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INTERNAL AND EXTERNAL ENVIRONMENTAL ANALYSIS5of substitution and competitive rivalry addresses how competitors may affect the industry and thecompany’s strategic plan. If Tesla is able to gain a position where it can favorably influence all the factors the greater it is for them to earn above-average returns. External analysisHitt Ireland and Hoskisson (2015) stated “Most firms face external environments that are turbulent, complex, and global – conditions that make interpreting those environments difficult. To cope with often ambiguous and incomplete environmental data and to increase understanding of the general environment, firms complete an external environmental analysis” The external environmental analysis includes four parts which are scanning, monitoring, forecasting, and assessing. During the scanning phase the company should be able to identify any early signs of environmental changes or trends. Monitoring is continuously observing the environmental changes and trends. Forecasting is developing projections of what may happen and how quickly from the results from the scanning and monitoring phase. Assessing is determining the timing and the effects of the environmental changes and trends. Even though Tesla motors have been a very stable and successful company it is important for them to do an external analysis which willkeep them ahead of the competition. The company should be able to continuously adjust their plans and strategies to reflect the environment (Teik, 2013).Competitor BenchmarkingIn 2003, Tesla entered the well-established automobile industry to prove that electric cars could be better than gasoline-power cars, and now the company is the world's leading electric vehicle manufacturer. Tesla is in the electric vehicle (EV), luxury sedan, and the sport utility vehicle markets. The main EV competitors are General Motors, Ford Motor Company, Nissan
INTERNAL AND EXTERNAL ENVIRONMENTAL ANALYSIS6Motors, and Volkswagen. However, Tesla was able to enter the EV market at a lower cost than rival companies. Stringham, Miller, and Clark (2015) wrote, "The cost of developing the Tesla Roadster and Model S were around $140 million and $650 million whereas General Motors spent $1 billion developing its first electric, the EV1, and $1.2 billion developing the Chevy Volt,and Nissan has spent $5.6 billion developing its relatively low-performance electric cars" (p. 7, para. 2). The Model S competes in the middle luxury segment with the Mercedes-Benz S-Class, BMW 7 Series, Lexus LS, Audi A8 and Porsche Panamera. The Model S outsold the competitorsin 2013 as shown in figure 1 below. The market commonality with the rivals is high. Tesla sharesresource similarity with competitors but has a competitive advantage with the lithium ion battery.