Tesla's Business Environment: Micro, Macro Factors & Risk Mitigation

This report provides a comprehensive analysis of Tesla's business environment, examining both microeconomic and macroeconomic factors that influence the company's operations. The microeconomic analysis focuses on factors such as the availability of employees and investors, as well as production costs and revenue generation. The macroeconomic analysis delves into political risks, security considerations (physical, digital, and sustainable), environmental factors, and social influences. The report identifies the strongest risk factors, including minimizing production costs and ensuring robust security measures, and proposes mitigation strategies for each. The analysis concludes that continuous environmental scanning is crucial for Tesla to effectively manage risks and maintain sustainable growth within the automotive industry.

The Business
Environment project 2

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Microeconomics factors...............................................................................................................1
Macroeconomic factors................................................................................................................2
Summary of strongest risk factors and proposals to mitigate those risks....................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
Online...............................................................................................................................................8

INTRODUCTION
Industry analysis is the activity which consist of identifying the factors and opportunities
for the organisation for further growth (Lopez, Aguilar and Santorum, 2021). This will also help
the organisations to identify the threats to defend well. Hence, it is one of the most essential
activity for the organisation to scan their internal and external business environment and analyse
the risk within their industry to mitigate them. Tesla is an American multinational automotive
company which is headquartered in Austin, Texas. This company is founded in the year 2003
and its founder is Elon Musk. They design and manufacture electric vehicles. The following
report covers micro and macro factors of the company and analysis of strongest risk factors from
micro and macro analysis. This report also covers mitigation strategies of the founded risk for the
automotive industry for Tesla.
MAIN BODY
Microeconomics factors
Microeconomic factors are those factors which will impact the company from internally
and it also occurs within the company. These factors are considered as controllable factors where
company has full control over the challenges and risks related to these factors. There are
following factors which will impact the automotive industry internally and these factors are
mentioned below-
Availability of employees- In context of Automotive industry, there are various kinds of
employees available to work with high reputed companies in this industry. According to a
statistical report, there are over 8,397,451 employees within automotive industry and China is the
leading country to employee over 1,605,000 employees and USA employing 954,210 within this
industry (The Automotive Industry Employs More People Than You Think, 2017). There are
technical tasks in this industry like assembling automotive parts, manufacturing main body of
vehicles, quality checks and many others. Hence, the companies within this industry need to hire
technical skilled and talented employees. Therefore, Tesla is required to analyse the skills and
talents they need within their main operations and hire employees according to that. There are
various kinds of skills which are seek by companies within automotive industry and these skills
are IT skills, communication skills, problem solving skills, effective knowledge about
assembling of different parts of the vehicles and many others.
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Availability of investors- Investors played a very important role for the success of a
company because they invest within the company and they make essential decisions for the
organisational growth (Cheng and Jin, 2021). In context of Automotive industry, they need to
manage their funds appropriately and invest high for their Research and Development (R&D)
department. The Quality Check department will also need high investment. Hence, the
companies within this industry make sure to attract those investors who can invest high for their
companies as well as who are having high knowledge about automotives so that they can provide
suggestions for the growth of their company. In context of Tesla, their main stakeholders are The
Venguard Group, Inc., BlackRock Funds Advisors, Geode Capital Management LLC and few
others (Tesla Inc(NASDAQ:TSLA), 2022) . They allow their suppliers to become their investors.
Production, cost and revenues- It is essential for the companies in automotive industry
to reduce their production cost and increase their profitability (Yun and et. al., 2019). In context
of automotive industry, they need high cost to produce each unit of their main product. The
production of this industry is in bulk. Most of the companies have different factories to
manufacture different parts of their vehicles like main body of vehicle is manufactured in one
factory and another factory will manufacture main engine of the vehicle. At the end the company
will assemble all parts together to make a running vehicle to sell in market. Revenue is the
money which is generated from normal business operations. The revenue is fully depends upon
total number of sales of the manufactured product. Hence, the sales of an automotive company
can only increase by enhancing their promotional activities and aware their customers about their
cars and main features of their vehicles. In context of Tesla, their production cost is high and
that's why the prices of their vehicles are also higher than their competitors.
Macroeconomic factors
External business environment consist of uncontrollable factors which occur at any time
and the companies can only make strategies of these factors effectively (Gherhes, Vorley and
Brooks, 2020). Companies are having more danger with these factors because the companies are
having no idea about them. There are various macroeconomic factors within Automotive
industry and few of them are explained below-
Political risk- It consist of political stability, trading restrictions, relationship at
international level and many others. Tesla is one of the fastest growing autonomous vehicle
company. America is having good relationship with other countries which improve its trading
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activities with other countries. Hence, improving trading restrictions will allow them to transport
their vehicles from one country to another. Hence, Tesla also focus to expand their business in
those countries where they found political stability and the government will support self-driving
cars. Tesla produces self-driving car which need fair and supportive political environment for
different nations across the world. Tesla make sure that they will get government support to
promote their cars effectively and attract customers.
Security- Security consist of safety toward few threats which can cause negative impacts
upon organisational growth (Pucihar and et. al., 2019). There are three types of security which is
considered here which are- Physical Security- It consist of protection of hardware, software and many others from
any physical action which may loss serious cause to the company. Few of the examples
of physical security are CCTV surveillance, locks, security guards, fire protection and
many others. These security will help the company to detect the threat and take corrective
action against the errors or threats. In context of Tesla, their offices and factories are
covered with CCTV cameras to analyse the activities of their employees and other
individuals who enter their workplace. Secondly, their factories where they manufacture
their driver-less cars are having various protection instruments against fire like fire
extinguisher and many others. In context of their manufacturing, then they also make sure
to add air bags in their car so that it will protect the life of back seaters in case of
accidents. Security guards at workplace will help the company to make a manual record
of their incoming and outgoing vehicles from their factories. Digital security- It consist of protecting the data which are available through online mode
(Habich-Sobiegalla, Kostka and Anzinger, 2019). This is the main responsibility of the
company to protect the data of their employees and customers so that external factors like
hackers and others will not misuse those data for their personal benefit. Electric cars cab
be hacked by hackers and in case any criminal hack the electric car then it will cause
huge number of road accidents. Hence, Tesla need to secure the digital system of their
cars to avoid such happening. Electronic cyber attacks are getting more common. Hence,
a good software with proper encryption will help the company to protect their digital
data. On the other hand, the software to store the information about their cars, customer
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and employees personal data and many others are also need to get secure. Tesla need to
update the software regularly which they use on daily basis.
 Sustainable security- It consist of taking security for planet and natural environment.
While making cars and especially electrical and driver-less cars, the company need to use
huge and advanced tools and machinesv(Secinaro and et. al., 2020). Hence, Tesla must
make sure that their tools and machines will not produce carbon emissions while
manufacturing their main product. On the other hand, Tesla make sure that it will not
harm natural environment while testing their cars. They are having their special tracks for
testing the drives of their driver-less cars.
Environmental factors- These are the factors which consist of protecting environment
and the interest of common community for organisational growth and reputation. There is a huge
harm for autonomous vehicle companies to harm their natural environment while manufacturing
their cars and other type of vehicles (Dibble, 2018). Hence, Tesla makes sure that their tools and
machines will be maintained on regular basis so that they will not produce carbon emissions in
the air which will harm the environment. Their products themselves are sustainable and
environmental friendly because they manufacture electric vehicles which are safe for
environment. According to a report, the manufacturing process of Tesla's Model 3 results in
higher GHG emissions as compared to equivalent combustion engine vehicles (Learn More
About Tesla's Environmental Footprint, 2022). As per the same report, the chosen organisation is
focusing to minimize the negative impacts to environment through their operations at every stage
of their manufacturing and promotions.
Social factors- This is one of the most important macro environment factor which is
required by Tesla to consider for effective growth in future. The behaviours of their customers
and their preference matters a lot for company. The best opportunity for Tesla is to target those
customers who are environmentally conscious and who prefer to use high level of technology.
Today most of the customers are preferred to use renewable energy and offering electric vehicles
will help the company satisfy their customers. The attractive interior of car with high quality of
technology will help the company to attract more customers (Kučera, 2019). Each car of Tesla
are sold to customers after effective test drives on special kind of tracks. This will help the
company to gain double surety that they are offering good quality to their customers. On the
other hand, they also prefer to manufacture customized cars for their customers where their few
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of the customers demanded for some additional features as per their will and Tesla track their
idea and demand into reality to satisfy them. The company will also charge additional prices for
additional features within their product.
Summary of strongest risk factors and proposals to mitigate those risks
From the above analysis of micro and macro business environment factors of Tesla it is
evaluated that few of the business risk are under control of Tesla which they can manage
effectively and few of the risk can impact badly upon their organisational growth and these risk
factors are mentioned below-
 The strongest risk in micro business environment is to minimize the production cost. The
autonomous car industry is one of the highest innovative industry where each product ned
huge research and testing (Sönksen and et. al., 2021). The quality matters a lot in this
industry. Tesla are facing various issues to minimize their cost because their main
purpose is to offer high quality to their customers and in case of maintaining high quality
they never think about cost. This will further increases the prices of their cars for their
customers. The company is suggested few suggestions to mitigate this risk like they are
required to hire a team which will only focus to evaluate those suppliers for the company
who will offer high quality of raw material within lower cost as compared to other
suppliers. This team is also required to maintain long term relationship with these
suppliers.
 In context of macro business environment, security factors will consider highest risky
factor for Tesla. Nowadays, hacking, theft, fire accidents and many others incidents
happen commonly. The company need to get safe from such threats. To keep the vehicles
safe from such threats the company is required to take various measures like keeping
active security guards at factories and workplaces, using CCTV cameras and using high
security of software which has the authentication for few of the selected and most trusted
employees of the company. These software need to get updated on regular basis.
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CONCLUSION
From the above information it is concluded that a company is required to scan their
environment on regular basis to analyse the opportunities for growth and threats to defend in
future. There are two types of business environment, micro business environment and macro
business environment. Micro business environment are those factors which are under control of
company and which occur within the company like availability of employees, production cost
and many others. Whereas external business environment consist of those factors which are
occurs outside a company whose impact is seen on the growth of the company like political
factors, environmental factors and many others.
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REFERENCES
Books and Journals:
Cheng, K. and Jin, B., 2021. Inventory pooling technique from the car rental industry: now and
in the autonomous future. International Journal of Business Environment, 12(1), pp.37-
63.
Dibble, C., 2018. Exploring the Potential of Environmental Impact Investing for Sustainable
Development: The Cases of Dominion Energy and Tesla Motors.
Gherhes, C., Vorley, T. and Brooks, C., 2020. The “additional costs” of being peripheral:
developing a contextual understanding of micro-business growth constraints. Journal of
Small Business and Enterprise Development.
Habich-Sobiegalla, S., Kostka, G. and Anzinger, N., 2019. Citizens’ electric vehicle purchase
intentions in China: An analysis of micro-level and macro-level factors. Transport
Policy, 79, pp.223-233.
Kučera, T., 2019. Application of the activity-based costing to the logistics cost calculation for
warehousing in the automotive industry. Komunikácie: Communications (Scientific
Letters of the University of Žilina), volume 21, issue: 4.
Lopez, C.P., Aguilar, J. and Santorum, M., 2021. Autonomous VOs management based on
industry 4.0: a systematic literature review. Journal of Intelligent Manufacturing, pp.1-
17.
Pucihar, A. and et. al., 2019. Drivers and outcomes of business model innovation—Micro, small
and medium-sized enterprises perspective. Sustainability, 11(2), p.344.
Secinaro, S. and et. al., 2020. Employing bibliometric analysis to identify suitable business
models for electric cars. Journal of cleaner production, 264, p.121503.
Sönksen, S.E. and et. al., 2021. Incidental Finding Prevalences in 3-Tesla Brain and Spine MRI
of Military Pilot Applicants. Aerospace Medicine and Human Performance, 92(3),
pp.146-152.
Yun, J.J. and et. al., 2019. The role of a business model in market growth: The difference
between the converted industry and the emerging industry. Technological Forecasting
and Social Change, 146, pp.534-562.
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Online
The Automotive Industry Employs More People Than You Think, 2017 [Online] available
through:
<https://www.nesfircroft.com/blog/2017/05/the-automotive-industry-employs-more-people-than-
you-think?source=google.com/>
Tesla Inc(NASDAQ:TSLA), 2022 [Online] available through:
<https://money.cnn.com/quote/shareholders/shareholders.html?
symb=TSLA&subView=institutional/>
Learn More About Tesla's Environmental Footprint, 2022 [Online] available through:
<https://insideevs.com/news/530007/tesla-environmental-footprint-data/>
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