Analysis of Industry: Tesla - SWOT, PESTEL, VRIO, Value Chain

This report analyzes the impact of external factors on Tesla using SWOT, PESTEL, VRIO, and Value Chain models. It identifies organizational capabilities that help Tesla maintain its leading position in the electric vehicle market.

Analysis of industry

Executive summary
The main aim of this report is to analysis those element that impact an industry form
outside. Tesla is a car manufacturing company. It is a leading organization in electric vehicle
market. Therefore this report will be based on various models including SWOT analysis, PESTEL
analysis, VRIO, value chain and so on. This report will identify the organizational capabilities that
help them, to maintain their leading position within the market.

Table of Contents
INTRODUCTION .............................................................................................................................3
PESTEL analysis and key drivers impact the organization..........................................................3
Analysis Porter's five forces for organisation................................................................................4
Resource value chain for organisation..........................................................................................5
Capabilities of Tesla......................................................................................................................5
VRIO analysis of organisation.....................................................................................................6
Value chain for chosen organisation.............................................................................................6
SWOT analysis of chosen organisation.........................................................................................7
CONCLUSION .................................................................................................................................9
REFERENCES.................................................................................................................................10

INTRODUCTION
Strategic management is refers to the management of organisational resources in a
successful manner in order to achieve its objectives and goals. It works as an action plan that
ensure that company's performance target are met and business grow continuously (Bello and
et.al., 2022). The company chosen in this report is Tesla which is an American automotive energy
company. This firm was founded by San Carlos in 1st July within United Kingdoms. This report
will be based on certain analysis of an industry including PESTEL, resources based value, VRIO
analysis, capabilities, porter's five forces, SWOT analyse and Value chain of an industry.
PESTEL analysis and key drivers impact the organization
Tesla needs to overcome difficulties linked with external factors determined in following
PESTEL analysis. This strategic management instrument will identify impact of the macro
environment on Tesla.
 Political- As Tesla has a world wide reach, this car manufacturing company may be
influenced by different trade policies, which are native to any specific region. The political
uncertainty and other changing economic cycle have an essential impact of its operation.
 Economic- Impact of the economic conditions on remote and macro environment are
considered analysis of external factor on Tesla. As the demand for electric car is increased,
price of the material is actually on decline for Tesla.
 Social- As the world is moving towards a sustainable society and make their contribution
in reduction of the carbon footprint (Chen Wen and Liu 2022). Hence, Tesla need to
consider the maintaining individual's status by manufacturing the cars with good quality
parts and capture the segment of customer, who are ready to pay a good amount of the
money for a status as brand value.
 Technology- There is a constant innovation in the technology and respective company
( Tesla) has been pioneering several tech advancement within market place. Recently, it
has launched a software that is smart summon. This software can be employed in every
type of cars that have a full self driving capability. Tesla further decide to expand its
streaming sites and also improve its efficient technologies or equipment.

 Legal – As Tesla wants to expand within other nations. For this, respective company need
to stay updated with all the foreign copyrights and patents existing in region company is
willing to enter. Tesla need to obey the different labor act and law accordingly.
 Environmental- As the world dis practices to make the environment more stable, for this
they are willing to purchase the electric vehicle in order to save on added expenses of
conventional vehicle and to save the environment. Therefore Tesla is also aiming to
reduce the green house gas emissions. Respective company has attained to minimize
emissions more than 4 metric tonnes.
Analysis Porter's five forces for organisation
These five forces analysis of the Tesla looks into external elements essential in automotive
industry and energy solution sector, and how such elements impact respective company. These
factors are mentioned below:
 Threat of the new entrants- Due to the low entry barrier, threat of the new entrants if
very high for Tesla. Its competitors are fossil fuel powered vehicles, electric vehicle and
traditional auto firms switching to the electric cars. It can increase barriers of the entry by
expanding its technology innovation in order to create the differentiated offering and
products (Guerin 2022).
 Bargaining power of the suppliers- Due to limited supply chain network, supplier's
bargaining power is very high for Tesla. Majority of the Tesla's vehicle part form the
German suppliers. If there is any disruption within German economy including energy
shortage, COVID19 lock down will impact Tesla's production negatively.
 Buyer's bargaining power- Customer's bargaining power is very low as Tesla divide its
products at high end market with the premium pricing. Critical sources of the sustainable
competitive benefit to successfully compete within high end market is differentiation,
proving services and product that no one else can (Zhang and Chen 2022).
 Threats of the substitute- This threat is high for Tesla, as it owns around 1.2% market
share of overall automobile market. Respective company has has a loyal customer base.
This critical sources of the competitive benefits for Tesla is a brand loyalty. It can lower
threat of substitute by competing in high end market and charging a premium pricing.

 Threat of rivals- Industry rivalry among the competitors is intense, from traditional
automakers, start ups and big automotive brand switching to electric. Compositor's
differentiation strategies and pricing restriction Tesla's profitability growth and market
penetration. Respective company can lower this threat by differentiate its product, place,
promotion and price in order to get a competitive advantages.

Resource value chain for organisation
The resources based value chain helps in assessing strength of business in relative to
competitors. This is based on economics which helps in improving the business efficiency and
leading to competitive advantage (Han and Trimi 2022). This is related to the internal factors of
organisation which involves the resources of brand reputation, organisation culture, employees.
This adopts internal perspective for explaining Tesla company internal resources and capabilities
collection that represent base on which value-creating strategies are developed. The internal
resources to company are as capital equipment, patents, brand name, finance and talented
managers. In the organisation this resources can be tangible or intangible. In context to Tesla the
resource based model describes linkage between resource identification and strategy selection for
having competitive advantage. The Tesla identifies internal resources and assess strength &
weakness after that these set of resources offers capabilities which is unique to firm and relative to
competitors. The company determines how it can be used in bet way for achieving competitive
edge and locate in attractive industry by formulating and implementing competitive strategies by
exploiting resources and capabilities in better way.
Capabilities of Tesla
The respective company is a leading manufacturing of the electric cars and elements
globally(Köken and et.al., 2022). One of the reason for its success is to focus on the
entrepreneurial concept. This firm may choose different strategies in order to increase their
entrepreneurial opportunities. Tesla's major competences and resources are innovation,
knowledge and connectedness. It produce electric cars which are operated by using sophisticated
software, that makes the driving more enjoyable and quite multifaceted. Hence, it is possible that
Tesla is operating in a favourable surrounding as automotive industry is changing and all these
transformation are main focus of the Tesla. Thus, development and use of the environmentally
friendly products can be related as a major concern of companies, government and customers.
More so, customer seek for the innovation and are ready for such driverless cars. All these type of
changes impact the company's entrepreneurial activity in a positive way as Tesla is capable to
address customer's wants and needs.

VRIO analysis of organisation
This model is used in organisation for evaluating the internal resources of company
leading to an competitive advantage (Liszewski 2022). It is a strategic management approach
which offers the internal analysis framework to identify advantages & resources within business.
It comprises of four strategies which are mentioned below in context to Tesla.
Value- The company Tesla has several valuable resources such as financial resources, human
resources, operation management and marketing expertise which leads to competitive
advantage. The customer and network loyalty is valuable for Tesla as customer contributes in
sales revenue. Tesla has valuable opportunities for brand extension as there is emerging of
new niches in market. The cost structure is not valuable as production methods leads to cost
affecting overall profits.
Rare- The are some resources which is rare to Tesla and some are not which leads to easily get
access to both present competitor and new entrant. The customer loyalty to Tesla is rare
which needs to invest in developing strong loyalty. The opportunity for brand extension is not
rare as other competitors are also targeting those niches. The cost structure is rare as it
requires lot investment in manufacturing and distribution network.
Imitable- There is increase of threat which is difficult for Tesla to imitate and it can be done
either duplication of company products or competitors bringing substitute products. The
customer network and loyalty is imitable for Tesla as other competitors also try but not
successful. The opportunities for brand extension can be imitated by the competitors. The cost
structure is imitate by competition leading to some amount of investment (Pandey Sahu and
Joshi 2022).
Organisation- The firm analysis that it able to fully exploit the potential of resources. The
customer network and loyalty in organisation leverages customer loyalty to good effects by
providing better services. For the brand extension opportunity in Tesla it would require high
marketing budget. The effective cost structure will help in combatting threats and use
strategically for investing in right place.

Value chain for chosen organisation
Value chain analysis of Tesla is discussed here to understand concept and functionality of
the value chain analysis within a real business model.
 Inbound logistic- It include storage and receipt of the raw material for building the
electric vehicle, solar panels and energy storage system (Pathik and Sharma 2022). Tesla
uses range of the scares ,material including cobalt, lithium, aluminium, steel and copper. It
is essential for Tesla to establish a long term strategic relationship with its suppliers.
 Operation- Tesla was incorporated in 2003 by group of the engineers who dreamt to make
an electric mobility for everyone. Its operation can be divided in to two line ODF the
product. (1)Automotive which comprises development, manufacturing, design and sales of
the electric vehicles. (2) Storage and energy generation segment include manufacturing,
installation, design and sale of the energy storage product and sole energy systems.
 Outbound logistic- It involves the warehousing and distribution of the electric vehicles,
solar panels and energy storage system of company. Tesla ships its electric vehicle to their
own stores in US and other 35 nations. It also make a direct deliveries of the electric
vehicles to its customers.
 Marketing and sales- Tesla's sales and marketing practices are unconventional, same as
other business practices of electric auto maker. Tesla's marketing strategy is referred to
as :zero dollar marketing. Ability to attract and extensive media coverage globally serves
as major sources of the value in term of enhancing level of the brand awareness at global
levels (Wiech and et.al., 2022).
 Services- Tesla has number of the high profile customer services complaints in past, its
practices of customer services have improved in last some years. It attempts for dealing
with the customers complaints problems more effectively. Tesla provide a post sales
services at the company-owned services centres and at the service plus location.
Respective company is building around 100 new services centres on the top of about 150
services centres it presently has.

SWOT analysis of chosen organisation
Strength Weakness
Tesla is a popular brand that known for their
innovative style as its vehicles designed are
very fresh and top class. It provide an extreme
comfort with good quality to customers.
Tesla has proven as best provider of the quality
in this filed as it use the renewable resources
that make it very viable alternative for the
future generation.
It is a dominant company within electric vehicle
sale since last some years. It goes to the further
build trust among the new prospects.
To provide a high quality, a lot of cost included.
Thus, high cost of the production is a hinder in
Tesla's production's volume.
Tesla's vehicle meet with the accidents many
time due to being driven automatically. It create
a risk for the mechanical failures.
All the above weakness inevitably lead to
company's inability to meet the demands (Wu
and et.al., 2022).
Opportunities Threats
It can expand its business in those nation, where
demand for the electric vehicle are more. It is a
great opportunity for the Tesla to tap into.
It can invest more in its technology in order to
reduce the car accident (Zeng and et.al., 2022).
Improving in this technology for making its
fail-safe is essential at this point for the firm to
attract more customers.
Tesla planning to bring production of its
batteries in house. It it executed efficiently, then
it could save lot money and time for company.
As mostly companies are moving towards the
greener production, thus Tesla is facing a
heavy competition from its competitors
globally. Tesla is threatened by organisations
having stronger hold don automotive market.
Tesla is offering the innovative solution, but it
might not be accepted by the customers
instantly.
To make company's product, Tesla uses high
end metals and alloys including steel, nickel,
aluminium and many more. These material are

very expensive that create financial burden on
respective company.
CONCLUSION
From the above report it is concluded that, to enter in an industry or to remain survive in
an existing sector, it is essential to analyses respective industry carefully. These analysis include,
the analysis of those factors that may impact a company form outside. These factors include,
porters five forces, PESTEL analysis, VRIO analysis and many more. Research on these analysis
make the company able to identify those element that has ability to influence a business positively
and negatively. There is a discussion on the car manufacturing company that may be impacted by
various components. These factors play an important role in the success or failure of a company.
Therefore it is essential for every business to remain updated with the changes in every factors in
order to to run their business continuously and efficiently.

REFERENCES
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