Management and Business Environment of Tesla

This report discusses the management and business environment of Tesla, including Mintzberg's theory of management, the contribution of critical thinking in effective performance, and taking account of diverse stakeholder interests. It also explores the implications of PESTLE analysis and Porter's five forces on Tesla's policies. Additionally, it examines corporate responsibility and national culture in the context of Tesla.

TESLA Electric Cars

Table of Contents
INTRODUCTION...........................................................................................................................3
Part A...............................................................................................................................................3
Management................................................................................................................................3
Mintzberg’s theory of management.............................................................................................3
Contribution of Critical thinking in effective performance of job of managers..........................5
Taking account of diverse interest of Stakeholders by managers................................................5
Part B...............................................................................................................................................5
PESTLE Analysis........................................................................................................................5
a. External forces that have most implications for the Tesla...................................................7
b. Extent to which Tesla’s policy take account for these forces..............................................8
c. How should managers decide which of the many factors identified in a PESTEL analysis
they should attend to? If they must be selective, what is the value of the PESTEL method?.8
Porter’s five forces.......................................................................................................................8
Part C.............................................................................................................................................10
Corporate Responsibility & National Culture...........................................................................10
a. Practices of Tesla...............................................................................................................11
b. Examples of corporate malpractice...................................................................................11
Hofstede’s dimensions of national culture................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Management can be defined as an activity in which all the efforts that are made by
different areas of organisation by teams and individuals of the organisations are coordinated and
directed towards achievement of organisational goals. This report will discuss about management
and business environment of the Tesla. In order to identify factors and analyse business
environment Pestle and Porter’s five forces model will be applied. Tesla is a American Electrical
vehicles and clean energy company. Tesla was founded in 2003 and operates under automotive,
energy storage, and energy production industry. The company is headquartered at Palo Alto,
California, U.S. products of the company are Electric vehicles, Tesla batteries, Solar Penal and
roofs. The company as of 2019 employs around 40000 employees and in 2020 Tesla reached a
market capitalization of US$206 billion and became world’s most valuable automaker by market
capitalization. This report later will also discuss about corporate social responsibility and
national culture in context of Tesla.
Part A
Management
Management is a set of principles that relates to function of planning organising directing
and controlling activities of organisation (Serrat, 2018). The activities are aimed at achieving
organisational objectives and application of management principle extends to all areas of
organisation. The areas that are covered in application of Management are financial resources,
human resources, information resources and physical resources. Management is basically based
on five primary principles that are planning organising staffing controlling and directing.
Mintzberg’s theory of management
Mintzberg theory of Management includes roles of managers. This theory provide 10
roles of managers based on three different aspects. The roles in mintzberg theory are-
Interpersonal Roles
The Figurehead

In this role managers require to perform ceremonial duties.
The Leader
In this role managers need to take responsibility of the employees. They need to motivate
and encourage employees to perform effectively.
The Liaison
This role requires making contacts with outside parties. In this role they also play role of
mediator between senior management and employees.
Informational Roles
The Monitor
This means that managers scans environment of business in order to collect information
that after business (Hidayat, 2020).
The disseminator
This means that distribute and pass information to subordinates which help them in
performing their duties.
The Spokesperson
This means sharing information with outside parties of the business. This also means that
they also represent organization in front of external parties.
Decisional Roles
The entrepreneur
This means that they seek to improve the organizational operations and initiate projects
within organization.
The Disturbance Handler

This means that they respond involuntarily to pressure too severe which cannot be
ignored. This means that they also play active role in organizational conflict and disputes and
their resolution.
The Resource Allocator
They distribute resources of organization so that they can be effectively used and achieve
organizational objectives.
The Negotiator
This role involves performing activities of a negotiator and commit organizational
resources in real time.
This model can be used by managers to identify what roles they need to play in different
situations and on the basis of that they can effectively play their role. managers can understand
the different requirements of the tasks and roles.
Contribution of Critical thinking in effective performance of job of managers
Critical Thinking refers to considering all the affecting aspects of a situation. This also
means that regarding a situation and problem managers (Ennis, 2018). This is important for
managers that they are able to think critically as this will enhance their decision making because
they are able to think from varied and various perspectives. Actions that are taken on the basis of
the decisions also get improved and this enhances overall performance of managers and makes it
effective.
Taking account of diverse interest of Stakeholders by managers
Managers are responsible towards all stakeholders whether they are internal or external.
This is why it is important that activities of organisation and decision of managers are able to
ensure interest of all stakeholders of the company. In order to take account of interest of all
stakeholders it is important that managers are aware of different interest of stakeholders and
along with that they also need to understand how and in what aspects their actions and decisions
affect interest of different stakeholders of the company (Hidayat, 2020). By doing this managers
will be able to take account of diverse interest of all stakeholders of Tesla.

Part B
PESTLE Analysis
Political
This factor of environment is concerned with politics and government of a country. This involves
identifying factors affecting Tesla. Tesla is based on US and this is gets affected by government
of policies of US. Along with this political relations of US with other countries also affect
operations and success of Tesla in other countries. Concerned with factor Tesla also is able for
government incentives that are available for electric vehicles company.
Economical
This means financial aspects of the business. Economic factors involve whether people of the
country and region are able to buy the products of company or not (Rastogi and Trivedi, 2016).
Along with this it also involve GDP, Cost of Operations, economic stability, cost of finance.
Decreasing cost of batteries and renewable energy is favourable for Tesla.
Social
This includes taste and preferences of the customers. In this factor business have to ensure that
their activities are aligned with social trends and this context Tesla is contributing in increasing
popularity of low-carbon lifestyle. Increasing preference to renewable energy is also favourable
for Tesla.
Technological
Technology in present business environment has become centre of growth and success.
Concerned with this Tesla being an automobile company is based on technology and further
electronic vehicles are an exceptional example of mechanical technology. Some of the elements
in this factor are increasing technological changes and increasing automation of business and
these are favourable for Tesla. However these factors for Tesla can also create a challenge.
Legal

This environmental factor includes all those elements that govern all activities and operations of
Tesla. This means this environmental factor involves rules and regulations that create legal
liabilities and constraints for Tesla. Regulations for energy consumption are one of the favours
for Tesla.
Environmental
This includes factors that are concerned with environment. Increasing impact of business and its
operations required businesses to consider the fact and follow norms of environment safety
(Christodoulou and Cullinane, 2019). Changes in climate and expansion of environmental
program are a favourable factor for Tesla.
a. External forces that have most implications for the Tesla
On the basis of analysis of environment for Tesla it can be considered that social
environment and legal environment has most implications on business of Tesla. The reason
because of which these environments are important and have implications on Tesla are that
social environment involved customers of the company and their preferences and choices. This
environment is frequently changing environment in which repeating changing social cultural
trends significantly affect business as they have to consider changing needs and wants of
customers. Moreover in a customer centric business environment social factor has significant
implications on business operations. Additionally, changes in this environment are
uncontrollable as well as difficult to predict. Social environment requires that Tesla developed a
culture of organisation where it is not very difficult for employees as well as for business and its
processes to rapidly change.
Another force that has most implications on the business of Tesla is legal environment.
The reason behind this force having implication on Tesla is that forces and elements of legal
environment are also unpredictable and additionally it is important for Tesla to obey all the rules
and regulations (Kiesha, 2018). They are binding on the company and create different constraints
on its business.
Other than this other forces of environment also have implication on Tesla but they can
be managed by internal environment. In which political and economic environment it can be
considered that Tesla is operating in US and its political and economic condition is favourable

for Tesla. Economic conditions can also bi managed by internal policies and practices of
organisation. This means that effective financial planning can help Organisation in insuring that
it is able to remain financially stable. Concerned with technological environment it can be
considered that Tesla has managed to develop effective Technology in manufacturing and
automotive which is a strong favour for the company. In relation with environmental factor it can
be considered that Tesla is company that has positive influence on environment. The reason
behind this is that firstly with its electric vehicles it has reduced impact of carbon on
environment and along with this Tesla is also working on renewable energy and this is why it has
positive impact on environment and is contributing in Environmental sustainability.
b. Extent to which Tesla’s policy take account for these forces
Tesla is having implications from social environment and legal environment. In this
context Tesla has managed to change its policies and practices so that it can cater changing needs
and requirements of the people (Gafarov, 2019).
Tesla is a big organisation and this is why it performs regular monitoring of the
environment. This allows company to identify and understand opportunities and threats that are
available in external environment.
c. How should managers decide which of the many factors identified in a PESTEL analysis
they should attend to? If they must be selective, what is the value of the PESTEL method?
In order to understand and identify what are the forces and factors that Tesla should
attend they need to understand impact of all the factors and this is possible with help of PESTLE
analysis. They can understand this with nature of the factor in terms of its impact on business and
capacity of business to deal with such challenges and changes in external environment. along
with this experience of managers can also help them in identifying and determining the force that
they should attend to.
Porter’s five forces
This is a model through which Tesla can understand impact of different industry forces
on the company. The forces that exist in industry are-
Threat of Entry in the market

This can become very difficult for company to analyse whether it has threat by the forms
that can enter into the market and increase the competition (Khurram, Hassan and Khurram,
2020). However for company it is very difficult to start from zero and enter into market in which
Tesla is operating. But due to increasing popularity of electric vehicles and environment friendly
vehicles existing automobile industries are entering into the industry and increasing competition
for Tesla. Chevrolet and Nissan are example of such companies. Tesla can increase its power in
this force by creating entry barriers the barriers of entry are economies of scale, brand identity,
strong brand identity of Tesla can create barriers for firms, switching cost, requirements of
capital and government regulations. However, companies existing and operating in automotive
industry can instead of these barriers can enter into the market of electronic vehicles and create
competition for Tesla.
Suppliers Power
This is another competitive force in which suppliers’ power is considered. Suppliers have
significant influence on the company and its business, in this competition gets affected by the
suppliers and supplies. This is because it has implications on cost and quality of the product
being provided by the firm. For Tesla there are several suppliers that can supply required
resources and material to the company.
Buyers Power
Customers have become very important for the business and its success in current
customer centric environment. Power of Tesla in this gets affected by number of sellers
(Moreno-Izquierdo, Ramón-Rodríguez and Perles-Ribes, 2016). Earlier there were limited
companies providing electric vehicles but increasing demand and popularity encouraged more
sellers and customers now have more choices and this increases competition for Tesla.
Availability of substitute product
Concerned with this force of the competition it can be considered that in this there is a
strong competition for Tesla. This is because substitute of Tesla and its products is conventional
vehicles. This is a strong competition for Tesla. There are several substitute for Tesla among
which Ford, Toyota, General Motors are some of the companies that are providing traditional

conventional vehicles. Tesla is electric automotive company and this is why it is operating in
automotive industry hence need to compete with these companies.
Existing Competitors
Existing competitors have direct impact on the competition and concerned with this
power of Tesla in this gets affected by number of competitors and businesses operating in the
industry. Some of the main competitors of Tesla are Porsche Taycan, Lexus ES Hybrid and
BMW i3 (Khurram, Hassan and Khurram, 2020). These are important competitors for Tesla and
increases competition for the company.
Several companies have changed their planning and policies to enter into electronic vehicles
company. Among many other companies Toyota is the one which has changed its strategy to
account for the change in the industry.
Part C
Corporate Responsibility & National Culture
Corporate responsibility also known as corporate social responsibility is a self regulatory
private business model for the business. This is aimed at contributing to social goals of the
company through activities, philanthropy and charitable nature of the business and these
activities are voluntarily carried out by the organisations. There are several structures that
contribute and encourage the system for corporate social responsibility these are leading by
example, in this company in order to encourage others and contribute in social goals carry out
activities and by this they lead others to do the same. Code of Ethics is other structure that
encourages CSR activities of the company (Huda and et.al., 2018). This structure of the
organisation contribute to members in understanding what is right and wrong activity, on the
basis of this they can make ethical decisions and carry out activity for CSR.
This means that when employees are required and encouraged to follow the code of
ethics they understand learn the values that are considered as virtue which is honesty, integrity,
fair and trustworthy and many others. This also encourage employees to understand that they

should avoid conflict between interest of CSR and personal interest because CSR interest
involves interest of more people.
Ethics Committee is another structure that encourages corporate responsibility for
ensuring and overseeing compliance with with rules of conduct, standards and policies that guide
organisation. They ensure that company and people in company are following rules of conduct
and they also oversee ethical decisions and conduct of the company. Having such body in the
organisation encourages that company undertake ethical activities and CSR. Ethical audit and
ethical reporting system also encourages CSR in the organisation.
a. Practices of Tesla
Tesla also undertakes CSR activities and strategy of Tesla’s social responsibility focuses
on the nature of business and its products (Sullivan, 2017). This is effective strategy in which
company perform its CSR activities and fairness and ethical standard also increase value of the
product and company manage to gain trust of the customers. This is because company’s products
are considered an answer to negative impact that conventional vehicles are making on the
environment. On the basis of CSR priorities stakeholders of Tesla are arranged in following
manner-
 Communities (highest priority)
 Customers
 Employees
 Investors/Shareholders
 Governments
Tesla is in several ways promoting CSR activities in which it is ensuring interest of
communities and its product recycling (Bendell, 2017). Effective product is important way in
which company is contributing in success of CSR.
b. Examples of corporate malpractice
These are the wrong activities that were knowingly done by the organisational people for
their individual or organisational benefit. Several such incidences have happened in which

interest of customers and society was compromised by the organisations or sometimes their
activities were completely unethical. Equifax’s Data Breaches is one of the example of such
malpractices. This is a credit rating company and sells sensitive and personal information to
financial institutions. But the company revealed that it is in worst data breaches and it affected
around half of US population (Reinecke, Arnold and Palazzo, 2016). In this it was considered
that company and senior people were aware with the flaw of system and they let hackers took
advantage of this.
Hofstede’s dimensions of national culture
In order to differentiate between national cultures, Hofstede developed five dimensions of
national culture. The five dimensions of national culture are-
Power Distance Index
This means extent to which inequality and power is tolerated in a country. High power
distance index indicates that inequalities and power differences are accepted and tolerated in
culture (Khlif, 2016). On the other hand low power distance index indicate that culture focuses in
equality. China is a country where high power distance is valued.
Collectivism vs. Individualism
This dimension is degree to which societies in a culture are integrated into groups.
Collectivism indicates that social goals are valued above personal goals and individualism
indicates that individual goals and achievements are kept at priority. USA is one of the
individualistic company.
Uncertainty Avoidance Index
This means extent to which uncertainty and ambiguity is tolerated. High uncertainty
avoidance index indicates low tolerance for uncertainty and ambiguity and on the other hand low
uncertainty avoidance index indicates that uncertainty and ambiguity is tolerated and people are
more likely to take risk.
Femininity vs. Masculinity

This means preference of society for the achievement and attitude towards gender
equality, behaviour. Masculinity includes distinct roles based on gender, assertive, and
concentrated (Andrijauskienė and Dumčiuvienė, 2017). Femininity indicates fluid gender roles
and modesty. Japan is considered masculine whereas Norway and Sweden are considered
feminine culture.
Short-Term vs. Long-Term Orientation
Extent to which society considers and sees its time zones and short term orientation
indicates focus on near future, and short term success and gratification is valued. Long term
orientation indicates focus on future and in order to maintain and achieve long term success and
gratifications are delayed.
CONCLUSION
On the basis of above discussion it can be concluded that environment is important factor
to consider in order ensuring success of the company. In this Pestle and competitive analysis can
be very helpful. Later this report discussed about corporate social responsibility and on the basis
of discussion it can be concluded that Tesla is employing effective practices for its corporate
responsibility. Later cultural dimensions were discussed and it can be said that they can also help
organisations to understand national culture and they can take corporate decisions on the basis of
that.

REFERENCES
Books and Journals
Andrijauskienė, M. and Dumčiuvienė, D., 2017, October. Hofstede’s cultural dimensions and
national innovation level. In DIEM: Dubrovnik International Economic Meeting (Vol.
3, No. 1, pp. 189-205). Sveučilište u Dubrovniku.
Bendell, J., 2017. The corporate responsibility movement: five years of global corporate
responsibility analysis from Lifeworth, 2001-2005. Routledge.
Christodoulou, A. and Cullinane, K., 2019. Identifying the Main Opportunities and Challenges
from the Implementation of a Port Energy Management System: A SWOT/PESTLE
Analysis. Sustainability. 11(21). p.6046.
Ennis, R.H., 2018. Critical thinking across the curriculum: A vision. Topoi. 37(1). pp.165-184.
Gafarov, R., 2019. Evaluation of the financial position and the performance of Tesla,
Inc (Doctoral dissertation, Masarykova univerzita, Ekonomicko-správní fakulta).
Hidayat, M., 2020. The Contribution of Understanding Role and Expectation Role Related to
Midlle Management Performance Based on Ten Leadership Role by Mintzberg.
Huda, M and et.al., 2018. Empowering corporate social responsibility (CSR): insights from
service learning. Social Responsibility Journal.
Khlif, H., 2016. Hofstede’s cultural dimensions in accounting research: a review. Meditari
Accountancy Research.
Khurram, A., Hassan, S. and Khurram, S., 2020. Revisiting Porter Five Forces Model: Influence
of Non-Governmental Organizations on Competitive Rivalry in Various Economic
Sectors.
Kiesha, F., 2018. PESTLE Analysis of Tesla Inc. The growth of the eco-friendly electric car
https://pestleanalysis. com/pestle-analysis-of-tesla/(2019-09-09).
Moreno-Izquierdo, L., Ramón-Rodríguez, A.B. and Perles-Ribes, J.F., 2016. Pricing strategies of
the European low-cost carriers explained using Porter's Five Forces Model. Tourism
Economics. 22(2). pp.293-310.
Rastogi, N.I.T.A.N.K. and Trivedi, M.K., 2016. PESTLE technique–a tool to identify external
risks in construction projects. International Research Journal of Engineering and
Technology (IRJET). 3(1). pp.384-388.
Reinecke, J., Arnold, D.G. and Palazzo, G., 2016. Qualitative methods in business ethics,
corporate responsibility, and sustainability research. Business Ethics Quarterly. 26(4).
pp.xiii-xxii.

Serrat, O., 2018. Mintzberg's model of managing: Random thoughts from an
observation. Unpublished manuscript, The Chicago School of Professional Psychology.
Sullivan, R., 2017. Valuing Corporate Responsibility: How Do Investors Really Use Corporate
Responsibility Information?. Routledge.