APPLIED CORPORATE STRATEGY

RUNNING HEAD: APPLIED CORPORATE STRATEGY
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Applied Corporate Strategy

Applied Corporate Strategy
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Table of Contents
Introduction................................................................................................................................2
External Analysis.......................................................................................................................3
Pestle Analysis........................................................................................................................3
Porter Five Forces Analysis....................................................................................................8
Internal Analysis......................................................................................................................10
Resources and Capabilities...................................................................................................11
VRIO Analysis.....................................................................................................................12
Value Chain Analysis...........................................................................................................13
Strategy Evaluation..................................................................................................................15
SAF Criteria..........................................................................................................................16
References................................................................................................................................18
Appendices...............................................................................................................................20

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Introduction
In this era of globalization and the digitalization automotive industry is changing at a faster
pace. The global automotive industry is in better shape and is expected to rise by 50 percent
in 2020 (Kagermann, 2015). But there were few challenges that organizations in this industry
faced that included complexity and cost pressure because of electrification, digital demand
that means customers want more connectivity and shifting industry landscape. Due to these
challenges the automotive industry shifts towards sustainable cars or electric cars at
affordable prices. According to Randall (2016), the above-mentioned factors are the reasons
for disruption in the automotive industry in 2016 and led to a shift of industry to the
production of electric cars.
In order to be successful in this changing environment, Tesla a well-renowned brand in the
automotive sector introduced a new concept that was focused on sustainable practices and
products (Dijk and Yarmine, 2010). With that new concept, Tesla's mission changed “to be a
leader in the market by bringing clean transport, renewable energy and by creating an entire
sustainable ecosystem”. The company is mainly known for its disruptive innovation
techniques and strategies and these strategies focus on creating and offering better products
than existing products at low prices with higher technologies.
The automotive industry influenced by many external factors that also included micro and
macro factors. Therefore, this report highlights Tesla a leading player in automotive industry
strategies for growth and success in the industry and factors that pushed Tesla to took the
decision to acquire SolarCity. Further, different tools are used to understand the corporate
environment in which the company operates. Some of the tools are Pestle analysis, Porter five
forces, VRIO analysis, and value chain analysis.

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External Analysis
The external analysis includes an analysis of the business environment of the industry in
which the company operates. In the below section, six factors that impacted the operations of
the company are analyzed in order to know threats and opportunities (Ibrahim and Harrison,
2019).
Pestle Analysis
Political Factors (Opportunity)
The political factors include political stability, government support, and political pressure. In
the automotive sector, the major changes that impacted the operations of Tesla were the
interest of the government on the green initiative, advance vehicle technology and reduction
in emission level (Jones, 2011). Due to initiatives of the government, Tesla received federal
grants, tax breaks, and loans in order to invest more in research and development. In the US,
a competitive synergy market leads to an environment that supported the acquisition of the
solar city by Tesla. Further, the distressing oil market boosted the need for electric cars due to
the government started to provide subsidies for the manufacturing of electric cars. It is seen in
the below figure that the electric vehicles market will be 35% of total vehicle sales by 2040
(Bloomberg,2016).
Source: (Bloomberg,2016)

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Economic Factors (threat)
The economic factors include economic growth, exchange rates, interest rates, and
purchasing power of individuals. Tesla operates in the automotive industry across the world
any changes in the above-mentioned factor directly influence the operations of Tesla. The
growth of the US economy since 2009, slowed down after that economy is growing but at a
decreasing rate that impacted on the operations and growth of Tesla as well. On the other
side, looking at the global perspective the economy will grow at a rate of 2.5 % on an annual
basis (Ravallion,2016). Hence, the economic condition in the domestic market is considered a
threat to the company but at the global platform, it is considered as an opportunity to increase
its market share and sales.
Source: (Worldbank,2013)
Social Factors (opportunity)
Social factors are related to habits, lifestyle, attitude and belief of the society or behavior of
the target audience that impact on company’s operations. Further, this directly impacts on the
supply and demand aspects. In the context of Tesla, consumer demand for environment-
friendly products drives the electric car market (Moons and DePelsmacker,2015). The
company takes advantage of this change and habit by offering environment-friendly cars to
women and men in both the segment. As because of the changing mindset and lifestyle of

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people it is estimated that electric car users by 2030 will be 120 million (Papadopoulos et.al,
2011). In a nutshell, Tesla takes advantage of this opportunity with its present strategy of
offering sustainable and environmentally friendly products in order to improve its
profitability and sales across the world. Further, launch of Tesla Model S and X in 2010
changed the way people experience transport services. This led to shift of people for clean
energy (Randall,2016).
Source: (Randall,2016).
Technological Factors (opportunity)
Technology advancement in the automotive sector is not a new thing and is not considered as
a threat as innovation in this industry is a frequent thing that changes the whole trend in the
industry. Technology is an aspect in which Tesla excels and has a competitive advantage. The
company has no such impact of technological changes in its operation because innovation
and technology is a driving force for Tesla. However, technology such as the use of batteries
in the electric car has some drawbacks such as huge expenditure on purchasing batteries,