Value Chain Analysis and Pestle Analysis of Tesla

This report provides a comprehensive analysis of the value chain and external environment of Tesla, highlighting the factors that have contributed to its success. It also includes a Pestle analysis of Tesla.

TESLA ELECTRIC CAR

Contents
INTRODUCTION...........................................................................................................................3
Porter’s value chain analysis.......................................................................................................3
Pestle analysis of Tesla-...............................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
This report contains information which highlights the value chain of Tesla with the analysis of
external environment. Other than this it has also been highlighted that what are the factors that
has made the company very successful in a very short span of time. This report has given the
complete analysis of the operations and procedures of Tesla. The purpose of this report was to
analyze the working of Tesla in the global business environment with the reasons of their success
(Hamilton and Webster, 2018).
Porter’s value chain analysis
The model of value chain analysis was introduced by Michael E. Porter. The activities that are
highlighted in this model are raw materials and its obtainment, production, sales and marketing
and after sales service. These stages add value to the finished product. It is necessary to analyze
the value chain for the business as it will help them to achieve great results if they are optimized.
This helps the companies such as Tesla to enhance their efficiency of operations through which
they create new factors to gain competitive advantage. There are two activities included in it that
is primary and support activities.
Primary Activities-
These activities deals with products and services when it is in the creation stge.
Inbound Logistics-
This aspect refers to the flow of goods that is inward which consists of storage, transport
and delivery. Tesla has many warehouses which are situated in US and many of them are leased.
The main manufacturing site of the company is in Fremont, California United States. The facility
is around 5.5 million square feet and many of their warehouses are apart from it such as
Livermore California, Sparks Nevada etc. These sites are used for storage and distribution.
Operations-
The company commenced their operations in 2003 and the purpose was to bring
revolution in the market and bring electric cars for everyone. Roadster and after that Model S
was launched in 2008. The headquarters of the company is in California still they have managed
to expand their base of operations and set the platform of supply chain global. There is one

facility of the company in Tilburg which offers testing the car to their consumers for Model S
and Model X. For the manufacturing of battery they have three gigafactory plants in different
places so that they can cover their channel of supply (Tallman, Luo and Buckley, 2018).
Outbound Logistics-
The gigafactory that is in Reno is one of the biggest facility of the company other than
that the main facility is in Fremont which deals with many of their operations of manufacturing
and there they can even test the final product. Distribution house of the company is in Tilburg
and it deals for the operations of service centre that are in Europe. Many facilities that are taken
on lease are used for the storage of parts and vehicles. They have started their gigafactory in
China Shanghai so that they can meet the needs of their customers in China.
Marketing and Sales-
The industry in which Tesla deals in involves high level of competition. Different types
of channels are used in the marketing such as traditional as well as digital so that they can
promote their brand and increase their sales. If it is compared then the money invested by Tesla
is very less from other companies. The strategy that is used by Tesla is use their own website for
marketing. other than it the CEO of the company that is Elon Musk also uses his personal pages
on social media to promote it. They have enhanced their network with other companies so that
they can use it for sales and service. These stores promote the products as well as they collect
feedback from the customers. These stores are in the outer markets but clearly visible and they
offer after sales service and retail sales.
Other than this the increase in the no of service centre has helped the company to increase
their demand in the market. With this they have successfully opened up a superchargers and
destination chargers. They main focus of the company has always been to maintain the image of
their brand in the eyes of the customers. The innovation brought by the company into the market
and the products offered by them that are of high quality as helped them to achieve maximum
level of satisfaction to their customers. It is China that is the major market for Tesla and to
promote their brand they are opening more of their stores and galleries so that they can meet the
expectations of people and increase their reach.

Products and Services-
The products that are offered by the company was introduced in 2008 with Roadster and
Model S. After that in 2015 they launched Model X and a year later Model 3. Currently they
have added a new addition into their portfolio and that is their cybertruck and the new Roadster
with energy products. The truck offers futuristic and Sci-Fi looks and with that it runs on battery
which makes it good for the environment. Other than this they offer solar tiles and products for
storage which helps to keep their portfolio diversified (Fabus, 2018).
Support Activities-
The activities that are primary are linked to activities that are of support. These activities
help the company to improve the efficiency as well as their effectiveness of the activities thata re
primary.
Technology-
Every company dealing in this sector has complied with the needs of technology so that
they can compete and survive in the market for long. It is with the help of technology that
evolution in the market has taken place and the fuel combustion cars will be replaced with
battery driven cars. Tesla was the first mover to this aspect but now many companies such as
BMW has introduced their electric cars but they are still trying to increase the range of the car
and add more to cars that are hybrid. Other than this the centre of focus in this aspect is cars that
offer autonomous driving and cars and electric mobility. Tesla offers both of these features that
is why their products are so popular. They have invested more than $ 1 billion in the aspect of
research and development. This has helped the company to improve their portfolio and make the
brand globally attractive.
Infrastructure-
The company has divided their division in two categories of product one for the segment
of automobile and another for the segment of energy products. The structure of administration is
unique as the decisions are taken by CEO and CFO looks after the area of accounting and
finance. For other department they have allotted different post of managers (Gaspar and et.al.,
2016).

HRM-
Currently the company has more than 45,000 employees which work for them as their
full time. It is the HR department of the company that makes sure that employees hired by them
are eligible for the job and they have enough talent that can help the company to keep their name
in the market. HR management of the company has remained keen and focused so that they can
attract the employees that can help the company and retain them for a long period of time. the
company is focusing on the department of HR as it is their job to look after the prospects of
growth and increase their strength so that they can stay competitive in the market.
Procurement-
Tesla takes many parts from other companies that are used in their cars. They have
maintained good relationship with their suppliers across the world. The reason behind that is they
need to procure many of the parts from them. For some of the materials they have many
suppliers but some of the products they have one or two suppliers. Even Panasonic is one of the
biggest suppliers of Tesla as the cells of battery that are required for its strength are supplied by
them to Tesla (Kasemsap, 2018).
Pestle analysis of Tesla-
Political Factors-
The cars that are offered by Tesla runs on battery which consumes the power of
electricity in order to run. Instead of fuel pumps it is necessary that there are sufficient stations
which provides electricity for cars. This is why the government of many countries has taken
initiatives so that they can work on the improvement of these aspects. Other than this if
consumers are buying electric cars then they can avail the benefit of tax credit. Tesla is working
on increasing their reach but it is the thought process of the customers that will help them
(Brenner, 2018).
Economic Factors-
After the evaluation of sales it has been noticed that sales of electric cars have been
increased. The rise was about 30 per cent across the world. The vehicles that the company offers
are cost effective more sales they make more they will be able to increase the margin of profit.

The company has already introduced their cars in the luxury segment but keeping in mind the
condition of the economy they need to enter into mid segment so that they can cater the needs of
middle class people (Shageeva and et.al., 2017).
Social Factors-
People are shifting to preserving the needs of the environment that is why they prefer
electric cars and in the long run it will be cheaper for them to use. The company has positioned
themselves well in the minds of the customer which is as an electric car that will sustain the
environment and this has helped them to gather their attention from other brands.
Technological Factors-
It is because of these factors that they are able to make their portfolio unique and
diversified. It is important that leaders of the company remembers that technology has a
downside and that is it becomes obsolete with time. This is why they need to keep their focus on
changing it constantly. It is a critical factor for the company as their product relies on it.
Currently by the features such as artificial intelligence and automated cars they are ahead of their
competitors.
Legal Factors-
This aspect is necessary for the company to be dealt with as they are entering into
different markets which will require them to work under their laws and regulations. Other than
this they will have to make patents on an international level. Otherwise it can be interfered with
legal issues. They have taken the advantage of international environment regulations by
promoting their cars as sustainable for the environment.
Environmental Factors-
This aspect works as the strength for the company as they have products which are eco
friendly. With the support of regulations and government they have made their name in the
market and been successful in increasing their share (Barac and et.al., 2016).

CONCLUSION
From the above studies it has been concluded that Tesla needs to enter into the mid segment so
that they can cater the needs of the people who are from middle class and they can serve their
needs. Also one of the reasons of their success is that they have been able to gather the support of
government and legal aspects which has made it easy for them to enter into different markets and
increase their reach. They have kept their relations good with the suppliers and other dealers so
that they can offer better services to their customers.

REFERENCES
Books and Journal
Barac, K., and et.al., 2016. The capability and competency requirements of auditors in today's
complex global business environment.
Brenner, B., 2018. Transformative sustainable business models in the light of the digital
imperative—A global business economics perspective. Sustainability, 10(12), p.4428.
Fabus, M., 2018. BUSINESS ENVIRONMENT ANALYSIS BASED ON THE GLOBAL
COMPETITIVENESS INDEX (GCI) AND DOING BUSINESS (DB): CASE STUDY
SLOVAKIA. Journal of Security & Sustainability Issues, 7(4).
Gaspar, J., and et.al., 2016. Introduction to global business: Understanding the international
environment & global business functions. Nelson Education.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
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.
Tallman, S., Luo, Y. and Buckley, P.J., 2018. Business models in global competition. Global
Strategy Journal, 8(4), pp.517-535.