A PESTEL framework groups forces in a firm's general environment in one of six factors. These factors are typically ones that a firm's managers have very little control over. That however doesn't mean they are unimportant. Indeed macroenvironmental factors can be either a death knell or a key provider of leverage points for a firm.
The ChapterCase opener on Tesla Motors and the U.S. automobile industry provides enough information for us to make some general conclusions about the role of PESTEL forces in this industry. One of the main forces in favor of a startup such as Tesla Motors is the technological factor. Tesla Motors develops all-electric powertrains and cars. Unlike complex gasoline engines, electric cars are powered by relatively simple motors and gearboxes that have few parts. As a startup, Tesla has focused on purely electric automobiles so they have developed a deep competency in this field relative to their larger and more broad-based competitors. Moreover, technological innovations have allowed startups like Tesla Motors to enter the electric car segment, effectively circumventing high-entry barriers into the broader automotive market.
Another factor weighing in favor of Tesla and the electric vehicle segment is the legal factor. The legal environment captures the official outcomes of political processes as manifested in laws, mandates, regulations, and court decisions. For example, to induce consumers to buy zero-emission vehicles, the U.S. government offers a $7,500 federal tax credit with the purchase of a new electric vehicle such as the Tesla Model S.
A third factor looming large in the entire electric vehicle market is the ecological factor. Ecological factors concern broad environmental issues such as the natural environment, global warming, and sustainable economic growth. Ecological factors can also provide business opportunities. Tesla Motors, for example, is partially addressing environmental concerns regarding the carbon emissions of gasoline-powered cars by building zero-emission battery-powered vehicles.
The other three factors; political, economic, and sociocultural will also impact the electric vehicle industry but perhaps in a less direct manner than the examples above. How the overall macro environmental forces will impact the long-term health of electric vehicle sales and profits is yet to be determined. Both large firms like General Motors and startups like Tesla Motors need to be cognizant of these impacts and flexible when conditions change in the months and years to come.
1.
value:
10.00 points
In the case discussing the electric car industry, which PESTEL factor is highlighted as the most important factor favoring a startup firm such as Tesla Motors?
technological factors
social factors
economic factors
ecological factors
supplier factors
References
Multiple ChoiceDifficulty: 2 MediumLearning Objective: 03-01 Generate a PESTEL analysis to evaluate the impact of external factors on the firm.
2.
value:
10.00 points
Non-market strategies employed by a firm may be used to exert some level of influence by the firm on the general environment. These may best fit in the political or legal factor categories of the PESTEL framework. Which of the following is an example of a non-market strategy?
conserving cash in the event of a new recession
lobbying to extend electric car tax credits
investing in Six Sigma technology
hedging EU currency for more stable earnings
targeting the millenial generation of consumers
References
Multiple ChoiceDifficulty: 2 MediumLearning Objective: 03-01 Generate a PESTEL analysis to evaluate the impact of external factors on the firm.
3.
value:
10.00 points
Innovations in process efficiencies such as Six Sigma quality, and service innovations such as social media are primarily elements of which macro environmental force?
economic factors
technological factors
sociocultural factors
ecological factors
political factors