Analysis of Tesla’s Business Model | Report

RUNNING HEAD: ANALYSIS OF TESLA’S BUSINESS STRATEGY
Title: Analysis of Tesla’s Business Model
Name of student:
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Author Note:

1ANALYSIS OF TESLA’S BUSINESS STRATEGY
The newly implemented regulations on environmental safety as well as the restrictions on
the vehicle emissions have ushered in the growing market of the fully electric vehicles.
Moreover, the shifting needs and concerns of the customer, coupled with the technological
advancements have brought in a vast change and a competitive market in the automotive
Industry. Tesla is among one of the leading companies in this sector that took a unique initiative
of focusing on the creation of the compelling cars rather than putting much endeavour on the
mass production and marke1t. The paper will discuss in details the effectiveness and impact of
this business strategy through the parameters of PEST analysis, Porter’s five forces, value chain
and Diamond of nation.
PEST analysis of Tesla:
1. Political: Tesla Company operates in various countries where the regulations and laws are
different. The Company has the compulsion of meeting up the requirements of environmental
laws and customer or trade laws in each of their operational area.
Impact on the Company: the political factors that influence the company have created
some of the positive impacts on it. The company can aim at the economic strengthening by
utilising the incentives offered by the government. Since the main operational area of the
company is in developed countries, there is also a more or less political stability. Thus the
environment is favourable for the intensive growth strategy.
2. Economic: the increased cost of fuel has been an opportunity for Tesla, being the electronic
car manufacturer. Other economic factors that can affect the business are- the cost of fuel, the
decreasing cost of battery, the economic condition of the population and others.
1 Stobbe Jr, J.J., 2019

2ANALYSIS OF TESLA’S BUSINESS STRATEGY
Impact on Tesla: the popularity of electric cars is intensely related with the global
economic growth. Again the decrease in the cost of battery is a boon for the company as battery
is an essential economic factor. This will help Tesla to effectively produce more EVs.
3. Social: the main social factors that affect the Tesla company are the rising concern of the
customer regarding the environment and regarding the possession of E cars as a status symbol.
This has helped Tesla to a great extent.
4. Technological: the company has made quite a good use of tthe recent technologies and
innovations. Apart from creating the fully electronic vehicle, the company also invests in the
manufacturing of solar panels, electric storages and others. The advanced functionality of
batteries also gives it an added advantage.
TWOS MATRIX ANALYSIS:
EXTERNAL
FORCES
INTERNAL FORCES
STRENGTH-
Improved technology
Distribution Channel
monopoly
WEAKNESS- poor
liquidity
Capacity issues
OPPERTUNITIES-
Making use of new
technologies
Expansion of market
Strength/ opportunity-
Company can make
use of the advanced
technology to expand
the market.
Weakness/opportunity
The exploration of
market can rule away
the capacity issues