 Hello and welcome to the session in which we'll discuss SWOT analysis. SWOT analysis is a framework that helps evaluate the strength, weaknesses, opportunities and threat. And this is where the SWOT comes from of a business idea, a business itself or a person. Now in our situation, we're going to perform SWOT analysis on a business. And it does allow us to do what? To assess, to evaluate the business internal capabilities, how well they are doing from an internal perspective? What are their strength? What are the resources? What is their competitive advantage? Strength and their internal capabilities also they may not be good. They could be considered weaknesses. So strength and weaknesses are internal capabilities to the business and external environment, looking at the external environment, which is represented by opportunities and threats. And this is going to help us to do what? It's going to help in strategic decision making and maintaining a competitive advantage in the market. So the first thing we're going to do in explaining SWOT analysis is explain what each term is, strength, weakness, opportunity and threat. And we're going to work a series of examples. Specifically, we're going to be using Tesla as an example to illustrate the concept of various strengths, weaknesses, opportunities and threats and how do they relate to the real world? Let's go ahead and get started by defining each term separately. Before we proceed any further, I have a public announcement about my company, Farhat Lectures dot com. Farhat Accounting Lectures is a supplemental educational tool that's going to help you with your CPA exam preparation as well as your accounting courses. My CPA material is aligned with your CPA review course such as Becker, Roger, Wiley, Gleam, Miles. My accounting courses are aligned with your accounting courses broken down by chapter and topics. My resources consist of lectures, multiple choice questions, true, false questions, as well as exercises. Go ahead, start your free trial today. Strength, what are the strengths? Those are characteristic of a business that give an advantage over others. Somehow you have some unique characteristics, something unique to you. You are good at it that relative to others, you are better. It gives you an advantage. Weaknesses, for example, strength, for example, Farhat Lectures. Farhat Lectures, what I pride myself on is I teach you the material. That's my job. That's my strength. Weaknesses, characteristic that place the business in a disadvantage relative to others. Now, it means I have a shortcoming in a certain aspect. Obviously, I'm not going to tell you what's my shortcoming because I'm perfect, right? Everyone's perfect. Just joking. So this is what our weaknesses are. Opportunities, elements that a business could exploit, could take advantage of to grow. Businesses will have many opportunities. Businesses also will face threats, elements in the environment that could hinder, that could cause trouble, that could not help you grow, that could help you shrink or lose market share. So those are strength, weaknesses, opportunities and threat. As a business, we're always going to use our strength to leverage opportunities and improve our weaknesses to address risk or threat to the business. Now, I'm going to go over Tesla using the SWAT analysis, starting with the strength. What are some strength for Tesla? Now, when I say Tesla, those strength could apply to many other companies. But if I just showed you the generic of them, it's not a good idea. It's just it doesn't make any sense. It's not interesting. So I'm going to tell you innovative technology. Now, many companies could be innovatively technological. They could have technological innovation, but I'm going to be specific about Tesla as a result of research and development. So also research, research and development by itself is considered a strength. But at the same time, if you lack innovation and technology, if you lack research and development, those will be weaknesses. So anything that's a weakness could be a strength. Anything that strength could be a weakness. I don't want to keep repeating myself every time I mentioned something. But every time I mention a strength, think if we don't have it, it's a weakness. Think about weaknesses. If we have it, it's a strength. So, for example, Tesla is a known for its cutting edge electric technology, electric vehicle technology, including advanced batteries and auto autonomous driving features. That's strength to Tesla. Brand reputation in Tesla. Strong brand, strong brand reputation. Tesla has established itself as a leader in the electronic vehicle market known for its quality, performance and sustainability. Excessive, extensive charging infrastructure. Simply put, extensive infrastructure to support the business. The company has developed a network of supercharger station providing convenient and fast charging option for Tesla owners. So when you provide an infrastructure for your customer, that's a strength. First mover advantage, that's always a strength when you are the first in the market. Tesla was one of the first companies to focus on mass producing electric vehicle, giving them a head start. And when you start early, you are going to learn from your mistakes. You're going to accumulate knowledge. And as you accumulate knowledge, you're going to use this knowledge to improve and gain a competitive advantage. Other strength, clarity of the vision. Tesla vision encourages innovation. Tesla, Tesla vision is to change the world to achieve sustainable transport. Tesla has pushed boundaries in electric vehicle technology, battery storage, charging infrastructure and even self driving technology. And this is in turn, it's going to attract talents because people appeal to that clarity of vision and it's also an appeal to investors as well. Marketing effectiveness, they're good in marketing. They have that direct to consumer sales. They bypass traditional dealership model. And that's a strength. They're cutting down their cost and allows them to control the customer experience, pricing and service quality. They have effective communication with their stakeholders and they have a heavy engagement on social media. For example, Elon Musk has a following on Twitter and other social media where he shares update about Tesla products and plan. That's effective communication with stakeholders. And this helps generate excitement, engage with consumers and maintain a high level of brand awareness, brand loyalty. And the loyalty with Tesla is like a cult like following. Tesla has built a strong and passionate community of fans and customers who advocate for the brand, further amplifying its marketing reach. So they all feed on each other, those strength. Management competency and its influence, specifically Elon Musk. His vision and influence is a significant asset to the company. You get a large social following that can shape public opinion and perception and those people, they open their wallets for Mr. Musk. Now, I'm going to look at weaknesses. Specifically, I'm going to start with the first weakness, Elon Musk, not Musk, Musk, Elon Musk. And notice here, I said Elon Musk under strength. And we can say Elon Musk could be a weakness on the flip side, just like any strength could be a weakness. They're heavily relying on his image and that poses a risk. What if he left the company or become unable to continue his role, especially that he's busy with many other companies? Due to personal reasons, health issues and legal or legal trouble. He always get into trouble with regulatory agencies like the SEC. It can lead to significant instability. His departure would cause a loss of investor confidence, a drop in the price of the company stock price and maybe disruption in the strategic planning. As I mentioned, he gets into trouble with the SEC. That's a risk. That's a weakness for Tesla. And he wanted to run several companies like Twitter, Boring, SpaceX, well, Space, not Sebax, SpaceX. So this is a weakness when it comes to Elon Musk. Also, Tesla, the company has high production cost. Manufacturing electric vehicle at scale can be expensive. It could impact profitability because there's a high cost. Production capacity constraints. Sometimes it's not only about cost. You cannot find enough parts. Meeting the high demand for Tesla vehicle has been challenging due to production bottlenecks and supply chain limitation. That's always, always the case. Other weaknesses is this service and support network. They do have a vast infrastructure relative to other electric vehicle companies, but not large enough. Tesla rapid growth and increase in number of its vehicle on the road has put strength on its service infrastructure. Customers reported long wait times for servicing and lack of parts. And that's not good. Although Tesla has been working to improve these issues, these services and support network is still developing and does not match. So relative to the traditional automakers, they don't have this vast network support. Again, since this is a weakness, this could be turned into a strength. Quality control issues. Tesla has faced criticism about quality control issues with its vehicle. That includes inconsistent fit and finish. Problem with paint, trim and electronics and the new vehicle. Well, these issues can be addressed under warranty, which is Tesla says will fix them. They could affect the perception of the overall brand quality of Tesla, potentially damaging its reputation and customer satisfaction. Again, great. This is a weakness. Any weakness is a potential strength and any strength. Well, if we lose it, it becomes a weakness. Opportunities. What are some great opportunities for Tesla? This is external factors, growing demand for electric vehicle. As the word transitioning toward cleaner transportation, there's a significant opportunity for Tesla to capture a larger market share. Also, they can expand into new market. Tesla has the potential to expand into the international market where electric vehicle adoption is still emerging, a.k.a. China. Diversification beyond automobile. Remember, we are moving toward cleaner transportation. We're moving over cleaner technology and Tesla can explore opportunities for energy storage, solar power, other renewable technologies leveraging its expertise and brand. Again, energy storage. It's a big one. Tesla's advancement in battery technology has potential beyond cars such as grid storage. Dependence on government incentive. That's an opportunity. Although it's a dependence, but it's an opportunity. We're going to see it's also a threat. Tesla's shares have benefited from government incentive and subsidies. For example, the government gave people who buy electric vehicle tax credit of seven thousand five hundred dollars, which could change over time. So this is an opportunity. But also this is could be listed under a threat. Dependence on government incentive because the government can change their mind. Another threat could be intense competition, especially from traditional automakers because they have the infrastructure. They have the know how they have the labor. They are moving into the electronic vehicle, increasing competition and potentially challenging Tesla market share. Tesla market share. Remember, we talked about porters, five forces. One of them was intense competition. It was that was a big one. Well, there is an intense competition in this in this market. Although Tesla still a lead, the lead, the leader, but they could lose that lead any time. Regulatory changes. Again, regulatory changes could be a threat. Regulatory changes could be an opportunity here. We listed it under a threat. Just to illustrate the point shift in government policies regarding emission standards, subsidies and incentive that could impact the business. There could be a threat, could be an opportunity for them. Supply chain risk. That's always a risk unless you have a really good supply chain. You're in control of your supply chain. Dependence on key supplier and potential disruption in the supply chain can affect production and delivery schedule. Any economic or political instability for this is and this goes across the board for any business. Macro economic factor like trade wars, economic impact of pandemic or something like COVID can influence material costs and overall demand in summary, in summary, SWAT analysis by analyzing those factors. We want to leverage our strength, wherever our strength are to capitalize on opportunities. We have to address our weaknesses to mitigate the threat. What should you do now? Go to Farhat lectures, work MCQs in order to be able to answer multiple choice and essay question, be able to explain this on an essay or answer any MCQ or true false question. Invest in yourself.