Tesla Inc. Global Strategy: PESTEL, VRIO, and Competitive Analysis
This paper presents a global company report on Tesla, Inc., examining the electric vehicle manufacturer's business operations, competitive landscape, and strategic position. Using PESTEL and VRIO analytical frameworks, the paper assesses Tesla's external environment—including political, economic, social, technological, environmental, and legal forces—alongside its internal resources and capabilities. The report evaluates Tesla's value, rarity, imitability, and organizational strengths and weaknesses, identifying where sustainable competitive advantage exists and where it is eroding. The paper concludes with short-term and long-term strategic recommendations for Tesla's business and corporate strategy, including leadership changes, product improvements, and geographic market prioritization.
- Introduction: Tesla's Business and Industry Overview: Tesla's origins, products, markets, and industry context
- External Environment: PESTEL Analysis: Political, economic, social, and legal forces affecting Tesla
- Internal Analysis: VRIO Framework: Tesla's value, rarity, imitability, and organizational challenges
- Sustainable Competitive Advantage: Gaps and Opportunities: Where Tesla's competitive edge exists and where it is missing
- Business and Corporate Strategy: Current strategic direction and its alignment with capabilities
- Future Recommendations: Short- and long-term strategic prescriptions for Tesla's survival
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What makes this paper effective
- The paper applies two well-established analytical frameworks—PESTEL and VRIO—systematically and in sequence, giving the analysis a clear academic structure that mirrors industry practice.
- It integrates a range of cited sources including peer-reviewed articles, financial news reports, and consumer data, lending credibility to its claims about market conditions and company performance.
- The recommendations are grounded in the prior analysis rather than being generic, with specific actions tied directly to identified weaknesses such as the Model 3 reliability problem and Musk's SEC conflicts.
Key academic technique demonstrated
The paper demonstrates the technique of linking internal capability analysis (VRIO) to external environmental scanning (PESTEL) to arrive at coherent strategic recommendations. This inside-out and outside-in approach mirrors standard strategic management methodology, showing how a firm's resources must be evaluated in the context of the competitive landscape before actionable guidance can be offered.
Structure breakdown
The paper opens with a business overview situating Tesla within the broader auto industry, then moves outward to PESTEL analysis before turning inward to VRIO. It transitions from diagnosis to prescription through sections on sustainable competitive advantage, business strategy, and corporate strategy, closing with forward-looking recommendations. This funnel structure—from context to analysis to action—is characteristic of a well-organized strategic management report.
Introduction: Tesla's Business and Industry Overview
Tesla, Inc. was launched in 2003 in California as a niche market luxury carmaker specializing in electric vehicles (EVs). The Tesla Roadster was its first product—a high-end EV aimed at affluent buyers rather than the mass market. Today, Tesla also offers the much more affordable Tesla Model 3, a mass-market EV designed for the everyday consumer, alongside the Tesla Model S and Tesla Model X. Tesla sells its cars in North America, Europe, and Asia. It has recently obtained financing to build cars in China, where its vehicles are already being sold, and is currently poised to enter Japan's market. Tesla's focus on sustainability and CEO Elon Musk's use of social media have made the company a favorite among investors who view sustainability as the future and Musk's innovative leadership as a major driver of growth. Baumgartner (2014) has shown that sustainability is a major factor in corporate social responsibility policies, and it is similarly vital to Tesla's success. Its vision for the future of technology and energy has made Tesla the leader in the EV market around the world.
Tesla is also involved in green energy through its SolarCity subsidiary. Tesla produces the Powerwall, which is designed to harness solar power for residential homes. By pursuing this business, Tesla has signaled to consumers and investors that it is serious about the green energy revolution. However, SolarCity carries substantial debt, and Tesla's acquisition of SolarCity was viewed skeptically by many, partly because the company was owned by a relative of Elon Musk. While green energy is a prevailing trend among technology companies, Tesla has so far capitalized on it by merging green energy technology with luxury car manufacturing. Competition is intensifying, however, and Tesla will need to move more vehicles to stay ahead of rivals.
The auto industry overall remains heavily oriented toward fossil-fuel-powered vehicles, which means Tesla is still a distinctive manufacturer. Nonetheless, the industry has taken notice of Tesla's consumer appeal. Hybrids have already come to market, but Tesla offers something different—a fully electric car—and other manufacturers have begun developing their own EVs to compete. Nissan, BMW, Jaguar, Audi, Ford, Infiniti, and many others are now working on electric vehicles.
The broader car industry may be facing headwinds, as recent reports indicate stagnant sales (Gardner, 2018). As Gardner (2018) notes, borrowing is becoming more expensive in many parts of the world as central banks raise interest rates, making auto loans less affordable. Rates are rising in both the United States and China—a major market for the global auto industry. In order for Chinese consumers to purchase new cars, they need accessible, low-cost loans, and rising rates are likely to dampen the auto market in China and undercut growth expectations there. As Ferris (2019) reports, auto sales in China fell for the first time in two decades, with a 3% drop in 2018, and a further decline was anticipated for 2019. This could signal serious trouble for the industry as a whole.
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