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presentation_answer.pptxEXTERNAL ENVIRONMENT ANALYSIS: SOLARCITY
Student’s Name
Institution
Company Overview
SolarCity is an American corporation that operates in the energy industry
The company specifically concerns itself with solar power systems
It designs, funds, and installs the systems
It believes in green energy and is committed to achieve it
SolarCity is a business organization that primarily deals with solar energy; it installs the systems.
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Industry analysis
The energy industry is very significant in the modern world
Everybody needs energy because it is a necessity
It is a competitive industry many businesses have entered in it
Green/renewable energy is a priority
The energy industry is competitive due to the increase in interest. Companies are competing to come up with renewable energy sources that do not pollute the environment.
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Competitive analysis
Solar City operates in a very competitive business considering the number of competitors that it has
Top competitors of the company include Power Assets Holdings and Brookfield Renewable Partners
Effective strategies are needed to survive (Freeman, 2010)
SolarCity runs its business in a very competitive business environment. One of the top competitors is Brookfield Renewable Partners. They operate in the same industry and target similar customers. It is necessary to achieve a competitive advantage to be successful in this competitive industry.
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Techniques analysis
PESTEL
The company is affected by political conditions because they determine the stability of the markets
Technology also plays a role because it determines the equipment utilized
Legal factors affect the rules and regulations
Political factors affect how SolarCity operates because they dictate the stability of the market. Economic factors also have a role to play in the sense that they determine how much the business invests in different areas. The company is also affected by the social factors because it has to operate in a way that is socially acceptable. It needs to consider the culture of the society in which it operates. With respect environmental factors, SolarCity has put in measures to make sure that the environment is conserved. It takes into account renewable energy and that is what its strategy is all about. Lastly, the legal factors require the company to operate with respect to the existing rules and regulations.
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Five Forces
This analyzes the level of competition within an industry (Kumar & Sharma, 2000)
The forces include; bargaining power of suppliers, threat of substitutes, bargaining power of buyers, threat of new entrants, and industry rivalry
The five forces affect the external environment of SolarCity in various ways. The bargaining power of suppliers determines the ability of the company to get raw materials for its operations. The threat of substitutes has made the company to produce high-quality products but sell them at affordable rates in a move meant to attract and retain its customers. Buyers also have a role to play in the external environment of the business. The company needs to meet them at their points of needs so that they are maintained and not lost to competitors. The company also faces the threat of new entrants and this means that competition will be tougher. This forces the business to maintain better relationships with its customers so that they are loyal despite new entrants. Lastly, the company is faced by industry rivalry and this is basically from existing competitors. It needs to make use of effective strategies in order to remain competitive in the industry.
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SWOT (OT)
The SWOT analysis looks at the environment in which a business operates (Bohn, 2009)
The company is faced by opportunities and threats from the external environment
It has the opportunity of expanding to new markets but also faces the threat of competition
One of the greatest opportunities that SolarCity has is the expansion into new markets. There are markets that the business has not yet set foot; this is a great opportunity for moving forward. Despite this, there is the threat of competitors. Many companies are interested in the energy industry and this is a threat because the number of customers per company is likely to reduce. It is necessary for businesses to focus on quality products and services so that customers are maintained.
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EFE
Below is SolarCity’s EFE matrix
| Opportunities | Weight | Rating | Weighted Score |
| Market expansion | 0.20 | 2 | 0.40 |
| Environmental conservation | 0.25 | 2 | 0.50 |
| Partnering | 0.15 | 2 | 0.30 |
| Threats | |||
| Stiff competition | 0.20 | 3 | 0.60 |
| Limited investors | 0.20 | 2 | 0.40 |
| Total Weighted Score | 1.00 | 2.20 |
The matrix summarizes the evaluation of the company’s external factors.
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CPM
Below is the CPM between SolarCity and Brookfield
| SolarCity | Brookfield | ||||
| Critical Success Factors | Weight | Rating | W/Score | Rating | W/Score |
| Advertising | 0.20 | 3 | 0.60 | 2 | 0.40 |
| Competitiveness | 0.25 | 3 | 0.75 | 3 | 0.75 |
| Management | 0.30 | 4 | 1.20 | 3 | 0.90 |
| Product Quality | 0.25 | 4 | 1.00 | 2 | 0.5 |
| Total | 1.00 | 3.55 | 2.55 |
The CPM compares SolarCity with its close competitor Brookfield.
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Trends in the industry
The energy industry is getting more focused on renewable sources (Kalogirou, 2013)
Environmental conservation is at the center of the strategies
The industry is making efforts to engage environmentally-friendly processes
The general trend in the energy industry is the idea that companies are focused on sustainability and environmental conservation.
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Areas of uncertainty
Sustainability of the areas related to the trends
To remain competitive, business must adjust their strategies
It is not sure whether or not environmental conservation will be achieved
The greatest area of uncertainty is the concern about whether or not the sources of energy will be sustainable. It is also uncertain whether or not the environment will be effectively managed. This makes it possible for businesses to adjust their strategies.
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References
Bohn, A. (2009). The SWOT Analysis. Munich: GRIN Publishing.
Freeman, E. (2010). Strategic Management. Cambridge: Cambridge University Press.
Kalogirou, S. (2013). Solar Energy Engineering: Processes and Systems. Boston: Elsevier.
Kumar, A. & Sharma, R. (2000). Principles of Business Management. New Delhi: Atlantic Publishers and Distributors.
