Pestle analysis of TESLA : Assignment

BUSINESS STRATEGY
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Table of Contents.
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
. Pestle analysis of TESLA ........................................................................................................3
Porter's five forces .....................................................................................................................5
Swot analysis of Tesla.................................................................................................................7
Ansoff Matrix and BCG matrix.................................................................................................10
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................13
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INTRODUCTION
Business strategy is considered as the set of competitive moves as well as action where a
business attracts customers,strengthening performances. It also achieves goals of the
company (Thompson,Strickland. and Gamble,2015). Present report lay emphasis on the
Tesla which was founded within 2003 through a group of engineers. It also evaluate the
influences on the macro environment such as pestle analysis of Tesla company. The goal of
this company is to prove people didn't required to compromise while driving electric cars as
they are quicker,better and posses more fun through gasoline cars. Roadster is the main
product of Tesla. To take entry within a new market Tesla needs to prepare a premium and
It also include the Swot analysis of the Tesla of the behaviour of the organization's success
as well as behaviour. It focuses on the Porter's five forces to the provided market of Tesla. It
also applied a range of theories such as Ansoff matrix and BCG theoris.
MAIN BODY
. Pestle analysis of TESLA
Political factors
Political factors such as government influences such as policies that effects the business of the
Tesla Company as well as industries. Such that policies have limit the performances of the
revenue of the company (Akter.and et.al.,2016). Tesla is a forefront of the electric vehicles.
Unlike the traditional cars it sued those cars which have both electricity and gas. These kinds of
vehicles do not nearly as same as the traditional car. Most of the drivers of Tesla use electronic
stations so that they can refill their cars.
Economic factors
The rise in Asia, United States of America and Europe from 2017 is 3.5 percent grow leads to the
more development of electric cars. These are the conditions which includes such as market
growth, currencies ,trade level as well as other variables that impacts the business of the auto
mobile industry like Tesla. Firm like Tesla needs to be address economics extra factors such as
decrease renewable energy cost, Economic stability issues (Higgins, Omer. and Phillips, 2015).
Tesla get benefits from the low battery costs .according to this Pestle analysis it consider the
decreasing renewable resources as it makes the Tesla product more attractive. Thus the economic
stability threatens the financial performance such as in Asia as well as in Europe.
Social factors
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Social factors that affect the Tesla Company such as enhancing popularity fall under the
opportunity. It also enhances preferences related to the renewable energy. The managers of the
Tesla must apply these strategies of that benefits must be maximized due to such external factors.
These firm analyses about the opportunity to grow within the business called Multinational
automotive business (Amran.and et.al., 2016). Tesla is a brand that is environmental sustainable.
it is also considers as the new.
Technological factors.
Tesla is considers as the both a foe and friend for example it assist the company to maintain a
competitive edge within the market. It enables Tesla to be fuel efficient. But at the same time
Tesla doesn't make so much obsolete regarding technology. Thus, Tesla relies on technology
both as positive as well as negative regarding vehicles.
These factors determines that how technologies impact the macro environment (Higgins, Omer.
and Phillips, 2015). Such as material engineering technology depends on the cost-effectiveness
as well efficiencies of the Tesla batteries. Mention below are the external technologies that are
considered to be significant within Tesla. Such as enhancing automation within businesses
(Hart, Sharma. and Halme, 2016) . Enhancing popularity of smartphones as well as
technological change at high rate. Tesla High rate increases its market boast the luxury as well as
power. Tesla has done an amazing job through maintaining their place within the people's mind
as that of the electric car.
Legal Factors
In this part laws as well as regulation can shape the managerial decisions as well as business
development. Laws and legal systems that can shape managerial decisions as well as business
development. It must includes various factors such as energy consumption, international
protection as well as dealership sales regulations within united states of America.
Tesla also the opportunity to expand its business safely over the market (Hsieh, Ma. and
Novoselov, 2018). It has the opportunity to sale its electric cars as well as energy products that
totally based on energy consumption regulation that clients must have to follow.
Environmental Factors
The ecological factors that impacts on the Tesla are considered as the significant forces such as
they have the opportunity to sale the cars which are more environmental friendly as these are the
cars which are more based on the climate change concerns and also expands its environmental
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programs as well as rising standards on the disposal waste. Tesla’s electric vehicles ,solar panels
and batteries are considered as suitable for directly addressing. These kinds Of external factors
also that are linked with environment friendly products as well as Business Sustainability
(González-Rodríguez.and et.al., 2018).
Porter's five forces
This a model that can recognizes and evaluates five competitive forces that can shape each and
every firm .It assists to determine the firm's strengths and weaknesses. It can be used to any
segment of te corporate sector of the economy to understands the level of competition. It is a
kind of business model that helps various industries to maintain the various level of difficulty. It
is considered as the important part that can shape every market as well as industry .the forces
measures profitability, intensity of competition, attractiveness (Razak.and et.al., 2016).
Five forces are mention below
Bargaing power of the suppliers
This forces consider that how much power as well as control an Tesla's supplier to rise its prices
as well as reduces the quality of purchased goods as well as services. That can in turn lower the
profitability of that firm. This is one of the important factor as less they are more they have
power. It also involves the cost switching ,uniqueness level of differentiation and strength of the
distribution channel within product as well as services (Ghemawat, 2016).
Buyer's bargain power
Market of outputs is also described in the bargaining power related to the buyers. It is very easy
for the customers to move from one company to another. Customers have a lot of power .Buying
power is low when customer's purchase low amount of products. Internet make the costumers
more informed about the products as customers easily review the negative or positive feedback
on websites and they become more empowered. They can also easily compare the prices with
other brands or websites also (Burlton, 2015).
Threat of Other products.
The existence of products outside also consider a similar product of different brands increasing
the propensity of consumer to switch to other products. For example toothpaste ,energy desks
also coffee brands .when customers have lots of options to choose from such as buyers determine
the products as well as lessening power of the businesses (Gumusluoglu. and Acur, 2016).
Threat of new entrants
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Barriers to entry within an industry is high ,so it is barely impossible for the organization to entry
with a new market because of high cost as well as strong competition. Industries such as
Auto mobiles or the health insurance can also claim an advantage called competitive advantage
such as Tesla. On the other hand when barriers to entry within a new market are considered as
the low then it will take advantages of the key technologies such as cost rise ,brand
loyalty ,Intellectual property as well as shortage of crucial resources (Thompson,Strickland. and
Gamble,2015).
Competitive rivalry
In the high competition of market ,organization such as Tesla can exercise like control regrading
process as well as goods of the services . When an industry has Porter's five forces
This a model that ca recognizes and evaluates five competitive forces that can shape each and
every firm (Razak.and et.al., 2016) .It assist to determine the firm's strengths and weaknesses. It
can be used to any segment of the corporate sector of the economy to understands the level of
competition. it is a kind of business model that helps various industries to maintain the various
level of difficulty. It is considered as the important part that can shape every market as well as
industry.The forces measures profitability, intensity of competition, attractiveness (Akter.and
et.al.,2016).
Five forces are mention below
Bargaing power of the suppliers
This forces consider that how much power as well as control an organization's supplier to rise its
prices as well as reduces the quality of purchased goods as well as services. That can in turn
lower the profitability of that firm. This is one of the important factor as less they are more they
have power. It also involves the cost switching ,uniqueness level of differentiation and strength
of the distribution channel within product as well as services (Burlton, 2015).
Buyer's bargaing power
Market of outputs is also described in the bargaining power related to the buyers. It is very easy
for the customers to move from one company to another. Customers have a lot of power .Buying
power is low when customer's purchase low amount of products. Internet make the costumers
more informed about the products as customers easily review the negative or positive feedback
on websites and they become more empowered. They can also easily compare the prices with
other brands or websites also (Razak.and et.al., 2016).
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Threat of Other products.
The existence of products outside also consider a similar products of different brands increase
the propensity of consumer to switch to other products. For example toothpaste ,energy drinks
also coffee brands such as the monopoly business it can fully handle the goods as well as prices
such as low market growth, players that have comparable strategies.
Swot analysis of Tesla
Tesla Inc. was a American start – up powered by Silicon valley. Tesla was named after
“Nikola Tesla”, who was a very successful inventor and scientist of his time. The company has
emerged as one of the most discussed and analysed companies among business organization
(González-Rodríguez.and et.al., 2018).
The Tesla business strategy is to emulate typical technological – product life cycles and
initially target, wealthy buyers, and then move in larger marketers at lower price points.
This production strategy includes an overpriced degree of upright combination, which
includes component production and proprietary charging infrastructure (Razak.and et.al., 2016).
Tesla is a chain management strategy that focus on long period growth strategy, demand
production, directory management and division.
Strength of Tesla
The feature of the SWOT analysis of Tesla Inc. deals with the profession strengths that
put up to the organizational growth as well as improvement (González-Rodríguez.and et.al.,
2018).
The following strength are as follows:-
Highly new processes. ,Tesla has make its positioned itself within a market as a unique brands
by focusing on the electric vehicles .It consist of power electronics, software, control
software gearbox. It can employs the digital powertrain system that can able to torque to te
front wheels that are independently and instantaneously controlled therefore resulted better
traction as well as improved performance (González-Rodríguez.and et.al., 2018).
Tesla also have strong marketing policies as well as improving customer base as it has
integrated as well as diversified marketing policies that aimed at enhancing customer
satisfaction .For consumer satisfaction Tesla has created integrated as well diversified
marketing policies aimed at enhancing consumer satisfaction .Tesla has its own real time as
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well as feedback and also have improved control regarding service operations and
customised warranty packages (González-Rodríguez.and et.al., 2018).
Weakness of Tesla
These factors are weaknesses that can reduce Tesla's desire and work growth.
The following weaknesses are as follows:-
1. Bounded market appearance
2. Little provide chain
3. Unreasonable charge
Tesla suffers a little marketplace .Most of the revenue generates within United States and
also have a little presence within china. Tesla makes its products which are environment
friendly but as the customers point of view they are not sure about these products to
invest or not as these are expensive also (Amran.and et.al., 2016). Company
manufactures cars within one plant which is located in Fremont, California so the plant
has the ability to manufactures only 500,000 vehicles as well as max production of the
Tesla is low and it’s been difficult to achieve higher targets.
Opportunities of Tesla
These factors are good time that Tesla can use to make better its business performance
management advantage and planned development, among other aspects.
The following opportunities are as follows:-
1. Worldwide sales expansion
2. International supply chain expansion
3. Work enlarging(González-Rodríguez.and et.al., 2018).
Vehicle technology is increasing day by day like hybrid new vehicles, electric cars, and
self driven autonomous cars. Company has launched many products within these
emerging technology areas.
Threats of Tesla
These factors are threats that avoid the company from make the best use of their benefits of its
power and option.
The following threats are as follows:-
1. Vigorous rivalry
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2. Variation of data into pieces (Burlton, 2015).
3. Owner of the dealership regulations
4. Extensive Competition
In today’s world Auto mobile Company complete each other more aggressively. Tesla is the first
company to create to electric cars ,Here two noticeable competitors such as Chevrolet Bolt and
Nissan offers a wide range of products than Tesla. Others companies plan to enter into the new
market of electric cars within next few years such as Mercedes-Benz as well as
Volkswagen,Ford. Many brands are not only launch environment friendly products but also
offers a lower price than the Tesla ,which becomes a Threat fas it thrives an electric car which
have unique features and unique value that are extremely expensive as well as unaffordable for
peoples (Ghemawat, 2016).
Product defects-Due to high complex engineering involved. Tesla's cars as well as others
energy products have major flaws within many cases. Here defected products provides weakness
in manufacturing ,design as well as other features that can harm the image of the company
permanently (Razak.and et.al., 2016).
Long term Confidence – Tesla due to its unstable manufacturing conditions suffers a lot from
disbelief among the public for its long term existence that can bale to give within a deficiency
for further business development (Hart, Sharma. and Halme, 2016).
Customer's Adaptation- Any part of the business can run through the customer's adaptation .If
the customers are ready to adapt change ,companies like Tesla thus it can be considered as the
slow unforgiving process that can producing new challenges . The firm is highly dependent upon
the consumers' willingness to adopt the electric vehicles.
Self driving cases are also concern for Pedestrians. In the survey conducted within US,many
of adults feels unsafe while using self driving vehicles. Especially the people which have age of
55 are more afraid to electric cars (Hsieh, Ma. and Novoselov, 2018) .
Shortage of supply- Tesla can face major issues because of the major suspension of the
manufacturing materials with the increased prices. The company uses aluminium,lithium, cobalt
and steel from the suppliers. All of these materials contain volatile prices as well as it can affect
the production of the company line in the future.
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Lack of regulations regarding self driving
As there are not proper rules as well as regulation for the self driving cars within many countries.
Such as Tesla's sale effected through self driving restriction within many countries. Thus it
creates confusing situation regarding legal complexity tat can increase the Tesla's self driving
project's within future (Hsieh, Ma. and Novoselov, 2018).
Ansoff Matrix and BCG matrix
Ansoff provides a matrix that has four various growth strategies.
Market Penetration- It is considered as the least risky as it leverages many of the firm's
capabilities and resources. It able to increases the market share of existing products of Tesla - It
can be
achieved through the combination of advertising ,sales promotion as well as increased promotion
regarding personal selling (González-Rodríguez.and et.al., 2018). It can secure within more
dominance products. It can be achieved through a combination regarding competitiveness. It can
able Restructure a mature market and
also provides a more promotional campaign as well as supported through a pricing strategy that
can designed to make market the market more unattractive regarding consumers (González-
Rodríguez.and et.al., 2018).
Market development-Here the growth strategy that able to ells its currents products within new
markets. Here new geographical markets are targeted and also approaching new country. It also
includes new dimension for the products as well as new packaging of product as various
different prices so that they can attract the people for selling their electric cars. It is a kind of
more risky rather than market penetration as here main aim is target new markets so that
customers can easily attract by them (Razak.and et.al., 2016).
Product development-The main aim of the product development is to introduce new products
into the current products. This is a kind of strategy that can bale to develop new competencies of
the Tesla company.
Diversification – It is considered as the growth strategy where both the products and markets are
new markets. This is considered as more risk strategy due to its business is moving within
market that has a little or no experience (Hart, Sharma. and Halme, 2016).
BCG MATRIX
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The BCG matrix is known as Boston Consulting group which is used to design to assist with the
long term strategic planning. So that business consider to growth opportunity through reviewing
its portfolio to determine where to invest or where it can discontinue (Hsieh, Ma. and
Novoselov, 2018).
The matrix is based on the four Quadrants that is given below.
Dog- These are the products which have low growth as well as market share. The aim of this
advice is to remove any kinds of dogs regarding the product of Tesla. In auto mobile sector of
Tesla ,when a car line ends than there is a still requirement of the spare parts (Razak.and et.al.,
2016).
Star Products- The business products that consider for the best market share as well as create
more cash are known as Stars. Due to their high growth rate ,stars can compare more amount of
cash. This is considered as the same amount of money coming in as well as going out.
Cash Cows -They are considered as the leaders which are within marketplace. They able to
generate more cash than they consume.
Question marks-Theses are the market which have high prospect but relativity low market
share. According to them they consume a lot of money and bring back a little. It is considered as
the problem child that lose money. As in business of Tesla it is growing rapidly as well as have
potential regarding growth,to sell or not (Razak.and et.al., 2016).
CONCLUSION
From the above study it is summarized that Pestle of Tesla that describes the political conditions
such as taxes and policies regarding the electric cars. Economic factors such as market
growth ,revenues and also factors that need to be reduced such as renewable source of
energy ,also social factors and technological factors as electric cars needs a complex engineering
for maintaining such products. Also, it is a environment friendly vehicles that makes the concern
with environment. After that it focused on the Porter's five forces such as how much impact the
suppliers on the Price hike on the firm Tesla. Also, barging power of Tesla has negative as well
as positive feedback from their customers with the help of Internet . Also threat of other product
is very high in market other companies can also produced the electric cars and also they
manufacture product which is not environment friendly but customer prefer them and product is
more environment friendly as well as costly as well. Strength of Tesla is its cars have power
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electronics a well as software gearbox. Furthermore, it also focused on the Ansoff matrix as well
as BCG matrix.
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