Business Environment Assignment 2022

THE BUSINESS ENVIROMENT
STUDENT DETAILS

Business Environment 1
Executive Summary
This assignment will be focus on the company “Tesla”. This is the American
automotive and energy company which manufacture electric cars. In this report, discussion
will be made regarding the micro environment factors and the impact of those factors on the
performance of the business. The targeted audience of the company includes those people
who desires to protect the environment by using the electric vehicle. The major opportunity
for the company is that the governments of the countries are concern about the environment
protection from the harmful gases. Thus, it has been concluded that the production of electric
car is the vast opportunity for the Tesla from the long term prospective.

Business Environment 2
Table of Contents
Introduction................................................................................................................................3
Identification and analysis of microenvironmental factors........................................................4
Impact of microenvironment factors on the company...............................................................6
Challenges and solutions for the company.................................................................................8
Conclusion................................................................................................................................10
References................................................................................................................................11

Business Environment 3
Introduction
The micro environment in the business includes all those internal factors which affect
the business functioning, decisions and strategies during the period (Solomon, Dahl, White,
Zaichkowskv & Polegato, 2014). Selected company for this assignment is "Tesla'. The
company makes electric cars through solar city and solar panel. Headquarter of the company
is situated in California. In this assignment, there will be a discussion about consumer
behaviour, competitor analysis, suppliers, etc. Apart from this their impact on business
performance, policies, structure, profitability, value-adding attributes, market share, etc. will
be discussed. In the end, recommendations or solution will be made.

Business Environment 4
Identification and analysis of microenvironmental factors
Below are the microenvironmental factors that influence the functioning and operations
of Tesla:
 Consumer Behaviour:
The purchasing behaviour of the consumer depends upon many factors which include
quality, price, promotion and environmental friendliness of the product. Tesla Model
produces environment-friendly cars thus it motivates people to purchase these cars
because it helps the environment in making sustainability.
 Competitor analysis:
The major competitor for the Tesla includes Ford Motors, General Motors, Honda
Motors, Navistar, BMW, Spartan Motors, Tata Motors and Wabco. Apart from this,
their competitors are started offering the hybrid gasoline-electric car with a
completely electric vehicle such as Nissan Leaf and Chevy Volt (Caranddriver, 2019).
 Suppliers:
Key suppliers of the company include:
 AGC Automotive: windshields
 Brembo: brakes
 Fisher Dynamics: power seats
 Inteva Products: instrument panel
 Modine Manufacturing Co.: battery chiller
 Strength of the company: Tesla's brand equity in the market is the strength of the
company. Apart from this, their product quality, eco-friendly system and innovation
strategy are also counted as strength of the company (Kammen & Sunter, 2016).

Business Environment 5
 Social: The impact that Tesla has on society is massive in terms electricity
performance and recognition of opportunity fuels. As Tesla gains attention, the
popularity of strength about green automobiles and alternative fuels grows which can
have an advantageous impact on global climate issues (Klöckner, Nayum &
Mehmetoglu, 2013).

Business Environment 6
Impact of microenvironment factors on the company
In this section, there will be a discussion about the impact on business of Tesla through
various internal and external factors:
 Impact of micro factors on business performance:
By analysis various micro factors, the company can recognize that the world should
move towards the zero-emission vehicle. The auto industry should move towards
electrification and global government is also concern about the adverse impact of
combustion gases (Nykvist & Nilsson, 2015).
 Political impact: External policies have a more positive or adverse effect on business
than internal policies. However, when governmental policies support the initiative for
an electric car then it acts as an opportunity for the company. On the other hand, when
in the country there is no political stability then it shows adverse effects on the
business.
 Impact on policies of the company:
Microenvironment factors force the business to change or modify policies. For
example, customer behaviour of purchasing more environmentally friendly cars forces
the company to makes policies which helps in sustaining healthy environmental
(Reed, Forehand, Puntoni & Warlop, 2012).
 Value-adding the attribute:
Tesla motors have the product strategy through this they enter in the high-end market
by adopting the innovation cycle and attributes. Their value-adding attribute also
includes the high interaction of technology and digital distribution channel which
helps the company in accomplishing their objectives within the period of time
(Schuitema, Anable, Skippon & Kinnear, 2013).

Business Environment 7
 Growth of Tesla:
Study of factors helps the Tesla in generating the revenue of $6.305B in June quarter
ending 2019 (Caranddriver, 2019). This revenue is the increment percentage of
58.65% as compared to last years. Moreover, Tesla is incorporating losses because
their recorded revenue is not enough to generate enough profit margins for the
company (Solomon, Dahl, White, Zaichkowskv & Polegato, 2014).
 Profitability:
By analyzing various micro and macro factors, it has been concluded that to enhance
the profitability, the company has to shut down various stores, cut employees, shift to
online sales, etc.

Business Environment 8
Challenges and solutions for the company
Challenge 1: Meeting higher production volume.
In order to make higher production volume, Tesla cannot lower their prices. Apart
from this, if the company becomes able to make higher production in short period time then
still the lithium-ion battery cannot be produced at the necessary rate (Schuitema, Anable,
Skippon & Kinnear, 2013).
Recommendations for challenge 1:
Tesla needs to focus on the production of battery because once battery production is
completed then rest of the production can be carried in shorter the span of time (Reed,
Forehand, Puntoni & Warlop, 2012).
Challenge 2: The competitiveness of the company in the global market.
The global government are focusing more on the use of the electric vehicle for the
safety and protection of the environment. However, expanding the market share at the global
level it may take longer time than expected (Nykvist & Nilsson, 2015).
Recommendations for challenge 2:
For expanding market share in the shorter duration of time, the company should focus
on making luxury cars. Focusing on luxury segments will help the company in enhancing its
market size (Klöckner, Nayum & Mehmetoglu, 2013).
Challenge 3: Tesla’s ability to manufacture lithium battery.
It will be beneficial in both the short and long run. In the short run, the company's
focus on lithium battery will help them in using these batteries for other means of production
also. On the other hand, in the long run, this will help the company in generating more

Business Environment 9
revenue. By following this, they can also enhance their market share within the automobile
industry (Caranddriver, 2019).
Recommendations for challenge 3
The generated revenue from the lithium battery can be used to build other effective
and efficient technology.

Business Environment 10
Conclusion
It has been concluded that Tesla's consumer behaviour depends upon attributes which
are product quality, innovative idea, affordability and eco-friendly cars. Apart from this, the
global concern for the healthier atmosphere is the opportunity for the company to enhance its
market share at the global level. Currently, the company is facing challenges related to
production of lithium battery, means of production, etc.

Business Environment 11
References
Caranddriver. (2019). TESLA. Retrieved from: https://www.caranddriver.com/tesla
Kammen, D. M., & Sunter, D. A. (2016). City-integrated renewable energy for urban
sustainability. Science, 352(6288), 922-928.
Klöckner, C. A., Nayum, A., & Mehmetoglu, M. (2013). Positive and negative spillover
effects from electric car purchase to car use. Transportation Research Part D:
Transport and Environment, 21, 32-38.
Nykvist, B., & Nilsson, M. (2015). Rapidly falling costs of battery packs for electric
vehicles. Nature climate change, 5(4), 329-338.
Reed, A., Forehand, M. R., Puntoni, S., & Warlop, L. (2012). Identity-based consumer
behavior. International Journal of Research in Marketing, 29(4), 310-321.
Schuitema, G., Anable, J., Skippon, S., & Kinnear, N. (2013). The role of instrumental,
hedonic and symbolic attributes in the intention to adopt electric
vehicles. Transportation Research Part A: Policy and Practice, 48, 39-49.
Solomon, M. R., Dahl, D. W., White, K., Zaichkowsky, J. L., & Polegato, R.
(2014). Consumer behavior: Buying, having, and being (Vol. 10). Toronto, Canada:
Pearson.

Business Environment 12