Tesla Inc.: External Environment, Culture, and Business Analysis

This report provides an analysis of Tesla Inc., focusing on its external and internal environments. It utilizes Porter's Five Forces model to assess the impact of external factors such as the threat of new entrants, industry rivalry, threat of substitutes, and the bargaining power of buyers and suppliers. The report finds that the threat of new entrants is low, while competition is moderate. It also explores Tesla's organizational culture, identifying key elements like product innovation, organizational structure, leadership, clear vision, boldness, and customer centricity. The report examines how these cultural factors influence Tesla's business model and overall success, concluding that Tesla's focus on innovation and customer satisfaction is critical to its competitive advantage in the electric vehicle market. The report also highlights the company's vision for sustainable energy and its commitment to customer-centric strategies.

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ORGANIZATIONS AND MANAGEMENT
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7/25/2019
acer

ORGANIZATIONS AND MANAGEMENT 1
Contents
Introduction......................................................................................................................................2
Porter’s five-force model.................................................................................................................3
Threat of new entrant...................................................................................................................3
Industry rivalry............................................................................................................................3
Threat of substitutes.....................................................................................................................3
Bargaining power of buyers.........................................................................................................4
Bargaining power of suppliers.....................................................................................................4
Organizational culture.....................................................................................................................4
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Introduction
Analyzing the external and internal environment of an organization provides with available
opportunity and threats for the company. The strategic framework used in the report to assess the
environment of Tesla Inc. is porter’s five-force model, which reflects five key factors influencing
the business. Moreover, the organizational culture will be assessing for the company in the report
further. Tesla Inc. an automobile company based in America. The company is manufacturing
various car models with specialization in an electric car. The concept for the company is to
provide clean energy storage with solar panels, electric cars, and renewable energy solutions.
The company has exported the products in various nations across the globe promoting
sustainable solutions to energy (tesla, 2019).

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Porter’s five-force model
The five forces as per this model include
The threat of new entrant
From the automobile industry, it can be said that the threat of new entrant for tesla is low. The
reason being the investment is very huge and the consumer base is quite small for the companies
in case of premium car ranges. Moreover, the company’s innovation and the use of advanced
technology has also reduced the threat of new entrants. In addition to this, in case a new
company is ready to enter into the industry after such huge investment, it would require large
time to attract customer and increase brand recognition and goodwill (Dobbs, 2014).
Industry rivalry
The threat of the competition is moderate as the companies that are close competition to the
company like Toyota, and Nissan are generally dealing with a premium automobile, but the
specialty of tesla that is electric cars along with innovation and updating technology is the key
competitive advantage strategy of the company. However, it can be said that the company is
running in a highly competitive environment where the competition from existing firms are high
but the new companies are very low (Ahlin, 2014).
Threat of substitutes
The threat of substitutes is low for tesla. The reason being it takes a large amount of
equipment’s, resources, and the capital involved in the automobile business is very large to
initiate the manufacturing of the vehicle. Thus, it can be said that the substitute for such products

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is not actually available to people easily. This reflects that the company does not have a
substitute as such while satisfying the same need.
Bargaining power of buyers
The bargaining power of buyers is high in nature. The limited access to customer segmentation is
the major reason justifying the threat for the company considering the buyer’s power is high.
Moreover, the switching cost for the customer in this industry is huge, as it is not always possible
to retain the customer and this decrease the barrier for the customer to look out for another brand
for next automobile purchase. Other than this it has been identified that the purchase volume is
quite low in the automobile industry, as the customers are not changing their vehicles for an
average of five to seven years.
Bargaining power of suppliers
The bargaining power of suppliers of tesla is low. The reason being the forward integration for
the suppliers is low in level. It has been identified that the size of suppliers are not very huge,
which may lead to increase the barraging power in the hands of suppliers. However, the level of
influence of the suppliers is moderate as the supply level is also moderate for Tesla (Biemans,
2018).
Organizational culture
There are various tools to assess the organizational culture of an organization. One of the tools
used to assess the tesla’s organizational culture is a key milestone, according to which the
benchmark is been set, which is used as the standard to compare the current cultural factors of

ORGANIZATIONS AND MANAGEMENT 5
the company. The key elements of organizational culture and key impact of these factors over
Tesla’s business are as follows
1. Business model
Product innovation is the key element of this factor for tesla, which let it product the electric cars
range. For example, sustainable batteries that are responsible for fast charging is one of the key
innovation that increases customer satisfaction (Anitha, 2019).
2. Organizational structure
The structure impacts the communication level and the way an organization will perform
depends on the organizational structure. The organizational structure of tesla clearly depicts that
the CEO of the company is not promoting hierarchal structure in the company, which has
impacted the higher level of innovation and new idea generation in the company (Kaur & Ma,
2015).
3. Leadership
Leadership ability of the company could majorly influence the success factor for the company
especially when it comes to a strategic decision and providing direction to the company. The
leadership is also directed towards driving innovation, which would also reflect that the
leadership adopted in the organizational is transformational leadership, which is promoting
technological change for example. Musk is said to be an innovative leader where the problem
solving approach is been used in case of vision, tendency, and persistence (research-
methodology, 2019).
4. Clear vision

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Vision provides direction to the organization reflecting the aim of the company and the objective
for which the employees need to work. The vision, for example, includes the acceleration of
sustainable vehicles by integrating the mass market electric vehicles to be compelled to the
market.
5. Boldness
Boldness is another cultural element found in tesla’s organizational culture, which has influenced
the innovation driven in the company. The boldness has increased the communication flexibility
among the employees. For example, this has increase the sharing of thought and new ideas from
employees to their superiors, which could be one of the useful and implemented as the key idea
generation and innovation to be used in the company, which could be for new product
development, improvement in services, or innovation through process (Alvesson, 2016).
6. Customer centricity
The customers are the major stakeholder for the company. The whole organization is working
towards the customer satisfaction. This includes considering the customer needs, wants and
expectation while preparing the strategy, business model, or conduct of any business activity.
This was the major reason influencing the business strategy and new product development. For
example, the tesla models like model 3 and Prius that are making customer available with
affordable electric cars are the result of this cultural factor of tesla (braineet, 2019).

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Conclusion
From the tesla report, it can be concluded that Tesla Inc. an automobile company based in
America. The company is manufacturing various car models with specialization in an electric
car. From the automobile industry, it can be said that the threat of new entrant for tesla is low.
The threat of the competition is moderate as the companies that are close competition to the
company like Toyota, and Nissan. The threat of substitutes is low for tesla. The bargaining
power of buyers is high in nature. The bargaining power of suppliers of tesla is low.
The key elements of organizational culture and key impact of these factors over Tesla’s business
are business model, organizational structure, leadership, clear vision, boldness, and customer
centricity.

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References
Ahlin, B. (2014). Entrepreneurs’ creativity and firm innovation: the moderating role of
entrepreneurial self-efficacy. Small Business Economics, 43(1), 101.
Alvesson, M. (2016). Organizational culture. New York: Sage.
Anitha, J. (2019). Role of Organisational Culture and Employee Commitment in Employee
Retention. ASBM Journal of Management, 9(1).
Biemans, W. (2018). Managing innovation within networks. London: Routledge.
braineet. (2019). tesla-innovation-culture. Retrieved from https://www.braineet.com/blog/tesla-
innovation-culture/
Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 32.
Kaur, S., & Ma, P. (2015). What organizational culture types enable and retard open innovation?
Quality & Quantity, 2123.
research-methodology. (2019). tesla-organizational-culture-a-brief-overview. Retrieved from
https://research-methodology.net/tesla-organizational-culture-a-brief-overview/
tesla. (2019). home. Retrieved from https://www.tesla.com/