expansion of automobile and renewable energy demand that continues to attract heavy investment in alternative energy sources (Diamond, 2019). The second opportunity is heavy investments in renewable energy and alternative automobiles to preserve the environment by reducing emissions from internal combustion engine cars. This has led to a significant change in attitude towards alternative energy for running homes like solar panels and electric cars (Pettinger, 2015). Another opportunity arising for Tesla is diversification that could help the company in the production of different brands that meet the level of innovation to attract a competitive advantage in the market. (b) Threats Facing Tesla, Inc. Despite the opportunities that are existing for Tesla, the corporation is experiencing some threats to its long-term performance and market penetration. First, there is high competition in the automobile companies that could threaten the survival of Tesla particularly with high
INTERNAL AND EXTERNAL ANALYSIS OF TESLA6production capacity and global outreach of other alternative brands. These external factors threaten the survival of the business by maximizing strengths and opportunities to overcome these threats (Diamond, 2019). The second threat is fluctuation in material prices. Material priceshave a strong impact on the cost of production that could attribute to an escalation in cost of production resulting in a decline in profitability and increase in products prices due to fluctuationin the price of lithium for energy storage products manufacturing for both solar panels and automobile (Mangram, 2012). Dealership regulation is another threat facing Tesla since it currently sells its products directly to the consumers without the involvement of dealers resultingin a general increase in profitability by eliminating dealership commissions. Macro-Environment Analysis: PEST AnalysisThe PEST analysis evaluates the macroenvironment factors that are external to the firm and market. These factors include political, economic, social, and technological. These factors are discussed below on their impact on Tesla. (a) Political factors– the political factors focus the attention on governmental impacts on the macroenvironment of a business (Pettinger, 2015). For Tesla, the political dimension has a significant impact on its survival and performance since conventional vehicles are dominating the market. The political influence can help in shaping the automobile and energy industry by shifting the attention to government subsidies and incentives to alternative products to discourage overconsumption of fossil fuels that harms the environment. These incentives and subsidies could help the corporation to reduce the
INTERNAL AND EXTERNAL ANALYSIS OF TESLA7overall cost of production, which could increase the affordability of its brands. Such measures require a policy to regulations that could be implemented through advocacy andpersuasion that are key aspects of political factors.