Micro Environment Analysis of Tesla Motors

The report investigates the microenvironment factors that impact the business of Tesla Motors. It explores the threats and opportunities faced by the entity as prescribed in the SWOT Analysis technique. The report also considers the elements of the Porters Five Forces’ analysis, and finally concludes on the same.

INTRODUCTION TO
BUSINESS

REPORT 1
Table of Contents
Introduction................................................................................................................................2
Micro Environment Analysis.....................................................................................................2
Opportunities for the company...............................................................................................2
Threats for the company.........................................................................................................3
Analysis of other factors........................................................................................................4
Customers...........................................................................................................................4
Suppliers.............................................................................................................................4
Competitors........................................................................................................................4
Shareholders.......................................................................................................................4
Regulators..........................................................................................................................5
Technology.........................................................................................................................5
Summary....................................................................................................................................5
References..................................................................................................................................6

REPORT 2
Introduction
The engineers Martin Eberhard and Marc Tarpenning founded the company Tesla Motors in
the year 2003. The entity is engaged in the manufacture of electric vehicles, and clean energy
generation and storage products (Tesla, 2018). The company is originally based at
California, having business operations around the globe. The environmental analysis of the
company refers to the overall evaluation of the external and internal factors that affect the
various business operations of the entity. A number of techniques have been prescribed over
the years that aid in the conduct of the environmental analysis of the entity.
The following report is aimed at investigating the microenvironment factors that impact the
business of the entity, as part of the environmental analysis of the company. The report will
explore the threats and opportunities faced by the entity as prescribed in the SWOT Analysis
technique. This would be in addition to the evaluation of the external environment factors
that play a key role in influencing the business. The report will also consider the elements of
the Porters Five Forces’ analysis, and finally conclude on the same.
Micro Environment Analysis
The micro environment analysis of an entity refers to the evaluation of the internal factors
that influence the decision making, performance and the overall strategies of the business
operations. The micro environment factors include the customers, suppliers, employees,
competitors, shareholders and the media.
One of the techniques to evaluate the internal factors governing a company, is SWOT
analysis that comprises the evaluation of strength and weaknesses of the entity. In addition,
the technique states that in order to evaluate the micro environment of the entity, it is also
essential to evaluate the opportunities and threats to the business.
The analysis of the opportunities and threats of the business of the Tesla Motors is presented
as follows.
Opportunities for the company
 One of the major opportunities for the company Tesla as in the industry of electric
cars is that the crude oil prices are consistently on the rise. As the crude oil prices are
consistently on the rise, the competitors would find it difficult to maintain the cost. In

REPORT 3
addition the rising oil and petrol price directly impact the interests and the buying
capacity of the customers as well. The same is an opportunity for Tesla to consistently
engage in the research and development to capitalise the opportunity arising from the
rising petrol and diesel prices.
 Another opportunity for the company can be stated that the company is yet to expand
its business operations in the emerging markets of the Asia Pacific like that of India.
The emerging markets of Asia Pacific are yet to be introduced with the energy run
vehicles and devices. The markets of India are covered by the competitors like Maruti
Suzuki, GM, Ford and others. The opportunity lies for the Tesla to grab and convert
the lower market share to its benefit.
 Another opportunity for Tesla lies in the fact that the electric vehicles marker is
further divided into various segments such as the road vehicles, underwater vessels,
electric spacecraft, rail vehicles, electric aircrafts and more. Thus, as the company has
already launched its home battery product, the Tesla Powerwall, it is one of the only
companies in the world that is engaged in the residential energy storage market. Thus,
the company can further introduce its products and diversify in the area of rail vehicle
market, aircrafts and such other than road markets.
Threats for the company
 One of the major emerging threats for the company is that the competitor
Volkswagen AG has also launched its own charging and electricity unit (Sachgau,
2019). This will not only make the Volkswagen battery operated cars more attractive
to the customers, but would also pose competition for the Tesla in the energy services
market.
 Another threat to the company is that the competitors like Porsche have already
jumped into the area of electric vehicle. As per the reports, the customers have already
started showing interests in the form of pre booking for the Taycan, the first electric
vehicle product of Porsche (Business Insider, 2019).
Thus, it can be stated in short that the company’s long existing business, large pool of
customers and the in house battery manufacturing provide the entity an opportunity to
diversify in emerging and untouched markets, and other areas such as residential, rail, space
and others. The major threat is continuous challenges posed by competitors and changing
customer preferences because of the introduction of the options in the market.

REPORT 4
Analysis of other factors
The micro environment analysis of the entity in relation to the external organisation aspects,
and other factors as per the Porter’s five force analysis is presented as follows. The
knowledge of the following is essential to gain an overall insight of the various factors that
influence the company.
Customers
The company has built a large base of customers over the years. The attributes of the
customers can be stated to be highly educated and considerate of environment values. In
order to maintain the base in case of the US customers for the newly launched Model 3,
Model S, and Model X, the company has decided to cut the prices. This is because the federal
tax credit for electric vehicle customers has begun to expire for Tesla (Matousek, 2019).
Thus, it shows the company also makes efforts to keep intact the customer base.
Suppliers
The company relies on the Chinese suppliers for the some specific parts. As the US is facing
the issue of tariff agreements with the China, it would be difficult for the entity to source the
components from the Chinese suppliers at the affordable rates. This could further impact the
profitability of the enterprise. In response to the above, the company recently made a request
to Trump administration for tariff exemptions for some Chinese-made products (Lambert,
2019). Thus, it can be stated that as of now, the suppliers are irreplaceable and play an
important role in the manufacturing process.
Competitors
The entity has been facing a lot of competition in the automobile industry. The competition
level has been growing as the competitors too are taking a plunge in the race of electric
vehicles. However, the company is having an edge in terms of the driving range and the
number of charging stations (Ray, 2019).
Shareholders
The shareholders play an important role in any entity, as their investment is on the stake.
Recently, the shares of the company traded at a high with the launching of the first overseas
Gigafactory in Shanghai, China (Jiang, 2019). This is a good news for the shareholders. On

REPORT 5
eof the major shareholders of Tesla is the Oracle founder Larry Ellison, who has recently
disclosed a $1-billion stake in Tesla (Beals, 2019).
Regulators
Recently the company launched its deal of the first plant in China with the manufacturing
capacity of 500,000 cars. This was followed by the long anticipated deal being signed in July
with the Chinese authorities. The above move is a significant as it was in response to the
increasing trade tariffs barriers as posed by the Trump government, and with the deal the
capacity would be doubled. Thus, it can be stated that the company takes into consideration
of the regulatory changes and make changes into its business strategy accordingly.
Technology
The company has sustained itself over 30 years on the basis of technological innovations and
has emerged a market champion on lines of the same. The company’s technological
investments and outcomes has led to the revolutionising the customer buying habits and the
behaviours over the last decade (Sheetz, 2018). One of the negative facet of the technology of
electric vehicles is that there exist risk of defective components and inadequate safety
measures, as in the organic models. One of the incident was 2018 car crash in Florida (The
Guardian, 2019).
Summary
As per the discussions conducted in the previous parts it can be stated that analysing the
micro environment factors is essential for the entities, as it aids the management to evaluate,
review and amend the current strategies, together with introduction of new strategies in
response to the environmental changes. The work was an attempt to identify the threats and
opportunities to the business of the Tesla. In addition, the various other factors were
evaluated in terms of recent environmental changes. Thus it can be concluded that ach group
of stakeholder had an important role to play in the functioning of the business of an
enterprise.

REPORT 6
References
Beals, R. K. (2019) Oracle Founder Larry Ellison Just Disclosed a $1 Billion Stake in Tesla
[online] Available from: https://www.barrons.com/articles/larry-ellison-tesla-stake-
51546960113 [Accessed on: 10/01/19].
Business Insider (2019) Porsche is becoming a threat to Tesla as demand for the Taycan
grows (VWAPY, TSLA, BMWYY, DMLRY) [online] Available from:
https://www.pulse.ng/bi/lifestyle/porsche-is-becoming-a-threat-to-tesla-as-demand-for-the-
taycan-grows-vwapy-tsla-bmwyy/bzqsnvn [Accessed on: 10/01/19].
Jiang, E. (2019) Telsa is rallying after breaking ground on its Shanghai Gigafactory [online]
Available from: https://www.businessinsider.in/Telsa-is-rallying-after-breaking-ground-on-
its-Shanghai-Gigafactory/articleshow/67422923.cms [Accessed on: 10/01/19].
Lambert, F. (2019) Tesla asks Trump administration for a tariff exemption on critical
computer in Model 3 [online] Available from: https://electrek.co/2019/01/05/tesla-asks-
trump-administration-for-a-tariff-exemption-on-critical-computer-in-model-3/ [Accessed on:
10/01/19].
Matousek, M. (2019) Tesla is slashing the price of the Model 3, Model S, and Model X by
$2,000 in the US [online] Available from: https://www.businessinsider.in/Tesla-is-slashing-
the-price-of-the-Model-3-Model-S-and-Model-X-by-2000-in-the-US/articleshow/
67353023.cms [Accessed on: 10/01/19].
Ray, T. (2019) Here Comes Tesla's 'Android Moment' -- and That's Not a Good Thing
[online] Available from: https://www.thestreet.com/technology/tesla-android-moment-nears-
14829433 [Accessed on: 10/01/19].
Sachgau, O. (2019) Volkswagen Plans Green-Power Alternative to Tesla's Energy Push
[online] Available from: https://www.bloomberg.com/news/articles/2019-01-08/vw-to-
become-electricity-charging-provider-in-battery-car-push [Accessed on: 10/01/19].
Sheetz, M. (2018) Tesla will revolutionize consumer buying habits like Amazon and Apple,
analyst says [online] Available from: https://www.cnbc.com/2018/12/14/analyst-tesla-will-
revolutionize-consumer-habits-like-amazon-apple.html [Accessed on: 10/01/19].

REPORT 7
Tesla (2019) About Tesla [online] Available from: https://www.tesla.com/about [Accessed
on: 10/01/19].
The Guardian (2019) Parents of Florida teen killed in Tesla crash sue electric car company
[online] Available from: https://www.theguardian.com/us-news/2019/jan/09/tesla-death-
florida-teenager-family-sue-elon-musk-car-company [Accessed on: 10/01/19].