Pusan National University: Tesla Inc. External Analysis Report

This report presents an external situational analysis of Tesla Inc., examining the company through the STEEP framework (Social, Technological, Economic, Environmental, and Political factors) and Porter's Five Forces. The STEEP analysis identifies opportunities related to increasing consumer prefere...Read More

Running head: EXTERNAL SITUATIONAL ANALYSIS OF TESLA INC. 1
External Situational Analysis of Tesla Inc.
Name of Student
Institutional Affiliation

EXTERNAL SITUATIONAL ANALYSIS OF TESLA INC. 2
STEEP Analysis
Social Factors
The analysis identifies different opportunities that the company can take advantage of to
aid its growth with regards to socio-cultural factors. For instance, Tesla Inc. can take advantage
of the increasing consumer preference of low carbon lifestyle as well as the rising preferences for
renewable energy. Within this STEEP analysis framework, these factors can help in improving
the market demand for the electric vehicles produced by the company (Cantonnet, Aldasoro &
Cilleruelo, 2015). Further, it is possible for the company to boost its financial performance by
distributing more of its wealth in the developing markets.
Technological Factors
This part of the STEEP analysis focuses on how technologies are used to influence the
macro-environment of the company. Tesla has greatly advanced in energy solutions and
automotive business because of the technologies. For this analysis, the technologies present both
threat and opportunity. The high technological advancement provides an opportunity for the
company to advance its products (He, et al., 2017). Even so, the same technological
advancement threatens the company with regards to the rapid obsolescence of technologies that
the company uses to make its products.
Environmental Factors
The external factors of the company are subject to the effects of the environmental
conditions discussed in this analysis. Tesla Inc. can create electric vehicles taking into
considerations the concerns on the climatic changes. Further, the company can raise its standards

EXTERNAL SITUATIONAL ANALYSIS OF TESLA INC. 3
on means of waste disposal and programs on environmental sustainability (Aaij, et al., 2016).
The solar panels, batteries and electric vehicles have been designed in a manner that they address
the environmental factors.
Economic Factors
This analysis focuses on the economic conditions on the macro-environment of the
company. These include the currencies, trade levels, market growth and other variables which
affect the company. For instance, the growth rate of the market of solar energy determines the
opportunities for growth of the company’s business. The business performance of the company
benefits from the low costs of battery. Subsequently, this factor leads to the affordability of the
electric products of the company (Genoveva & Siam, 2017). Also, the economic stability of the
markets helps in strengthening the company.
Political Factors
Normally, government entities are amongst the strong forces which affect business
performance. Trade policies, for instance, can hinder the business performance and the revenues
of the company. Tesla Inc. can enhance its financial performance when the government offers
those incentives (Weisbrod, et al., 2017). Additionally, this analysis focuses on how Tesla
Company can expand its business across the globe. Political stability in the major markets within
which Tesla operates helps the company to expand its sales and penetrate new markets.

EXTERNAL SITUATIONAL ANALYSIS OF TESLA INC. 4
Porters Five Forces Analysis of Tesla Company
The intensity of competition amongst market rivals
The intensity of competition amongst market rivals has steadily increased amongst
industry players. Many companies have been trying to create electric-powered cars as a way of
competing with Tesla Inc. (Mangram, 2012). Even so, there have not yet been any companies
that have designed cars which look exactly like Tesla with similar performance. Additionally, no
market rival has replicated a similar network of the many charging stations in the whole world.
Threat from companies getting into the industry
New entrants that are getting into the industry of electric vehicles are high. Even so,
Tesla has gained a competitive advantage over other companies since it produces unique
batteries made of lithium which differentiates it from other business rivals (Moritz, Redlich,
Krenz, Buxbaum-Conradi & Wulfsberg, 2015). There is not yet another company which has
come up with a similar battery like that produced by Tesla Inc. As a result, the threat of market
rivals is still low.
Bargaining power of the customers
Generally, there is low bargaining power amongst the buyers of Tesla cars. While buyers
decide whether or not to buy a product, Tesla sets its own prices for the customers to utilize its
vehicles powered by batteries. The cost of making the proprietary batteries together with solar
charging stations makes the company set the prices for the consumers. The buyers, in this case,
cannot dictate the pricing strategy.
Bargaining power of the suppliers

EXTERNAL SITUATIONAL ANALYSIS OF TESLA INC. 5
For Tesla Inc., the suppliers’ bargaining power is very high. When Tesla got into the
automobile industry, there were different suppliers who did not want to change their production
to enable Tesla to produce its vehicles. Because of the few suppliers, Tesla did not become a
popular choice for suppliers and had to pay specific suppliers more than others because of
limited competition.
Competition of substitute products
Tesla is experiencing low threats with regards to substitute products. There is not yet any
company that has attained a similar success rate as Tesla Inc. regarding its fully electric powered
vehicles. Further, there is not yet any company that has built lithium-ion based battery as Tesla
Inc. thus, it remains superior amongst its market rivals.

EXTERNAL SITUATIONAL ANALYSIS OF TESLA INC. 6
References
Aaij, R., Amato, S., Anderlini, L., Benson, S., Cattaneo, M., Clemencic, M., ... & Jones, C.
(2016). Tesla: an application for real-time data analysis in High Energy
Physics. Computer Physics Communications, 208, 35-42.
Cantonnet, M. L., Aldasoro, J. C., & Cilleruelo, E. (2015). Analysis of the competitive
intelligence activities of small and medium‐sized enterprises from the industrial
sector. Human Factors and Ergonomics in Manufacturing & Service Industries, 25(6),
646-658.
Genoveva, G., & Siam, S. T. (2017). Analysis of marketing strategy and competitive
advantage. Journal of Economic & Management Perspectives, 11(1), 1571-1579.
He, L., Anderson, L. C., Barnidge, D. R., Murray, D. L., Hendrickson, C. L., & Marshall, A. G.
(2017). Analysis of monoclonal antibodies in human serum as a model for clinical
monoclonal gammopathy by use of 21 tesla FT-ICR top-down and middle-down
MS/MS. Journal of The American Society for Mass Spectrometry, 28(5), 827-838.
Mangram, M. E. (2012). The globalization of Tesla Motors: a strategic marketing plan
analysis. Journal of Strategic Marketing, 20(4), 289-312.
Weisbrod, C. R., Kaiser, N. K., Syka, J. E., Early, L., Mullen, C., Dunyach, J. J., ... &
Hendrickson, C. L. (2017). Front-end electron transfer dissociation coupled to a 21 tesla
FT-ICR mass spectrometer for intact protein sequence analysis. Journal of The American
Society for Mass Spectrometry, 28(9), 1787-1795.