Impact of External Business Factors on Tesla's Policies and Strategies
Added on 2023-06-04
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Running head: CONTEMPORARY BUSINESS MANAGEMENT
Contemporary business management
Name of the student
Name of the university
Author note
Contemporary business management
Name of the student
Name of the university
Author note
1CONTEMPORARY BUSINESS MANAGEMENT
Executive summary
The aim of this report is to discuss about the impact and importance of the external business
environmental factors in the business operation of tesla. There are number of parameters are used
in determining the intensity of the different factors on tesla. It is identified that tesla is having
number of challenges and opportunities in terms of their external business situations. In addition,
this report also discussed about the industry competitiveness for tesla and it is found that tesla is
facing high competitive forces in some of the areas. The concept of disruptive innovation and
technology is also critically analyzed in this report and from the perspective of tesla. This report
concluded that tesla is one of the major technology disruptors in the automobile sector.
Furthermore, this report also concluded that there are number of gap areas identified for tesla,
which were also further discussed. A few steps are recommended that will further help tesla to
overcome the identified gap areas and enhance their global business potentiality.
Executive summary
The aim of this report is to discuss about the impact and importance of the external business
environmental factors in the business operation of tesla. There are number of parameters are used
in determining the intensity of the different factors on tesla. It is identified that tesla is having
number of challenges and opportunities in terms of their external business situations. In addition,
this report also discussed about the industry competitiveness for tesla and it is found that tesla is
facing high competitive forces in some of the areas. The concept of disruptive innovation and
technology is also critically analyzed in this report and from the perspective of tesla. This report
concluded that tesla is one of the major technology disruptors in the automobile sector.
Furthermore, this report also concluded that there are number of gap areas identified for tesla,
which were also further discussed. A few steps are recommended that will further help tesla to
overcome the identified gap areas and enhance their global business potentiality.
2CONTEMPORARY BUSINESS MANAGEMENT
Table of Contents
Introduction......................................................................................................................................4
Determination of external factors....................................................................................................5
Political factors............................................................................................................................5
Economical factors......................................................................................................................5
Social factors...............................................................................................................................6
Technological factors...................................................................................................................7
Determination of industry competitiveness.....................................................................................7
Bargaining power of the buyers...................................................................................................7
Bargaining power of the suppliers...............................................................................................8
Threat of the substitutes...............................................................................................................8
Threat of new entrants.................................................................................................................8
Technological disruption and disruptive innovation.......................................................................9
Relevance of disruptive innovation for tesla...................................................................................9
Influence of technological disruption on internal policies............................................................10
Effectiveness of the response of tesla............................................................................................11
Introduction of premium products.............................................................................................11
Developing infrastructure..........................................................................................................12
Backward integration.................................................................................................................13
Initiation of radical approaches.................................................................................................14
Table of Contents
Introduction......................................................................................................................................4
Determination of external factors....................................................................................................5
Political factors............................................................................................................................5
Economical factors......................................................................................................................5
Social factors...............................................................................................................................6
Technological factors...................................................................................................................7
Determination of industry competitiveness.....................................................................................7
Bargaining power of the buyers...................................................................................................7
Bargaining power of the suppliers...............................................................................................8
Threat of the substitutes...............................................................................................................8
Threat of new entrants.................................................................................................................8
Technological disruption and disruptive innovation.......................................................................9
Relevance of disruptive innovation for tesla...................................................................................9
Influence of technological disruption on internal policies............................................................10
Effectiveness of the response of tesla............................................................................................11
Introduction of premium products.............................................................................................11
Developing infrastructure..........................................................................................................12
Backward integration.................................................................................................................13
Initiation of radical approaches.................................................................................................14
3CONTEMPORARY BUSINESS MANAGEMENT
Identification of the areas of improvement....................................................................................14
Market growth strategies...........................................................................................................14
Forward integration...................................................................................................................16
Conclusion.....................................................................................................................................16
Reference.......................................................................................................................................18
Identification of the areas of improvement....................................................................................14
Market growth strategies...........................................................................................................14
Forward integration...................................................................................................................16
Conclusion.....................................................................................................................................16
Reference.......................................................................................................................................18
4CONTEMPORARY BUSINESS MANAGEMENT
Introduction
It is important for the contemporary business organizations to effectively determine the
external business factors in order to have sustainability in their business operation. In addition,
determination of the external business environment will also help the business organizations in
identifying their effectiveness in dealing with challenges. On the other hand, the contemporary
business organizations are having the major challenges of dealing with the increased degree of
competition in the global market (Timmer et al. 2015). The impact of the external business
factors are varied in different business sectors and one of the major affected sectors is the
automobile sector. This is due to the reason that automobile sector is facing the threat of new
entrants in the market along with frequent change in the technological aspects and preference
pattern of the customers. Thus, it is becoming important for the automakers in determining the
external trends and initiates their business strategies accordingly (Townsend and Calantone
2014).
Tesla is one of the newest entrants in the global automotive market. They can be
considered as a medium sized automaker compared to the established players in the market but
their innovative approach is getting them placed distinctively in the market (Tesla.com 2018). In
addition, their innovative approach can also be termed as disruptive due to the fact that entry of
tesla in the automobile market created a stir in the existing market trend and revolution for the
electric mobility started. However, with the rapid and frequent change in the automobile market,
it is also becoming challenging for tesla to cope up with the current market trend and maintain
their competitiveness.
Introduction
It is important for the contemporary business organizations to effectively determine the
external business factors in order to have sustainability in their business operation. In addition,
determination of the external business environment will also help the business organizations in
identifying their effectiveness in dealing with challenges. On the other hand, the contemporary
business organizations are having the major challenges of dealing with the increased degree of
competition in the global market (Timmer et al. 2015). The impact of the external business
factors are varied in different business sectors and one of the major affected sectors is the
automobile sector. This is due to the reason that automobile sector is facing the threat of new
entrants in the market along with frequent change in the technological aspects and preference
pattern of the customers. Thus, it is becoming important for the automakers in determining the
external trends and initiates their business strategies accordingly (Townsend and Calantone
2014).
Tesla is one of the newest entrants in the global automotive market. They can be
considered as a medium sized automaker compared to the established players in the market but
their innovative approach is getting them placed distinctively in the market (Tesla.com 2018). In
addition, their innovative approach can also be termed as disruptive due to the fact that entry of
tesla in the automobile market created a stir in the existing market trend and revolution for the
electric mobility started. However, with the rapid and frequent change in the automobile market,
it is also becoming challenging for tesla to cope up with the current market trend and maintain
their competitiveness.
5CONTEMPORARY BUSINESS MANAGEMENT
This report will discuss about the impact of the external business factors on the policies
and decision making process of tesla. In addition, the opportunities to be gained by them from
the change in the external business factors will also be identified. The impact and influence of
disruptive innovation and technology on the policy making of tesla will also be critically
evaluated in this report. The response of them towards the disruptive innovation will be
determined along with their effectiveness. In accordance to the identified factors, this report will
also discuss a few recommended steps for the further improvement for Tesla.
Determination of external factors
Political factors
Political factor is having a huge importance for tesla due to the reason that stability in the
business environment will determine the effectiveness of them in their long term business
operation. As of now, tesla is having their major operation in the United States and Canada with
both the countries is politically stable and low level of risk. The political stability in their major
markets is helping them to initiate their business process without having the risk for coup and
instable policies (Aisen and Veiga 2013). In addition, the pro business and capitalist approach of
the government of the United States and Canada is further helping tesla in having favorable
business environment. Thus, it can be concluded that stable political environment is important
for the business operation of tesla and in their future foreign operation they should select the host
country based on their political stability.
Economical factors
Economical factors are also important in the business operation of tesla due to the reason
that it will determine the profitability and revenue. According to Sierzchula et al., (2014), one of
This report will discuss about the impact of the external business factors on the policies
and decision making process of tesla. In addition, the opportunities to be gained by them from
the change in the external business factors will also be identified. The impact and influence of
disruptive innovation and technology on the policy making of tesla will also be critically
evaluated in this report. The response of them towards the disruptive innovation will be
determined along with their effectiveness. In accordance to the identified factors, this report will
also discuss a few recommended steps for the further improvement for Tesla.
Determination of external factors
Political factors
Political factor is having a huge importance for tesla due to the reason that stability in the
business environment will determine the effectiveness of them in their long term business
operation. As of now, tesla is having their major operation in the United States and Canada with
both the countries is politically stable and low level of risk. The political stability in their major
markets is helping them to initiate their business process without having the risk for coup and
instable policies (Aisen and Veiga 2013). In addition, the pro business and capitalist approach of
the government of the United States and Canada is further helping tesla in having favorable
business environment. Thus, it can be concluded that stable political environment is important
for the business operation of tesla and in their future foreign operation they should select the host
country based on their political stability.
Economical factors
Economical factors are also important in the business operation of tesla due to the reason
that it will determine the profitability and revenue. According to Sierzchula et al., (2014), one of
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