Global Business Environment

This report analyzes the business environment of Tesla, including the impact of government policies and changes in the business environment. It also discusses the influence of PESTEL factors on business performance and the impact of government on the structure and operation of the organization.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Analysis of business environment of a firm................................................................................1
Impact of Government on structure and operation......................................................................2
Impact of changes in business environment................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................5

INTRODUCTION
Global Business Environment refers to the analysis of the various factors which affect a
firm internationally (Barac and et.al., 2016). For this report Tesla has been chosen. It is an
electric car manufacturer based in Palo Alto, California, United States. In this report, focus will
be made on analysis of business environment of an organization, assessment of impact put by the
government. Additionally, understanding of changes in the business environment will be
discussed as a part of this assignment.
MAIN BODY
Analysis of business environment of a firm
The business environment of a firm contains different types of factors which can affect its
working pattern (Bedianashvili, 2016). These are micro and macro factors. Micro factors are on a
small-scale while Macro factors are on a large-scale.
For the analysis of internal business environment of an organization SWOT analysis can
be used effectively. The analysis in the context of Tesla is as follows-
Strengths Weaknesses
 Environment-friendly cars- Tesla
provides environment-friendly cars to
its various customers.
 Efficient production system- Tesla
makes use of efficient production
system which not only saves the costs
but is also eco-friendly.
 Lack of demand in certain segments-
There is a relative lack of demand in
certain segments for Tesla which acts
like its weakness.
 Higher costs- Tesla incurs higher costs
in its production which can reduce its
overall profits.
Opportunities Threats
 Expansion- Tesla can target expansion
in those countries where it is not
present currently so that it is able to
encash this opportunity effectively.
 Innovation- Tesla can use innovation
and can target certain premium
 Competition- Increasing level of
competition in the electric car segment
can result in creation of a threat for
Tesla.
 Tax policy- Increase in the overall tax
rates can increase the costs for Tesla.
1

customers to earn higher level of profits
in order to sustain in the market in the
future time period.
Thus this will lead towards a decrease
in the overall profits. Therefore
stringent tax policy of the government
is not good in the context of Tesla and
can reduce its income level in the
future.
Influence of PESTEL factors on business performance-
 Political factors- The political factors like political situation in the country can create an
impact on the overall business performance because the company has to adjust according
to the influence generated by these factors. Thus if the political situation changes this can
impact Tesla a lot.
 Economic factors- The economic factors like economic growth rate can influence the
business performance because the firm has to make sure that it adjusts accordingly.
Therefore In the context of Tesla this can generate a lot of influence because it can either
increase or decrease the profits.
 Social factors- The social factors like society's attitude towards the products and services
can affect the business performance. For Tesla, it is important because it can increase or
decrease the overall profitability level.
 Technological factors- The technological factors like technological changes create an
impact on the overall level of performance of the organization. For a company like Tesla,
it is crucial to consider them so that the overall goals and objectives are attained.
 Environmental factors- For the companies it is required that they are able to consider
the overall impact of the environmental factors and can make sure that they can revise
their products accordingly. Tesla has to ensure that the desired adjustments are made
accordingly.
 Legal factors- The legal rules and regulations have to be considered by the companies so
that they are able to adjust their products accordingly. In Tesla this will be helpful for
ensuring that it can comply with these legal rules and regulations to enhance profits.
2

Impact of Government on structure and operation
There is an impact which is created by the government on the structure and operation of
an organization. It can be analysed as follows-
 Government policies- The government policies can lead towards creation of an impact
on the operations of an organization (Kasemsap, 2018). In the context of Tesla, it is quite
crucial that it is able to mould its structure and operations according to these policies
which will ensure that it is able to adjust efficiently and effectively to them. If these
policies are strict in nature then this will impact the company's profits negatively.
However if these policies are not strict then this will positively impact the profits of the
company in the future time period.
 Tax rates- An enterprise is required to make certain adjustments according to the
prevailing tax rates in the country which are set up by the government. For Tesla, it is
necessary that it is able to adjust its structure and business operations according to the
different types of tax rates. Higher tax rates can reduce its profits while Lower tax rates
can increase its profits.
 New laws- If the government of a country brings new laws into place then this will lead
to requirement of adjustments from companies in their structure and operation. In the
context of Tesla, it is quite crucial that it can adjust structure and operations according to
the prevailing new laws. Stringent laws can lead to reduction in profits while Relaxed
laws can increase the profits.
 Interest rates- The government of a country can create a change in the interest rates. In
Tesla, this is very important because in this manner this can create an impact on its
structure as well as operations. Lower interest rates are beneficial for the company while
Higher interest rates are not beneficial for it.
Impact of changes in business environment
In the context of a business, the business environment refers to the sum total of the
different types of forces which exist in the market and are not in control of a firm but affects its
performance (The Impact of Business Environment on Organizational Structure, 2020). It is
quite fickle and dynamic in nature. It can change anytime which will lead towards changes in an
organization to adjust to it. The impact which it can create on Tesla is as follows-
3

 Change in technology- Whenever dynamic changes in business environment are
witnessed this can create a change in the technology. In Tesla it is quite important that the
right technology is adopted. In this way it will make sure that the adjustments which are
required can be made. Thus this will lead it to acquire a much-desired strategic and
competitive advantage in the future time period.
 Efficiency and Effectiveness- When there is a change which is witnessed in the dynamic
business environment it can lead towards an increase in the overall level of efficiency as
well as effectiveness. In the context of Tesla it is necessary to raise this level to adjust
swiftly to the changes.
 Training for the workers- There is a requirement for providing the required training to
the workers in the organization for adjusting to the changes in the business environment
(Shageeva and et.al., 2017). For Tesla it is important that it provides the correct training
to its employees so that they are able to enhance their level of skills as well as
competencies. This in this way the managers can make sure that the organization is able
to easily make more profits.
 Use of new techniques- There is a need of making sure that the correct techniques are
used so that the managers are able to introduce the required changes within the
organization. In the context of Tesla it becomes crucial to use new techniques for
introducing the required changes.
There can be a wide impact which the drivers of change are able to put on the key functional
areas within the organization. The impact which care put by them on the functional areas in
Tesla explained as follows-
 Impact on Marketing department- The customers are one of the drivers of change
within an organization. Thus for a company like Tesla they can influence Marketing
department because their new needs and requirements will require that this department is
able to use appropriate strategies and techniques so that it can enhance the level of
revenues in the right manner.
 Impact of HR department- Technology development is one of the important drivers of
change within a company. Thus for an organization like Tesla it is quite crucial that the
HR department is able to train the employees according to the change which is required
4

within an organization which will help a lot in ensuring that the overall level of goals and
objectives can be attained.
CONCLUSION
From the above report, it can be concluded that the business environment of an
organization is dynamic and ever-changing in nature. Thus it is required from the management
that they are able to use certain techniques for adjusting to its new changes so that sustainable
level of growth can be achieved.
5

REFERENCES
Books and Journals:
Barac, K. and et.al., 2016. The capability and competency requirements of auditors in today's
complex global business environment.
Bedianashvili, G., 2016. The Global Business Environment, European Integration and the
Cultural Potential of Social-economic Development of Georgia. Globalization &
Business.
Kasemsap, K., 2018. Mastering business process management and business intelligence in global
business. In Global Business Expansion: Concepts, Methodologies, Tools, and
Applications. (pp. 76-96). IGI Global.
Shageeva, F. T. and et.al., 2017, September. Training the achievement-oriented engineers for the
global business environment. In International Conference on Interactive Collaborative
Learning. (pp. 343-348). Springer, Cham.
Online
The Impact of Business Environment on Organizational Structure. 2020. [Online]. Available
through: <https://medium.com/@tallydekho/the-impact-of-business-environment-on-
organizational-structure-26dcbf164ffc>
6