Comprehensive Report: Socioeconomic and Legal Framework for Business

This research report provides a comprehensive analysis of the socioeconomic and legal frameworks that significantly impact modern businesses, particularly in the context of technological disruption. The report examines how technology is reshaping the business environment globally, emphasizing the disruptive effects of innovations like those pioneered by Tesla Motors. The analysis delves into the knowledge economy, exploring its core concepts and drivers of economic change, including macroeconomic dimensions, demographic shifts, and technological advancements. It investigates the impact of legal and political factors on business development, with a specific focus on the implications of the sharing economy and anti-trust laws. The report uses Tesla as a case study, examining how the company navigates these complex frameworks. The findings highlight that while Tesla's disruptive business model has the potential to revolutionize the market, it also faces challenges related to skills gaps in areas like AI and machine learning, as well as the need to adapt to shared economy services. The report concludes with recommendations for Tesla, including focusing on employee skill development programs and adapting to the changing business environment.

Running head: SOCIAL ECONOMIC AND LEGAL FRAMEWORK
Social Economic and Legal Framework
Name of the Student
Name of the University
Author Note

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Table of Content
1. Introduction............................................................................................................................3
2. Literature Review on knowledge economy and various drivers of economic change...........5
Concept of knowledge Economy...........................................................................................5
Macro- economic dimensions of business.............................................................................6
Demographic and socio-economic shifts.............................................................................12
Technological drivers of change..........................................................................................15
3. Impact of legal framework and political factor....................................................................17
Role of political factors in the economic development and its implication on Tesla..........17
Implications of ‘sharing economy’ for Tesla.......................................................................18
Formal and informal legal systems and anti-trust laws and social economy development. 19
4. Conclusion and Recommendation........................................................................................19
Recommendation..................................................................................................................20
References................................................................................................................................22

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Executive summary
This research report provides a detailed analysis of socio economic and legal framework
creating colossal impact on business today. It is essentially important to learn how technology
disruption is actually affecting the socio-economic and legal environment across globe. To
analyse this growing impact of disruptive technology on socio-economic and legal
environment, Tesla Motor’s disruptive technologyhas been analysed in the report. The
findings indicate that Although Tesla with its disruptive business model is going to penetrate
the market with its electronic car models, Tesla may observe that Technology-driven trends
are most likely to revolutionise how the big players in the sector respond to changing
customer behaviour, build partnership as well as drive transformational change. Tesla faces
the challenges of shared economy services in the car manufacturing sector. The industry
might observe enormous skills gap in relation to AI and Machine language. Tesla, besides its
automated business model development, should focus on the skills development programs for
the employees.

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1. Introduction
This research report presents a detailed analysis of socio economic and legal
framework which creates significant impact on businesses today. It has been identified that
business environment is highly dynamic in nature and technology has been the major driver
in market dynamics. Undoubtedly, technology advances have significantly changed the
business environment across the globe because every business today incorporates technology
in its operation, product and all other aspects of the business. As the rate of technology
adoption in business is rapidly increasing, there is an emerging shift in socio economic and
legal environment associated with the business. Rapid growth in technology emerges as
technology disruption which is actually changing the shape of socio economic and legal
framework.
Consequently, business practices in contemporary market place are following new
pattern. According to Pandit, et al. (2018), disruptive technology is most likely to play a
great role in enhancing the quality of life of people, global economies and business model of
the organizations. It has also been identified that a disruptive technology which also changes
the product that once was generally expensive as well as complicated but now with the
disruptive technology, production of resources is quite easy and affordable. In this context,
Gao et al. (2016), commented that at a point when the innovation that has the potential to
change the growth of the industry, longstanding organizations mostly consider it to be
unattractive and it is not something which the customers need. It is also estimated that profit
margin are not adequate to address the enormous technology expense.
Subsequently, the emerging innovation is often overlooked. Another business after
sometime, manages to go with innovation in the market place. This means once disruptive
innovation grows, even the small scale innovation growingly raise technology performance

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on the elements of mainstream consumers. Therefore, it is essentially important to learn how
technology disruption is actually affecting the socio-economic and legal environment across
globe. Thus, to analyse this growing impact of disruptive technology on socio-economic and
legal environment, real world business scenario has been considered in the analysis. The
analysis has been performed on Tesla Motor’s disruptive technology.
Tesla Motor:
It has been identified that Tesla is one such brand in the car manufacturing sector that
takes the quest for next-level technology as well as sustainability to another level.
Throughout the disruptive innovation, it has been identified that Tesla’s automotive start-up
is mostly having a good year and in September, the organization expects to start shipping its
all electronic Model 3 to non-employee consumers, who, by now logged 500,000 pre-orders
(Chen and Perez 2018). The report published in 2019 indicates the fact that even though there
is a growing success in Tesla’s model, its stocked is jumped taking the 14 years of old start-
up’s valuation to over $53 billion, which is steps ahead of other US car manufacturer.
However, despite such rocket-growth, Tesla alone lost nearly two billion dollars in the past
two years. Nonetheless, Van den Steen (2015) commented that even though there have been
some financial loss, in the field of disruption, the organization Tesla by stepping in the high
end market as a sustaining innovation is most likely to face powerful, established incumbents
like BMW and Mercedes. In this context, Eggers and Eggers (2011) commented that Tesla is
actually approaching the market with its resources process and profit formula by developing a
hybrid model. Thus, it can be mentioned that quest for being disruptive is uninterrupted in
Tesla’s journey.
As put forward by Mangram (2012), socio-economic trends have high impact on Tesla’s
business model because increasing price of fossil fuels and affordability rate of people enable

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Tesla to come up with the idea of incorporating disruptive technology. It is noted that since
the launch of smart-phone, it is quite certain that customers are most likely to adapt to
complex and expensive technology if the technology is able to make their lives easier than
before. In business, it is mostly treated as user value convenience and ease. It is noted that
such core values bought up the technology-based cultural items of 21st century. So, it can be
mentioned that businesses today often translate such priorities into future technology and
need of the society. It is worth mentioning that Tesla in the Automotive sector leverage the
opportunity for core restructuring. The large tech giant like Tesla not only consider product
purchaser when developing strategies and business model, it should take users and groups
into account as they are affected by commotion issues. Phute (2016) mentioned it has been
decades long automobile sector shifted attention from conventional technical agenda to social
commodity. It is worth stating that social participation, landscape and cities are shaped by
such personal mobility. In this context, Oltra and Saint Jean (2009) young as well as
technically savvy generation played the major role in transforming the automotive sector to a
greater extent. Thus, Tesla’s popularity lies in the fact that the organisation mostly focus on
the use of utility of the vehicles rather than the mass production in order to make people’s
live easer. It can he also mentioned that Tesla’s business model will incorporate
unprecedented change with respect to far reaching effect it might have on the industry. It is
also noted that in spite of falling inventory, vehicles sales may invariably increase. It is also
noted that Tesla in the automotive industry is most likely to start to invest less in product
range.

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2. Literature Review on knowledge economy and various drivers of
economic change
Concept of knowledge Economy
As put forward by Peters (2007) knowledge economy is a sort of economy in which
the manufacture of goods and services is fundamentally based on knowledge-intensive
activities. On the contrary, Amidon (2009) mentioned that in knowledge economy is a
significant portion of economic growth as well as employment is the outcome of knowledge-
intensive activities. Authors of this study have also mentioned that a knowledge-intensive
activity may also include a set of collection, analysis and series of information. For example,
Tesla in the automotive sector, manufacture electronic vehicles by installing AI-enabled
technologies and through the manufacturing, the organization contributes to employment
opportunities in US with the increase of 19%.
This means Tesla effectively understands the gaps in the market that due to increasing rate of
carbon emission and demand of mobility, the organization needs to manufacture a sustainable
vehicle that contributes to economic balance. On the contrary, Godin (2008) mentioned that
success in knowledge requires significant level of commitment of both workers as well as
organizations to learn and brush up skills, expertise that can help to apply innovation and
become innovative; thereby, the knowledge-based business may involve educational
institution and science and technology based organisation. Tesla is one such information
based organization whose most of the products are derived from scientific and technological
research. For example, Tesla’s model 3 is embedded with AI technologies. On the contrary,
Smith (2002) stated that increasing growth of economic knowledge is more of a part of larger
modifies the production of tangible goods in developed nations towards the intangible goods
and services.

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Macro- economic dimensions of business
It has been identified that the automotive sector is one of the major industrial as well
as economic force worldwide and it makes almost 69 million vehicles and trucks. Thus, the
sector has a direct relation with economy behaviour. As put forward by Birnleitner and
Student (2013), in spite of the fact that several large corporations have issues with the
overcapacity as well as low profitability, the car manufacturing sector retains potential
influence and importance. Jullien and Pardi (2013) argued that economy environment in the
21st century has been dynamic in nature, which significantly affects the business to a larger
extent. There have been some drivers of economies that enable the changes in the economy
and create further impact on business.
As put forward by Gao et al. (2016), United State comeback with the economic recovery
because jobs in many sector have been created which significantly pushes the unemployment
down to pre-crisis level dropped to 5.0 %. Technology-driven trends are most likely to
revolutionise how the big players in the sector respond to changing customer behaviour, build
partnership as well as drive transformational change. As put forward by Tellis (2006),
economy today is dramatically changing and this is It is driven by the government supported
developments in the emerging sector, increase of new technologies, consumers’ shifts in
preferences and changing policies of sustainability. This means that these forces certainly
Creates the path for four disruptive technology based trends especially in the car
manufacturing sector like the popularity autonomous driving, diverse mobility, electrification
and connectivity. As put forward by Hardman et al. (2013), a many industry players and
experts believe in the fact that there is a number of trends which are most likely to reinforce
and accelerate one another and here automotive sector is ripe for disruption. As put forward
by Zapata and Nieuwenhuis (2010) as per the global understanding of game-changing
disruption already on the horizon, there lacks an integrated point of view on how the sector

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may look in 10 to 15 years as the consequence of such change. Thus, Tesla being the
significant part of 2020 automotive revolution focussing on the scenario about the changes
appearing and how the changes are most likely affect conventional vehicle manufacturing,
suppliers and new potential players.
As put forward by Dwivedi, Srivastava and Srivastava (2017), the automotive revenue
pool is most likely to enhance and diversity towards the on demand mobility services as well
as data driven-services. Consequently, the scenario may create up to $1.5 trillion or more
than 30% in the possible revenue in 2030. According to Pilkington, Dyerson and Tissier
(2002), Tesla’s automotive revenue pool is most likely to maximize as well as vary towards
the on-demand automobile services as well as data-driven services.
Figure 1: High End Disruption
(Source: Danneels 2004)

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Furthermore, Furthermore, Ferràs-Hernández, Tarrats-Pons and Arimany-Serrat (2017) stated
vehicles would become the primary platform for passengers and drivers due to later
autonomous technology and connectivity. Thus, the scholars argue that such pace of
innovation particularly in technology based system may require the cars to be updated. In this
context, Dijk, Wells and Kemp (2016) arguably mentioned the fact that since the shared
mobility solutions within a limited life cycle becomes more general and common, customer
are most likely to become aware of technology advances. This may further enhance the
demands for upgradability in privately used vehicles.
On the contrary, Pandit et al.(2018) mentioned that in spite of the shift towards the
shared mobility, sales of vehicles could most likely to grow, it can be seen at a lower rate (2%
per year). It is observed that overall international sales is most likely to continue but the
growth on an annual basis is estimated to decrease by 3.6% over the last five years to around
2% by 2030. Therefore, it is expected that even the high-end market of Tesla is also going to
provide a decrease in its sales. It is noted that such decrease is significantly driven by some
major micro-economic factors along with the rise of emerging mobility services like e-
hailing. Furthermore, it has also been identified that nee mobility services might lead to a
certain decline in private sales vehicles but such decline may be offset by enhanced sales in
some shared vehicles. This needs to be replaced quite often because of the higher utilisation.
As put forward by Dachs, Stehrer and Zahradnik (2014changing customer preferences,
tightening regulations, as well as technological breakthrough contribute to a fundamental
shift in individual mobility approach. This means it can be mentioned that the rate of rapid
use of multiple model of transportation on an individual level is relatively high.
Consequently, conventional business model of car sales can be utilised or achieved by on
demand automobile solutions by the drivers in dense and populated cities of the world. As put
forward by Ülengin et al. (2014), buyers today usually treat the cars as the purpose vehicles

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and moreover in the coming future such group of buyers would prefer more flexibility to
develop solutions for the purpose, on demand mobility via smart-phones. Conversely, Gopal
and Thakkar (2016) stated there can be a new segments of specialised vehicles driven by
customers’ growing habit of using tailored solutions. It can be stated that in the coming days,
markets for vehicles may be developed for e-hailing services. Vehicles developed for greater
utilization and greater mileage. Therefore, it can be mentioned that such shift in consumer
shifts can affect the sales and manufacturing rends of Tesla, as Tesla only focus on privately
owned cars for high-end markets but rapid changes in consumer preferences and availability
of other alternative choices can affect Tesla’s business.
Consequently, this shift to diverse mobility solutions which is up to one out of ten
new cars sold in 2030 can be a shared vehicle and this can directly decrease the sales of
private-use vehicles. Thus, in order to measure the outcome on a scale, Amighini and Franco
(2013) mentioned that more than 30% miles driven in new cars sold can be from the shared
mobility. On the contrary, Eggers and Eggers (2011) mentioned that trends in the urban areas
may replace the nation because the most relevant section dimension that counts mobility
behaviour and the opportunities of automotive revolution across the world. Dijk, Wells and
Kemp (2016) commented that understanding where the opportunities of coming future lies
needs more in-depth view of the mobility markets than the easy state once before. Thus, it is
highly important to segment such markets by the urban type based fundamentally on the
density of the population, economic development and prosperity. Authors of the above study
have also mentioned the fact that across all sort of segments, customer preferences, policy
regulations as well as availability of price of emerging business model may significantly
diverge. In response to this statement, Hardman et al. (2013) provided an example of the
scenario – in London ownership of car is already being significant burden for a large
percentage of population because of high congestion fees, lack of parkin tariff and several

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other factors. On the contrary, Gao et al. (2016) mentioned that particularly in the rural areas,
particularly, the state of Lowa in United State, private-car use may remain the most preferred
means of transportation till now. This sort of city thereby becomes the major indicator for the
mobility behaviour by replace the conventional regional perception on the automobile
market. Tellis (2006) also mentioned the fact that by 2030 the major large city like New York
is most likely to have much more in common with the market compared Shanghai.
On the contrary, Zapata and Nieuwenhuis (2010) mentioned that once technological
as well as regulatory issuers have been addressed because almost 15% of new vehicles sold in
2030 could be autonomous. In this context, Dwivedi, Srivastava, and Srivastava (2017)
mentioned that vehicles that are completely autonomous need to be commercially available
before the onset of 2020. Authors of this study have also stated the fact that advanced driver-
assistance system (ADAS) may play a great role in making the regulators, customers, and
corporations for the middle term scenario of cars that are being over-controlled by drivers. It
can be further mentioned that the introduction of such system in the market demonstrates that
primary challenges that imped faster market penetration include pricing, customer
understanding, safety and security. Furthermore, in relation to technological readiness, the
major tech players and start-ups could most play a great role particularly in the development
of autonomous vehicles. In this context, Pilkington, Dyerson and Tissier (2002) commented
that stiff regulations and acceptance rate of customers may represent excessive hurdles for the
autonomous vehicles. Nonetheless, such barriers are resolved; the autonomous cars provide
tremendous values for customers.
Conversely, Dijk, Wells and Kemp (2016) mentioned the fact that electronic vehicles
tend to become viable and the most competitive, nonetheless, the speed of such adoption
could vary strongly at the regional range. It is noted that stiffer regulations on emission,