Strategic Management 2: Environmental Analysis of Tesla Motors

This report provides a strategic audit of Tesla Motors, focusing on its external and internal environments. It begins with an introduction to Tesla Motors, an American automobile company specializing in electric vehicles, and discusses the increasing demand for sustainable vehicles globally. The report then delves into the external environment, analyzing general factors such as technological advancements, political and legal factors, demographic changes, and economic conditions. It also applies Porter's Five Forces to assess the competitive landscape. The internal environment section examines Tesla's resources, capabilities, and value chain analysis, highlighting its strengths and weaknesses. Key resources include financial assets, production facilities, and brand value, while core capabilities encompass power train development and brand management. The value chain analysis covers inbound and outbound logistics, operations, marketing, and sales. The report concludes with a summary of Tesla's strengths, such as its technological assets and global charging infrastructure, and weaknesses, including high R&D expenses and limited manufacturing volume. References are provided for further research.

Running Head: Strategic Management 1
Environmental Analysis of Tesla Motors

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Contents
Introduction......................................................................................................................................3
External environment.......................................................................................................................3
General environment....................................................................................................................3
Porter’s five forces.......................................................................................................................3
Competitive environment.............................................................................................................4
Internal environment........................................................................................................................5
Resource and capabilities.............................................................................................................5
Value chain analysis.....................................................................................................................5
Strengths and weakness...............................................................................................................6
References........................................................................................................................................7

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Introduction
This report is all about the strategic audit of a company. or the discussion, company Tesla
Motors is taken. Tesla Motors is the American Automobile company which is manufacturing and
designing the electric cars and vehicles. Tesla Roadster manufactured by Tesla was the electric
sports car that followed other electric and luxury vehicles. In current time, Tesla is operating at
the global level including the major markets of America, Asia and Europe. It is observed that the
demand for electronic and sustainable vehicle is increasing continuously and it is increasing the
opportunity of the companies like Tesla for manufacturing innovative products. Now, Tesla has
better chances to expand in various countries like India, New Zealand, and Dubai and in many
countries. This report focuses on the external and internal environment analysis of Tesla for
successful business operations (Miller, 2012).
External environment
General environment
Current market situation of the company Tesla Motors can be analyzed by various
analyses such as Porter’s five forces, SWOT analysis etc. In case of general environment
analysis, there are some factors i.e. development of technologies, legal and political factors,
changes in the demography, economic factors which impact on the business operations and
growth of the company. The political factors impact on the electric car manufacturing company
including laws and rules set by the government. These rules can impact on the manufacturing
and distribution of the motor vehicles. Demographic factors include country barriers that impact
the marketing of the products in all over the world (Andrews & Johansen, 2013).
Porter’s five forces
Threats of new entry-
 High level of knowledge is expertise is needed,
 No economies of scale because of low volume production,
 Need high capital investment to enter, and
 Companies with high economic power can easily enter in market

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Bargaining power of buyers-
 High level of competition creates moderate choice for customers,
 Low choice in terms of design, price and functionality, and
 Buyers are expected to increase for electric vehicle in future
Bargaining power of suppliers-
 Bargaining power of suppliers is moderate,
 Limited number of suppliers, and
 Raw material is competitive landscape for suppliers (Conaty, 2016)
Threats of substitute-
 Moderate threat of substitute products,
 Substitute of fuel and hybrid cars,
 Slow technological breakthroughs in the electronic vehicle industry, and
 Consumers are price sensitive so, they do not differentiate in the immediate value (Hill,
Jones & Schilling, 2014)
Competitive rivalry-
 Competitive rivalry in the industry is high,
 Some successful competitors in the electronic vehicle market,
 Industry is on the developmental stage,
 Sales of electric vehicle is expected to grow at global level, and
 Intensity of rivalry is likely to increase
Competitive environment
The competitive environment of Tesla Motors can be analyzed by understanding the
available opportunities and threats in the automobile market.
Opportunities-
 Marketing of electric vehicle is in the developing stage so, company Tesla has
opportunity to expand its business in the international market,

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 Further, the company can operate collaboratively with the other companies such as
Daimler and Toyota, and
 The product electric vehicles are environment friendly so, the company would be able to
fulfill the environmental policies.
Threats-
 New companies are entering in the automobile industry and these companies are
increasing strong competition in the market,
 With the development of market, the new market research can change the current trend of
the industry, and
 Further, the rules and regulations imposed by the government may impact negatively the
business operations of the company
Internal environment
Resource and capabilities
Tesla motors are operating in the manufacturing and distribution of electric vehicles. For
the company, key resources are financial resources, showrooms, production plant, service
centers, charging stations i.e. superchargers, IPR (power trains), brand value, alliances with other
auto makers and key employees. These resources are helpful in the growth and success of the
company. In terms of capabilities, company is capable in many areas. Key capabilities of Tesla
Motors are Power train development, brand management, strong public relations, effective
financial management, innovative marketing and sales strategies, market leadership in terms of
electronic vehicles and mass production of electronic vehicles at the global level. These core
capabilities of Tesla Motors help the company to stay competitive in the global market (Clausen
et al, 2012).
Value chain analysis
Value chain analysis of Tesla Motors includes three activities i.e. inbound logistics,
outbound logistics and operations. The inbound logistics of the company includes supply chain
activities, business activities, and negotiation markups with the distributors and dealing with the
suppliers etc. In the operations part of Tesla Motors includes manufacturing, management of

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business and distribution of products. Outbound logistics of the Tesla Motors includes set of
products and facilities, competitive advantage, product distribution with highest standards, and
offering products to the customers etc (Jobber & Ellis-Chadwick, 2013). In the part of the
marketing and sales, Tesla Motors includes marketing actions to add value in the products.
Along with this, it also includes marketing teams to provide effective products and services.
There are the customer service members to deal with the product related issues. Tesla Motors has
well developed infrastructure to provide effective services to the potential customers
(Akpoyomare, Adeosun and Ganiyu, 2012).
Strengths and weakness
Strengths-
 Physical and technological assets such as intellectual property and its factories,
 Global charger infrastructure and component manufacturer for various automobile
manufacturers and electric vehicles in the market i.e. BMW, Mercedes-Benz and Toyota,
 High level of confidentiality,
 Low marketing expenditure by the company, and
 Exclusive electronic vehicle manufacturer (Kachaner, Lindgardt & Michael, 2011)
Weaknesses-
 Difficult to retain the profit because of R&D expenses which are the cause of losses,
 Low manufacturing volume in Tesla company,
 Negative incidences may negatively impact on the business operations of the company,
and
 Company has limited funds to introduce and launch new products in the market.

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References
Akpoyomare, O., Adeosun, L. and Ganiyu, R. (2012). Differentiation and Positioning Strategy:
A Toss of the Same Coin: International Journal of Management and Sustainability. 1(2).
pp.53—65
Andrews, R., & Johansen, M., (2013). Organizational Environments and Performance: A Linear
or Nonlinear Relationship: Public Organization Review. 12 (2). pp.175-189.
Clausen, T., Pohjola, M., Sapprasert, K. & Verspage, B., (2012). Innovation Strategies as a
Source of Persistent Innovation: nIndustrial and Corporate Change. 21 (3). pp.553-585.
Conaty, P., (2016). International Expansion in the Retail Industry: A Multi-Case Study on
Strategic Expansionary Variables.
Hill, C., Jones, G. & Schilling, M., (2014). Strategic management: Theory & Cases: An
Integrated Approach. (11th). Cengage Learning
Jobber, D. & Ellis-Chadwick, F., (2013). Principles and Practice of Marketing. (7th)
Maidenhead: McGraw-Hill Education
Kachaner, N., Lindgardt, Z. & Michael, D. (2011). Innovating low-cost business models.
Retrieved on 19th October 2017 from
http://www.emeraldinsight.com/case_studies.htm/case_studies.htm?
articleid=1911692&show=html
Miller, D., (2012). Is the Tesla Model S the First Sexy Green Car. Retrieved on 19th October
2017 from http://www.hollywoodreporter.com/news/tesla-model-s-morgan-freeman-
395593

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