Tesla's Market Position: An Environmental Analysis Report - US Auto

This report provides a comprehensive environmental analysis of Tesla, Inc., focusing on its strategic position within the U.S. automobile industry. It begins with a literature review of environmental analysis, PEST, Porter's Five Forces, and SWOT methodologies. The report then evaluates macro-environmental trends influencing the U.S. automobile industry using the PEST model, covering political, economic, social, and technological factors. Next, it analyzes the competitiveness of the U.S. automobile industry using Porter's Five Forces model, assessing buyer power, supplier power, the threat of substitution, competitive rivalry, and the threat of new entry. Finally, the report conducts a SWOT analysis of Tesla Motors, Inc., identifying its strengths, weaknesses, opportunities, and threats. The analysis aims to provide insights into Tesla's current market position and strategic options, concluding with recommendations for navigating challenges and capitalizing on opportunities.

Running head: Environmental analysis of Tesla
Environmental analysis of Tesla
Name of the student
Name of the University
Author note

1Environmental analysis of Tesla
Executive summary
The aim of the report is to focus on the environmental analysis based on the organization
mentioned in the case study that is Tesla, Inc. It states the importance of environmental analysis
in the sphere of business strategy. The report has elaborated on the different issues or difficulties
that Tesla faces because of various reasons as per the case study. Meanwhile, the report also
analyses the quality and chances of the organization. The study continues the discussion by
recommending the different advances that can be taken to gauge and deal with its difficulties,
issues and dangers. The paper starts with a discussion which gives a general review of
environmental examination and then proceeds with PEST analysis, Porter's five forces analysis
and SWOT analysis.

2Environmental analysis of Tesla
Table of Contents
1. Introduction..............................................................................................................................2
2. Literature review......................................................................................................................2
3. Discussion....................................................................................................................................3
3.1. Evaluation of the industry trends using PEST Model...........................................................3
3.1.2 Political factors...................................................................................................................3
3.1.3 Economic factors................................................................................................................4
3.1.3 Social factors.................................................................................................................4
3.1.4 Technological factors..........................................................................................................5
3.2. Analysis of the competitiveness of the U.S. Automobile Industry – Porter’s Five Forces
Model...............................................................................................................................................6
3.2.1 Buyer’s power – Moderate.................................................................................................6
3.2.2 Supplier power – moderate.................................................................................................7
3.2.3 Threat of substitution – Moderate.......................................................................................7
3.2.4 Competitive rivalry – Moderate..........................................................................................8
3.2.5 Threat of new entry - Low..................................................................................................8
3.3. Analysis of the SWOT for Tesla Motors, Inc...........................................................................9
3.3.1 Strength...............................................................................................................................9
3.3.2 Weakness..........................................................................................................................10
3.3.3 Threats..............................................................................................................................10

3Environmental analysis of Tesla
3.3.4 Opportunities....................................................................................................................10
4. Conclusion..............................................................................................................................11
5. References..............................................................................................................................13

4Environmental analysis of Tesla
1. Introduction
The examination aims to give an internal and external market investigation on account of
the organization named Tesla, Inc. It expresses the significance of environmental analysis in
central administration. The report will center on the different issues or difficulties that Tesla is by
and by looking because of various reasons. In the meantime, the report likewise investigates the
quality and chances of the organization. The report finishes up by prescribing the different
advances that can be taken to gauge and deal with its difficulties, issues and dangers while
rolling out improvements in its current approaches with the end goal to build item deal and hold
its situation in the market. The paper starts with a writing audit which gives a general review of
environmental examination alongside PEST investigation, Porter's five powers investigation and
SWOT investigation. The whole talk gives a rundown of it in the closing passage with significant
discoveries.
2. Literature review
According to E Dobbs (2014), environmental analysis comprehends the impact of the
outer and inward condition on an organization's development. Such kind of examination is the
key factor of a market investigation External investigation decides the business methodology by
auditing of the external components or condition, while, an internal review is the investigation of
variables internal the business. On the other hand, as per Ho (2014), Porter’s Five Sources
investigation is by and large led by performing full-scale environmental segments that is PEST
analysis – political, financial, social, and innovative components Porter's five powers
investigation. Bull et al. (2016) suggests that in the event of internal examination, SWOT

5Environmental analysis of Tesla
analysis is performed. Interior and external research is the significant piece of essential
administration to comprehend the probability, existing position, and further tasks of business.
Hence the paper leads the research dependent on the organization named Tesla.
3. Discussion
3.1. Evaluation of the industry trends using PEST Model
3.1.2 Political factors
Tesla Inc. is one of the leading companies in the automobile sector of the United States.
The automobile industry of US is one of the fast-growing areas among the business sphere. The
company has gained enough popularity at the forefront of electric vehicles. Instead of traditional
fuel run vehicles, the cars manufactured by Tesla Inc. run by both gas and electricity (Hill, Jones
and Schilling 2014). Moreover, the vehicles used by Tesla use less fuel, unlike the traditional

6Environmental analysis of Tesla
cars. Thus, it can be seen the US government’s directives of industrial low carbon emission
influence the Tesla significantly which can be evident as the company use such advancement in
its business development. The free trade policy, on the other hand, impacts the company in a
positive manner due to which the company focuses more on foreign markets.
3.1.3 Economic factors
The automobile industry of the United States generates a tremendous amount of revenue
to the overall economy of the company. The current decrease in the cost of the battery within the
US market helps the company to produce more with a high quality of the battery (Hitt and Duane
Ireland 2017). On the other hand, due to the cost reduction in the area of battery usage, the
company has been able to invest more in other areas which can enhance its competency than
other rival companies. The primary current trend in the US Market is the use of renewable
energy source at an exponential rate. Using the advantage, Tesla makes its products more
affordable as well as environment-friendly for its target customers (Ethiraj, Gambardel and
Helfat 2018). However, in this regard, it needs to be discussed that the unstable economic
condition in the international markets where the company operates business impact grossly since
it determines the market prices while having a significant effect on the purchase behavior of the
customers. The political and trade acts and its recent changes similarly have an adverse effect on
the sales of the company.
3.1.3 Social factors
The United States with its world class institutes is the hub of skilled professionals which
enable the company to hire the best talents from the reputed institutes and use their excellence in
its business process (Schaltegger and Wagner 2017). As a result, it is seen that the individuals of
different cultural diversity are included in the workforce of the company since a large number of

7Environmental analysis of Tesla
students from different corners of the world used to come to the United States with the aim of
studying. Most importantly, with more students choosing the engineering studies as a career
option, the company is benefitted since it deals in the electronics and technological field (Burns,
Bush and Sinha 2014). On the other hand, influenced by the environment-friendly drive globally,
the company is driven to implement low carbon measure along with renewable energy source in
its business process.
3.1.4 Technological factors
With an exponential rate technological advancement and its uses are being rapidly used
in the entire business sphere of the United States, and the automobile industry is no exception
(Wheelen et al. 2017). The company over the years has been using newer technology keeping the
marketing requirement in mind so that it can provide the customers with a more user friendly,
affordable, latest technology based cars.

8Environmental analysis of Tesla
3.2. Analysis of the competitiveness of the U.S. Automobile Industry –
Porter’s Five Forces Model
3.2.1 Buyer’s power – Moderate
Tesla Inc. is one of the leading companies in the automobile sector of the United States.
The automobile industry of US is one of the fast-growing sectors among the business sphere. The
company has gained enough popularity at the forefront of electric vehicles (Grant 2016). Instead
of traditional fuel run vehicles, the cars manufactured by Tesla Inc. run by both gas and
electricity. Moreover, the vehicles used by Tesla use less fuel, unlike the traditional cars. Thus, it
can be seen the US government’s directives of industrial low carbon emission influence the Tesla
significantly which can be evident as the company use such advancement in its business
development (Burns, Bush and Sinha 2014). The free trade policy, on the other hand, positively
impact the company due to which the company focuses more on foreign markets. Hence, it can

9Environmental analysis of Tesla
be stated from the above analysis that the bargaining power of the buyers or customers of Tesla
is moderate.
3.2.2 Supplier power – moderate
The vehicle business of the United States creates a great measure of income to the
general economy of the organization (Schaltegger and Wagner 2017). The current reduction in
the expense of the battery internal the US advertise encourages the organization to create more
with a high caliber of a battery. Then again, because of the cost decrease in the territory of
battery use, the organization has possessed the capacity to contribute more on different zones
which can improve its competency than other adversary organizations (Ethiraj, Gambardella and
Helfat, 2018). The significant current pattern in the US Market is the utilization of sustainable
power source at an exponential rate which suggests a moderate bargaining power of the
suppliers of Tesla Inc..
3.2.3 Threat of substitution – Moderate
Utilizing the preferred standpoint, Tesla makes its items more reasonable and additionally
condition inviting for its objective clients (Hitt and Duane Ireland, 2017). In any case, in such
manner, it should be examined that the shaky financial condition in the global markets where the
organization works business effect terribly since it decides the market costs while hugely affect
the buy conduct of the clients. There are several companies in the US automobile industry like
Porche which focuses not only on products rather on the services in order to compete with rival
companies. Hence, it implies a moderate rate of threat of substitution for the company.

10Environmental analysis of Tesla
3.2.4 Competitive rivalry – Moderate
The United States with its reality class foundations is the center point of gifted experts
which empower the organization to procure the best abilities from the presumed establishments
and utilize their magnificence in its business procedure (Hill,Jones and Schilling 2014).
Subsequently, it is seen that the individuals of various social assorted variety are incorporated
into the workforce of the organization since a substantial number of understudies from different
corners of the world utilized to go to the United States with a point of examining (Ethiraj,
Gambardella and Helfat 2018). Above all, with more understudies selecting the building
contemplates as a lifelong alternative, the organization is profited since it bargains in the
hardware and mechanical field (Hitt and Duane Ireland 2017). Then again, impacted by the earth
neighborly drive all-inclusive, the organization is headed to actualize low carbon measure
alongside sustainable power source in its business procedure. Thus, with the existence of top
automotive manufacturer, it can be stated that the competitive rivalry for Tesla is moderate.
3.2.5 Threat of new entry - Low
Along with exponential rate, innovative headway and its uses are as a rule quickly
utilized in the whole business sphere of the United States and the car business is no exemption
(Schaltegger and Wagner 2017). The organization throughout the years has been employing
more up to date innovation remembering the advertising prerequisite with the goal that it can
give the clients a more comfortable to use, moderate, most recent change based autos. This
suggests a lower rate of the threat of new entrants in the automobile industry of US since the
company uses the latest technology based innovation in its products which new companies can
hardly think of.

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3.3. Analysis of the SWOT for Tesla Motors, Inc
3.3.1 Strength
Tesla Inc. is one of the leading organizations in the car part of the United States. The car
business of US is one of the quickly developing divisions among the business circle. The
organization has sufficiently increased prevalence at the bleeding edge of electric vehicles
(Burns, Bush and Sinha 2014). Rather than conventional fuel run vehicles, the autos made by
Tesla Inc. keep running by the two elements gas and power. Additionally, the cars utilized by
Tesla utilize less fuel dissimilar to the conventional vehicles. Subsequently, it very well may be
seen the US government's mandates of mechanical low carbon outflow impact the Tesla
altogether which can be apparent as the organization utilize such progression within its business
advancement (Grant 2016). The unhindered commerce arrangement then again positively affects
the organization because of which the organization concentrates more on foreign markets.