Business Organisations in a Global Economy

This report explores the impact of business environment on organisations in a global economy, focusing on Tesla's decision to expand in Norway. It includes a PESTLE analysis of the macro environment and a Porter's Five analysis of the industry. Recommendations for decision making are provided.

BUSINESS
ORGANISATIONS IN A
GLOBAL ECONOMY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Background of company.............................................................................................................3
Business environment.................................................................................................................3
Analysis.......................................................................................................................................7
CONCLUSION AND RECOMMENDATION...............................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment generally means a collective environment which includes both
internal as well as external forces which may affects the organisation in the negative as well as in
the positive way. employees, customers, management, supply and demand and business
regulations all are generally part of business environment. This report is based on the Tesla
decision to expand their business in the Norway by making a FDI decision. They are generally
looking to bring the new product in the market to capture one of the most developed economy of
Europe in current Scenario. For the same this report highlights the PESTLE analysis of Norway
Macro environment. After that on the basis of result of Pestle analysis report used to highlights
the analytical analysis for the company on the basis of Porter's 5 analysis. In the end report
concludes the outcome of both the framework and on the basis of the same used to recommended
the best practices which can be employed by them at the time of decision making.
MAIN BODY
Background of company
Tesla, Inc. is an American electric vehicle and clean energy company based in Palo Alto,
California. Tesla's current products include electric cars, battery energy storage from home to
grid scale. Tesla is one of the biggest auto-mobile company in the UK market in the current
scenario. Tesla used to had 16% market share in the market (Perera, 2017). This is very good
number for the company as company used to operate in heavily competitive market. Tesla was
founded in the year 2003 by the founder Elon Musk, JB Straubel, Martin Eberhard, Marc
Tarpenning and Ian wright. In current scenerio Tesla used to operates in Total of 28 countries.
Business environment
PESTLE ANALYSIS
Political Factor: These factor generally used to describe the amount of the influence
political decision or political policies generally had on the performance of an organization.
Looking at the political factor it had been understood that there is good sort of political stability
in the Europe, this will ultimately help the company in managing the policies of the company in
the long run. Reason behind highlighting the same is that political stability will ultimately open

up the room for organization to follow the same rules and regulation. As it had been find out that
at the time of change in the ruling parties, all the party generally used to bring the different
changes in their policy, this ultimately used to impact the performance of the company in the
long run. At the same time looking at the flip side of the coin it had been understand that Tesla
may have to face the issue of online procurement of different raw material (Shtal and et.al.,
2018). As it had been understand that UK is one of the hub of Tesla production but after
implication of Brexit in UK. It had created a good sort of the hurdle for all the organization to
have a trade between two nation. This will create variety of legal compliance for the company
and efficiency of the production will also see the negative impact, reason behind highlighting the
same is that it will increase the cost of the company in the long run.
Economic Factor: These factor generally used to describe the impact of different
economic factor such as foreign trade policy and interest rate on the performance of the business.
After understanding the Economic condition of Norway it had been understand that Norway
economic is one of the growing or developing economic in general. It had been identified that
interest rate in the nation is very much favourable (in lower side) (Rastogi and Trivedi, 2016).
This is very good sign for the company as it means that the organization will able to get or
source good amount of fund from the market to fund variety of the different activity of the
company in the market. This will help the company in the initial stage of their expansion.
Looking at the negative side of Economic factor it had been understand that after Covid 19 there
is good sort deflation in the nation and also price of water and petrol is riseing at rapid rate. This
is not that good sign for the company. As both the hint generally suggest that this will ultimately
enhance the cost of the company in the long run. As it had been understand that not having this
sort of the thing in the company favour will ultimately increase the cost of the company in the
long run and it will too difficult for the company to sustain for longer period.

Figure: GDP of Norway
(Source: Norway: Growth rate of the real gross domestic product (GDP) from 2009 to 2021,
2020)
Social Factor: Social factor generally passess on the information about the impact which
may be seen by the organization due to social economical changes. Looking at the social factor it
had been understand that it is not that bad for the company, as it had been understand that need
and preference of the customer generally changes on the regular basis, but it had been understand
that the product of the company is more than good for the company to satisfy the need of the
different customer base in the organization. It had been understand that there was good sort of
preference of hybrid cars in the nation, for the same reason to satisfy the same need in the market
organization is having a good sort of product in the market to satisfy the need of the customer in
the best way possible. At the same time it had been also identified that after covid 19 pandemic
customer are not that motivated to have a car or the luxurious car as they are more attracted
toward having a good sort of saving for the future so that it used to help them in overcoming
variety of the issue. Hence, expanding the business in the situation where customer are not
willing to pay good price of the money for the company product can prove a wrong decision for
the company as well (Vallati and Grassi, 2019).

Technological Factor: This factor looks at the change or impact which will be seen by
the organization due to innovation in the technological factor. It is another factor which is very
much important for the organization, as there are variety of the different technology which is
used by the organization to carry out different operation of business. Looking at the impact of
technology factor it had been understood that this factor is very much favourable in the market.
Reason behind highlighting the same is that company generally uses a good number of new
technology in the market to develop new product in the market (Локтионова, Сычева and
Шацкая, 2018). This will ultimately help the company in providing good sort of the product to
customer in the market. This is really very good sign for the company, at the same time it had
been understand that technological factor may also create the issue for the company as well, as it
had been analysed that it will be very difficult for the company to understand the best technology
which can be used by the organization to carry out the different operation of company. Their is
one sort of opportunity for the company as well, as company can look to innovate the new
product and offer the same in the market to get a first mover advantage in the developing country
like Norway.
Legal Factor: This factor is not that favourable for the company as it had been identified
that there are variety of the different type of laws and regulation which are there in the Norway
in regards of different stakeholder interest. This will ultimately force the company in changing
the previous policy and on the basis of the new laws and regulation forms the new policy which
help the company in overcoming variety of different legal issue. It had been understand that this
will impact the efficiency of the organization in the long run and also it will create the situation
in the organization where organization has to take variety of the decision on the basis of different
legal permission. This will impact the overall decision making of the company (Irawanto, 2017).
At the same time it had been also understand that following different legal factor in the
organization will also create the situation in the organization where goodwill of the company will
be improved as following all the legal compliance help company in attracting the eye of the
customer toward the company.
Environmental factor: This factor generally used to look at the impact of different
environmental aspect on influencing the performance of the business in the long run. It had been
understand that there are very strict rules and regulation which had been made in the
organization to make sure that all the organization are following the environmental policies in

the nation. This may create the legal issue for the organization if they are not able to follow the
same rules and regulation. Looking at the operation of TESLA it can be said that the
organization will able to overcome all such type of the issue with the ease. As it had been
analysed that Tesla generally used to follow the Green HRM activity in the organization and also
promotes the recycled raw material in their operation. This all things generally used to come
under the CSR policy of the company, so by following all this policy in the organization, TESLA
will able to overcome variety of Environmental factor (Wellner and Lakotta, 2020). It will also
help the company in building good sort of the image of the company in the market as well.
Analysis
After looking at the Macro business environment with the help of the PESTLE analysis it
had been understand that there is good sort of opportunity for TESLA to expand their business to
Norway. Better understanding the decision by looking at the level of competition present in the
industry will be the best choice. For the same reason Porter's Five analysis of the company is as
follows:
 Threat from existing competitor (High): This threat is very high in the industry, as it
had been analysed that there are variety of the different type of the organization generally
used to operate in the market. They also used to offer the same type of the product in the
market, this ultimately used to create the good sort of the issue for the company to attract
the customer toward the company product. As existing company in the market has
created good sort of the good will in the market. Hence, this threat is very high to be
consider before making any FDI decision by Tesla (Moreno-Izquierdo,, Ramón-
Rodríguez and Perles-Ribes, 2016).
 Threat from New entrant (Low): It had been understand that the threat from new
organization in the market is very low in nature. It had been understand that there are
many few number of the organization who generally used to enter the industry with new
product to be offered to the customer (Lewis, 2017). It has been understand that entering
the auto mobile industry generally used to demand the good sort of capital requirement
for the individual to invest. This ultimately used to create the situation in the market
where very low number of new entrant generally used to enter the industry. Hence, it can

be said that this sort of threat in the market is very low in the industry, this is very good
sign for the company in the long run.
 Threat from substitute product (Normal): Looking at this sort of the threat it had been
understand that threat from substitute product is normal. As there is substitute of car but
most of the customer generally preferred to have a car as a primary mode of
transportation (Lewis, 2017). At the same time it had been also understand that
government in the nation generally used to promote the usage of public transport in the
nation. This will create some sort of the issue for the organization to dealt in long run, so
it had been understand that this sort of force in the organization is very much normal in
nature for the organization.
 Bargaining power of Customer (High): Looking at the bargaining power of the
customer in the market it had been understand that there is good sort of the bargaining
power in the hand of the customer. As it had been understood that there are more than
one organization which is available in front of customer to select and procure the good
from them (Moreno-Izquierdo,, Ramón-Rodríguez and Perles-Ribes, 2016). This
ultimately used to give good sort of bargaining power in the hand of the customer, as they
can opt for different organization if they are not happy with the product of one company
in the market. Hence, this threat is very high to be consider before making any FDI
decision by Tesla.
 Bargaining power in the hand of supplier (Low): Looking at the bargaining power in
the hand of the customer, it had been understand that there are more than one type of
buyer who are available in the market. It will ultimately give the choice in the hand of the
Tesla to select the best supplier from whom they are looking to have a raw material for
their product. Hence, it had been understand that this sort of force is very much
favourable for the company in the long run. As they will able to synchronize the cost
structure of the company in the best way possible (Локтионова, Сычева and Шацкая,
2018).
CONCLUSION AND RECOMMENDATION
After going through the report it had been understand that there is good sort of the
opportunity available in front of the organization to make a FDI decision in the organization. At
the same time there are some sort of the issue which are also derived by the analysis. One of the

same was the interest of the customer toward the luxurious car in the organization, for the same
reason it has been recommended to the organization that they used to focus on the marketing
activity of the company. Marketing activity of the company will generally help the company in
promoting the good sort of awareness of the companies product in the market. This may help the
company in overcoming the same issue (Rastogi and Trivedi, 2016). At the same time another
issue which had been identified is the amount of the competition which is present in the market.
For the same reason it had been recommended to the organization that they used to offer good
and innovative product in the market, this will ultimately help the company in seeing good sort
of result from the market. As it had been understand by that innovative product will only help the
company in overcoming the issue of competition which is prevailing (Vallati and Grassi, 2019).

REFERENCES
Books and journals
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Nandonde, F. A., 2019. A PESTLE analysis of international retailing in the East African
Community. Global Business and Organizational Excellence. 38(4). pp.54-61.
Shtal, T and et.al., 2018. Methods of analysis of the external environment of business activities.
Rastogi, N. I. T. A. N. K. and Trivedi, M. K., 2016. PESTLE technique–a tool to identify
external risks in construction projects. International Research Journal of Engineering
and Technology (IRJET). 3(1). pp.384-388.
Vallati, M. and Grassi, A., 2019, July. AI to Facilitate Legal Analysis in the PESTLE Context.
In The EMerging Technology conference (EMiT) 2019 (pp. 66-68). IET.
Локтионова, О. С., Сычева, Н. С. and Шацкая, Е. Ю., 2018. NECESSITY OF PESTLE
ANALYSIS WHEN ENTERING THE INTERNATIONAL MARKET.
In СТАНОВЛЕНИЕ И РАЗВИТИЕ НОВОЙ ПАРАДИГМЫ ИННОВАЦИОННОЙ
НАУКИ В УСЛОВИЯХ СОВРЕМЕННОГО ОБЩЕСТВА (pp. 100-103).
Irawanto, D. W., 2017, May. Indonesia Human Resource Management Practices: Cultural
Dimension and PESTLE Analysis. In Conference Proceedings International
Conference on Social Science and Management ICSSAM (pp. 574-590).
Wellner, S. and Lakotta, J., 2020. Porter's Five Forces in the German railway industry. Journal
of Rail Transport Planning & Management, p.100181.
Moreno-Izquierdo, L., Ramón-Rodríguez, A. B. and Perles-Ribes, J. F., 2016. Pricing strategies
of the European low-cost carriers explained using Porter's Five Forces Model. Tourism
Economics, 22(2), pp.293-310.
Lewis, R., 2017. Porter's Five Forces of competitive advantage.
Online
Norway: Growth rate of the real gross domestic product (GDP) from 2009 to 2021. 2020.
[Online]. Available through: < https://www.statista.com/statistics/327284/gross-
domestic-product-gdp-growth-rate-in-norway/>