The Firm is Tesla Motors 1.Are any changes taking place in the macro environment

Question

The Firm is Tesla Motors

1.Are any changes taking place in the macro environment that might have a positive or negative impact on the industry in which your company is based? Apply the PESTEL framework to identify which factors may be the most important in your industry. What will be the effect on your industry?

2. Apply the five forces model to your industry. What does this model tell you about the nature of competition in the industry?

3. Identify any strategic groups that might exist in the industry. How does the intensity of competition differ across the strategic groups you have identified?

4. How dynamic is the industry in which your company is based? Is there evidence that industry structure is reshaping competition, or has done so in the recent past?

Explanation / Answer

1. PESTEL analysis of Tesla motors.

a. Political:- American governments have great influence for electric cars in main stream public. Due to environment friendly options government is also promoting such type of cars. Department of Energy grants US$465 million loan to Tesla.

b. Economic :- The cost of operating a vehicle is increasing mainly due to rise in fuel cost. As growth rate is marked fair in this segment and other economic factors also boost growth of this segment. Government also offers rebates and insurance companies’ offers discounts on auto insurance for electric vehicle.

c. Social: - Tesla’s awareness to climate changes & low carbon footprint in production. Promotion of changes in energy policies by government. Declining preference of petroleum fuel boost is growth in the industry.

d. Technological: - Due to high technology driven market Tesla is leading the markets with new and uniqueness in its products. In USA the Department of Transportation has created charging stations to support such initiatives.

e. legal :- as it emits zero carbon dioxide so very less chance to get into any legal issues.

f. Ecological :- As world is moving towards go green concept so people awareness in this field will increase its demand.

2. Porter’s Five-Force analysis on the motors car industry :-

1. Threat of new entrants:-

   a. existing player can give competition by reducing their price.

   b. high cost of entry.

   c. saturated industry very less place for small players to enter.

2. Threat of Substitutes:-

    a. only few substitutes in market available.

    b. cars can be substituted by local public transport options.

3. Bargaining Power of Suppliers:-

     a. Low bargaining power due to few suppliers in this segment.

4. Bargaining power of Buyers:-

     a. Tesla motors don’t sell products in bulk.

     b. Do not have standard products. Tesla automobiles are very unique in the industry.

      c. buyer power is extremely low due to few competitors.

5. Rivalry among Existing Players:-

     a. rivalry is very high due to large number of players.

     b. intense pricing wars.

     c. The fixed costs are extremely high in this industry. This makes it hard to leave the industry.

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