PESTLE, SWOT and Porter’s 5 Forces Analysis of NASA

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23/09/19 Business Reference this

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What is NASA’s position in the space industry?

In this text, I will explain what the PESTLE, SWOT and porters 5 forces models are, and I will critically evaluate the use of PESTLE, SWOT and porters 5 forces models by firms in their analysis of their business environment.

The purpose of this assignment is to get a better understanding of porters 5 forces, PESTLE and SWOT analysis and how they can be used to create a picture of your business and to be able to grow from it. NASA is going to be the main business in focus. NASA is in the space industry which is a complicated but interesting industry. The country of operations is the US, their headquarters is in Washington DC, but they have 10 other facilities across the country. The NASA has grown a lot from 1959 when they had a budget of $89 million and today they have a budget of $20.7 billion. That is a huge jump and says a lot about the importance of space travel and how expensive it is.

(Data from https://en.wikipedia.org/wiki/Budget_of_NASA )

Before PESTLE, SWOT and porters 5 forces can be used one must understand what they mean, how they can be used and what benefits it can give your business. Let’s start with PESTLE. PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental. The political factors have a big impact on NASA, it is a government regulated firm. This means that the government gives it its budget, and how much they will get depends on the president. This makes business planning harder than if it was revenue. The government does not control the company, it is independent but if they get their annual budget from the United States government.

Economic factors are controlled by the government. NASA’s budget is just getting bigger and bigger because they develop new technology, or they come up with new theories which require more materials. It costs a lot of money to develop new technology, but the budget they get from the government helps them a to grow. Without this money, they would never have been able to do the missions they do or develop new machines. A rocket can cost around $500 million to build and launch, this is because of the amount of fuel its uses and all the materials they need. However, because of new technology, the costs are only going down. A rocket from SpaceX (a rival company for NASA) costs on average $60 million to launch every time, this is because SpaceX is a private company and is not regulated that much by the government. NASA’s prices are going down, but they are not yet as low as SpaceX’s.

The social factors don’t affect NASA as much as the other factors. The public is getting more aware of what is going on, NASA and other companies in the space industry are getting larger and larger. Humans must explore, Christopher Columbus showed this a long time ago and space exploration is our type of exploration. The public cannot buy any of the rockets, but they can apply for a job at NASA or just watch on their websites if they are interested. People are not always happy with NASA and how much they pollute, but others do not care and think it is for the best and for the future of mankind. 

The technological factors are one of the most important factors. NASA is all about technology, they research and develop all the time. Technology is their worst and best friend. They would like to travel faster in space and go to other galaxies, but our lack of technology stops this. But this does not mean that they have not achieved anything. They have multiple rovers on Mars and in not too long there will be humans there too. The space industry is an industry filled with technology and it will get more advanced over time.

NASA has a lot of legal regulations against them, they must do what the government says or else they can lose some their budget. The government usually don’t interfere that much, but it can happen. NASA was for a long time the leading company when it came to space technology and exploration, but SpaceX is strong competition for NASA because they are getting bigger and they don’t have that many regulations from the government as NASA.

The rockets have an impact on the environment, but NASA is using a lot of resources to make it better. They try to help the environment as much as possible, they use more green energy and other fuels. When they release materials from a launch they make sure that it lands in the ocean, so it can become an ecosystem for the fish in the water.

Now that the PESTLE is done, how does this help? The company needs to be honest with them self’s, they have a lot more inside information that what is in this text. PESTLE could be a good analysis for NASA because they can look at how they affect the environment and find out how much and where they influence. When they know this, they can do better in the departments which isn’t as good as they can be. On the other hand, PESTLE isn’t always a good option for all companies, for example, a small takeaway store. PESTLE maybe won’t be as effective for them as it will for NASA, a SWOT analysis will probably be better for the takeaway store.

SWOT is a type of analysis where you look at the Strengths, Weaknesses, Opportunities, and Threats for a company. This type works pretty much all businesses. Some strengths that NASA has is experience, they are one of the oldest space agencies in the world. They have a good budget and are one of the most trusted information sources when it comes to space. They have a good piece of the market even though SpaceX has a bigger share when it comes to launches. Some weaknesses to NASA is that they don’t have such a big market share as they used to, they are maybe not able to think outside the box as much as newer companies. They are dependent on the government to deliver a high budget for them to develop. There are a lot of opportunities in the space market, the market is always changing and developing. Space is not something humans will fully understand; new things will always show up. Their competitors are strong, but they don’t have as much experience and not as many resources. If they develop something new they can get a bigger market share, the market will always expand and develop. The threats are few, but they are strong, SpaceX is NASA’s biggest competitor. They are new compared to NASA which means that they don’t have as many contacts and resources as NASA, yet. The competition is becoming bigger as other countries are also getting interested in space travel and exploration. There are not many substitutions and market entrants are slow.  

SWOT is a good analysis which fits well with PESTLE. However, there are some downsides to using this way of analyzing your business. It is hard to know how much of an impact the different factors will have on you and the data in the analysis can be quickly outdated

Next in line is Porters 5 forces. This is a weary powerful tool when you want to get a better view of the market and your position in it. The 5 forces are Rivalry among existing competitors, Threat of new entrants, Bargaining of suppliers, the threat of substitute products and the bargaining power of buyers. The first one is rivalry among existing competitors, the number of competitors is not large it is SpaceX and some small European that is the competition. NASA probably has the best brand loyalty of all the competitors, most people have heard of NASA and trust them. The industry is constantly growing which makes space for other companies, but the big competitors are quick to fill it in. The space industry is an oligopoly where there are few but large companies who have control.

The threats of new entrants are not too large, the barriers to entry are quite high because it is an expensive industry, so you need a huge capital to enter this market. The space industry is highly regulated by the government, some companies more than others. The suppliers bargaining power depends on what you supply them with. If you supply them with more unique products such as advanced technology, you can bargain more than if you supply them with food or aluminium. NASA has a long line of suppliers, they need food, aluminium, technology, fabric for spacesuits and much more. They are dependent on their suppliers on some things, but other things they can just switch to another company.

The threat of substitute products is not as high as the space industry is not too open to the public. If it was possible for the public to buy rockets they must be weary wealthy. Other substitute products are cheaper in use, but NASA is constantly working to put the prices down and make it cheaper for themselves. At last, we have the bargaining power of buyers. This one is not too relevant for NASA. They sell merchandise and other things for fans, they sometimes sell collectibles from launches, but these are weary expensive, so the number of buyers is limited.

This model is powerful but not all the forces are relevant for all industries or businesses. As bargaining power of buyers for NASA. Porters 5 forces give a good snapshot for the short term, but as SWOT the data can be outdated quickly. It is a good model but not for all industries that is why it is important that relevant models are being used.

The space industry has changed a lot over the years, the market structure is different since now it is starting to get more privatized than before. It is in constant motion, and it is moving in the right direction for NASA. They are getting a bigger budget from the government. The government regulates NASA more than their competitors, this isn’t always a bad thing, but it makes things more expensive. NASA’s competition is not too many but the few are large, this makes the space market into an oligopoly. The models in the text is a good way to analyze the company but not every point works too well, and some models are better than others. Because the space industry gets bigger it also gets more expensive to develop new technology, it will continue to get more expensive in some departments but cheaper in other areas.

My recommendations to NASA is to focus more on the environment. They have the power to change it, they are working on it and it is probably not ever be their focus, but it should be in more focus as the time goes. They should find ways to make space travel cheaper and then focus on developing something faster. When it gets cheaper you can focus more on making things more advanced and make everything faster, if you make space travel cheaper you can focus more on development rather than fuel.

Sources

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  • Beattie, A. (2018, March 9). The Pitfalls of Porter’s 5 Forces. Retrieved from Investopedia: https://www.investopedia.com/articles/investing/103116/pitfalls-porters-5-forces.asp
  • Davis, J. (2018, March 28). How the heck did NASA (and science) get such a good 2018 budget? Retrieved from The lanetary society : http://www.planetary.org/blogs/jason-davis/2018/20180328-nasa-science-good-budget.html
  • guardian, T. (2016). Nasa budgets: US spending on space travel since 1958 UPDATED. Retrieved from The guardian : https://www.theguardian.com/news/datablog/2010/feb/01/nasa-budgets-us-spending-space-travel#data
  • Hamilton, L., & Webster, P. (2015). The internation business enviorment . New York: Oxford University Press.
  • NASA. (n.d.). Retrieved from Wikipedia : https://en.wikipedia.org/wiki/NASA
  • Nordmeyer, B. (2018, June 27). Advantages & Disadvantages of SWOT Analysis. Retrieved from Chron : https://smallbusiness.chron.com/advantages-amp-disadvantages-swot-analysis-41398.html
  • Quora. (2018). How much does it cost to build a space rocket? Retrieved from Quora : https://www.quora.com/How-much-does-it-cost-to-build-a-space-rocket
  • Smith, J. (2010, September 23). NASA’s Role in Green. Retrieved from NASA: https://www.nasa.gov/centers/ames/greenspace/nasas-role.html
  • Tools, M. (n.d.). SWOT analasys . Retrieved from Mind Tools : https://www.mindtools.com/pages/article/newTMC_05.htm

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