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Tesla's Business Environment in the UK: A Stakeholder Analysis

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Added on 2024/06/28

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This report examines the business environment of Tesla in the UK, focusing on the company's operations in the automotive sector. It analyzes the impact of macro and micro environmental forces on Tesla's business, including political, economic, social, technological, legal, and environmental factors. The report also utilizes Porter's Five Forces model to assess the competitive landscape and identifies key stakeholders, including investors, shareholders, employees, suppliers, business partners, and customers. The report concludes by evaluating the effectiveness of Tesla's responses to stakeholder needs and policy actions.

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THE BUSINESS ENVIRONMENT
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Executive summary
This report is associated with the analysis of the business environment of Tesla that has
developed its business in UK to deliver electric vehicles. In this study, discussion of porter’s five
forces is done for understanding the competitive environment of business. The report has
demonstrated the key stakeholders of Tesla using stakeholder mapping analysis. Analysis of the
macro and micro levels in business has been done for gaining a vivid outline of business
operations. Furthermore, measures and steps that are taken by Tesla in meeting the requirements
of the stakeholders are mentioned in the report.
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Table of Contents
Introduction......................................................................................................................................4
LO2.................................................................................................................................................. 5
LO3.................................................................................................................................................. 7
LO4.................................................................................................................................................. 9
LO6................................................................................................................................................ 12
Conclusion..................................................................................................................................... 14
Reference list................................................................................................................................. 15
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Introduction
Understanding the business environment requires the analysis of both macro and micro factors,
which further helps in meeting the needs of stakeholders. This helps develop competitive
advantage in the market. This study will analyse the business environment of PLC Company,
Tesla, UK that is founded in year 2003 (Tesla.com, 2019). The company is operating its business
in automotive sector for delivering new cars and other light vehicles. It is found that company
has a registered office in Horton Road, England from where the company gets approval for its
new cars. This report aims to understand the requirements of different stakeholder in the business
of Tesla UK.
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LO2
2. Demonstrate an understanding of the nature of the environment that organizations
operate in
Public sector is the part of economy that is own and operates by the government to provide
effective services to the citizens of nations. It has been found that funding of the public
organizations is mainly raised using different methods like taxes, fees and other financial
transfers from the federal and state government. For example, British Council is one of the
public organizations of UK that is responsible for strengthening the cultural relations and
developing educational opportunities.
Figure 1: Private and public sector of UK economy
(Source: Bullock et al., 2015)
On the other hand, private sector of UK is found to develop by individual entrepreneur for
making profit through the business activities (Bullock et al., 2015). Hence, it can be said that
business funds and profits depend on the product and service quality of the organization. For
example, Tesla UK is a private organization that is founded by entrepreneur, Elon Musk to
develop new designs of cars for the company.
Social enterprises are the businesses that are formed with the aim of social objective in order to
reinvest the purpose of the business for maximizing the profit level of owners and shareholders.
It has been found that about 9% of UK small businesses are considered as social enterprises and
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the report shows that about 1.44 million populations are getting employment in social enterprise
(Civilsociety.co.uk, 2019). For example, Integrated Care 24 is a social enterprise that is
actively providing high-quality care to the people.
Different structures that are present in the private sectors where the organization can operate in
are mentioned below:
1. Pure competition
In case of pure competition, the structure that is followed in the private sector is a partnership
and sole trader. Following this structure in the private sector, the company can be able to produce
standardized products and gain profit in the UK market.
2. Monopolistic competition
Monopolistic competition is described as the market situation where there are intense
competitions. Generally, small businesses structures that are selling a unique product are found
to come under the monopolistic competition (Bullock et al., 2015). For example, Nike is an
example of this market situation that is selling products different from its competitors like Under
Armour and Addidas.
3. Oligopoly
This is a market structure where two or more firms are doing business together. The structure
that is followed for operating the business is franchises and companies (Head and Spencer,
2017). This helps the business in understanding the price as well as other marketing aspects
largely. Companies such as Hyundai, Toyota, Ford and others are examples of Oligopoly market
structure.
4. Monopoly
A firm is said to have the power of monopoly when the company have more than 25% market
share. The structure followed for private monopoly firm is a single seller that is found to sell
unique item and do not face much competition in the market.
5. Laws of demand and supply
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The structure followed for demand and supply is a sole trader in order to keep balance in both
supply and demand of the market. Law of supply and demand is a situation that is used for
explaining the relationship between sellers and buyers.
After investigating all the structures, it is found that Tesla is present in monopolistic competition
as the competition level is quite high.
LO3
3. Illustrate and explain the impact of environmental forces on organizations at micro and
macro level
Macro levels of the company
Political Tesla is found to get negatively affected due to
the Brexit issues in the UK. It has been found
that the prices of the spare parts of cars
increased due to increase costs of suppliers. On
the other hand, the UK government has taken
steps for improving the hybrid and electric
engines that has helped Tesla in getting support
in manufacturing process.
Economical The inflation rate is found to rose up to 3.1% in
the year 2017 that indicates sales of Tesla got
decline (Colacito et al., 2018). Additionally,
GDP rate is expected to increase by 1.93%
from 2012 to 2022 that shows Tesla can be
able to overcome the economic struggles faced
in business. Sales of electric cars got raised by
30% from 2016 to 2017 that shows the
company can earn huge profit.
Social Manufacturing of electric cars has created a
love among the UK populations. The company
has been able to gain a sustainable position in
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the market by elimination the number of
traditional vehicles.
Technological Businesses in the UK are developing new
technologies in business for offering best
solution to customers. The UK has been able to
attract £28bn in the investment of technology
from 2012 (Cooke and Huggins, 2018). Hence,
Tesla has used this advantage for developing
new gadgets and EV batteries for the vehicles.
Legal The UK has strictly advised the companies to
follow Companies Act 2006 for maintaining
the rules and regulations of the government
(Legislation.gov.uk, 2019). However, Tesla is
found to follow international environmental
regulations for reducing harmful emissions.
Environmental The cars manufactured by the company are
environmentally friendly as it mostly uses
electricity rather than gas.
Table 1: Pestle analysis
(Source: Learner creation)
Micro levels of company
Strength: The main strength of Tesla is innovative manufacturing, positive energy storage
capacity and power train engineering. This indicates getting support from the UK government
with funds and hybrid approaches have helped to develop these strengths of the company.
Weakness: The main weaknesses are high production costs, expensive vehicles and high load of
debt. This shows that the company is losing its sales position due to a high inflation rate of the
UK.
Opportunities: The Company has a unique scope of reducing the use of fossil fuels which
indicates that Tesla can address the environmental challenges such as irregular weather
8

conditions. With the use of EV vehicles, the company can be able to gain a sustainable position
in automotive sector (Liao et al., 2017).
Threats: Tesla is facing huge competition in the automotive industry of the UK from companies
like Ford, Toyota and others. This shows that by developing new promotions for the consumers
and taking advantage of technology investment, Tesla can improve its market position.
LO4
4. Assess the significance of impact of environmental forces at an organization, market,
sector and or industry level
Porters five force model
This model is used in the business for analysing the 5 competitive forces for understanding the
strengths and weaknesses of the company.
Figure 2: Porter’s five forces
(Source: Mathooko and Ogutu, 2015)
New entry threat: New entries are the new firms that can decrease the performance level of a
particular organization. It is found that competing with Tesla business is hard, as they have
successfully developed their brand position in the market.
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Bargaining power of customers: The customers of Tesla are the direct factors that help in
raising business sales. However, the bargaining power of customers in Tesla is low as the
company is focused on mainly high-income groups those looks for an effective quality product.
Bargaining power of suppliers: The suppliers are the one that helps in the development of car
products suitably. Hence, the bargaining power is high for Tesla as control of sales and
distribution of products are in the hand of suppliers.
Substitute threat: Tesla is experiencing high substitution threat due to intense competition
level. As the prices of the car products are comparatively high, the company is facing high level
of substitution among the middle-class group of consumers.
Rivalry threat: This factor determines the level of competition where the company operates in
(Mathooko and Ogutu, 2015). Tesla is found to operate in the high competitive environment. For
example, the major competitors of Tesla are Ford and Toyota that has created barrier in gaining
profits in the business.
LO5
5. Demonstrate an understanding of the requirements of a variety of stakeholders to a
chosen organization
Stakeholder analysis process
Stakeholder analysis is the step of stakeholder management that helps in identifying the
stakeholders and prioritising them accordingly for business success (Andriof and Waddock,
2017). It has been analysis that stakeholder analysis is done for listing the set of stakeholders for
setting effective strategies in business.
Determination of stakeholder
As per the analysis, the main stakeholders of Tesla UK are found to be investors, shareholders,
employees, suppliers, business partners and customers. The company is focussed on improving
the working standards of internal stakeholders such as employees and other labour groups so that
they can develop the EV products efficiently.
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Keep complete informed Manage thoroughly
Minimal contact Anticipate and meet needs
Investors Customers and suppliers
Government and
investors
Employees and customers
Stakeholder mapping
The purpose of stakeholder mapping is to understand the significance of stakeholders and engage
them in the business process effectively (Reed and Curzon, 2015). Mapping is generally done by
breaking down the components in four phases:
Figure 3: Stakeholder mapping
(Source: Reed and Curzon, 2015)
Identification: This is the first process that is used for understanding the current groups of
stakeholders in the company. In this step, the group of stakeholders are screening in order to list
them as per their requirements (Andriof and Waddock, 2017). For example, in Tesla, the
important stakeholders are communities, employees, investors and government. The businesses
of Tesla are highly influenced by the communities and customers come in next group for whom
the products are designed by the company.
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Analysing: It has been analysed that developing a significant relationship among the
stakeholders and business can help in mitigating the business issues. In Tesla, the analysis of the
stakeholders is done using effective communication techniques with both external and internal
groups.
Mapping: Mapping of the stakeholders is done in the business of Tesla by comparing the
product verification and requirements of the customers in the product. It is found that Director of
the company maps the stakeholders as per the sales and revenue of the business. For example,
stakeholder group of Tesla that is, government and investors falls in the quadrant of keep
complete informed. On the other hand, employees and customers of the company should be
managed thoroughly in order to improve the sales. Moreover, contacts with the investors can be
minimal as they only need to be contacted for seeking funds. Finally, needs of customers and
suppliers should be addressed for managing the operations effectively.
Prioritising: This is done in business for generating more sales. For example, in Tesla,
employees are considered to be a most prioritising group of stakeholder as they are the one for
developing the designs of the EV products.
LO6
6. Measure and appraise the effectiveness of the responses of organizations to policy actions
taken by key stakeholders.
The type of actions that Tesla has taken to meet the needs of the main stakeholders is presented
below:
 Tesla does stakeholder management by using one-to-one communication with the
employees and labour group to analyse the needs of these stakeholder groups. Moreover,
actions such as sharing information and using friendly attitude are used for meeting their
needs
 On the other hand, while dealing with the government, the company tries to make them
satisfied by keeping its up-to-date information about the product manufacturing system.
 The feedbacks and concerns of the stakeholder groups are taken into consideration for
developing the business and meet their expectations.
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Measurement of actions
Actions and steps Measurement of action Benefits
Face-to-face communication
system
High This step has helped the
company to understand the
requirements of the
employees, such as advanced
training, improved leave
policies and others effectively.
Providing up-to-date
information
Medium Government can understand
the environmental impact that
can happen due to the business
operation of Tesla. Hence, this
has helped in maintaining the
international environmental
regulations for mitigating the
issues.
Collecting feedback and
concerns of stakeholders
High This has helped in
understanding the satisfaction
level of the stakeholders in the
Tesla business.
Table 2: Measurement and appraisal of actions
(Source: Learner creation)
13

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Conclusion
This study has helped to understand the business current business environment of Tesla.
Moreover, environmental forces of Tesla are discussed that has helped in analysing its impact of
the business operations. Based on the strengths and weaknesses of the company, it can be said
that company requires considering the macro factors strongly for developing competitive
advantage in business. Hence, it can be concluded by saying that Tesla, the UK can develop its
marketing approach further if it focuses on the mentioned stakeholder groups effectively.
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Reference list
Andriof, J. and Waddock, S., 2017. Unfolding stakeholder engagement. In Unfolding stakeholder
thinking (pp. 19-42). Routledge.
Bullock, J.B., Stritch, J.M. and Rainey, H.G., 2015. International comparison of public and
private employees’ work motives, attitudes, and perceived rewards. Public Administration
Review, 75(3), pp.479-489.
Civilsociety.co.uk (2017). There are 471,000 social enterprises in the UK, government report
finds. [online] Available at: https://www.civilsociety.co.uk/news/there-are-471-000-social-
enterprises-in-the-uk-government-report-finds.html [Accessed 5 Jun. 2019].
Colacito, R., Croce, M.M., Gavazzoni, F. and Ready, R., 2018. Currency risk factors in a
recursive multicountry economy. The Journal of Finance, 73(6), pp.2719-2756.
Cooke, P. and Huggins, R., 2018. High-technology clustering in Cambridge (UK). In The
institutions of local development(pp. 63-84). Routledge.
Head, K. and Spencer, B.J., 2017. Oligopoly in international trade: Rise, fall and
resurgence. Canadian Journal of Economics/Revue canadienne d'économique, 50(5), pp.1414-
1444.
Legislation.gov.uk (2019). Companies Act 2006. [online] Available at:
https://www.legislation.gov.uk/ukpga/2006/46/contents [Accessed 5 Jun. 2019].
Liao, F., Molin, E. and van Wee, B., 2017. Consumer preferences for electric vehicles: a
literature review. Transport Reviews, 37(3), pp.252-275.
Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management, 29(3), pp.334-354.
Reed, M.S. and Curzon, R., 2015. Stakeholder mapping for the governance of biosecurity: a
literature review. Journal of Integrative Environmental Sciences, 12(1), pp.15-38.
Tesla.com (2019). Model S | Tesla UK. [online] Available at:
https://www.tesla.com/en_GB/models [Accessed 5 Jun. 2019]
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