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Business Strategy: Tesla's Pestle Analysis, Porter's Five Forces, and Swot Analysis

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Added on  2023/01/19

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This report analyzes Tesla's business strategy through Pestle analysis, Porter's five forces, and Swot analysis. It examines the political, economic, social, technological, legal, and environmental factors affecting Tesla's operations. It also evaluates the bargaining power of suppliers and buyers, threat of substitutes and new entrants, and provides a Swot analysis of Tesla's strengths, weaknesses, opportunities, and threats.

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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
(Chang, 2016) . . 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
theories.
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 (Lehmann, 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.
Positive impact – now, many countries' government is trading with developed nations. So, it
will allow Tesla to expand in those countries.
negative impact – Any change in political situations will highly impact on tesla's operations.
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 (Lehmann, 2016) Tesla get benefits
from the low battery costs .according to this Pestle analysis it consider the decreasing renewable
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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.
Positive impact - Rise in developing nations GDP such as India will allow tesla to expand their
market.
Negative – Downfall in GDP of developed nations like Germany ,US etc will impact on Tesla's
growth.
Social factors
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 (Chang, 2016) . Tesla is a brand that is environmental sustainable. it is
also considers as the new.
Postive- Now people are besoming more environment friendly so there needs had changed. It
will rise in company growth.
Negative- If companies are not able to sustained environment this will impact negatively on
people's perception.
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 (Collins,
Worthington and Schoen, 2016)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 (Chang, 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.
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Positve – Technological advancement has boosted growth of tesla.
Negative- Under developed countries are not able to do technological advancements
Legal Factors
In this part laws as well as regulation can shape the managerial decisions as well as business
development. legal systems and laws that can form business development and managerial
decisions . 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 (Chang, 2016)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.
Positive-
Negative- change in health and safety laws of countries will impact on Tesla's operations.
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
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
(Lehmann, 2016)
Positive- Change in CSR policies and sustainability will result in growth of Tesla
Negative- Change in environmental laws of nation will enforce company to change its own
policies and laws. So it will impact on their operations.
VRIO/ VRIN ANALYSIS OF TESLA
Value- The firm have the production process called coefficient production. The external
environment able to neutralizes the threats.
Rarity- Firm is also producing rare products as it is the only firm that focuses regarding the
production of the Ev's
Imitability '
The factory of the firm took time as it was considered to be costly and done to avoid the
duplicate factory. It may be imitated but takes large money as well as time.
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Organisation
It is closed to company which state use of advance resources in producing products.
Porter's five forces
Through this 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 (Collins, Worthington and
Schoen, 2016)
Five forces are mention below
Bargaing power of the suppliers
the bargaining power of suppliers is low. 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
(.Spil, ., Kijl,. and Salmela, 2016, )
Buyer's bargain power
the bargaining power of buyers is low. 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 (Collins,
Worthington and Schoen, 2016)
Threat of Other products.
The threat of substitute is high. 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
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choose from such as buyers determine the products as well as lessening power of the businesses
(Lehmann, 2016)
Threat of new entrants
the threat of new entrants is high. 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 (Collins, Worthington and Schoen, 2016)
Tesla's Swot analysis
Swot analysis is considered as he simple framework for the evaluation of the strength as well as
weakness and also the opportunities and threats of a company like Tesla. It assists to recognize
that a what a company have strengths or what are its weakness .It also suggest that what are
lacking within the firm and also how to minimizes these kinds of risks. It also focuses on the best
possible advantages regarding chances for the success of the firm.
Tesla Inc. was consider as an American start – up powered through Silicon valley. A
very successful inventor as well as scientist of his time. “Nikola Tesla”, Tesla was named after
That. The company has risen as one of the most discussed as well as analysed companies
among business organization (Malerba, and et.al., 2015).
The business strategy of Tesla is to reproduce typical technological – Such as initially
target, product life cycles, move larger markets within lower prices.
An overpriced degree of upright combination is included in their protection strategy , also
includes proprietary charging infrastructure as well as component production proprietary
charging (Collins, Worthington and Schoen, 2016)
Chain management strategy is focus by The Tesla through long period growth strategy,
directory management and division, demand production.
Strength of Tesla
SWOT analysis features of Tesla Inc. deals with the profession strengths that put up to
the firm's growth as well as improvement (Chang, 2016)
The following strength are as follows:-
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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 (Malerba, and et.al., 2015).
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
well as feedback and also have improved control regarding service operations and
customised warranty packages (Lehmann, 2016)
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 (Lehmann, 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:-
11 Worldwide sales expansion
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1 International supply chain expansion
1
1 Work enlarging (Malerba, and et.al., 2015)
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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:-
11 Vigorous rivalry
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1 Variation of data into pieces (.Spil, ., Kijl,. and Salmela, 2016, )
1
1 Owner of the dealership regulations
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1 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
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
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 (Lehmann, 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 (.Spil, ., Kijl,. and Salmela, 2016, )
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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 (Malerba, and et.al., 2015)
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.
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 (Spil, Kijl, and Salmela, 2016).
Ansoff Matrix and BCG matrix
Strategic plan
Mission To accelerate the world's transition to
sustainable energy.
Vision To create the most compelling car
company of the 21st century.
Objective Primary objectives- To generate the demand
as well as driving sales regarding electric cars
within market.
Secondary Objectives- Enhances its market
share from 3 % to 5 %
Strategies 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 -
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It can be
achieved through the combination of
advertising ,sales promotion as well as
increased promotion regarding personal selling
(Malerba, and et.al., 2015) 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
(Linder, and Williander,2017)
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 (Evans and et.al., 2017)
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.
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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
(Chang, 2016)
Tactics BCG MATRIX
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
(Collins, Worthington and Schoen, 2016)
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 (Boyd
and et.al., 2017)
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
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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 (Anwar, 2019)
Evaluation Product development- it uses product
development strategies as it is advantageous
regarding the performance quality of the
current product. They also provide new
vehicles to the current market that is innovative
vehicles helps to increase its branding as well
as reputation within global marketing.
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
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more environment friendly as well as costly as well. Strength of Tesla is its cars have power
electronics a well as software gearbox. Furthermore, it also focused on the Ansoff matrix as well
as BCG matrix
REFERENCES
Books and Journal
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Anwar, J., 2019. Business strategy and organizational performance: measures and
relationships (Doctoral dissertation, COMSATS Institute of Information Technology,
Islamabad).
Boyd, B. and et.al., 2017. Hybrid organizations: New business models for environmental
leadership. Routledge.
Chang, J.F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Collins, J.D., Worthington, W.J. and Schoen, J.E., 2016. Family business CEO succession:
Examining personal retirement expectations. Journal of Small Business Strategy. 26(2).
pp.51-70.
Dickson, M.A. and McCord, J., 2016. The integrated business strategy of a Central American
denim apparel manufacturer. Latin American Journal of Management for Sustainable
Development.3(1). pp.66-79.
Evans, S and et.al., 2017. Business model innovation for sustainability: Towards a unified
perspective for creation of sustainable business models. Business Strategy and the
Environment. 26(5).pp.597-608.
Lehmann, C.F., 2016. Strategy and business process management: Techniques for improving
execution, adaptability, and consistency.
Linder, M. and Williander, M., 2017. Circular business model innovation: inherent
uncertainties. Business strategy and the environment.26(2). Publications.
Madhushree, R.R., Kumar, A. and Aithal, P.S., 2018. Business Strategy of Top Indian IT
Company: MindTree. International Journal of Case Studies in Business, IT, and Education
(IJCSBE).2(1). pp.22-36.
Malerba, F. and et.al., 2015. Dynamics of knowledge intensive entrepreneurship: Business
strategy and public policy. Routledge.
Spil, T., Kijl, B. and Salmela, H., 2016, April. Digital Strategy Innovation; Toward Product and
Business Model Innovation to Attain e-Leadership. In International Conference on
Management, Leadership & Governance (p. 321). Academic Conferences International
Limited.
Ukko, J. and et.al.,2019. Sustainability strategy as a moderator in the relationship between digital
business strategy and financial performance. Journal of Cleaner Production.236. p.117626.
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