Executive summary
 

OpenAI has come a long way since its foundation years. Moreover, it has a long way to go in the future. Thus, to enhance and accelerate its growth and development, it can implement strategic decisions and ideas, along with implementing them for better outcomes. Apart from that, it is one of the recognised AI research companies globally. Its brand value can also be a competitive advantage to the company. Furthermore, it can collaborate with other globally recognised companies to expand its business. Additionally, it can also adopt effective marketing strategies to enhance its global visibility. Thus, the following report can provide a detailed overview of the environment for OpenAI to develop. 

 

Introduction

 

As stated by Henry(2021), strategic management refers to the process of planning and monitoring business ideas along with the successful implementation of those ideas to enhance the growth and development of an organisation. Apart from that, organisations must make strategic decisions for the betterment of the company. In addition to that, as discussed by Cherunilam(2021), the business environment includes the factors that influence the growth and sales of a company. The external environment involves the factors over which the company has no control, while the internal environment includes the components over which the company has control. In this report, an analysis of the critical evaluation of the external and internal environment of OpenAI will be conducted. 
 

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Overview of the company
 

As per the information provided on LinkedIn (2025), OpenAI is an AI research and deployment company with headquarters in San Francisco, CA, the United States. The company was founded in 2015 as a nonprofit company with specialities in artificial intelligence and machine learning. OpenAI is an American artificial intelligence (AI) company founded by Sam Attman, Greg Brockman, Ilya Sutskever, and Elon Musk in 2015. Some of the well-known AI tools developed by the company are ChatGPT, DALL-E and Whisper. Moreover, in 2017, the company invested around $7.9 million in cloud computing. This investment not only accelerated the research and efficiency but also led to beneficial collaborations, such as with Microsoft. However, in 2018, Elon Musk left the OpenAI Company. Moreover, in 2018, the company launched its first iteration of the generative pre-trained transformer (GPT). Gradually, the company transitioned to commercialisation. In 2024, OpenAI made effective collaboration with major technology companies such as Reddit (RDDT), News Corp (NS) and Apple (AAPL).
 

According to the information provided on the official page of OpenAI (2025a), the mission of the company is to ensure that humans, along with society and the communities, can benefit from artificial general intelligence. The vision of the company is to build a safe and beneficial artificial general intelligence (AGI) along with initiatives to achieve and apply for the welfare of humanity. As mentioned by OpenAI (2025b), Sam Altman is the CEO of the company, and the board of directors includes Adam D’Angelo, Dr Sue Desmond-Hellmann, Dr Zico Kolter, and many more. Apart from that, the chairman of OpenAI is Bret Taylor. Apart from that, OpenAI Foundation directors will also operate on OpenAI Group’s board to ensure its mission, long-term incentives and commercial success of the company. Thus, the mission of the company includes fair distribution of benefits and incentives among its people, along with identifying and addressing the potential risks effectively and efficiently. Apart from that, the vision of the company includes empowering humanity along with the implementation of the latest and advanced technologies to drive innovation in fields such as health care, education and many more.

 

Environmental analysis
 

External Analysis
 

As discussed by Rêgo et al. (2022), external environment analysis refers to the evaluation of those factors over which an organisation has no control.
 

PESTLE Analysis

As stated by Uztürk and Büyüközkan(2023), the PESTLE analysis is a strategic framework that evaluates the external factors influencing the growth of the company. It has six components: Political, Economic, Social, Technological, Legal, and Environmental factors. 
 

Political factor

As per the data provided by the Global Economy (2025a), the political stability index of the United States in 2023 was 0.03 points, which increased from 0.01 points in 2022. However, low political stability inversely impacts the development of an organisation operating in that country. Thus, based on this factor, OpenAI may struggle to attract global investors, along with affecting its operational functions.  
 

Figure 1: Political stability index

(Source: ResearchGate, 2025a)

 Economi cfactor
 

According to the information provided by the Global Economy (2025b), the economic growth rate of the United States in 2024 was 2.8% which decreased from 2.89% in 2023. Thus, OpenAI may face a reduction in its sales and profit margin, as a low economic rate indicates a decrease in customer purchases along with the increase in production and raw material costs. Apart from that, a low economic rate also reduces the returns on investments. 

 

Figure 2: Economic growth rate

(Source: ResearchGate, 2025b)

 Social factor

As mentioned on the page of the Global Economy (2025c), the population growth rate of the United States in 2023 was 0.49% which increased from 0.37% in 2022. Thus, based on this factor, OpenAI can have a huge human capital, which can increase its productivity rate along with its performance and efficiency. 
 

Figure 3: Population growth rate

(Source: ResearchGate, 2025c)
 

 Technological factor

As per the information highlighted by the Global Economy (2025d), the innovation index of the United States in 2025 is 61.7 points, which declined from 62.4 points in 2024. Thus, a high innovation index implies a positive influence on the growth and development of an organisation. Hence, OpenAI can have more innovative and talented candidates who can drive the creativity and boost the performance of the company. This can be financially beneficial for the company. 
 

 

Figure 4: Innovation index

(Source: ResearchGate, 2025d)

 Legal factor

Moreover, OpenAI can adhere to the legal rules, laws and regulations of the country in which it is operating. This can save the company from paying unnecessary fines and penalties. Thus, the company can invest that money in innovating its products and services, which can eventually lead to an increase in sales and annual revenue. 
 

Environmental factor
 

In addition to that, OpenAI can follow the rules of the Environmental Act and take the initiative to contribute a positive impact on society, the community, and the environment. As stated by Robertson(2021),sustainable practices can enhance the brand reputation of an organisation by reducing its operational costs. Apart from that, it can attract customers who support the environment and its inhabitants.
 

Porter Five Forces
 

As discussed by Pangarkar and Prabhudesai(2024), Porter Five Forces is a framework introduced by Michael Porter that analyses the competitive advantage of an organisation based on five components. The five factors are threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitute products, and rivalry among competitors.
 

Threat of new entrants

As stated by Kormakova et al. (2023), the access a new market or enter a global market, an organisation needs a large investment. Thus, OpenAI have a low influence on it based on this factor. 
 

Bargaining power of buyers
 

As the prices of services and products reacted to AI and machine learning generally fixed, thus, consumers have less impact on changing the prices accordingly to their requirements.
 

Bargaining power of suppliers

However, the power of suppliers has a high impact on the company, as it requires specific software and materials that are not available to every supplier. 
 

Threat of substitute products

OpenAI may be highly influenced by this factor, as there are various AI models present in the market. Thus, the company needs an effective marketing strategy to maintain its competitiveness. 
 

Rivalry among existing competitors

As per the data provided by GlobalData (2025), some leading technological companies are Alibaba Group Holding Ltd, Alphabet Inc, Amazon.com Inc, Meta Platforms Inc, Microsoft Corp and NVIDIA Corp. Thus, these companies can be potential competitors to OpenAI.
 

Forces	Level	Analysis
Threat of new entrants	Low	New startups need huge investments to maintain their existence in the market.
Bargaining power of buyers	Moderate	Customers cannot influence the price of AI or machine learning services
Bargaining power of suppliers	High	OpenAI is highly independent of specific suppliers for primary materials
Threat of substitute products	Moderate	As it is difficult to develop an advanced AI model
Rivalry among competitors	High	OpenAI has many competitors in the market.

Table 1: Porter’s Five Forces Analysis

(Source: Created by learner)

 

Internal Analysis
 

VRIO Analysis
 

As stated by Amaya et al. (2024), the VRIO analysis is a managerial tool used to evaluate the resources and capabilities of an organisation. VRIO stands for valuable, rare, imitable and organised.
 

Resources	Valuable	Rare	Imitable	Organised	Implication
Brand Recognition	Yes	Yes	Mostly	Yes	Sustainable Competitive Advantage
Human Capital	Yes	No	Yes	Yes	Temporary Competitive Advantage
Strategic Partnership	Mostly	No	Yes	Yes	Competitive Parity
Advanced Models	Yes	No	Mostly	Yes	Sustainable Competitive Advantage

Table 2: VRIO Analysis

(Source: Created by learner)

 

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The first strategy that OpenAI can target is to expand its business globally, along with more business collaborations with big and well-known tech companies. As stated by Aakerand Moorman(2023), accessing new markets along with expanding the business can be financially beneficial for an organisation. Thus, OpenAI can target the global market to enhance its development and sales. Apart from that, it can implement strategic and effective marketing strategies to enhance its global visibility and reach the maximum number of audiences. In addition to that, collaborating with well-known and recognised brands can enhance the value of OpenAI, along with improving its customer base. Furthermore, OpenAI can analyse the market statistics, data and trends to identify its opportunities and threats to make better strategic decisions for the development of the company. Apart from that, it can also help the organisation to remain ahead of its competition in the industry. However, there is a high risk of failure in the new global market as the intensity of competition is much higher. 
 

The second strategy that OpenAI can implement is to focus on improving its software as well as hardware, along with increasing the range of services and products that the company provides. Thus, it can help the company to increase its customers along with an enhancement in its sales and annual revenue. Thus, OpenAI can invest in advanced skills and software to improve its employees. As stated by Lamarre et al. (2023), talented and skilled employees led to better production. Thus, this strategy can assist the company in growing and enhancing its revenue. However, there are some potential drawbacks to this strategy. To implement this strategy, OpenAI need huge investment along with global investors. Hence, the company need effective resources to implement this strategy along with a significant risk of failure. 

 

Recommendation
 

Thus, OpenAI can implement the first strategy that targets the global market to enhance its business, along with strategic collaboration with well-recognised tech companies. This can be financially beneficial for the company. Apart from that, the company can implement the principle of Carroll’s principle of corporate social responsibility theory to maintain its sustainability, along with being financially stable. As stated by Srivastava et al. (2021), Carroll’s pyramid of CSR was introduced by Archie B. Carroll in 1991. Organisations must fulfil their responsibilities to maintain their sustainability, along with being competitive and corporate in the industry. It states that the primary responsibility of an organisation is to be profitable. After being financially stable, only then can it fulfil its other responsibilities. Moreover, the second responsibility is the legal one. It obligates the company to adhere to the rules and regulations of the country in which it is functioning. Next comes the ethical responsibility that ensures fair labour practices in the internal and external workspace of an organisation. The last responsibility is the philanthropic responsibility. It states that a financially sustainable and stable organisation must contribute a positive impact on society, community and the environment in which it is operating. Thus, by fulfilling all the responsibilities, OpenAI can improve its brand value while being competitive in the market. 

 

Conclusion
 

To conclude, a detailed analysis of the internal and external factors that influence the development of OpenAI is being conducted. Apart from that, some strategic decisions that the company can apply in its work culture to increase its productivity are also being discussed. Thus, it can be inferred that the global recognition and value of the company can be a competitive advantage to attract more customers. In addition to that, it can adopt the principle of Carroll’s pyramid of CSR to meet all the responsibilities and be a corporate organisation. Additionally, it can also take necessary actions such as effective marketing strategies and brand collaborations to develop and accelerate its growth. 

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