MGT501 Business Environment Assessment Assignment One – Environment Scan Part A Individual/Group Individual Length 1500 words Learning Outcomes This assessment addresses the following subject learning outcomes: a) critically evaluate the effect of the ext

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Home >Biology homework help >MGT501 Business Environment Assessment Assignment One – Environment Scan Part A Individual/Group Individual Length 1500 words Learning Outcomes This assessment addresses the following subject learning outcomes: a) critically evaluate the effect of the ext

Tesla Environment Scan Report

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Introduction

Founded in 2003 by a group of engineers that produces electric vehicles as well as a huge variety of clean energy generation and storage products.

Introduction

Source: Tesla (nd)

The financial statement for the second quarter of 2018 revealed 717 million loss

Today, Tesla released its financial statements for the same quarter, and revealed the biggest loss in the company’s history: $717 million. But that was balanced by some good news: $2.2 billion in cash reserves, which is higher than many analysts were expecting, and means there's money on hand to keep building without borrowing more.

https://www.wired.com/story/tesla-q2-2018-earnings-call/

Microenvironment Factors

Political

Source: David (2018)

Political

The CEO of Tesla donated $40K to Republican PAC.

U.S–China trade war, the costs of shipping rose by 40% making it difficult to exports its cars to China.

Economic

Tesla tax is expected to raise the price, Ex: Model X, by 70,000 kroner ($8,850).

Economic

In Australia Tesla is still very expensive.

In China, the taxes are around 40%.

Source: Bailey (2018); Nelson (2017)

Social

Technological

Tesla cannot be predicted is regarding natural resources available.

Technology come at a cost which will be the final price of the product.

Tesla cars are zero-emission and people are seeking for a lifestyle with low-carbon emissions and preferring renewable energy sources.

Source: Walsh (2014)

Environmental

Tesla claims to be environmentally friendly.

Some researches show the impacts of electric vehicles which could possibly be a threat in the future.

Ex: batteries (from mines), C02

Source: Wade, 2016.

Legal

One of the biggest challenges that Tesla faces regarding legal issues is due to the fact they do not have the right to sell its cars directly in 8 states in the U.S.

Source: Lambert (2018).

Five Forces Model

Threat of Substitition

New Entrants

Competitive Rivalry

Substitutes

- High level of competition;

- customer have a huge variety to choose from.

- EV’s being sold to the mass market

- Developing industry with high growth expected

- High fixed costs

- Decrease of overall profitability

Buyers

Competitive Rivalry

The Bargaining

Power Customers

- Few suppliers

- High knowledge of technology

- Quality improvement

- Switching costs

- Price performance

- Hybrids and fuel cars available

- Large capital investments

- Government policy

- New technologies from European companies

Suppliers

The Bargaining Power of Suppliers

New entrants

Macro-economic Factor

GDP

Tesla’s continuing need for cash adds a degree of financial fragility.

In 2008 Tesla almost went bankrupt

U.S GDP grew up to 0,7% in 2017; the slowest in 3 years.

If the U.S do not grow at an acceptable rate, Tesla will suffer the consequences of economy;

Source: Hahn (2017).

* Tesla’s continuing need for cash adds a degree of financial fragility.

* In 2008 Tesla almost went bankrupt * U.S GDP grew up to 0,7% in 2017; the slowest in 3 years

* If the U.S do not grow at an acceptable rate, Tesla will suffer the consequences of economy;

Unemployment

Source: Okane (2018).

Fire 9%

(Around 400 – 700 workers)

Restructure operations

To boost profitability

Unemployment:

* Tesla decided to fire around 9% of its workforce (around 400-700 workers); Tesla claimed it was part of its “company-wide restructuring”

* Tesla said that these cuts will not affect production

* Speculations were raised regarding the fact that the company needs to cut some expenses

Inflation

Tesla to generate revenue of $ 117-171 annually in 10 years to maintain the current price

Source: Cooper (2018).

the average selling price of a competitor as BMW requires between 2.3 - 3.4 million vehicle sales per year

Monitoring current

inflation

Tesla needs 20-29%

of the market

in the field of premium vehicles or access the non-premium section

Market

pricing expects

*Market pricing expects Tesla to generate revenue of $ 117-171 annually in 10 years to maintain the current price*Monitoring current inflation, the average selling price of a competitor as BMW requires between 2.3-3.4 million vehicle sales per year*Tesla needs 20-29% of the market in the field of premium vehicles or access the non-premium sectionReference: https://seekingalpha.com/article/4202179-stock-prices-suggest-teslas-future

Trade and Trade barrier

The US-China trade war will end the profit from import products;

Source: Bloomberg (2018)

Products build in US are expected to rise 25%  This decision threatens the European car market

US President put a 34$ Billion Tarif in Chinese imports; China decided to do the same on cars

Every car produced in US will have an extra 40%

Trade and Trade Barriers

* The US-China trade war will end the profit from import products;

* Products build in US are expected to rise 25% * This decision threatens the European car market;

* US President put a 34$ Billion Tarif in Chinese imports; China decided to do the same on cars

* Every car produced in US will have an extra 40%

https://www.google.com.au/amp/s/www.bloomberg.com/amp/news/articles/2018-07-01/trade-war-is-giving-bmw-ford-and-tesla-a-whiplash-in-china

Exchange Rates

Source: Campbell (2018)

The currency rate between AUS Dollar and US Dollar affected the price of Model S

In April 2015, the exchange rate was about 6%* Furthermore, recent adjustments raised the praise for more 4.2%

The total price of a Model S in Australia is 102,400 + luxury car tax = 106,900

While in US the start price is around $94,000

* The currency rate between AUS Dollar and US Dollar affected the price of Model S

* In April 2015, the exchange rate was about 6%* Furthermore, recent adjustments raised the praise for more 4.2%

* The total price of a Model S in Australia is 102,400 + luxury car tax = 106,900

* While in US the start price is around $94,000

https://www.caradvice.com.au/355386/tesla-model-s-prices-rise-due-to-australian-currency-struggles/

Globalization

Testla aims for global standardization to meet the pressing demands of cost reduction.

The increase in 'perceived value' of Tesla products by customers is the winning strategy for the global recognition of the futuristic brand.

This perception is culturally rooted and supported by innovations such as: Superchargers arrangement and a global network of service centers that follows the customer both in the purchase phase and subsequently.

Source: Yuying, et.al (2018)

*Testla aims for global standardization to meet the pressing demands of cost reduction.

*The increase in 'perceived value' of Tesla products by customers is the winning strategy for the global recognition of the futuristic brand.

*This perception is culturally rooted and supported by innovations such as: Superchargers arrangement and a global network of service centers that follows the customer both in the purchase phase and subsequently.

Reference: https://globalmarketingprofessor.com/teslas-international-expansion-strategy/

Supply Chains

The “production hell” occurred because the subcontractor was not able to manufacture correctly the batteries.

It is not the first problem with supply chains.

In 2016, an investigation was carried out : German manufacturing company.

The company hired 140 workers and paid them around 5$ per hour

Source: Simpson (2018)

Global Supply Chain: * The “production hell” occurred because the subcontractor was not able to manufacture correctly the batteries * The software had to be re-written and mechanical elements redone * It is not the first problem with supply chains* In 2016, an investigation was carried out regarding a German manufacturing company, Eisenmann* The company hired 140 workers and paid them around 5$ per hour in order to build a paint shop for Tesla Model 3 in California

Tesla SWOT Analysis

Leader in the Ev's sector;

focus on eletric car;

Strong CEO and brand awareness;

Environmental concern;

EV market expanding;

Mass market production;

Yearly production limited;

Infrastructure inadequacy;

Chinese taxation on importations;

Competition;

CEO reputation;

OPPORTUNITIES

THREATS

WEAKNESSES

STRENGHTS

Recommendations

Problems

Solutions

Money: Tesla spends more money than it can make.

Lawsuits: Tesla is facing several lawsuits (taxes not paid, car malfunction, and employment)

Establish a production pattern that will generate revenue.

Make alliances with governments to get less taxes.

Source: Sapienza (2018).

* The biggest problems that Tesla is facing are: 1. Money: Tesla spends more money than it can make 2. Lawsuits: Tesla is facing several lawsuits regarding taxes not paid, car malfunction, and employment 3. Production: Tesla faced major problems with the production of model 3, delaying deliveries and generation more expenses 4. Investors interest: Tesla has big promises for the future but in order to keep its investors Tesla has to fulfil its promises* Firstly, Tesla needs to solve the problem regarding production which affects the money and production topic; * It is necessary to establish a production pattern in order to maximise the production of model 3 and deliver it to the buyers; * By delivering all the pre-ordered cars, Tesla will generate revenue and perhaps generation, even if in a small amount, revenue * Additionally, it is necessary to deliver cars that are 100%, opposed to Model S which experienced some malfunctions and glitches * Finally, in order to keep its shareholders, the main source of money for Tesla, it is necessary to fulfil the promises; Tesla needs to create the image of a trustworthy company

Recommendations

Problems

Solutions

Production: Tesla faced major problems with the production of model 3, delaying deliveries and generation more expenses.

Investors interest: Tesla has big promises for the future but in order to keep its investors Tesla has to fulfil its promises

Deliver cars opposed to Model S

it is necessary to fulfil the promises

Source: Sapienza (2018).

Conclusion

Some wrong choices are putting in risk the reputation and market share of this company:

the constant losses in the market share

polemics regarding the CEO

Tesla needs to apply the recommendations and re-establish itself as the most popular electric vehicles company.

Thanks

References

Bailey, M. (2018). Tesla Australia makes a profit, despite it all. Retrieved from https://www.afr.com/business/transport/tesla-australia-makes-profit-despite-parents-loss-and-poor-electric-car-market-20180606-h110qh

Bloomberg (2018). BMW, Ford and Tesla brace for ‘Nightmare’ Tariff whiplash. Retrieved from https://www.bloomberg.com/news/articles/2018-07-01/trade-war-is-giving-bmw-ford-and-tesla-a-whiplash-in-china

Berger, T. (2014). Where's the real value in Tesla’s patent pledge?.Retrieved from https://theconversation.com/wheres-the-real-value-in-teslas-patent-pledge-30410

Business dictionary online. (n.d). Retrieved from http://www.businessdictionary.com/definition/microenvironment.html

Bhardwaj (2018). Tesla added twice as many employees in 2018 as it now plans to cut. Retrieved from https://www.businessinsider.com.au/teslaCgrewCrapidlyCnowCcuttingC 4000CemployeesCchartsC2018C6?r=US&IR=T

Campbell, M. (2018).Tesla model S prices rise due to Australian currency struggles. Retrieved from https://www.caradvice.com.au/355386/tesla-model-s-prices-rise-due-to-australian-currency-struggles/

Cooper, J. (2018). What stock prices suggest about Tesla's future. Retrieved from https://seekingalpha.com/article/4202179-stock-prices-suggest-teslas-future

References

Carter, S., & Martin, E. (2018). If you invested $1,000 in Tesla in 2010, here’s how much you’d have now. Retrieved from https://www.cnbc.com/2018/08/08/if-you-invested-1000-dollars-in-tesla-in-2010-heres-what-youd-have-now.html

Churchill, F. (2017). Suppliers blamed for Tesla Model 3 delays. Retrieved from https://www.cips.org/en-AU/supplymanagement/news/2017/november/suppliers-blamed-for-tesla-model-3-delays/

Daboush, G. (2018).$5 billion investment. Retrieved from http://fortune.com/2018/10/17/tesla-factory-china-shanghai/

David, J. (2018). Elon Musk insists he's neither Democrat nor Republican, as political contributions come under fire. Retrieved from https://www.cnbc.com/2018/07/15/elonC muskCdownplaysCgopCdonationsCtoutsCenvironmentCandChumanCrights.html

Ell, K. (2018). Too much competition in electric cars means Tesla stock will drop to $84 by end of 2019: Analyst. Retrieved from https://www.cnbc.com/2018/04/11/too-much-competition-tesla-stock-will-drop-to-84-by-2019-analyst.html

Hahn, L. (2017). The Tesla Inc (TSLA) Stock Factor everyone ignores: The Economy. Retrieved from https://investorplace.com/2017/05/the-tesla-inc-tsla-stock-factor-everyone-ignores-the-economy/#close

Harpaz, J. (2013). Tesla Success Fuelled by U.S. Innovation Policy?. Retrieved from https://www.forbes.com/sites/joeharpaz/2013/10/18/teslaCsuccessCfueledCbyCuCsC innovationCpolicy/amp/

References

Higgins, T. (2018). Behind Tesla’s Production Delays: Parts of Model 3 Were Being Made by Hand. Retrieved from https://www.wsj.com/articles/behind-teslas-production-delays-parts-of-model-3-were-being-made-by-hand-1507321057?mod=djemlogistics

Kim, T. (2018). Elon Musk admits Tesla will have to turn a profit one day. Retrieved from https://www.cnbc.com/2018/06/12/elonCmuskCadmitsCteslaCwillChaveCtoCturnCaCprofitC oneCday.html

Isidore, C. (2018). Tesla has a problem. Maybe a big problem. Retrieved from https://money.cnn.com/2018/03/28/news/companies/tesla-model-3-cash- crunch/index.html

Lambert, F. (2018). Tesla is currently fighting for the right to sell its cars directly in 8 states. Retrieved from https://electrek.co/2018/02/14/teslaCpushingCrightCtoCsellCcarsC directlyCstates/

Lopez, L. (2018). Tesla employees describe what it's like to work in the gigantic Gigafactory. Retrieved from https://www.businessinsider.com.au/tesla-workers-describe-working-in-gigafactory-2018-8?r=US&IR=T

Meyer, P. (2018). Tesla Inc.’s Organizational Structure & Its Characteristics (Analysis) C Panmore Institute. Retrieved from http://panmore.com/teslaCmotorsCincCorganizationalCstructureCcharacteristicsCanalysis

Matousek, M. (2018). Some new Tesla cars are being delivered with flaws, and owners say getting them fixed is a painful process. Retrieved from https://www.businessinsider.com.au/some-tesla-customers-experience-service- problems-2018-8?r=US&IR=T

Matousek, M. (2018). Tesla fires back after a scathing report alleges the company underreported injuries. Retrieved from https://www.businessinsider.com.au/tesla-responds-to-report-claims-about-misreported-injuries-factory-2018-4?r=US&IR=T

References

OKane, S. (2018). Tesla’s toughest competition ever was on display in Geneva. Retrieved from https://www.theverge.com/2018/3/10/17096608/tesla-jaguar-porsche-audi-evs-geneva-motor-show-2018

Okane, S. (2018). Tesla lays off thousands of workers as part of a ‘company-wide restructuring’. Retrieved from https://www.theverge.com/2018/6/12/17454004/elon-musk-tesla-layoffs-restructuring

Rains, B. (2018). Tesla Revenue. Retrieved from https://finance.yahoo.com/news/lookCteslaC aposCtslaCrevenueC155203507.html

Sapienza, J.D (2018). Tesla in trouble? here's why the company is in danger of failing. Retrieved from https://www.cheatsheet.com/money-career/tesla-in-trouble-in-danger-of-failing.html/

Stewart,J. (2018). Tesla loses more money than ever, but says profits are coming. Retrieved from https://www.wired.com/story/tesla-q2-2018-earnings-call/

Simpson, P. (2018). What is behind Tesla's supply chain woes?. Retrieved from https://www.cips.org/en-AU/supply-management/news/2017/december/whats-behind-teslas-supply-chain-woes/

Wade, L. (2016). Tesla's Electric Cars Aren't as Green as You Might Think. Retrieved from https://www.wired.com/2016/03/teslasCelectricCcarsCmightCnotCgreenCthink/

Walsh, T. (2014). Investing in Socially Responsible Companies: Tesla Motors Inc VV The Motley Fool. Retrieved from https://www.fool.com/investing/general/2014/11/01/investingCinC sociallyCresponsibleCcompaniesCteslC2.aspx