BSS058-6 Strategy and the Global Competitive Environment Assignment Sample 2023
Introduction
This report is based upon examining the contemporary external strategic environment, to identify the external business organisation critical discussion in regards to the UK has been carried out through the help of Pestel analysis. For the same manufacturing industry of the UK has also been taken into consideration, where their current trends and issues will be discussed and presented during this report. The external analysis for the industry determines the opportunities and threats that either drives profitability and growth for the concerned industry.
UK’s manufacturing is considered to be one of the most successful industry as it grows by 1.45% annually and contributes towards 25% growth of the UK, GDP. Examining further this industry also employees more than 2.7 million people and accounts for 45% of total exports (Uktech, 2020). This report will critically examine the opportunities and weakness that are being presented by Pestel analysis of the UK in regards to the manufacturing industry. Three most potential plausible situation will be examined and based on that one most appropriate plausible situation will be considered followed by appropriate justification. Critical examination along with identification of the current trends and its implication within the manufacturing industry of the UK will be examined and determined during this report.
Pestel analysis of UK, Manufacturing industry
Pestel analysis for the business organisation benefits them in determining the most appropriate situation upon which decision is being taken to consider the investment to improve the overall process and productivity of the organisation. Pestel analysis also helps in examining about the external business environment that includes of changes in taxation reform, policies, economic trends and societal factor that increases the capability of the industry to make up their mind to invest and establish their operations within the respective countries. Pestel analysis in regards to the manufacturing industry within the UK seeks towards examining crucial and important information. Examining the manufacturing industry of the UK, it has been noticed that post the pandemic situation the production and productivity has sharply gone down and has increased the issue of stockpiling. Furthermore, the export of manufacturing goods has shown negative downfall since the year 2016. Considering this situation the pestle analysis benefits in examining the feasibility of manufacturing industry in respect of operating their business within the UK geographic location.
Political: Examining the political situation of the UK critical and significant information has been gathered that points out that corporate taxation within the UK has grown to 19%, along with 2.35% of trade taxes has also been levied. Considering the current pandemic situation it becomes difficult for the manufacturing industries in operating their business as because sourcing resources and raw materials from foreign suppliers have gone higher. Lockdown situation all over Europe and the UK has resulted in shut down of small and medium OEM manufacturer that has negatively impacted on the overall business operations of the UK manufacturing industry (Lse, 2020). The political situation of the UK for manufacturing industry is also not feasible in the current situation as because it has been predicted that post the pandemic situation the inflation of UK will grow to 2.1% from 1.8% in the past year that will also negatively impact on the operations of the manufacturing plants.
Economic: The start of the year 2020 for the economy of UK brought negative and unexpected results, as it was been forecasted that the UK economy is expected to grow by 2% by the year 2020, the current situation of the pandemic has drastically fallen down the UK economy (Bbc, 2020). Some of the worst felt sectors that suffered the wrath of pandemic includes of services, manufacturing and construction combining of this sector all total of production and productivity fell by 20.4%. Some of the factors that have resulted in negative growth of the UK economy includes lockdown and effects of social distancing that has negatively impacted on the downfall of consumer demand along with disruption in the supply chain. Combining of all this factor has negatively impacted on the economy of the UK along with business growth opportunities for the manufacturing industry.
Social: Social lifestyle of people due to the concern issue of the pandemic has also been transformed rapidly as most of the people are now maintaining physical distancing and avoiding to visit crowded places. Post the lockdown situation in the UK, the number of employees associated with different jobs visiting regular office has gone down drastically, more and more people are living under the constant fear of being getting affected hence as a result of which the number of people in the manufacturing industry has gone down drastically. Furthermore, it has also been expected that post the pandemic situation the purchasing capability of the people will fall drastically that will impact on their social lifestyle. Therefore, low employee turnover and falling of purchasing capability of people will negatively impact on the business operation of the manufacturing industry.
Technological: One of the opportunities that the manufacturing industry in the UK amidst the pandemic situation enjoys is the advancement in technology. The growth of technology that includes automation, system processing and AR and VR has significantly contributed towards the growth of the UK manufacturing industry (Uktech, 2020). The growth of technology makes it possible for the UK to streamline most of its business operations so that higher performance and productivity can be achieved over some time.
Environmental: The companies having operational and manufacturing bases in the UK are required to follow the environmental laws imposed by the government of the country. The manufacturers operating in the country are required to follow sustainability standards and ensure the protection of the environment and ecology by controlling their footprint based on the Environmental Protection Act (1990) (Legislation, 2020). This has accelerated the adoption of circular economy as the consumers have also become aware of the sustainability standards and CSR initiatives of the companies.
Legal: It is essential for the companies operating in the manufacturing sector to abide by the government regulations for ensuring smooth operations and avoiding any possibility of litigation or controversy. The companies operating in the manufacturing industry are required to abide by the Equality Act (2010) for ensuring that there is equal participation of people from all segments of the society and there is no discrimination based on gender, religion or ethnicity (Legislation, 2020).
Three most potential plausible situations
Automation in the manufacturing industry
Automation is one of the possible future trends in the manufacturing industry of the UK. The rise in international competition has influenced the manufacturers in the country to integrate automation in the business for increasing productivity and operational performance along with reducing cost in the long term. The use of robots in the manufacturing industry of the UK is less than average as the manufacturing industry of the country uses 74 robots against 10,000 workers each (Verdict, 2019). The performance of the manufacturing industry in the country has been fluctuating as the sector has relied heavily on the use of low-cost materials and low skilled labour. The use of automation and robots is predicted to take place in the manufacturing industry of the country in the future across the small and medium-sized businesses due to the prospect of increased productivity in the light of lack of availability of skilled labours (Industryweek, 2019). The current challenge in the manufacturing sector of UK related to the skills shortage and the possibility of further reduction in the skilled workforce due to Brexit as the manufacturing companies would not be able to employ workers from other EU Nations. There is a possibility of the replacement of 20 million jobs in the manufacturing industry with robots.
Acceleration of the circular economy
The circular economy is defined as the collective procedure of operation within an economic system consisting of closed loops in which the components of a product or service do not lose their values as the raw materials are used to their full potential along with the use of system thinking and renewable energy sources for the overall procedure (Manufacturingglobal, 2019). The aim of establishing a circular economy in any operation or manufacturing process is to eliminate waste and ensure the resources are used continually. The consumers of the modern-day have become increasingly aware of the core practices of the organisations and the brands from which they purchase. The sustainability standards and waste management of the manufacturers have become important to the buyers as it influences their purchase decisions. Along with this, the quest of the manufacturing companies to earn more profits and become sustainable in the long term has created the scenario of acceleration in the adoption of the circular economy (Industryweek, 2014). The model of adoption of circular economy enables the manufacturers to use a regenerative model for using all the raw materials and existing goods for more than one product life cycle. The acceleration of circular economy in production and manufacturing in the future is associated with high levels of innovation and generation of wealth in the process, which supports the triple bottom line of people, planet and profit (Lacy & Rutqvist, 2016). The increasing trend of recycling and recovering the products for neutralization is associated with the acceleration of a circular economy. The possibility of increasing resource productivity and enhancing competitive advantage along with reducing the negative impact on the environment it would accelerate the growth of the circular economy in manufacturing.
Leveraging supply chain for competitive advantage
The future of manufacturing in the UK is also associated with the process of leveraging the supply chain of organisations for gaining a competitive edge over the market rivals. The use of technology like artificial intelligence and blockchain has been associated with better tracking and timely disposal of raw materials across the supply chain. This would benefit manufacturing by reducing the time to market of the products and maintain quality (Azevedo & Barros, 2017). The automation of the supply chain with the use of robots and leveraging smart supply chain with the integration of advanced analytics would resolve the issues of responding and detection in the future along with creating automatic orders for the company based on the market demand and customer orders. This would result in increased time and performance efficiency of the supply chains, which would accelerate the process of manufacturing and enable the firms to gain competitive advantage (Dennis, et al., 2017). The integration of the supply chain with information systems and quality control techniques like TQM would result in a competitive advantage for the companies in the future.
Justification of most plausible situation
The use of automation and robotics is the most plausible future scenario while considering the manufacturing industry of the UK. MP’s of the country have already declared warning due to the lack of uses of robots in the industries, which leads to poor performance in comparison to global competition (Theguardian, 2019). The use of robots has increased tremendously across the manufacturing sectors of countries with special impact in the automotive manufacturing sector. The advancements in the field of artificial intelligence have made it possible to develop robots with the lower cost along with the integration of cloud connectivity for monitoring the performance during manufacturing. The developments in the industrial internet of things have also made it possible to apply automation on a larger scale by the manufacturers and suppliers due to supporting a consumption-based model (BBC, 2019). There is winning prediction made by the International Federation of Robotics stating that 50 per cent of the production across the globe would be automated by 2030 (Telegraph, 2020). Automation in the sector is also predicted to facilitate innovation and quality improvement in the consumer.
Automation in the future brings the possibility of enhancing economic growth in the sector and the overall country along with boosting jobs. However, there have been some concerns regarding the increase in income inequality among the workers due to the introduction of robots. This is been argued by Oxford economics by stating that the regions in which there are low skilled workers and economic weaker tend to have a lower rate of employment automatically.
Figure 1: Manufacturing Automation. Source: (BBC, 2019).
There has been a rise in the percentage of the usage of robots for manufacturing in countries like the US, South Korea, China and Germany. Automation in the manufacturing sector has been determined to be e threatening for the low skilled workers working in buses for production (BBC, 2019). However, the creativity and intelligence of the employees cannot be replaced immediately or in the immediate future to come as humans will continue to operate valuable positions in the sector. It would be a challenge for the policymakers and leaders of business organisations to train the workers so that they can adapt to the present standard and scenario of automation in the country.
The cumulative job losses across the globe due to automation has been estimated to be 1.7 million across the region of Europe, China and the US. The experts foresee China to be the leader of the world regarding the incorporation of automation in manufacturing with more than 40 million units in the next decade. There is also a possibility of the replacement of thousands of job positions in the manufacturing sector to industrial robots and automation. The foreseeable future until 2030 is estimated to grow at a rate of 30% regarding the incorporation and installation of robots for manufacturing (BBC, 2019). This is estimated to create a boost for the global economy by 5 trillion dollars, which would be subsequently beneficial for the workers to repurpose their skills and receive employment in other sectors. This indicates the possibility of the creation of more jobs for the workers throughout the globe in comparison to the job losses while ensuring the enhancement in quality of life and quality of products.
Conclusion
From the report about the evaluation of the possible future scenario in the manufacturing industry of the UK, it has been concluded that automation of the manufacturing industry with robots is the most plausible future scenario. The three plausible scenarios being considered where automation in the manufacturing sector along with the circular economy and leveraging the supply chain. Automation is the most possible scenario due to having the potential to significantly improve the productivity and performance levels of manufacturing along with reducing the cost of operations while preserving the quality. The misconception about automation regarding taking jobs of workers is predicted to be clarified as the use and implementation of robotics across the production plans will create the scope of workers to be appointed in most skilled positions.
References
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Dennis, Z., Cheong, T. & Sun, D., 2017. Impact of supply chain power and drop-shipping on a manufacturer’s optimal distribution channel strategy. European Journal of Operational Research, 259(2), pp. 554-563.
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