This report discusses Tesla motor’s corporate strategy, including external and internal analysis, opportunities and threats, and strengths and weaknesses. It also explores the use of analytical tools such as PESTLE analysis and Porter’s Five Forces Model.
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APPLIED CORPORATE STRATEGY
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TABLE OF CONTENTS INTRODUCTION...........................................................................................................................3 Q1 EXTERNAL ANALYSIS..........................................................................................................3 PESTLE Analysis........................................................................................................................3 Porter’s Five Forces Model of Tesla...........................................................................................4 Opportunities and Threats of Tesla..............................................................................................6 Q2 INTERNAL ANALYSIS...........................................................................................................7 VRIO Model of Tesla..................................................................................................................7 Strengths and Weaknesses of Tesla.............................................................................................8 CC Analysis...............................................................................................................................10 Q3 RECENT STRATEGY............................................................................................................10 SAF Model.................................................................................................................................11 CONCLUSION..............................................................................................................................12 A SUMMARY OF THE ORIGINAL FEEDBACK.....................................................................13 REFERENCES..............................................................................................................................14
INTRODUCTION Acorporatestrategyisclearlydefinedas,long-termobjectivethatcompaniesor businesses set for creating theircorporatevalue in the market, and motivate to workforce for implementing the appropriate actions for achieving huge customer satisfaction. Currently top- level management within most businesses focuses on making very effective corporate strategy gain huge competitive advantage in this competitive market. In this modern and dynamic world, no company can survive in the market without adopting an effective corporate strategy.This report discusses Tesla motor’s corporate strategy. There is Tesla motors is an American electric vehicle manufacturing company, headquartered in California, United States. Some other aspects also have been discussed in this report which has based on Tesla’ corporate strategy. Thera are external and internal analysis has conducted for the Tesla in this report to deeply analysis its structure of corporate strategy. Some models and frameworks also has used in this report for identifying and analysing different business environment factors of Tesla Motors. Q1 EXTERNAL ANALYSIS PESTLE Analysis Thisisanalyticaltoolwhichhelpsbusinesstoanalyseexternalfactorsinthebusiness environment.This also helps the businesses to develop effective strategy to compete in the market. Political Factors Due to increase in the demand of electrical cars government has imposed high taxation to earn revenues from the company this has impacted the profit margins to grow in the market. Economic Factors Increase in employment in the global economy has also increased the cost of pay employees more. This has influenced the allocation of resources of Tesla for future innovations. Social Factors Change in preferences of customers and increased the sales of company as it reduces the cost of maintenance of customers. However customer with traditional mindset does not trust electric cars which have impacted the market size.
Technological Factors Company has to invest heavily in innovation, research and development as technology is changing very fast. This is impacting the efficiency of products and services which Tesla offers in the market. Environmental Factors Global environmental concerns like global warming have affected the climatic changes. As Tesla has developed electric cars it is also helping to increase its visionary cause and brand value to grow effectively. Legal Factors Implementation of high safety and security laws on electric cars has slowed the efficiency of Tesla to grow. It has also increased the cost to be in compliance and be ethical and legal in its operations. It is impacting its market share and profit margins negatively. Porter’s Five Forces Model of Tesla There are many factors which hells to increase the productivity of the organisation and provideeffectiveunderstandingtocompeteinmarketandattainhigherprofitmargins effectively. Porter five forces model helps to analyse the entire factor which can impact the competitiveness of Tesla to reduce its market share in market and also impact its growth opportunities effectively(Bolodurina, 2016). This model is also very essential for Tesla to develop effective understanding of the future trends of customers to increase the productivity and quality of their cars to provide satisfaction and increase the quality of products to gain higher profit margins. To evaluate industry attractiveness, it is very essential for Tesla to adopt this modelandincreasetheproductivityofcompanyandattaincorecompetencyinmarket effectively. Due to increase in the trends of solar energy company also has to understand its threats and opportunities top gain effective understanding before investing in this sector to gain higher profit margins effectively. Threat of New entrants (High) Increase in demand in automotive industry the threats of manufacturing companies have also increased due to high risk of new entrants which can impact the market short of the company and also influence the profit margins of the company. Tesla is having high risk of new entrants in the market as many companies are very innovative and also invest much on research and development to increase the performance of the products and increase satisfaction of the
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customerseffectively.Teslaimprovesitseffectiveunderstandingabouttechnologyby developing high performance workforce and also increasing the efficiency of them. This will helps the company to become more effective in supporting the company and achieving its objectives effectively.Many companies also have the threat from Tesla due to high potential growth of company which also attracted more customers. Bargaining Power of Buyers (Moderate) Buyers are the king of market and also have the power to influences the market demand to reduce prices of companies in automotive industries effectively. Tesla has moderate threat of bargaining power of buyer which can decrease the prices of products to satisfy customers and also provide them better options(Melissen and et.al., 2018. This is because of high completion in market although the threat is moderate as the company also deals in electric cars which support sustainable energy as well. This helps to attracts more customers and reduces their bargaining power to impact the profit share of Tesla. There is strong threat to company of globalization which can increase the bargaining power of customers however company has increased its productivity and improved the quality of products to attract customers with same price range and even lower to many substitutes. Bargaining Power of Suppliers (Moderate) Suppliers of Tesla also ahs the moderate power to impact the profit margins of the company. The issue of bargainingpower ishigh cost rawmaterialswhich increase the production cost of the products and impact the growth opportunities of the company(Frandsen and Johansen, 2018. It is also very essential for the company to determine alternate raw material to reduce bargaining power of the company. As Tesla in investing in solar energy as the new alternative fuel which will also reduce the cost of buyer to maintain cars and also reduce cost of raw material to develop this type of car. There are many factors which also helps the company to develop better supply chain and also increase the profit margins of Tesla and compete in market effectively. Threat of Substitute Products (Moderate) Increase in the competition in the market has also increased the number of substitute products of Tesla. This has also increased the threat of company to generate more revenue and market share. This is also very essential for the company to develop its market growth and increase higher profit margins. The threat of substitute is moderate as there are not many electric
cars available in the market which can impact the sales of company and also reduce the efficiency of Tesla to grow. Threat of Existing Competition (High) There is high threat of existing player in the market as they have the potential to innovate and invest in the electric cart segments which will also reduce the market share of Tesla and provide ineffective productivity ion the market. This has also impacted the sales and market share of the company to become leader in the market. Due to increase in the innovation of competitors it is very difficult for Tesla to survive in the market and achieve all the factors to achieve core competency in the market(Schmidt and Redler, 2018). Tesla also has to innovate its products in order to compete in market and increase its market share. Opportunities and Threats of Tesla It is very essential for Tesla to determine its opportunities and threats to increase its productivity and also gain higher profit margins. Opportunities 1.Tesla has many opportunities in the market to grow which can also increase the potential of the company to become more effective and increase market share. As the company has opportunity to expand in new market which are developing and do not have any electric car competitors this will increase the sales of their company and increase profit margins effectively. 2.It is also very essential for Tesla to analyse all the available resources to develop low budget cars and increase the efficiency to attract more customers from the market effectively. 3.Tesla also has to opportunity to increase the quality of battery life of their cars which increases the customer satisfaction and improve the sales rapidly. Threats 1.As Tesla has developed many high end technology to increase the quality of car and travel of customer however this has increase the threats of company due to many errors in technology which has compromised the safety of passengers(Wu, 2018). This has impacted the brand value of Tesla negatively.
2.Defect in the products has also increased the call backs and reduced the profit margins of the company to invest in the other segments. 3.It is very difficult for the company to increase the customer knowledge to adapt to new technology which is also losing market share despite of cost efficiency for customers. Q2 INTERNAL ANALYSIS VRIO Model of Tesla This model is a framework which provides analysis of all the resources which has competitiveness to increase the market share of the company(Alexandrova, Stankova and Mladenova, 2016). Tesla uses this strategic analysis model to understand productivity of resources which helps to increase internal competitiveness of company to increase market share and profit margins to grow rapidly in market. ResourcesValuableRareInimitableOrganisation Capital√ Technology√√√√ Human Resource√√√ Intellectual Property √√√ Valuable Valuable resources are these which add value in the activities of the company and increases profit margins to grow. This resources are also helpful to generate all the factors and analysing these factors also can increase the quality of products and adds value of customers to increase their satisfaction level and motivate them to become loyal to the company effectively. Tesla identified resources which are valuable which are capital as it helps to provide better opportunity for company to develop effective technology. Technology, human resources and intellectual property are the key resources which increase the value of customer and use all the opportunity to increase profit margins effectively. Rare
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There are many factors which not available win the market which increases its monopoly in the completive market. Tesla also has some resources which are rare in market and help to increase brand value of the company(Pramudita, 2016). It is very essential for the company to understand the rare resources to gain core competency in the market. Tesla has developed and effective technology like cruise control in which the car become the driver to and handle the steering. This resources help company to attracts more customers in the company effectively. Employees of Tesla are also very effective and well skills and trained tohavebetter knowledge which helps them to attracts more customers and satisfy them effectively. Inimitable These are the resources which are present in the business and no one can copy those due to many factors. This resource also provides competitive advantage to company and increases the profit margins by attracting more customers. Tesla has innovated many technology and digital tools and registered them in patent act which helps them company to protect their innovation from other competitors and provides long term competitiveness in market. Organisation Organisationisthemostimportantstrategywhichhelpsthebusinesstounderstandthe combination of all the resources which helps them to achieve their objectives. As having rare resources and not using them optimally can also reduce the efficiency of the company and impact the competitive advantage in market(Pidun, 2019). Tesla also has the identify the effective method and also provide better training to employees which increases the cultural values of organisation to support in achieving objectives of company to increaseprofit margins effectively. Strengths and Weaknesses of Tesla Strengths 1.Currently Tesla has great market reputation, because it always believes in provide quality vehicle to customers. People who care for natural environment are specially like to buy its vehicles, because it only produces electric vehicles which never harm environment. On the other side, Tesla has lots of funding sources, because every investor is currently
wants to invest in this brand. Reason is, the company is fully running on its progressive path. 2.The founder of Tesla called Elon Musk have great fan following in the whole world, because people like him because of his hard work and innovation skills. Currently company has very effective workforce which day or night giving their great contribution in all over growth of the Tesla (Thomas and Alluru, 2016). On the other side, it has very large market share in electric vehicle industry. Most people only give priority to this company when they decide to buy an electronic vehicle. 3.Tesla has exclusive range of vehicles which no other vehicle manufacturing company can capable to provide in market. For example; Tesla’s cyber truck. Recently this truck has gained huge popularity in all around the world. People has really liked creativity of company.R&D (Research and Development) team of company is too goof in their job role, because it always tries to produce that type of vehicles which can attract lots of people towards brand. Weaknesses 1.Tesla mainly focus on producing those vehicles which only rich people are able to afford in market. Reason is, people who comes from low income groups are not easily able to afford vehicles which this company has provided. On the other side, if any person buysTesla’s vehicle, then it need to pay very amount for maintaining that vehicle. 2.In Asian countries, most peopledepend only on petrol and diesel vehicles, so companies which provides petrol and diesel vehicles in these countries will give very tough competition Tesla. On the other side, convince people to buy electric vehicles, it is very big challenge for this company (Manral and Harrigan, 2018). Reason is, currently many people like to stay with old technology. 3.Many times batteries of their vehicles becomes low in few time, so their customers have face many challenges to ride it. Many times customers are complaints about quality of their vehicles, because they not get satisfied with manufacturing quality. From establishment to date, company has not gained much profit, because some specific people are only customers of Tesla. Many times their marketing campaigns becomes failed for choosing inappropriate marketing strategy.
CC Analysis In year 2013, Tesla’s price of share shot the range of $20 to $35 over the last some years to the $190.90 high. In year 2016, the price share was reach around $250, then in year 2017 climbed around $340. But that price is a simple matter of history. On that time the Tesla motors has very strong cash inflow, and still has. Currently this company is completely running in the profit. Last year the Tesla motors has generated US$24.578 billion revenue which is really too excellent to this company. Q3 RECENT STRATEGY The Tesla has used merger strategy to merge with Solar city company. Top-level management of company has decided to acquire that company for using their great assents and resources. Currently Solar city is the subsidiary company of Tesla. The company has offered $2.6 Billion to Solar city to complete merger process. This strategy is also a part of corporate social responsibility where a company owner choose merger strategy to exit and succession from their existing business. For example; solar city. On the other side, it is also a strategy when a business owner acquires an established company for growing their existing business operations (Delmas, Lim and Nairn-Birch, 2016). For example; Tesla. There is merger is the best strategy which currently chosen by many companies or businesses to exit and succession their business. That’s why top-level management of company has decided to choose this strategy. The founder of Tesla, means Elon Musk was really excited to merger with solar city, because solar city has those all resources on that time which Tesla has required for their own growth. The marketing team of this company has complete whole market research before merging with that company. Basically, a set of strategies were used by company to achieve profitable deal. Tesla’s marketing team is currently too active on their job role, because it has researched each information about solar city company before merging with it. This was really tough task to the company, because many times merging strategy becomes failed because of poor market research. Each business or company should learn with Tesla about how to use merger strategy. Reason is, many times businesses not capable to achieve expected benefits from this strategy, that’s why companies need to use merger strategy like Tesla has used during acquiring. Nowadays solar city is giving great contribution in the all over growth of the company. The
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founder Elon Musk always try to learn new things from different things, so he most of the time takes very risky steps. In this case, this merger was also a very risky deal on time for this company (Hodge, 2019). On the other side, proper consultancy also played great role in any merger deal, because a business consultant who has proper knowledge of market is always gives appropriate strategy to complete a merger deal. SAF Model SAF model is very helpful tool for analysing strategic possibilities. Currently many businesses or companies are taking huge advantages through this model. SAF model was mainly developed by Gerry Johnson and Kevan Scholes. Basically, SAF refers three major terms of business environment called; Suitability, Feasibility and Acceptability which has been discussed below; Suitability:According to the current situation, top-level management of Tesla should use diversification strategy, because this the most sustainable strategy for the company. Basically, this strategy can enable to Tesla for gaining excellent return from its acquisition aspect. Feasibility:According to feasibility, the management of Tesla need to ensure that existing strategy will affect company positively or negatively. The management is responsible to analyse strengths and weaknesses of strategy as well. Acceptability:According to the acceptability term of SAF model, existing management of Tesla should prepare a financial plan for systematically implementing that strategy in its daily operations. There are three stage SAFe tests is basically agile testing which helps to people for using a vehicle in proper manner. It is applied in any place, because each business should take systematic corporate strategy to complete its decided target on time. Currently Tesla is investing huge fund on developing such corporate strategy which support to company to gaining effective profit in market. The founder of company is too creative, so it is capable to create some more strategies like merger. In this recent strategy, company mainly has focused on achieve a profitable or beneficial deal. Currently precious resources of solar city company are completely using by Tesla, because the company has complete acquired its all assets and resources with proper legal work. Most of the time businesses does many mistake while using a corporate
strategy, an at the end these mistakes negatively influence existing business environment of businesses (Abdullah and Budiman, 2019). That’s why all companies or businesses should use some effective corporate strategies to gain huge benefits in market. There is SAFe tests model just teach to companies only one thing that, each company is responsible to conduct various research and development activities. Reason is, a company can easily gain various corporate strategy through these strategies. According to Tesla’s top-level management, an organisation should take high risks for gaining high profit in market. There are many risk factors are always existing in each investment of Tesla, because it always like to provide some different products and services to their customers. In this case, Tesla’ this steps also comes under another corporate strategy called product differentiation. All people knows about Tesla’s speciality that, it is a brand which always serves some innovative vehicles to them. There are lots of challenges has faced by Tesla during using various corporate strategies, but company’s risk taking strategy always provides them huge profit in market. During using merger corporate strategy, the company was not putted huge efforts to convince solar city for merging (Frandsen and Johansen, 2018). Reason is, Tesla has great brand reputation and currently it is running on progressive path, so each company is always ready to merge with it. That’s the actual impact of corporate strategy. CONCLUSION It can be concluded that Tesla has great opportunity to expand their business operations at the large scale with the support of different corporate strategies. Innovation factor of company is too excellent, because it can easily produce various attractive vehicles. On the other side, currently company has large market share in electric vehicle industry. It is basically a strength of Tesla. it has some weaknesses as well, like only people who comes from high income groups are only able to afford its vehicles. In this case, top-level management of company is need to use some effective corporate strategies to remove such weaknesses. Recently, the company were used merger strategy to acquire all precious resources of solar city. That was really profitable deal to the company, and nowadays solar city is a major subsidiary company of Tesla.
A SUMMARY OF THE ORIGINAL FEEDBACK Feedbacks which has given by respective teacher has positively affected my work. Now I am able to make a very attractive and very productive project work on the topic of “Applied Corporate Strategy”. Generally, feedbacks which I have received that improved my abilities of research work. Feedback has given opportunity that, how to develop our strengths in academics. I have learnt somewhere that feedbacks give chance to enhance our work quality, so now I has understood that this is completely true. For example; for the first time my teacher has given me feedback that, “You did a very poor report.Please make sure that you follow the guidance”. It means, I have not done good work in the report according to my teacher, in which I have followed this feedback comment. I have improved my work in the report with proper report writing, I have addressed all feedback comments about poor work, void introduction, on pestle, and many other comments. So, this is my first feedback which has given my teacher to me, so again I have worked according to that feedback for next submission. That was great experience to me, because that feedback has really given opportunity to develop my writing skills. After submitting first feedback, I was become very confident, because that first feedback has positively affected my learning abilities and writing skills. On that time, I was become full confident and claimed that now I will not receive any feedback from my teacher. But my that mind-set was not true, because after few days, my teacher has again given me. In that next feedback teacher told me that “find attached the brieffor the resit andplease make sure that you add tables and diagrams as it is required”. So again, I enable to myself for dealing with this second feedback, I have addressed all feedback comments which has given by my teacher in this feedback. In this situation, this second feedback also has given chance to learn that how to add additional tables and diagrams within the report, so that was also very new experience to me. I have claimed, I have perfectly addressed feedback comments which my teacher has given in the second feedback, and then again have submitted that feedback file to my respected teacher. Basically, these all feedbacks have very positively affected my whole learning and writing abilities. With support of these feedbacks, now I am able to make a very productive report.
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Thomas, M. and Alluru, J.R., 2016. Thriving in a downturn: aligning corporate strategy and the economic context to ensure stable growth.Strategic Direction. Wu, M., 2018. Corporate Strategy and Analyst Behaviour.