general environment research | Business | University of Texas at Arlington

GENERAL ENVIRONMENT RESEARCH

PEST-DEG Analysis – Broad Market Forces Influence Industry 

Make sure that you clearly identify the strength of each force and provide a robust explanation of the force relevant to the industry.   Make sure to include citations. 

Item1: Political / Legal

· Strength of Force? (Strong, Medium, Weak)

· To what extent do the laws and regulations of the U.S. government significantly influence the performance of the industry? Give examples. 

· Is this force more of a threat or opportunity to the industry, or both? (Explain)

Item 1 Submission:

· Strong: Tesla is heavily affected by government regulations related to electric vehicles and emission standards.

· The laws and regulations of the U.S. government significantly influence the performance of the industry. One example is California’s Zero Emission Vehicle mandate. It requires automakers to have a certain percentage of their vehicles be “zero-emission vehicles” (Air Resource Board, 2023) by the model year of 2035. This in turn has made all automakers invest more of their money and resources into electric vehicle technology.

· The political/legal force is more of an opportunity to the electric vehicle industry because more state regulators are wanting to enact resolutions that encourage the use of safe energy. An example of a threat, however, would be when Wyoming tried to pass a resolution to “end the sale of new electric vehicles by 2035” (USA Today, 2023).

Item 2: Economic

· Strength of Force? 

· To what extent does the broader economy (including global economy) significantly impact industry performance? Give examples. 

· Is this force more of a threat or opportunity to the industry, or both? (Explain)

Item 2 Submission:

· Strong: Recessions, inflation rates, and exchange rates can heavily impact Tesla, Inc.’s financial performance.

· The broader economy (including the global economy) can significantly influence the electric vehicle industry. When there’s high gasoline prices, electric vehicle sales go up because customers consider them to be a cost-effective alternative. Another example of how the broader economy can affect the electric vehicle industry is economic factors reducing your average person’s disposable income. If wages and employment rates are low, then the sale of electric vehicles will go down because customers would more likely than not have the money or afford a new EV.

· The economic force is more of a threat to the electric vehicle industry since interest rates, tariffs, trade deficits, among other economic factors can greatly reduce the amount of electric vehicles being sold because if the economic factors are bad, customers will not be as inclined to spend their money on a non-essential like an electric vehicle.

Item 3: Sociocultural 

· Strength of Force? 

· To what extent do social trends – diversity, work-life balance, etc. – significantly influence demand for the industry’s products or services demanded in the next five years? If you believe there this is a strong force, you must explain which trends are important (impactful) and why. 

· Is this force more of a threat or opportunity to the industry, or both? (Explain)  

Item 3 Submission:

· Medium: Factors like workforce diversity and women in the workforce would not greatly impact the electric vehicle industry. However, factors like environmental awareness and consumer preferences (or shifts in preferences regarding product and service characteristics) can heavily influence the electric vehicle industry.

· Social trends that revolve around diversity, work-life balance, etc. do not significantly influence the demand for electric vehicles. But a strong sociocultural force is being conscious of environmental issues. The more aware consumers are of their carbon footprint, the more likely they are to want to reduce it. Customers are becoming more conscious of the fact that “electric vehicles in the US produce less than half the emissions of a gasoline car on average” (US Energy Solutions, 2023).

· The sociocultural force is more of an opportunity for the EV industry because social trends that encourage society to be more green-minded when it comes to eliminating fossil fuels make the demand for electric vehicles increase exponentially.

Item 4: Technological 

· Strength of Force? 

· To what extent do new technologies significantly influence the operations of the industry now or within the next five years? Give

SPECIFIC
examples. 

· Is this force more of a threat or opportunity to the industry, or both? (Explain)  

Item 4 Submission:

· Strong: Tesla’s success as a company is heavily reliant on constant innovation in research and development for battery upgrades, self-driving features, and energy storage devices.

·  New technologies significantly impact the operations of the electric vehicle industry in the present day and will continue to do so for the foreseeable future. One example is the technological innovation of creating infrastructure for public charging. The production of charging stations helps EV drivers have the ability to travel long distances. In June of 2023, Ford and General Motors struck a deal with Tesla to make their EVs “use Tesla’s charging stations with an adapter” (CNBC, 2023). Improving accessibility for new electric vehicle owners is a top priority for all EV manufacturers.

· The technological force is typically more of an opportunity for the electric vehicle industry because new innovations in technology can incentivize prospective customers to purchase an EV and get rid of their old car or truck.

Item 5: Demographics

· Strength of Force? 

· Are there any demographic statistics and trends that you believe significantly influence the performance of the industry now or within the next five years?  Give examples

· Is this force more of a threat or opportunity to the industry, or both? (Explain)

Item 5 Submission:

[Enter your submission text/data here.  Match your answers to the bullet question posed]

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Item 6: Environmental 

· Strength of Force? 

· To what extent do environmental factors significantly influence the industry (i.e., climate, sustainability) now or within the next five years? Give examples. 

· Is this force more of a threat or opportunity to the industry, or both? (Explain)

Item 6 Submission:

[Enter your submission text/data here.  Match your answers to the bullet question posed]

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Item 7: Global 

· Strength of Force? 

· To what extent do general environment factors in other countries where the industry operates affect the performance of the industry?  Give examples

· Is this force more of a threat or opportunity to the industry, or both? (Explain)

Item 7 Submission:

[Enter your submission text/data here.  Match your answers to the bullet question posed]

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