Tesla Motors: Comprehensive Analysis of Operations and Strategies

This report offers a comprehensive analysis of Tesla Motors, a leading electric vehicle and energy company. It begins with an introduction to Tesla's mission and background, highlighting its focus on sustainable energy solutions. The report emphasizes the importance of environmental analysis for understanding market opportunities and challenges, then delves into a PESTLE analysis, examining the political, economic, social, and technological factors affecting Tesla's operations. Furthermore, it applies Porter's Five Forces model to assess the competitive landscape, including competitive rivalry, the threat of new entrants, and the bargaining power of buyers and suppliers. A SWOT analysis is also included, providing a detailed view of Tesla's strengths, weaknesses, opportunities, and threats. The report concludes with an in-depth examination of Tesla's strategies, market position, and overall business environment.

Tesla motors

Tesla motors
Introduction
The primary objective of this report is to highlight and evaluate the functions and operations of
Tesla motors which is popular brand in electric and automotive industry. Tesla motors is an
energy and automotive company that specializes in electric car manufacturing (Tesla, 2018).The
paper discusses that how environmental analysis is extremely important for every organization to
stand out over the rivals. The study further emphasizes on the PESTLE analysis that is needed to
identify and measure the opportunities and challenges of the market. Along with this, the paper
provides a brief information about the porter five forces model and SWOT analysis. More detail
of the task has been elucidated below.
Backgrounds of Tesla motors
Tesla Inc. is an American company which was incorporated in 2003 in Palo Alto California
(Tesla, 2018). The company manufactures, develops, designs and sells energy storage systems,
electric vehicles and solar energy products in the global market. There are two segments of the
company including automotive and energy generation and storage. The automotive segment
includes the development, manufacturing, design and sales of electric vehicles (Mangram, 2012).
On the other hand, energy segment includes the installation, manufacture, design and sale of
stationary energy storage products. Tesla builds energy storage products for commercial and
home use. Tesla struggles with BMW, Honda, Toyota, Nissan, Ford, Mercedes, Samsung, and
Lexus to be a leader in the automotive industry. The mission of the company is to accelerate the
entire world’s transition to sustainable energy (Tesla, 2018). To generate global sustainable
energy ecosystem, the company also manufactures a unique and dynamic set of energy solutions,
Solar roof, powerwall, enabling homeowners, powerpack and businesses to manage and handle
the renewable energy generation, consumption and storage (Rowland, 2018).
Need and importance of environmental analysis
Environmental analysis is an effective and unique strategic tool. It is a process to evaluate and
identify the internal and external factors that may affect the company’s performance and
productivity. Environmental analysis is needed to identify and measure the threats and
challenges of the market. To identify and analyze the environmental scanning, it is significant to
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measure and evaluate the business and how it may affect the environment business across the
world. Environmental scanning may be defined as a process of identifying, analyzing, gathering
and dispensing facts, and information for strategic and tactical purpose. According to Bass and
Dalal-Clayton (2012), environmental analysis would help the organizations to evaluate and
understand what is happening both outside and inside the company and to maximize the
probabilities that the organizational policies and strategies developed would significantly reflect
the company’s environment. The environmental analysis is needed to identify and measure the
strength of the organizations that further helps in gaining competitive benefits in the global
market. Thus, environmental analysis plays a major role in measuring strengths and weaknesses
of the organizations effectively. A literature is given by Dixon (2013), environmental analysis
helps to evaluate and measure the opportunities and threats in the market. Early recognition of
threat and risk are always beneficial as it helps to diffuse off some threat. Proper and dynamic
environmental analysis and scanning help to make optimum utilization of natural, scare human
and capital resources. Systematic and effective analysis of business environment helps the
companies to minimize wastage and make effective use of available resources without evaluating
and analyzing the internal and external environment resources could not be utilized in a hassle
free manner. Therivel and Paridario (2013), analyzed that effective and unique analysis of
business environment helps the company to increase and enhance their strength, reduce the
weaknesses, diffuse the risks and grab the ample of opportunities. This enables the organizations
to grow and survive in the global market. Decision making is a tool of choosing the best
alternative from among multiple available alternatives. An environmental analysis is extensively
significant and dynamic method in understanding and decision making in all the circumstances
of the business. The success and growth of the organizations depend upon on the unique and
precise decision making capability. The analysis and study of environment enable the
organization to choose best option for the growth and progress of the firm. In this way,
environmental analysis plays a major role in boosting revenue and returns internationally.
Without undertaking environmental analysis and scanning, the organization cannot build and
improve a strategy and plan for the progress and growth of the business.
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Macro environment analysis of Tesla motors
A macro environment is a situation that exists in the economy as a whole instead of only one
region. It has been studied that macro environment can affect the long term targets and goals to a
large extent. The macro environment is a wide context within which a firm conducts its long
term activities and operations. An organization cannot control on the macro environment factors,
these factors are considered uncontrollable. If a company wants to become a leader in the global
market then it needs to focus on the external environment. It will help the firm to struggle with
rivals in the competitive market. Tesla is famous for its sustainable innovation business strategy
and model. The PEST analysis is done by Tesla motors to identify and evaluate the risks, threats
and opportunities in the market. The PEST analysis for Tesla has been discussed below.
Political factors: It has been studied that political environment of any country may impact its
business environment negatively and positively as well. It also affects the economic environment
of the country directly. The political factors may affect the regulatory environment also. It has
been investigated that US is the second biggest democracy across the world. The country enjoys
a stable and dynamic political climate however there are have been some major issues and
challenges currently. The USA promotes and advocates democracy in all over the world. With a
dynamic and stable political environment, technology advanced infrastructure, US positions
itself as an excellent destination for FDI, thus Tesla motors can take ample of advantages while
expanding and exploring the business. On the other hand, U.S also faces some international
challenges for some of its interventionist plans and policies in some part of the world. The
political system of the country is stable and dynamic to beat the competitors (David, 2018).
Economic factors: It is investigated from the various studies that USA is a biggest and growing
economy across the world in terms of nominal GDP. In the third quarter of 2018, the GDP figure
was $5,164,757 million, United states is the global growing and leading economy with regard to
GDP, as it could be seen in the ranking of quarterly GDP of the 50 countries (Countryeconomy,
2018). It can provide ample of benefit to Tesla to increase market share and sale of the products.
The GDP of the country grew 0.9% in the third quarter of 2018 as compared to the previous
quarter (Countryeconomy, 2018). Hence, Tesla can uplift its revenue and returns while initiating
the business in such market. On the other hand, various challenges or issues are also presented in
the country that is putting adverse impact on the sale and growth of Tesla. It is worth noting that
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labor is not cheap in the country particularly when compared to Mexico, India and China. Along
with this, global economic landscape is changing constantly which is a biggest risk for the U.S.
There is no suspicious that the nation is global leader and economic superpower. On the other
hand, interest rate, exchange rate and inflation rate may also put direct impact on the long term
goals and objectives. Increased economic activity during the recession is a significant and unique
element that has impacted growth of Tesla motors. All the economic factors need to be
considered while growing business at international level (David, 2018).
Social factors: The socio-cultural factors are imperative and unique that may have a major
influence on the supply and demand of automotive products internationally. The socio-cultural
factors include customer, culture, values, income level, and buying behavior of the consumers.
The environment is sustainable and dynamic for automotive vehicles in the country (Somers,
Owens and Piliawsky, 2008). USA is a third most populous nation across the world with a total
population of around 326 million (David, 2018). Along with this, the country is a diverse
therefore, Tesla can attract and retain majority of people in U.S. Furthermore, it is noted that US
education system is excellent and unique in the world. It is investigated people in U.S possess
high income level thus; Tesla can increase the sale of automotive vehicles internationally. Most
of the people in the country buy luxury vehicles to maintain a highest standard in the society.
Therefore, Tesla motors can improve and enhance productivity and results in U.S (Hillson and
Murray-Webster, 2017).
Technological factors: The USA is an international player in technology and science.
Americans have a longstanding fascination for advanced and innovative technology thus, the
organization can increase profits and market share in this country. The country is adapting and
implementing the innovative technologies in various fields to attract maximum companies for
doing business smoothly. Advanced technology has changed the various ways many things are
done. Innovative technology can help Tesla motors to reduce and eliminate the extra production
costs. The rate of technological innovation and change is highly quick in the USA. However, the
nation faces strong and unique risks and challenges from ample of countries like India, China
and South Korea. Before initiating the business, Tesla motors needs to focus on the technological
factors to compete with rivals in the global market (David, 2018).
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Tesla motors
Porter five forces model
Tesla motors is an innovative producer of electric vehicles that provides innovative and attractive
vehicles to the customers in all over the world. To evaluate and analyze the position of the
competitors, porter five forces model is used by Tesla motors. The porter five forces model for
Tesla motors has been elucidated below.
Competitive rivalry: Tesla, Inc. manages and operates business in a highly and effective
competitive market. This force highlights the impact of competition on the energy and
automotive industry environment. Rivalry in the US and the international automotive industry is
high and strong. There is ample of companies in USA that have expertise in producing or making
in electric cars. Due to which, there are various competitors which could impact on the
performance and productivity of Tesla motors. The overall competition in automotive and
electric sector is high and intense but due to unique and dynamic positioning of Tesla motors
does have a competitive benefit in the market in which it works or functions (Ayala, 2016).
Threat of new entrants: It is studied that there is low and weak threat of new entrants for Tesla
motors in the U.S market. Due to entry barriers such as low acceptability, and initial investment
of the electric vehicles, there issues or barriers are significantly high, which also contradicts the
threat of new entrants. The threat of new entrants is low because the firm is using dynamic and
innovative strategies and approaches to cope up with rival globally (Warner, 2010).
Bargaining power of buyers: It has been studied that Tesla motors has introduced innovative
products like electric and energy cars which are quite unique and dynamic as compared to other
competitors. The bargaining power in the hand of the customers is relatively low and weak. The
overall product presentation and designing of the electric cars is unique and dynamic thus, it can
attract wide range of customers in the U.S market. In today’s era, there is no other firm which
can compete with Tesla motors in electric car segment. Most of the customers prefer to buy the
electric products of Tesla motors therefore; bargaining power of the buyers is weak as well
(Rothaermel, 2015).
Bargaining power of suppliers: It is examined that Tesla motors has gained technical expertise
in producing electric cars, it becomes natural the firm has strong and effective supplier system
which is dynamic and effective and has taken long time to develop products. The success and
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Tesla motors
growth of Tesla motors depend on the suppliers to ensure smooth and dynamic process of
manufacturing of its electric cars. After the various studies, it has been found that bargaining
power of suppliers is high for Tesla motors (Stringham, Miller and Clark, 2015).
Threat of substitute: The threat of substitute is low and weak in electric and automotive vehicle
industry. There are few substitutes including hybrids, hydrogen transportation and hydrogen
vehicles that can affect the profitability and market share of Tesla motors in U.S market.
However, Tesla consumers are very environmentally cautious thus, they do not buy substitute
products in the competitive market. It is noted that the substitute products are of lower quality
hence substitute products cannot impact on the productivity and performance of the firm
(Kancherla and Daim, 2018).
SWOT analysis of Tesla motors
SWOT analysis of Tesla motors has been elaborated below.
Strengths Weaknesses
 Tesla motors is built and enhanced 1st
fully electric sports car “The roadstar”
 The company maintains strong and
unique relationship with suppliers.
 Tesla motors has the ability to develop
electric vehicles in the U.S market
(Mbaskool, 2018).
 The prices of their products are higher
as compared to competitors.
 The economies of scale are not attained
due to high cost of vehicles.
Opportunities Threats
 There is high and growing market
 Maximizing gas and oil prices
 The firm is receiving support from
government.
 There is high and immense
competition.
 Limited range of electric products.
 Concentrated industry is another
weakness (Mbaskool, 2018).
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Conclusion
It is measured from the above analysis that U.S is a very competitive and unique market because
there are many sellers in the market of the electric vehicles. Tesla motors would be able to be
effective and successful through the deployment of high and advanced technology in the electric
cars. The above analysis reveals that environmental scanning and analysis are needed to initiate
the business activities at minimum risk. By conducting environment analysis, the risks can be
minimized and highest opportunities can be taken effectively. Apart from this, Pestle analysis,
porter five forces analysis and SWOT analysis are done by the company to judge and evaluate
the issues and obstacles of U.S market.
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Tesla motors
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