough technology to make hybrid cars a reality for people, but at the same time the industry need to conduct researches to improve them. Legal Factors: Some legal issues can also influence the success of hybrid car industry. There are some negative developments that can affect the industry. As hybrid cars are silent they might cause accidents. The National Federation of Blind of US objected that the silent cars will put the blind people, who rely on their hearing to spot an approaching vehicle, at risk (Tan et al, 2012, pp.5-6). However, some legal issues are boon for hybrid car industry. For an example, the strict environmental laws on emission have given hybrid car-makers some added advantage over conventional car-makers (Boone and Kurtz, 2013, p 50-51). Cities like New York are trying to make hybrid taxis mandatory for greener environment. At the same time their efforts are being legally challenged by the conventional taxi owners in courts (Grynbaum, February 28, 2011). Environmental Factors: Concern for environment is the main cause that spurred the development of hybrid cars. Hybrid cars consume less fuel and emit less amount of harmful gas. The conventional cars emits harmful green house gases like CO2, CO, SO2 etc. in large amount causing global warming Thus hybrid cars are beneficial for environment (Anderson, and Anderson, 2010 p.107). Not only air pollution, sound pollution can also be controlled by the use of hybrid cars as they are silent. Cities in US are getting more and more populous with time. Some streets are always noisy with vehicular traffic causing serious health problems to its dwellers. Legal restrictions on noise pollution can provide additional opportunities to hybrid car industry (Tan et al, 2012, p.6). Increase in population in many US cities has increased the number of vehicles in those cities. This put the cities at greater risk of environmental pollution. This factor can accelerate the growth of environment friendly hybrid car industry (Anderson, and Anderson, 2010 p.107). A fact the hybrid car manufacturers should always remember that, given a choice, many people will choose a powerful car over an environment friendly car. So, hybrid carmaker should constantly make improvements in terms of power and performance (Anderson, and Anderson, 2010 p.106). SWOT Analysis: From the above discussion of the six factors a short and simple SWOT analysis could be performed by confining the analysis under only these six factors. Strength: The strengths are political support, economics of fuel, improvement in balance of payment of the country, enhanced social status of the owner, cutting edge technology, environmental rules that benefit hybrid car owner and makers and above all the environmental friendly performance. Weakness: The weaknesses of the hybrid car industry are high purchasing cost of the car, need for further technological improvements and comparatively inferior power and performance of the cars. Opportunities: New and stricter environmental laws will make buying and using of hybrid cars cheaper. Day by day people are growing more and more concerned about environment. This will influence them to opt for the greener hybrid cars. Moreover, only a fraction of car owners are using hybrid cars; there is a vast market open for this sector (Anderson, and Anderson, 2010 p.107). Threat: As discussed under the legal factors, there are some minor legal threats. Opposition of some people to the new technology is also a threat. Effects of the factors on business activities and Conclusion: Each of six discussions under PESTLE analysis above includes a brief discussion on how a factor can influence the hybrid car industry. Here a summery of them is made. The political factors of the hybrid car industry are favourable to the industry. Companies should lobby for more. Companies should take care of the high price of a hybrid vehicle while giving the customer more fuel economy. Companies should consider the social factors like enhanced social status of greener car owners, women’s preference for hybrid cars etc. while developing promotional campaigns for their cars. Every hybrid carmaker needs to improve their existing model and develop new models through constant research and development programs. The companies must try to win public favour by repeatedly telling people about the environmental benefits of the car. This will give the industry strength for fighting against the legal challenges it may face. This discussion could be concluded with a new hope of growth in the hybrid car industry. References: 1. Anderson, C. D. and Anderson, J. (2010). Electric and Hybrid Cars: A History. Jefferson: McFarland & company Inc. Publishers. 2. Boone, L. E. and Kurtz, D. L. (2013). Contemporary Marketing. Mason: South western Cengage Learning. 3. Grynbaum, M. M. (February 28, 2011). City’s Lengthy Push for Hybrid-Engine Taxicabs Hits a Legal Dead End. The New York Times. Accessed on 27 May, 2013. Available at < http://www.nytimes.com/2011/03/01/nyregion/01taxi.html?_r=0> 4. Miller, R. L. and  Stafford, A. D. (2010). Economic Education for Conumers. Mason: South western Cengage Learning. 5. McCurry, J. (February 9, 2010). Toyota issues global recall of hybrid cars. The Guardian. Accessed on 27 May, 2013. Available at < http://www.guardian.co.uk/business/2010/feb/09/toyota-hybrid-cars-global-recall> 6. Schiffer, M. B.;  Butts, T. C. and  Grimm, K. K. (1994). Taking Charge: The Electric Automobile in America. Washington: Smithsonian Institution Press. 7. Tan, J.et al (2012). PESTLE Analysis on Toyota Hybrid Vehicles. Accessed on 27 May, 2013. Available at < http://ic-tmt.utem.edu.my/index2.php?option=com_docman&task=doc_view&gid=25&Itemid=31 > 8. Wilson, J. Q. and Dilulio, J. J. (2008). American Government: Institution and Policies. Boston: Houghton Miffflin Co. Read More