The Boston Matrix

The impact of external influences can be huge for a business, both positively and negatively.

What is PESTLE

PESTLE is an analytical tool that involves identifying factors that may influence business activity and performance, and can be used to inform corporate strategy.

Let’s break down what PESTLE stands for and how each factor can relate to Tesla:

Political

Some countries are politically volatile, and special attention needs to be paid when undertaking business ventures in these regions. Others are stable and democratic, so less attention needs to be paid to the political landscape. Activities of pressure groups can also influence business activity.

Tesla have had lots of access to government funding, most notably a $465 million loan to fund the production of their EV’s in America.

Economical

The general state of economy has huge impact on businesses. Falling unemployment increases demand for many businesses. Stable prices leads to more certainty and more investment. Strengthening exchange rate makes exporting harder, though imports become cheaper .

Ever-changing fuel prices have lead to an increase in demand for EV’s, helping Tesla to grow and develop their business, fulfilling part of their mission to “accelerate the world’s transition to sustainable energy”.

Social

Whilst major societal shifts do not happen very regularly, even gradual social and cultural changes still have an impact. Some factors include a greater number of people attending university, meaning businesses have more highly skilled people to select.

A growing environmental awareness has helped Tesla as consumers move toward sustainable transport.

Technological

The rate of technology change can provide new product opportunities or help improve efficiency. It can shorten product life cycles, as businesses replace old products for ones with the newer technology. The advancements of robots and AI means capital is replacing labour, leading to lower average unit costs. Social media has also improved communications between businesses and customers.

Tesla invests heavily in battery innovation and autonomous driving AI, however regulations surrounding this are coming into place as this is a very new area. This leads on to the next section.

Legal

There is a legal framework in which businesses have to operate, as well as governments introducing direct legislation at businesses to protect vulnerable groups. Examples of legal factors influencing businesses include the EU VAT laws changing, as it is now charged to country where products were bought as opposed to where they were sold for digital products

Tesla faces safety and autopilot regulation challenges, and lawsuits have affected Tesla’s product development and brand reputation, for example: “A Florida jury ordered Tesla to pay more than $200m to victims of a deadly crash involving its Autopilot driver assist technology.”

Environmental

Finally, people increasingly more protective of environment, as threats of global warming and damage to animal habitats become more evident and exposed to society. People are now more inclined to buy ‘green’ goods, new ways to generate power through renewable sources, and trends of recycling are all aspects that businesses need to be aware of to operate successfully.

Tesla’s EVs reduce emissions, aligning them with climate change policies and making their cars more attractive to environmentally conscious consumers.

To conclude, PESTLE is a valuable tool that when used with other analytical tools can provide a valuable insight for businesses and help them to align their corporate strategy to current affairs, increasing their chances of success.