Introduction
Companies that have global ambitions have to consider a multitude of factors and barriers that can possibly influence their success in the market. Tesla Inc. as one of the companies that have recently emerged as a global car seller is an example of such a company. The economic environment is one of those factors that can dramatically change the company’s performance and influence its success. Therefore, an appropriate response is needed to withstand the challenges of the macro-and microeconomic situation. The current report is going to explore the key impacts of micro-and macroeconomic factors on Tesla Inc. using PESTLE and SWOT analyses.
Positive and Negative Impacts of Macro Environment (P4)
The macro-environment is the environment in which businesses operate and, specifically, the factors on which businesses have limited or no influence (Bansal & DesJardine 2014). For instance, Tesla has a major competitor in the face of Nissan and its electric car, the Nissan Leaf. Tesla Inc. cannot undo its competitor and is unlikely to buy the competitor company in any reasonable situation under normal circumstances. For Tesla Inc., it may be a negative impact because Nissan Leaf is a highly popular and cheap electric vehicle that occupies a considerable portion of the market. On the other hand, for a customer, such a situation where a single car producer cannot change global competition in its favor is a positive circumstance. Competition usually creates lower prices, higher quality, and a variety of options.
However, there are other examples of macro-environment such as natural forces. Tesla cars like any other electric vehicles are very dependent on charging stations. If, as a result of a storm, certain power stations are offline, Tesla clients will be left without support. Therefore, companies have to plan such situations in advance and be mindful of the macro environment.
PESTLE model Applied to Tesla’s Macro Environment (M3)
Political Macro-Environmental Factors
Economic Macro-Environmental Factors
Social Macro-Environmental Factors
Technological Macro-Environmental Factors
Legal Macro-Environmental Factor
Environmental Macro-Environmental Factor
Impact of Macro and Micro Factors on Objectives and Decision-Making (D2)
Given such limited influence that Tesla Inc. has on the global macro environment, it has to adapt to all PESTLE factors and utilize micro factors to its advantage. An informed objective statement is one of the practices that can help Tesla prevail on the market. Both macro and micro factors are of significance in the process of forming an adequate objective statement. For instance, Tesla Inc. should consider macro-environmental economic factors such as the presence of major competitors in the face of BMW, Nissan, Audi, and others. Given the fact that, in the nearest future, these companies will not leave the market for electric vehicles, Tesla’s objective planning needs to include strategies of effective competition.
Micro factors such as limited distribution options abroad also need to be kept in mind. Tesla has no production capacities abroad and it has to serve the international demand through worldwide shipments, which incur additional costs. Such a burden influences the company’s ability to compete with electric vehicles produced by BMW in their domestic region such as the EU. The objective should, therefore, include strategies to address this issue. This example appears to explain the utmost significance of micro factors for an objective statement. Both micro and macro factors influence decision-making. A decision guided by one of the factors alone could be ill-chosen and lead to substantial losses. In addition, the company needs to view all possible PESTLE micro and macro factors to be successful (Ho 2014). Such an approach will allow informed decision-making. However, the limitation of such an approach lies in the fact that it consumes time and resources to gather necessary information. In addition, the information about macro factors can rapidly become irrelevant. Nonetheless, macro and micro factors assessed in full complexity can help Tesla make adequate goals and decisions.
SWOT analysis of Tesla (P5)
SWOT is a powerful tool that can grant a comprehensive outlook on a company providing information on its strengths, weaknesses, opportunities, and threats. It can assist decision-making by outlining areas where the company needs improvement inner structure improvement. In addition, it can tell if some external factors may influence its performance.
Strengths
Weaknesses
Opportunities
Threats
Interrelation of Strengths and Weaknesses with External Macro Factors (P6)
Strengths and weaknesses mainly represent the company’s internal attributes. Strengths are in the available resources the company could use to withstand the pressure of the factors that it cannot possibly influence. Weaknesses include the underused or underdeveloped areas of the company’s affairs that can potentially become useful tools in addressing external macro factors. The latter, in turn, can hinder or boost the performance of the company depending on Tesla’s ability to manage its resources and take a guided approach to decision-making and planning.
For instance, Tesla could utilize its main strength such as a positive media image to advocate globally for the advent of electric cars. Thus it could, to some extent, manipulate public opinion in order for this macro factor to become the contributor to Tesla Inc.’s success. Due to such advocacy, electric cars and Tesla will become linked in the minds of potential customers. By addressing its key weakness of charging stations through collaborating with local energy companies, Tesla could also link its name to bringing electric cars to a specific region and promote its cars more effectively. Again, public opinion and competition as macro factors could be turned in the company’s favor.
SWOT and Decision Making (M4)
Given the examples mentioned above, SWOT provides a range of opportunities for decision-making (Benefits and limitations of SWOT analysis 2016). This type of external-internal factor analysis allows making informed decisions based on the data gathered within the company, applied, and compared to the data about the environment. A decision guided by such a holistic model provides Tesla with an opportunity to tailor it to the current market situation, political, social, and other environments judging from the resources it has available and those that can possibly be available. Such a model considerably enhances planning capabilities as it presupposes reinforcing strengths and addressing weaknesses in order to counter threats and seize opportunities.
In addition, decisions guided by such a model are more likely to comprehensively predict and address near-future adverse events and profit from positive ones. For instance, Tesla could advance its products for the profitable middle-class segment in the regions with less competition due to its ability to produce charging stations.
Conclusion
All things considered, external factors could rarely be influenced by companies. Yet, utilizing SWOT and PESTLE analyses, a company such as Tesla Inc. could take advantage of and adapt to almost any situation, drawing upon its strengths and minding its weaknesses. External and internal factors are tightly linked and need to be considered in the process of decision-making in order to have a strategic advantage in the market.
Reference List
About Tesla n.d., 2018, Web.
Bansal, P & DesJardine, MR 2014, ‘Business sustainability: it is about time’, Strategic Organization, vol.12, no. 1, pp. 70-78.
Benefits and limitations of SWOT analysis 2016, Web.
Ho, JK 2014, ‘Formulation of a systemic PEST analysis for strategic analysis’, European Academic Research, vol. 2, no. 5, pp. 6478-6492
Moritz, M, Redlich, T, Krenz, P, Buxbaum-Conradi, S & Wulfsberg, J 2015, ‘Tesla Motors, Inc.: pioneer towards a new strategic approach in the automobile industry along the open source movement?’ in Management of Engineering and Technology (PICMET), 2015 Portland International Conference, Portland, OR, pp. 85-92.
Yang, M, Kim, D & Alexe, M 2018, ‘Flexo-photovoltaic effect’, Science, Web.