External environment

Discuss about the Environmental Analysis of Tesla Motors.

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).

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).

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

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

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,
• 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

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 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 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-

• 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.

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. (11^th). Cengage Learning

Jobber, D. & Ellis-Chadwick, F., (2013). Principles and Practice of Marketing. (7^th) Maidenhead: McGraw-Hill Education

 Kachaner, N., Lindgardt, Z. & Michael, D. (2011). Innovating low-cost business models. Retrieved on 19^th October 2017 from https://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 19^th October 2017 from https://www.hollywoodreporter.com/news/tesla-model-s-morgan-freeman-395593