PESTEL Analysis The PESTEL model provides a way to evaluate
The PESTEL model provides a way to evaluate, monitor, and scan important external factors and trends that may have an impact on the company. PESTEL is an acronym for political, economic, sociocultural, technological, ecological, and legal. Every company must critically understand how these factors will affect them in the short-term and long-term as well. Tesla is an electric car manufacturer located in California. The electric car industry, as well as other alternative fuel vehicles, are a very young and new component to the overall giant automotive industry. It is important that Tesla uses a PESTEL model to understand which opportunities will make them and break them.
The first factor analyzed is the political influences on the company. The political factors that influence Tesla include regulations within the car industry such as safety standards, however these must be met by all car manufacturers. Specific political influences on Tesla is that the government will give tax cuts or incentives to buy these electric vehicles because it is beneficial to the environment. For example, as stated in the case, a base Model S will receive a $7500 tax deduction, reducing the price to about $52000. One political factor that could be a threat is the global expansion and acceptance of the Tesla products, and the additional costs that come with them. Tesla stumbled when bringing their product to China because the price was too high, not enough charging stations, and limited technicians that can work on these advanced cars. It is going to take some time and resources to propel Tesla into every car market around the world.
The next factor in the PESTEL model is the economy. The current economy has a great impact on the car buying market. In 2008 financial crisis, car sales hit historic low as 11 million vehicles. This external factor had a negative impact on the entire industry. During Tesla’s first vehicle production, the roadster, the company drastically undervalued the cost of materials and labor which related in about $50,000 lost on every vehicle sold. In today’s society the economy has rebounded and stabilized. Therefore, governments are willing to invest in these companies of the future, which will result is cheaper and increased production over vital parts like the lithium batteries. This has resulted in the major gas companies to lower their prices and keep the traditional gasoline car buyer on the road. Most importantly, consumers will have the funds to spend on luxury, innovative, and high-quality cars like Tesla.
The sociological factors include environmental awareness, sustainability, and the future of our planet are great opportunities for Tesla. Tesla and its creator, Elon Musk, are focusing on producing a vehicle that will help save the planet and also work properly for its customers. People are attracted to Musk’s social awareness and his concern for the future of society. This leads into the technological factors that are both a thread and an opportunity for this new market. Tesla is the providing some of the newest and advanced technology within the car industry. Some of this technology includes self-driving cars, how and where the batteries will recharge, and at home or portable charging abilities. We are living in a time of highly accelerated technological advancements, which will ultimately help Tesla become one of the leading car manufacturers of the future.
The Ecological factor is what helped make Tesla what it is today. In today’s society people are concerned about the well beings of our planet, reducing greenhouse gases, and ensuring a sustainable future. Many countries have pledged to reduce selling gasoline only vehicles within the next 15 to 20 years. This is a huge opening for Tesla to reach these international markets with their electric vehicles. However, there is some competition from other sources of alternative fuels such as biofuels, hydrogen, and natural gas. The electric car still seems to be the best options.
Lastly are the legal factors that Tesla may face. Some of these factors are dealing with rules and regulations on these new technology and automotive safety. Other legal factors are how these vehicles are sold to the public. Currently Tesla is receiving backlash from dealerships because Tesla does not franchise or allow Tesla’s to be sold new anywhere besides their dealerships or online sales department. In conclusion, these PESTEL factors are significant to Tesla’s decision making and overall success as a company.
The SWOT analysis determines where the business stand. SWOT is an acronym for strengths, weaknesses opportunities, and threats. Elon Musk and Tesla are known for their high products differentiation in electric power train technology. They are providing some of the latest technology within the new release cars. With their cars, this created strong marketing policies and improved customer base as well. Tesla is outstanding their competitors by creating excellent performing vehicle. The Tesla Model S competes with the top foreigner’s brands like BMW and Mercedes Bens. According to the National Highway Traffic Safety, the Model S recorded the best safety test score ever.
After that is said, Tesla also has some of its weak areas in the company. When ordering a Tesla vehicle, no matter how much anyone is willing to pay. It takes about a solid year to be delivered. The wait time will make consumer look into another brand. In addition, Tesla cars are overpriced. Tesla also must pay shipping costs to deliver vehicles around the world. This is causing them to make a little less profit and increasing their assets. On the other hand, their debt is skyrocketing as they’re growing. Tesla has lost control of their financial goals and need to focus on how to profit more for the company.
The next factor of the SWOT analysis is opportunity. For the future, oil is becoming more expensive. The demand of electric cars is looking at a high growth in the industry. While technology is advancing, Tesla has the opportunity to create solar power technology. This will be a great way to create more profit. Major companies like Panasonic would like to sign with Tesla and this would give the company an opportunity to save 30% of the cost of production. Tesla are also working their way into the logistic industry. They are creating electric trucks and this will make the logistic market for energy storage market create revenue.
The major threat to Tesla is Nissan and other brand names like BMW and Mercedes Benz. They have many loyal customers and stable supplier base throughout the world. Also, Tesla is a young company which is still growing They’re facing companies that have been in the automobile industry for years. Tesla will be facing many challenges when it comes to searching for alternative suppliers. Tesla main concentration is on the United States, but what will happen if they enter the global market? Tesla will be drained out if they get into China, India, Russia and other high populated countries. The fact the foreign currency exchange rates, it will make Tesla seem very expensive then it is now. On the other hand, Tesla will decrease in revenue because when the currency rates are calculated in terms of a dollar.
The VRIO analysis is an evaluation of the company’s resource and its competitive advantage. The VRIO is an acronym for value, rarity, imitability, and organization. Tesla’s products have come in strong in the market to change the automobile industry. The company has well rounded their organization in manufacturing, charging network, self-learning cars, and Tesla stores. The whole strategy focusing on the environment and going green is a unique idea. They have resolved the energy demand challenges for the entire world.
The value of Tesla’s primary focus is to the change the energy products. They’re working on the batteries to improve. For an automobile company to work on an industry which help them take a lead. They will also work on other technology to advance for future’s creations within the car model. They will need to work of the value of the energy products to increase the revenue at Tesla. Tesla wants to advance in the products they work on it in the long term they can succeed.
The rarity for another company to work as Tesla did, it will be very difficult for them to accomplish. Tesla have spent large amount of money and effort to reach the current stage in which is difficult to replicate by other companies. It will be a financial risk for other companies to follow Tesla’s lead. Tesla will be facing a major loss for the company. Tesla has a major debt but they will soon improve on their gadgets which will help them succeed. Tesla out burns every automobile company due to their going green.
The organization of Tesla showing strong leadership and improvement for the culture. The practices are indeed to make the company capable obtain their advantage. Elon Musk the CEO of Tesla had lead the team with get leadership. The organization has a great competitive advantage in the long run. The Tesla stores are used to educated consumers in the departments to stay updated with new information. They study the environment press to see how they can succeed in their goal for new solar power products. They organization the brand so, at Tesla station only can be used by Tesla vehicles.
The company well rounded their organization in manufacturing, charging network, self-learning cars, and Tesla stores. The analysis of Tesla is a multitrillion dollar company. Elon Musk had change the game a lot and is focusing on more to come in the future. He is known as the real iron man in real life. This is the internal and external analysis on Tesla. Lastly are the legal factors that Tesla may face. Some of these factors are dealing with rules and regulations on these new technology and automotive safety. Other legal factors are how these vehicles are sold to the public. Currently Tesla is receiving backlash from dealerships because Tesla does not franchise or allow Tesla’s to be sold new anywhere besides their dealerships or online sales department. In conclusion, these PESTEL factors are significant to Tesla’s decision making and overall success as a company.