TESLA AUTOMOBILE COMPANY

Focus on External and Internal Environments of Tesla Company

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Course

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https://www.coursehero.com/file/63912385/TESLAdocx/
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Question One

PESTEL Analysis to Identify the Forces Affecting Car Manufacturing of Alternate Energy
Vehicles.

PESTEL stands for POLITICAL ECONOMIC SOCIAL LEGAL TECHNOLOGICAL

AND ENVIRONMENTAL FACTORS ANALYSIS.PESTEL is a common framework used by
most companies to monitor and analyze external factors that are affecting an organization. Tesla
Motors, as a top company in the motor vehicle industry, needs to overcome challenges posed by
external factors marked in this PESTEL ANALYSIS. For Tesla Motors macro-environment
factors from the automotive industry must be reviewed and analyzed, which includes customers.

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Tesla has a reputable image and broad market range, owing to its extensive customer base

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globally. PESTEL ANALYSIS can be used by Tesla to ensure long term profits and success. This

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can be achieved through the integration of PESTEL ANALYSIS in its long term strategic goals

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formulation. In recent years Tesla Motors have majored in increasing sales and boosting
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profitability across all sectors globally. This can be related to a useful approach to external
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factors as indicated by PESTEL ANALYSIS, as shown below:
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(a) Economic factors

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Tesla has been at an advantage of acquiring better and durable batteries at lower costs
which in an economic view seems to offer a better bargaining power. Due to this
favourable external factor, the company’s automobile products are available at lower
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costs boosting customer base. Decreasing renewable energy costs will allow affordability
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while factor-like unstable economic will negatively affect Tesla sales volumes.

(b) Political factors

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Government effects on Tesla business activities and the external factors are reviewed
under this PESTEL analysis. Factors such as Government incentives for Electric cars,
expansion of trade agreements over the borders, and political stability in the business
geographic location reach can be described as factors that project opportunities. Through
Government incentives, Tesla is able to produce electric at lower costs for its customers.
Political stabilities and favourable trade agreements provide opportunities even for
international operations customer reach.

(c) Social factors

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Factors such as increasing taste and preference for renewable energy, low carbon
favourable lifestyles and favourable wealth distributions for growing markets are seen as
opportunity boost factors Tesla automobile electric cars as they work in favour to
improve and raise demand for electric vehicles produced at Tesla.

(d) Technological factors

Factors such as robust business automation, change in technology and favourable

preference on online E-commerce systems are external factors offering significant
opportunities to Tesla. Improvement of existing technology provides an opportunity for
Tesla to diversify automation on its vehicles. Also, it may pose a threat due to TESLA
technologies becoming obsolescence in short periods. Online tastes boost the online

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customer for Tesla.

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(e) Environmental factors

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Factors such regulations on carbon dioxide emissions and renewable energy usage for a
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clean environment will act as opportunistic ground created for Tesla as electric cars serve
the two rules on a positive side. Customer and sales will increase definitely.
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(f) Legal factors

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Factors such as increasing international patents standards and regulations globally,

regulations on sales by all automobile companies and favourable energy consumption
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regulations will Tesla a favourable ground to market their electric cars in the whole
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world. Regulations on automobiles companies may be, for example, to meet such
parameter standards on electric cars technologies will maybe to some level boost Tesla
car productions or affect negatively with low productions.
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Question Two

SWOT analysis to analyze internal and external conditions Tesla must consider going forward

Tesla automobile is an American based automobile company uses renewable energy to

produce faster, safer and affordable luxurious electric cars. Elon Musks is the Chief Executive

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Officer of Tesla motors (Carlson, 2015). SWOT analysis tries to identify emerging chances and
growth of Tesla motors as shown below;

(a) Tesla Strengths

Energy efficiency—Tesla exploits renewable energy such as solar power which to some
extent is cheap to manufacture electric cars.
Manufacturing of environmentally friendly cars that emits less carbon dioxide offers
Tesla competitive advantage.
Tesla has a manufacturing cost advantage, where it outsources some of the
manufacturing components and resources to other major automobile companies.
Tesla is a significant supplier manufacturer to several automobile companies such as
Toyota. This boosts the Tesla profits and revenues generated.
(b) Weaknesses of Tesla

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Tesla is one of the best automobile company on electric cars, but it has a limitation of

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little experience in the automobile industry marking its few years since inauguration in

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2003, Toyota in matters experience surpasses Tesla.

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Model X recent; a high technology car has got an adverse impact on the market due to it
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being regarded as unaffordable and expensive
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Long times delivery of ordered cars on their responsive websites where comprehensive
procedures delay the delivery process. This has a negative impact on customers.
(c) Opportunities of Tesla
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Tesla has, in recent years, accrued many customers across the world comparing to other
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brands.
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The world has changed in an embrace of environmentally friendly and solar energy cars
at the expense of the gasoline cars.
Tesla has one of the most affordable brands around the world. Tesla offers electrics cars
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even at half costs prices of other car brands such as Chevrolet brand
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(d) Threats of Tesla

In recent years, there have been increased in the number of companies manufacturing
electric cars. They include Toyota, Chevrolet and many others.
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Tesla high Model X car has proved to be expensive even though of high quality and
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technology as well.
The growing number of competitor automobile companies who are even offering better
cars than Tesla has provided a market threat.
The electric car technology has fallen out of favour to the young generation who refer the
electric cars as not fancy.

Question Three

Using VRIO analysis, evaluate whether Tesla has sustained a competitive advantage.

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Tesla products have sustained competitive advantage through the company’s clean energy
products which through improved technology, affordability will resolve challenges energy
demand globally. Tesla has a patented technology and improved developing technology of
energy products which offers technological advantage and batteries long life that is rare.
Imitating Tesla products and technology is complicated through strong manufacturing and
positioning. Tesla has spent significant amounts to cover a large customer base which is hard to
replicate by the other brands. Tesla got strong leadership, organizational skills, a culture which
has offered it a competitive advantage over its competitors.

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Short-term objectives required for Tesla to survive

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Through Tesla advertisement strategies, the vast market reaches enormous amounts
of profits accrued should be used to develop affordable and more efficient electric cars.

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Also, profits margins from markets should be used in research and development, thus
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generating even more affordable cars. Amount of profits accrued from the cycle sales and
generation of revenues should be used to develop even more customized vehicles that are
effective.
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The primary elements of Tesla’s internal and external environment that need to be addressed
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External environment

Tesla should identify strategic partners to work with to develop even better
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alternative energy products. Also, the company requires to venture on even more
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affordable, superior cars in large scale through striving for economically feasible products
for end-users.
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Internal environment
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Tesla should reduce the cost of production, and hence a proportional product price
reduce through massive investment in research and development. Also, Tesla to maintain
quality and performance on products even at reduction costs. Production mainstreaming
development substantial needs reduction.

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Reference

Carlson, W. B. (2015). Tesla: Inventor of the electrical age. Princeton University Press.

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