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BUSIINESS NOTES ON INTERNAL ENVIRONMENTAL
ANALYSIS
This is a comprehensive summary note focuses on internal
environmental analysis based on an identified company. This internal
factor analysis is a result from the consideration of the micro-economic
environment on a given company and provides a basis from which the
opportunities and risks of the market can be worked out. The notes
present a highlight on strategic marketing concept using the example of
the company.
The notes will help student understand the role of an internal
environmental scan on a company and presents the prevailing factors
that has led to the rise of the company in the automobile industry and
the effects it has caused in various industries. These skills will be
essential in any workplace, and will give students a competitive edge
when it comes to securing employment. As such, understanding
internal environment analysis can have a significant impact on a
student's future career prospects.
later. Although much of today's success is attributed to Elon Musk, the first word did not go to him (Matthews, et al, 2020). In July 2003 Martin Eberhard founded the company together with Marc Tarpenning and named it after the inventor Nikola Tesla. Even then, they were convinced that electric cars would play an important role in the future. In addition, they did not agree that General Motors took back the leased EV1 electric cars in order to scrap them. Elon Musk only joined the company a year later and became CEO in 2008. Through an agreement, he can officially designate himself as a co-founder of Tesla (McCain, 2019). The two original founders have not been with the company since 2007 and 2008, respectively. In March 2008, Tesla's first electric car, the Tesla Roadster, went into production. This consisted of the body of a classic sports car and had a range of at that time a pioneering 350 kilometers and almost 300 hp. The drive battery consisted of lithium-ion batteries, which are also used in notebooks. This was followed by the IPO on June 29, 2010 at an issue price of US $ 17 per share. A value that was rated as unexpectedly high at this point in time. Tesla has been there since Ford in 1953, the first US automaker to go public. With the Model S, the world's first sedan with a purely electric drive comes onto the market, with an even greater range and even better performance than the Tesla Roadster. Drivers of a Tesla model can charge their cars on the superchargers that Tesla introduced in 2012 (Li, 2018). There are now over 18,000 superchargers at over 1,600 locations worldwide (Petro, 2020). Up to Model 3, three more electric cars were developed and brought onto the market, but said Model 3 was tough. Strategic Role of Corporate Strengths/Weaknesses in the Internal Strategy Analysis Tesla Motors is currently the phenomenon on Wall Street. Within a week, the company was able to collect over 300,000 pre-orders for its new Model 3 electric car - many observers
already see this as the beginning of a paradigm shift in the auto industry. But Tesla Motors is not only likely to change the automotive industry with its uncompromising strategy for electric cars, other branches of industry will also be permanently affected by the rise of Tesla Motors (Petro, 2020). This, in turn, is of interest to investors who are still invested in these industrial sectors. Every electric car Tesla Motors sells hits the oil industry. Tesla drivers no longer visit traditional gas stations, but instead charge at fast charging stations (superchargers) or other electrical charging stations. To date, Tesla has sold more than 100,000 electric cars worldwide. Assuming that every Tesla driver covers 10,000 miles (16,000 kilometers) a year, that would save 400 gallons or 1,500 liters of gasoline per year, assuming average consumption. With 100,000 Teslas on the road, that would save 40 million gallons of gasoline (151 million liters) per year, which would mean losing around $ 100 million in revenue to the oil industry each year. And this should only be the beginning, because other manufacturers are of course also pushing their way onto the market with electric cars. The rise of Tesla Motors also has far-reaching consequences for the advertising industry, because Tesla Motors has a completely different advertising strategy than the majority of automakers. Tesla boss Elon Musk considers classic advertising to be ineffective. Consumers won't find any Tesla advertising on TV, instead Tesla wants to invest every remaining dollar in improving its products, as the Tesla boss emphasizes again and again (Mangram, 2012). The Tesla founder sees greater added value for his customers in this. This strategy should also have an impact on the advertising industry, after all, automakers are among the largest advertisers. In 2015 alone, three of the top 10 largest advertisers came from the auto industry. These were General Motors ($ 3.1 billion in ad spend), Ford ($ 2. billion), and Fiat Chrysler ($ 2.2 billion) (Li, 2018). Tesla has taken a different approach here
Opportunities, Threats”, which also reflect the four evaluation criteria from the previously determined data from the strengths-weaknesses and opportunities-risks analyzes."For the systematic presentation of the results, the internal and external aspects are compared within the framework of the SWOT matrix" By finally linking the results of the opportunity-risk analysis and the strengths- weaknesses analysis in the form of a SWOT analysis, recommendations for action can be derived that determine the prerequisites for determining marketing strategies and goals. Furthermore, the special conditions can be defined on the basis of an analysis of the industry structure, which also influence the choice of strategy and provide a framework and direction for the setting of objectives. Representation of a SWOT analysis Strengths Diversification of income A strong Brand reputation A Strong automobile patents portfolio Better management and HR advantage Competency in marketing and Strong product portfolio Weaknesses Debt level and bankruptcy threats Price competition from other giant firms in the industry Over-dependence on product sales Opportunities Need for more energy conservative automobiles Growing interest in electric cars Global energy crises Threats Production complications Future uncertainties The internal strengths and weaknesses analysis should be set up at the beginning of a SWOT analysis. The company's own internal performance potential should be analyzed in
comparison to the competition in order to continue to promote one's own strengths and to expand and improve weaknesses. Above all, strengths that have a unique selling point should be used profitably. This so-called USP (Unique Selling Proposition) of the company gives the company sales advantages and serves to differentiate itself from the competitors in the market (WORKS, 2019). Weaknesses, on the other hand, which constitute the disadvantages of a company compared to its competitors, should be precisely identified in order to force the reduction and to catch up with the competitors through improvements. As a second step, the external factors “that emerge in the macro environment (economic, socio-cultural, technological, political-legal, demographic) or in the micro environment (customers, suppliers, competitors, etc.) of the company” are worked out and Identifies the opportunities and risks that the company faces in the market. These aspects cannot be controlled by the company itself, but the effects of the individual factors on the company can be better assessed and further actions can be adjusted accordingly. The chances are "positive environmental conditions that favorably influence or support a market project." It is important to use internal company strengths in such a way that the opportunities in the market can be ideally used in order to improve the probability of success of the company. "The given environmental conditions do not necessarily have to present themselves as opportunities for a company, but can also turn out to be risks. IFE matrix analysis. Internal Factor Evaluation analysis evaluates the internal environment of a firm and reveals the strengths and the weaknesses. The IFE matrix is a strategic management tool used to audit or evaluate the internal environment of a company and reveal the main strengths and weaknesses in the functional areas of a business.
Quality products Strong brand reputation Distribution channels Strong patent portfolio
Weaknesses Debt level Overdependence on sales Strong market competition Environmental impact
Total 1. The buyers are also a driving force in an industry because, depending on the market constellation, they can force the providers in an industry to make certain offers and behaviors. Because they pursue the goal of high quality or better service at a reasonable price shopping. As a result, they compete with the respective industry and put a strain on profitability. Customers achieve this through strong and growing bargaining power. The bargaining power of buyers increases, for example, when there is a high concentration of buyers, a large volume of buyers or when the products bought make up a high proportion of the total costs of the suppliers. Finally, the bargaining power of buyers can also be influenced by replacement products or by the ability to backward integration. Grand Strategy Matrix. Grand Strategy Matrix tool is useful in formulating the feasible strategies of a company. This strategy Matrix is mostly used to identify the alternative strategies. It is a classic and simple matrix that helps to formulate alternative strategies based on the position of the company in one of its 4 quadrants: market growth (slow or fast) and the competitive position of the company (weak or strong). The matrix is generated automatically from the score that indicated. The company is currently operating at the first quadrant which is characterized by strong competitive advantage and a fast market growth. Tesla has a strong competitive strength in that it climbed to the top of the most valuable carmaker and draws its circles there alone. The stock
peaked at over $ 2,500 and has seen incredible growth since going public in 2010. With the production of the Model 3 the company faced enormous difficulties. These were so severe that Tesla was only a few weeks away from bankruptcy because money had been burned like crazy - even though the Model 3 became the world's best-selling electric car at the same time. Unlike the other Tesla models, the Model 3 was no longer in the luxury segment, but was available for the price of a mid-range car. But that wasn't the only bankruptcy Tesla struggled with. In 2008, the company was only a few days before bankruptcy and was particularly dependent on external donors. In May 2009 Daimler AG rose with $ 50 million at Tesla (Alghalith, 2018). The value of the investment would be around ten billion dollars today, if CEO Dieter Zetsche had not sold the stake in 2014 for 600 million euros. Tesla Inc. Grand strategy Matrix Fast market growth WCP Quadrant 2 Weak competitive advantage Fast market growth Quadrant 1 Strong competitive position Fast market growth SCP Quadrant 3 Weak competitive position Slow market growth Quadrant 4 Strong competitive advantage Slow market growth Slow market growth Strategic Role of Internal Resources/Departments/Processes Focal company’s business-level strategies; Tesla’s product line and target market Tesla deals with a wide line of products including automobiles, and energy. The Tesla product line has largely contributed to the soaring Tesla shares. The manufacturing company is now more valuable than the car giants such as VW, Daimler and BMW- together. In contrast to the three just mentioned, Tesla recognized early on that for large numbers of electric cars there is
manufacturers. Production operations are based on research and development. This places the company a step before the other competitors in the market. The company's vision and mission statements are the foundations of the company’s success. The vision and mission of the company is defined in order to be able to draw up a current situation analysis at the company. The external environmental conditions that affect Tesla Motors Inc. are explained here. A SWOT analysis is then carried out in order to highlight the opportunities and risks, weaknesses and strengths of the company. The five forces that influence the company from outside and that have a power over various properties are shown using an industry structure analysis. Finally, an overview of the strategic marketing concept of Tesla Motors Inc. is summarized on the basis of a conclusion. In addition, the marketing concept ensures the plannability and controllability of all marketing activities of a company and the analysis of the relevant market. This analysis shows a control cycle that is intended to demonstrate the possible sequence of a strategic marketing concept. Before a company works through the strategic marketing concept based on the control cycle, it is important to clearly define the mission and vision of the company and clarify the common values at the beginning of the analysis (Alghalith, 2018). These should ideally be overriding the internal corporate goals and thus have a meaningful effect. Since the corporate vision describes the future draft that the company would like to achieve in the long term, the formulation of the vision should therefore focus on the benefit of the customer as well as the company for society. Thus the vision gives a general idea of the desired future of the company and defines the desired target state. This also means that the vision contains the trend-setting goals, to which all employees can orient themselves in the long term and thus their willingness to work towards a common goal is promoted (Alghalith, 2018).
Strategic Financial Analysis for the Last Reported Fiscal Year Based on the company's income statements, the key financial ratios indicate a high level of success. The following rations can be used to justify the success trajectory of the company. The profitability indicators can be used to measure the profitability and success of the company. The profitability indicators relate variables from the profit and loss account to balance sheet figures or other earnings figures. Important profitability figures are return on investment and return on sales. The following table presents the various ratios for Tesla Company as 0f 2020. Tesla Inc. Tesla P/E Ratio (2020) 686. Tesla Price to Sales (2020) 18. Tesla Net Profit margin (2020) 3.5% Return on Equity (2020) 6.91% Return on Investment 4.16% Tesla Quick Ratio (2020) 1. Current Ratio (2020) 1. LT Debt to Equity (2020) 39.33% Tesla Total Debt to Equity 47.23% Asset Turnover (2020) 0. Tesla Inventory Turnover 6. Revenue/Employee (2020) 507.94K Tesla Net Income/Employee 17.78K Receivable Turnover (2020) 22. The profitability or the rate of return of a company is usually given as a percentage and can be illustrated by various key figures. The profitability of a company is shown, for example, in the return on investments as return on capital or as profit in relation to sales as return on sales.
influence on the future of the company. A common and practicable grid for evaluating the macro-environment distinguishes influencing factors from the economic, socio-cultural, technological and political-legal environment. These are intended to give the company competitive advantages in the market by strengthening internal strengths and avoiding or improving weaknesses. The focus of the so-called strengths-weaknesses analysis, "are to gain strategically relevant information the groups of the 'strategic triangle' - customers, competitors and own company.
References Alghalith, N. (2018). Tesla: innovation with information technology. International Journal of Business Research and Information Technology, 5 (1), 37-51. Li, Z. (2018). Strategic Audit on Tesla. Mangram, M. E. (2012). The globalization of Tesla Motors: a strategic marketing plan analysis. Journal of Strategic Marketing, 20 (4), 289-312. Mas, S. M. (2018). Tesla Motors. SWOT analysis and corporate strategy. GRIN Verlag. Matthews, T., Hirve, M., Pan, Y., Dang, D., Rawar, E., & Daim, T. U. (2020). Tesla Energy. In Innovation Management in the Intelligent World (pp. 233-249). Springer, Cham. McCain, C. (2019). A Strategic Audit of Tesla, Inc. Petro, S. (2020). BUSINESS AND FINANCIAL ANALYSIS OF TESLA INC. WORKS, H. (2019). Strategic Case Analysis A Case Study of Tesla. Yılmaz, F. K. (2019).Valuation of Tesla, Inc.
