The Global Business Environment

This report discusses the changes in the global business environment and their impact on firms' strategies and operations. It focuses on Tesla's use of Porter's value chain analysis for growth and success in the electric car industry.

THE GLOBAL
BUSINESS
ENVIRONMENT

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Pestle analysis..............................................................................................................................3
Porter Value chain analysis.........................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
There are several changes in global business environment that adversely impacted on
firm’s strategy and operation such as new technology or changes in preference and needs of
customers. Company in order to grow and sustain its business in competitive market condition
have to adapt to external changes for making optimum utilisation of opportunities and finding
new ways to remove threats. Due to increase pollution in environment, prices of diesel and petrol
and limited availability of resources people are demanding products that are eco friendly and low
cost. This report is about Tesla that has introduced electric vehicles in order to cover large
market area and fulfil needs of customers beyond their expectancy level. It has discussed about
porter value chain of Tesla that have contributed in growth and success of enterprise.
MAIN BODY
Pestle analysis
Political factors: Government are encouraging more and more companies in automobile sectors
to takes initiative in manufacturing of electric car so that less harm can caused to natural
resources and environment of country. Subsidies and taxes break are some tools that have been
used by government of Europe to initiate firms such as Tesla to sells electric cars in order to earn
profit (Bashir and Verma, 2017). Thus, this factor has contributed towards reducing cost of
manufacturing and enhancing profitability of company.
Economical Factor: It can be stated that economy of country have grown with introduce of
electric cars by companies thus helps in generating lot of employment and revenue for individual
living in society. So, electric car have provided opportunities to Tesla to expand its business
operation and sales volume by meeting needs of customers in best possible manner.
Social Factor: There are various individual that are considered about increase pollution in
environment or interested to buy eco friendly cars. Thus launch of electric car by Tesla have
contributed in fulfilling requirements of customers and building strong brand image of firm.
Technological Factor: There are several innovation and changes in technology so Tesla by
adapting to these trends such as introduce of electric cars that are fuel efficient and eco- friendly
is able to promote growth and sustainability of business.
Legal Factor: Government have made certain rules and regulation in order to protect employees
and customers being cheated by enterprise. Tesla has followed all legal laws made by
government of Europe in order to sustain its business operation for longer period of time.

Environmental Factor: Citizen of Europe are becoming more and more concerned about
increasing pollution and wastages of resources thus Tesla by taking initiative to protect
environment by delivering electric cars have expand and grow its business operation across
worldwide (Toma and Marinescu, 2018). Less use of fuel and carbon emission have contributed
in attracting existing as well as new customers to select products and services of Tesla as
compared to other competitors.
Porter Value chain analysis
Porter value chain is a process that includes several key activities and definite
organisational structure that lead to convert of raw material into finished products so that it can
be delivered to final consumers. Therefore, In other terms it includes all process that contributed
in processing of raw material and delivery of finished goods to end users for satisfaction of its
needs. Tesla is enterprises that have strong porter value chain which have contributed in
delivering qualitative services to number of individual that stay in society. Porter value chain
consists of two main activities which are performed by Tesla in electric car industry to earn
profit that is primary and supportive activities that are illustrated below:
Primary activities: These are most basic activities that are undertaken by company in order to
influence customer to select products and services of Tesla as compared to other competitors in
industry (Milev and Al-Habaibeh, 2020). Key components of primary activities are inbound
logistics, operation, outbound logistics, marketing and sales and services that contributed in
creating values and increasing brand image of enterprise in competitive market.
Inbound logistic: Companies that are operating in automobile industry needs lot of space to
stores raw material so that car or vehicles can be manufactured and delivered to customers.
Tesla has various warehouses, wide space to store raw material that has contributed in effective
assembling or storing resources for achievements of objectives. Company have always emphasis
on building strong relationship with suppliers so that it can get products at lower prices within
limited time frame. Manager has planned in advance the way raw material needs to be distributed
in enterprise so that finished products can be produced and delivered to customers. Therefore
inbound logistics have lead to collect of qualitative raw material from various sources at
minimum prices for satisfaction of customers requirements.
Operation: It is second stage of porter value chain which state that way input products like raw
material are converted into finished goods. Manager of Tesla have set standard procedure and

policies that need to be followed by individual while manufacturing of electric cars which have
contributed in delivered extreme qualitative products and services. It has also contributed in
making optimum utilisation of available resources, reduction in amount of wastage, error and
mistakes thus reduce overall cost of company. It can also be stated that manager effectively
monitors and supervise performance of each employees in order to find error and take
appropriate action to control and get specific results or outcome.
Outbound logistic: It includes activities that are related to deliver of finished products to
customers that are staying across worldwide. Tesla have strong market presence or distribution
channel which contributed in growth and success of company. Large numbers of people are able
to get delivery of electric vehicle within minimum times thus it has enhanced customers
experienced and increase brand image of enterprise (Ortar and Ryghaug, 2019). Strong
distributional channel and warehouse, stores in different geographical location have lead to
supply of finished products to customers that are staying in different parts of country.
Marketing and sales: It is process that is used by company in order to attract customers or
create awareness among people about products and services in which firm deals so that they are
motivated to make purchased for fulfilment of their requirements. Through marketing operations,
Tesla promotes and advertises to the consumers about the goods and products manufactured by
the business organisation in order to generate their interest into the operations and functions of
the business organisation and the products that it manufactures, so that the consumers can
become interested and engage in conducting a financial transaction with the business
organisation (Koc and Bozdag, 2017). Tesla makes use of both digital and traditional marketing
channels for their marketing operations through the various tools that these channels provide.
Tesla uses digital marketing tools such as online websites, social media platforms, smartphone
applications in order to promote and advertise their manufactured products and cars to a wide
range of global audience through the use of the internet, as significantly reduced costs. Tesla also
makes us of traditional marketing tools such as newspapers, billboards, TV and Radio
commercials, magazines etc. to promote and advertise their manufactured goods and services to
a very large base of global audience who may or may not have access to the internet. Use of both
traditional and digital marketing tools allows for Tesla to advertise and promote their
manufactured goods and services to a very large base of global audience, interacting with them
through interesting and engaging marketing content.

Services: These include all the activities of Tesla that help the customers have a sense of trust
with the goods and services of the business organisation and increases the overall satisfaction of
the customers with the goods and services provided by Tesla. Tesla provides various supportive
services to their customers, in order to be able to effectively satisfy their varying and diverse
needs within the electric car industry. Tesla provides standardised and effective pre and post sale
services to the customers who choose to purchase their electric series of automobiles such as
effective customer service, monthly maintenance of purchased electric cars, upgrades and
personal modification services through which the customers can personalise their purchased
Tesla electric automobiles to their individual demands and preferences, repairs through which
the customers can repair the damages incurred by their purchased tesla electric automobile
through their daily usage (Simatupang, Piboonrungroj and Williams, 2017). In addition, tesla
also provides return services to their customers, through which the customers of Tesla can return
their previously owned older Tesla electric car model and upgrade it to the brand new model
unveiled by Tesla that year, at reduced costs based on the overall condition and model of the old
electric car owned by the customers of Tesla. Such services are immensely important towards the
overall success of Tesla within the electric automobile industry as it is due to such services that
Tesla provides to their customers that their customer’s needs, requirements, demands and
preferences are effectively met and satisfied by the business organisation, allowing for Tesla to
increase the overall loyalty metrics of their customers towards the business organisation and
allowing for Tesla to retain greater number of serviced customers for their future operations
within the electric automobile industry.
Support Activities: Secondary activities of tesla based on the Porter’s value chain model
comprise of operational activities within Tesla that helps to make the primary activities of Tesla
to be increasingly more effective and successful. The secondary activities within Tesla include
human resource management, technological development, infrastructure, procurement of
required raw materials etc.,
Human Resources: These include all the human resources that Tesla possesses in order to
effectively be able to conduct its daily operations in a successful manner and how such human
resources are managed within the business organisation. Tesla possesses human resources which
are highly skilled, experiences and talented, which allows for Tesla to come up with new and
innovative designs, prototypes and blueprints for their new electric car models on a consistent

basis (Flanagan, Lepisto and Ofstein, 2018). The highly skilled human resources of tesla allow
for the business organisation to operate successfully within the electric automobile industry.
Technology: Technology and technological solutions are also a major factor that influences the
overall operational performance of Tesla and its profit margins in the consumer markets. Tesla
possesses dedicated research and development department which is capable to innovating and
inventing new technological solutions that are able to increase the overall value that the Tesla’s
electric automobiles are able to provide to their customers (Eling and Lehmann, 2018). Tesla
makes use of highly sophisticated and advanced technological solutions for their electric cars
such as machine learning, artificial intelligence etc. in order to make their electric cars self
driving.
Infrastructure: Tesla has also invested significantly into developing its operational infrastructure
since it entered into the electric automobile industry. This developed infrastructure allows for all
the distinct and diverse operations of Tesla to be increasingly valuable and allows for such
operations to be conducted towards optimum standards of performance and efficiency. The
infrastructure of Tesla comprises of various manufacturing plants, warehouses for inventory
storage, logistical department, operational and management offices etc., through which the
business organisation is able to conduct its various different operations in a smooth and
cooperative manner towards accomplishing the overall objectives and goals of the business
organisation.
Procurement: These relate to all activities within Tesla, through which the business organisation
procures the raw materials and technological solutions from external markets that are required
for its manufacturing operations (Zamora, 2016). Tesla procures such raw materials from the
various industry suppliers present in the external markets of the business organisation.
CONCLUSION
Through the findings of this report, it can effectively be concluded that there are present
various forces and factors in the external macro environment of a business organisation operating
in the electric car industry such as Tesla, which can influence and have a positive or negative
impact on the operations and profitability of the business organisation. This report analyses the
factors and forces present in the external macro environment of Tesla in order to identify the
impact of such forces on the operations of Tesla. Further the report also makes use of the

dedicated model of Porter’s value chain with the intention to analyse the operational activities of
Tesla which it makes use of in order to deliver valuable manufactured electric cars and products
to the consumers.
REFERENCES
Books and Journals
Bashir, M. and Verma, R., 2017. Why business model innovation is the new competitive
advantage. IUP Journal of Business Strategy, 14(1). p.7.
Milev, G. and Al-Habaibeh, A., 2020. If all cars were electric, UK carbon emissions would drop
by 12%. The Conversation.
Ortar, N. and Ryghaug, M., 2019. Should all cars be electric by 2025? The electric car debate in
Europe. Sustainability. 11(7). p.1868.
Koc, T. and Bozdag, E., 2017. Measuring the degree of novelty of innovation based on Porter's
value chain approach. European Journal of Operational Research. 257(2). pp.559-567.
Simatupang, T.M., Piboonrungroj, P. and Williams, S.J., 2017. The emergence of value chain
thinking. International Journal of value chain management. 8(1). pp.40-57.
Flanagan, D.J., Lepisto, D.A. and Ofstein, L.F., 2018. Coopetition among nascent craft
breweries: a value chain analysis. Journal of Small Business and Enterprise
Development.
Eling, M. and Lehmann, M., 2018. The impact of digitalization on the insurance value chain and
the insurability of risks. The Geneva papers on risk and insurance-issues and
practice. 43(3). pp.359-396.
Zamora, E.A., 2016. Value chain analysis: A brief review. Asian Journal of Innovation and
Policy. 5(2). pp.116-128.
Toma, S. G. and Marinescu, P., 2018, May. Business excellence models: a comparison.
In Proceedings of the International Conference on Business Excellence (Vol. 12, No. 1,
pp. 966-974). Sciendo.