Icon College: Business Environment Analysis of Tesla (June 2017)

This report provides a comprehensive analysis of Tesla's business environment, focusing on its organizational structure, key functions, and the impact of various external factors. The report begins by classifying different types of organizations, including private, public, and voluntary enterprises, and examines their legal structures, using Tesla as a case study. It then delves into the size and scope of Tesla's operations in the UK and other countries. The report further explores the essential functions within an organization, such as administrative, design and production, human resource, sales and marketing, finance, and research and development, and how these functions relate to corporate objectives. A significant portion of the report is dedicated to a PESTLE analysis, examining the political, economic, social-cultural, technological, environmental, and legal factors influencing Tesla's performance. The report also includes an internal analysis of Tesla to identify its strengths and weaknesses, considering the impact of macro factors. The conclusion summarizes the key findings and insights from the analysis. The report is intended for students studying business and the business environment, and it provides a practical application of theoretical concepts using a real-world business example.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION .....................................................................................................................................3
TASK 1....................................................................................................................................................3
P1 Different types of organization and its legal structure ................................................................3
P2 Different types of organization and its size and scope ................................................................4
TASK 2....................................................................................................................................................5
P3 Function of an organization relating to corporate objectives .....................................................5
TASK 3....................................................................................................................................................7
P4 Macro factor and its positive and negative impact .....................................................................7
TASK 4....................................................................................................................................................9
P5 Internal analysis of an enterprise in order to identify strength and weakness ...........................9
P6 Strength and weakness relating to the macro factor ................................................................10
CONCLUSION ......................................................................................................................................11
REFRENCES..........................................................................................................................................12

INTRODUCTION
Business environment is too complex and dynamic in nature and its influence a
company positive or negative manner. It is significant for a corporation to analysis their
environment and make strategy accordingly in order to provide long term growth and
development. There are two types of factor micro and macro impact the performance of a
business in the longer run (Dahan and et. al., 2010). This report based on Tesla which is
automobile enterprise and operates its business in UK and other European countries. This
study will be explaining about the types of business and its size and scope such as private,
public, voluntary with its legal structure. Further, there are various functions and its relation
with the organizational goals is also significant for an enterprise. Additional, this report also
discussing about the environmental factor such as political, social, legal and so on.
TASK 1
P1 Different types of organization and its legal structure
Business can be run and managed in several ways depending upon the owner, who
chooses themselves and will affect the company's and the owner's liability (Teece, 2012).
This is one of the foremost decision that owner should make regarding their business
structure in order to utilise the resources in the efficient and the effective way targeting to
company's goal and objectives.
Business Organisation can be classified as:
 Private
 Public
 Non-Voluntary
Private: This type of companies is legally registered according to company's act, UK. It is
run by the individual or group of people who work together to generate revenue which are
controlled by the private players. Such types of organisation are free from the government
control and restrictions (Wirtz, Schilke and Ullrich, 2010). However, they can also become
partner with Government Bodies in order to serve the Nation. Their main function is to earn
high productivity by generating greater revenues and attain a better position in the market
place. There are many private companies in UK like Formula One, Virgin Trains, Tesla etc.
whose main aim is to fulfil the demand of desired customer by generating higher revenue

Public Company: It is a form of organisation which fully owned, managed and controlled by
the Government Bodies. Public companies can offer their shares to public to raise fund from
them for commercial use and are free to trade their shares with limited liability. For freely
transferring of their shares it needs to be listed in the London Stock Exchange(LSK). Their
main aim is to have greater access to the capital and having eminent profile (Reinhardt and
Stavins, 2010). The value of raising fund from public is in how it can be enlisting to serve the
business. By having more potential of funds, Public Company can pursue new projects, pay
off exiting debt, make acquisition & merger etc. some of the examples are Burberry, Rols
Royace, Royal Dutch Shell etc.
Voluntary enterprise: This is also termed as Not for Profit Organisation in which company do
not make profit for private owners, investors or shareholder. Their main purpose is to serve
the society or the weaker section of the society and fulfil their desired needs and wants other
than simply making profit. Example are: Kanga Wrap, People against Poverty, The Rainbow
House Project etc. Two categories fall under this form of organisation one is Charity
Company and the other is Community & Interest Companies (Auzair, 2011).
Charitable Trust: They are run by the groups of volunteers who work together in order to
provide servicing to the society. It can be to run a campaign, or to improve the conditions of
the neighbourhood, serve the weaker section of society etc.
Community and Interest Companies: In such organisation members voluntarily join together
and have a common purpose to work on it (Rossi, Vrontis and Thrassou, 2012). It is an
easiest and the quickest way to serve the problems of the society by joining the hands of
another people who are also having the common goal.
P2 Different types of organization and its size and scope
Tesla, UK: Tesla is one of the emerging private player in auto-mobile industry. They operate
their business in different countries such as UK, USA, France, Germany and other Asian
nations. They deals in offering electric cars to their customer at an affordable price. The size
of Tesla Motors is high in field of electronic is gaining day by day as they are using the
renewable energy which is serving the society as well. In today's scenario where pollution is
growing on very rapid mode these inventions are serving the society at a great level. Tesla is
having the strong sales growth and moreover the Brand Recognition is so strong that US
News ranked the Company as #1 in the list of hybrid cars. Tesla are in making process of cars

which are 10x times safer than the other average cars on the road. It is the energy efficiency
company which are the advantage of cost reduction and existing strong investors and
partners.
NHS: It is publically funded national health service which provides mostly free services to
the society. It is statutory fully registered with the system of UK government. It provides
healthcare mostly in England including services like primary care, dentistry, ophthalmology,
in-patient care, long-term healthcare (Lee, Olson and Trimi, 2012.). The residents are having
the access to use the any services of NHS without paying any payment except for some
specific NHS service.
Action for children: It is a UK based children charity working together to help young people
and their families. Their main agenda is to focus on that every single child dose get the
required love, support and opportunity to show their potential to the fullest. They mainly
deliver their services in the main area like Family Support, Disability, Children in care,
Support for young people and Education (Pikka, Iskanius and Page, 2011). The scope of
Action for Family is wide in the prospective of giving education to children who doesn't get it
due to insufficient fund. Proper support to families has been provided by them for the old age
people who had thrown out of their houses. Basically, they are covering all the weaker
aspects of the society very well and working hard on it.
TASK 2
P3 Function of an organization relating to corporate objectives
There are some key functions which an organisation undertakes in order to sell and produce
their products and services. These functions are-
 Administrative Function: this function involves all the administrative tasks such as
handling of mails, preparing documents, organising meetings, sending mails, respond
to inquiries etc. (Christopher and Holweg, 2011). Without this department orders
cannot be processed, workers may not have the tools they require in the completion of
their task and customer problems would not be resolved. Tesla required to use manage
their operational activities in an effective manner which can meet their short and long
term goals and target in an effective manner.

 Design and Production Function: This function is important for a company to design
and produce any product and service. It includes some factor of production such as
land, labour, material, capital, energy, information etc. Tesla having a dedicated
design department who create innovative products which can satisfy future customer
needs and increase their sales.
 Human Resource Function: The human resource department is very important for any
organization. HR Department recruit and select those candidates which are suitable
for the post for which they hire the candidates (Zott, Amit and Massa,, 2011). They
have the responsibility of training and development of staff. Tesla have more than
30000 staff which is highly skilled and qualitative and contributing in order to
achieving organizational goals and target.
 Sales and Marketing Function: This function helps in the sales and marketing of the
product they produce. Organisations use distribution channels for the marketing of
their product. They use advertisement, social media, promotions etc. Tesla is one of
the major function where they need to promote their products and services in order to
create awareness in the market. For this, cited firm can be used various
communication tools such as social media, digital media, and print media.
 Finance Function: Finance is very essential for the working of the company. Without
finance they cannot run their organisation. Finance is required for the establishment of
the company and in day to day operations of the company (Hämäläinen, Näyhä and
Pesonen, 2011). The key role of this department is to arranging capital from various
resources such as internal and external at the minimum cost of capital.
 Research and Development Function: Before the launching of any product, every
organisation conduct research. The main aim of R&D Department is to create new
product, improve in existing product, improve in production methods, reduce cost and
increase the profitability of the company (Palo and Tähtinen, 2011). Tesla investing a
large amount of capital in order which help to produce a high quality and
technological advanced products for its potential customers. Recently, top
management of the enterprise also announced that they are planning to launching a
new and unmanned car for their future. This helps to crease a competitive advantage
over its rival firms and make them profitable for the longer run.

TASK 3
P4 Macro factor and its positive and negative impact
Pestle framework is used when we have to analysis the macroeconomic factor such as
political, social or legal factors that have an impact on the organisation. Such factors
influenced the customers as well as the other organisation. This framework will let us know
how TESLA is linked with its external factors in the context of UK.
Political: Initially UK Government has shown interest in encouraging and making electric
vehicles using renewable energy (Kolk, 2016). Thus, providing initial loan to Tesla Motors
which help them to attract many customers and also give them Federal Tax Credit of up to
$7500 for purchasing of electric vehicle. States like Virginia and Colorado offers tax credit to
Tesla Motors. Moreover, the political interference was less and there was no middle man
between the Manufacturer and the customer which results in cost saving. This factor
positively influenced Tesla performance in the longer run.
Economic: In the current scenario where fuel rate is increasing day by day and our natural
resources are depleting, Tesla has come out with the mixture of renewable resources and
using innovative technology which results in electric vehicles with green energy generation.
Because of using renewable energy in their cars, they are attracting many customers as well
as the investors which automatically help them in serving the nation, thus reducing the cost of
renewable energy (Dahan and et. al., 2010). There are various elements such as fiscal and
monitory policy which provide consistency in Tesla business in the longer run.
Social-Cultural: Green car attracting the customer because of the environmental issues
facing by the country and moreover it leads to decreasing the rate of cost of renewable
energy. Also Tesla, focusing on providing 10x safer and the comforter cars to its customers
keeping in mind the “Go Green Campaign” and creating awareness among people regarding
the environmental issues such as climate change.
Technological: Using innovative technology and by making batteries which are eco-friendly
in use making the electric vehicle more efficient and effective. High growth rate of
technology change, make Tesla to upgrade their product to online mobile system (Teece,
2012). Tesco investing billions of dollars on the research which provide a competitive
advantage in their business.
Environmental: Today, customer is more aware towards then climate and other issue which
required to offer product and services in an eco-friendly way. Driving vehicles which are
harming the environment are worse than to use vehicle with renewable energy techniques

which makes the cost effective and efficient and serving the society in greenhouse gas
emission.
Legal: Some state wants the mediator between the manufacturer and the customer thus,
hiring sales team. Therefore, the third party indulge here make money by selling car and then
from repairs but these cars are having lower maintenance cost which are not suited to them
(Wirtz, Schilke and Ullrich, 2010). Moreover, Government has increased the Laws and
Regulation related to the auto mobile unit. These legal issue can be:
Minimum wage act: This is one of the major legislative issue where Tesla should follow
government guidelines in an effective manner. These are:
Age Wage rate per hour (£)
Age 16-18 4
Age 18-20 5.55
Age 21-24 6.95
Working hour limit: Each and every country is having its own laws on the working hour
limit. In the context of UK, where an enterprise should follow these limitations and protect
the right of an individual at work place.
Source: (What Are the Driving Forces of PESTLE Analysis?, 2016)
Illustration 1: PESTEL Analysis

TASK 4
P5 Internal analysis of an enterprise in order to identify strength and weakness
Internal analysis is another factors which influence business in a limited manner and identity
new opportunities. It is significant for Tesla to understand these elements and make their
decision accordingly. Each enterprise is make sure that to provide a long term profitability in
order to avoiding potential risk on their business. Therefore, this is role of manager is to
conduct SWOT analysis:
SWOT Analysis of Tesla Motors
Strengths
electric vehicles with infinitely scalable
clean energy generation and storage
products
 Launched Roadster fully electronic
sports car first time which is highly
hybrid vehicle and creative design
for their potential customers.
 Serving accessible and affordable
products which can be increase sales
in near future.
 Tesla also having a worldwide
supply network such as Toyota
which can deliver its product and
services in an effective manner.
 Higher growth rate in various
countries such as UK, USA and
other parts of the world (Auzair,
2011).
Weakness
 High cost involved in order to
developing new product in the
longer run.
 Lack of production facility which
create a major issue for supply
product at the worldwide
(Reinhardt and Stavins, 2010).
 There is giant manufacturer such
as Toyota, Honda, Cheverly, GM
etc. provide a tough competition.
 Longer delivery period due to slow
production level threat to lose
opportunity.
 Mostly restricted to certain market
area such as US and UK.
Therefore, Tesla required to
expand its business in to other part
of the world.

 Tesla also required large number
of amount in order to expand its
business in to other countries can
be crate problem in their
development.
 Lesser experience in Automotive
Unit as compared to others like
Audi, Mercedes, Toyota.
Opportunities
 Model 3 is introduced with much
lower price as compared to others
 Environment friendly cars and
generate very little noise
 Aiming to produce human driven
cars that are 10x safer than average
car on road
 There is emerging market such as
India, China. Indonesia, Malaysia
etc. where they can sale its product
at the larger number in near future.
Threats
 Growing competitors like Nissan
leaf, BMW
 Adaptation to electric car is too
slow and it takes time for fully
operational.
 People still not comfortable with
using cars equipped with enormous
batteries (Rossi, Vrontis and
Thrassou, 2012).
 There are other merging players in
the electric vehicle such as Google,
Apple, BMW etc. provide an
extensive competition which is not
good for the company.
From the above information, helps to provide enough data to make their decision more
effective for the near future and make them more profitable in the longer run. Manager of
cited firm needs to use different aspects in order to evaluate these elements and provide a
consistent growth.
P6 Strength and weakness relating to the macro factor
As already explained the influence of macro factor in the business and its current and future
performance. In the context of Tesla, the strength of the enterprise is innovative design and
technology which can provide competitive position in the market (Development of Business
Environment. 2017). therefore, macro factor is not influence a larger level. On the other hand,
the firm is not enough resources which influence by the macro factors. These are:

Political factor In the context of UK, where government are stable which
provide consistency in the business policies. It helps for
Tesla and its future performance in the longer run. The
current government in the UK is promoting electric car
which can provide booster for them and they can sale
maximum number of cars in the upcoming years
(WirtzSchilke and Ullrich, 2010).
Economic factor This is related with the economic stability and other
economic element a country. UK micro economics is quite
impressive which leads to increase the demand of vehicle in
and provide long term benefit for Tesla.
Social factor Tesla product cost is low which can increase its sales in the
UK due to there are large number of middle and lower
income groups which can be targeted.
Technological factor Tesla is already technically advanced which can provide
tough competition in the auto-mobile sector.
Environmental factor This is positively influence Tesla and also help to provide a
consistent growth. For example, government of UK has
been decided to prevent pollution in the next few years and
promote electric vehicle transportation in the next few years.
Legal factor The firm is a global famous due to its brand image which
can provide a strategic advantage which is very significant
for the company (Teece, 2012). Therefore, Tesla need to
follow all legislation which can enhanced its image in the
public at the larger level.
CONCLUSION
As par the above mentioned report, it has been concluded that business environment
plays a larger role in the success for an enterprise. This report provide explanation about the
various types of organization such as private, public and voluntary. These business enterprise
are also legally formed as par the laws and legislation of UK. This report also discussed about
different organizational functions and its role in the attaining organizational goals and target.

Further, it has been concluded regarding internal and external analysis of the company and its
negative and positive impact on the company and its future growth.