Business Strategy for Tesla: Impact of Macro Environment, Internal Capabilities, and Competitive Analysis

This report explores the impact of macro environment, internal capabilities, and competitive analysis on Tesla's business strategy. It covers topics such as PESTLE analysis, SWOT analysis, Porter's Five Forces model, and the application of different theories and concepts. The report also discusses the use of Porter's generic strategy and Ansoff matrix in growing the business.

BUSINESS
STRATEGY

Contents
INTRODUCTION...........................................................................................................................................4
P1 Macro environment which impacts on business organization................................................................4
P2 Internal environment and capabilities of an organization..................................................................5
P3 Uses of porter’s fires force model......................................................................................................6
P4 Application of a range of theories, concepts and modals....................................................................7
CONCLUSION...........................................................................................................................................8
REFERENCE..................................................................................................................................................9

INTRODUCTION
Business strategy is the long term planning which is used to run a business long time. Without
business strategy a business cannot sustain in competitive market place. So business strategy is important
which help to grow a business. To understand the value of business strategy Tesla has been taken. It was
founded in 2003 by group of engineer (Scholes, 2015). It is electric vehicle charging, home car charging
company. It is multinational company which helps to attract the customer through new products and
services. It has conducted so many business strategies which provide new model and automatic services.
This report will covered various topics such as PESTLE and SWOT analysis of enterprises, porter’s five
forces model that helps in competitive environment Moreover, report will discuss about models, theories
and concept of the organization.
P1 Macro environment which impacts on business organization.
Tesla is a multinational company which manufactures different types of car Model that help to
attract the customer. The manager of Tesla build number of business strategy in order to grow a business
and crack the competition. The PESTLE analysis of Tesla is given below:
Political: Tesla has opportunity to grow its financial performances through government support
which helps to run a business globally. As government has given freedom to expand the business by using
free trade agreement. It does not formulate any strict policies and regulation which impacts negatively.
The manager of Tesla prepares number of strategy that help to grow the business. This opportunity
impacts positively for enhancing business activities.
Economical: Tesla focuses on business performance which is useful to save the cost. As it uses
new business strategy and manufacture car at low battery cost. By producing low cost battery it attracts
customers and maintains the quality of products and services. this external factor translates the
affordability of industry’s electric automobile products. Moreover, it contain decreasing renewable energy
cost which make Tesla’s products more attractive. The manager of Tesla uses different pricing strategies
which are affordable and useful for customers. Hence, economically environment impacts positively to
business organization (Akter and et.al., 2016).
Social: Social environment affects the business organization such as Tesla’s growth is based on
rising opportunity to grow the international automotive business by using low carbon lifestyle that help to
attract the large number of customers. The marketing manager of Tesla analysis the market and get the
needs of people. After getting needs and lifestyle produce that kind of products at reasonable cost and
provides at large market. As population is growing continuously the demand of product are also
increasing .Theses external factor improve market demand and supply electric vehicles to customers as
they want. Hence, this factors impacts Tesla in order to grow the demand by satisfying the customers. The
manager of Tesla boost the financial performance by giving preference to renewable energy.
Technological: This factor affect Tesla’s business greatly such as material engineering
technology which help to expand the business over the market. By using material engeering technology
and new technology it can increase the efficiency and productivity. As it produce cost effective batteries

which attract people and emphasis to purchase the products. The manager of Tesla uses new technology
to produce electric vehicle an maintain the customer loyalty in order to sale electric vehicles.
Legal: Tesla has great opportunity to safely expand its business that focuses on electric vehicle to
attract the customer. It follows the patent protection law that help to save the products from copy by the
other industry. No other company has right to copy the electric vehicle that attracts customer. The
manager of Tesla produce the products and services and expand the business by following patent
protection law.
Environmental: This analysis considers ecological elements which impact on Tesla,
environment. For example, the company has opportunities to promote its electric vehicles based
on climate change, expanding ecological drivers, and rising values on waste disposal. This help
to increase the productivity of the organization by reducing the carbon and accepting the climate
change.
P2 Internal environment and capabilities of an organization.
SWOT analysis of Tesla that help to show the how a business organisation sustain in
competitive market. SWOT analysis refers strength, weakness, opportunity and threat that run a
business perfectly (Shuen,2018).
Strength: Tesla is a international company which provides number of electrical vehicle
who consume low battery and low cost. It attract the customer by providing attractive products.
As it has wide area to sell the products and services which increases the customer loyalty. The
manager of Tesla has capacity to produce technological engineering products that make more
confedencial to customer..customer gets happy to purchase this kind of products and increases
the demand of products..
Weakness: Tesla is facing the high debt load problem because of high competition and variety of
products are available in market. It invested a high amount of cash in order to crack the competition and
growing the business. New competitors has been created a problems for Tesla because it need to invest
the high amount which may be a weakness. Moreover, highly competition in market which can switch the
customer towards another industry's products. The manager of Tesla has number of competitiors because
free entry and exist at market place which increases weakness of the company.
Opportunity: Tesla has great opportunity to expand the business market such as it produce new
engineering vehicle car model that help to attract the customer. The manager of Tesla get the information
of market and people interest, manufacturer products Accordingly in order to grow the business market.
additionally it uses new technology and less cost batteries to manufacture products. By providing
attractive products customer influenced and maintain the customer continuously. In other words Tesa has
opportunity to expand the business by eliminating the competition and increasing demand of business.
The manager of Tesla creates new opportunities for organisation and growing business (Razak and
et.al., 2016).

Threat: Tesla has treat also such as funding production ramp which may be a problem for Tesla. It need
to arrange the fund for running a business. Moreover, high competition at market place which may be a
reason of low productivity and profitability. The manager need to arrange highly amount of capital to
sustain in competition.
P3 Uses of porter’s fires force model.
Tesla uses porter’s five forces that help to analysis the competitive environment. It states that
how a company crack the competition and sustain in market by making number of attractive products. As
Tesla is vehicle engineering company who uses different strategy to be sustain at market place. The main
purpose of using this model is to know the competition and know the position of business. The five
elements are described below-
Competitive rivalry: This involves the number of competitors and who are the competitors. The
marketing manager of Tesla inquiry the market and get information about its competitors. If competitors
are high then it need to produce more attractive products that help to attract the visitors and customers.
Tesla built new products in order to face the competition and increase the strength of business.
Threat of new entrants: There is not entry and exit barrier which may be a challenge for
company. Tesla need to take patent or know how to sustain in market place that will help to face the
challenges. Moreover, government policies also help Tesla to be constant in competitive market. The
manager of Tesla get patent of product and services in order to increase the sale of products.
Bargaining power of buyer: There are large number of number of buyers because business
stand at global market and the products are differentiated that influenced customers. In this situation the
bargaining power of buyer is low because customer purchases products at high prices. As customers does
not have alternative option to purchase electric vehicle car at low cost. So they purchases products and
services at high cost. In this situation the switching cost is low and Tesla can sell products and services
according to their strategy ( Linder and Williander, 2017).
Bargaining power of supplier: As Tesla is well known company who produce number of
products. At market palace there are number of suppliers who sells raw material at different cost. So Tesla
has opportunity to purchase raw material in less cost as it want. If limited sources are available in market
then Tesla has to pay according to suppliers. So it’s advantage for Tesla that no switching cost of supplier
who can charge price according to them. This model help to increase the number of products and services.
Threat of substitute products: This means if substitute of products are available in market then
threat of substitute is high. It may be a challenge for Tesla that customer can purchase another
engineering model car from other company. So to be sustain and doing low threat of substitute Tesla need
to sell its products and services at low prices which customer can be afford easily. By doing such Tesla
can face the competition and increase the number of sale (Leonidou and et.al., 2015).

P4 Application of a range of theories, concepts and modals.
Tesla uses different types of theories and models that help in growth of business and expand the
business strategy. It uses porter five generic model in order to beat the competition. This model is
described as below-
Cost leadership: This means companies focuses on prices and demand of products. In this
strategy organization has to create the large market share and low prices of products in order to influenced
the customers. If Tesla uses this strategy it has keep the less cost of products as possible as can or need to
increase the market share that will help to create the large demand of products and services. If the
manager do so they can increase the productivity and profitability.
Differentiation: In this strategy organization target a wider market by producing the unique or
differentiated products. This strategy help to influenced the customer to buy new and unique products. If
Tesla uses this strategy then it need to produce unique and differentiated products. If the products will be
unique customer will purchase more products and will reference to others also (Torrent-Sellens, 2015).
Cost focus: In this strategy organization focuses on cost and reduces the cost of business
activities.. such as it considers low cost of raw material, labor and etc. The main object of this strategy is
to focus on cost. If Tesla uses this strategy it has to select the niche market, it mean low competition
market place where number of customer purchases products at low prices. Moreover, it will need to
understand the dynamics of market and needs of customers.
Differentiation focus: This strategy mostly involves strong brand loyalty and trust among
customers. Its main target is niche market where competition and uniqueness of products are available.
Tesla can use this strategy by establishing low competitive market and unique products. The manager of
Tesla has to produce new and attractive engineering products in order to face the challenges.
From the above strategy Tesla should adopt differentiation strategy that will help to beat the
competition. This strategy will be suitable and acceptable such as by providing new engineering model
car it will attract customer and make available at low cost it can increase the number of customer. This
will suitable because Tesla has unlimited financial and skilled human resources that help to increase the
productivity and profitability. The manager of Tesla need to manufacture electric as customers wants and
focuses on number of products.
Tesla also uses Ansoff matrix that is a strategic planning tool which provides a future growth and
expanding business activities. It involves different phases to growing the business at market place. The
Ansoff matrix is described as below-
Market penetration: This strategy is adopted when industry has existing product and existing
market. It is used in growth of business in existing market. Tesla can use this strategy by producing
existing products. It does not need to incurred extra cost that may be a challenge for Tesla.
Market development: This strategy consider new market and existing product. Tesla can use
this strategy by expanding the business at new market and providing existing products. In this strategy
company have to treat the products as new entrants in new market. If the product have already high brand
then it may be easy for companies to sale the products and services. In other side, if the product is new
and not established in market first it need to cater the existing products. Hence, Tesla can use this

business strategy that will help in growth of business (Martinez-Simarro, Devece and Llopis-Albert,
2015).
Product development: This is used in new product and new market that help to growth of
business activities. It mainly focuses on customer base and new product development strategy that help to
growing the business activities. Tesla is fast growing company is planning to bring new product such as
electric vehicle that help to attract the customers. By introducing new products it can expand the market
place.
Diversification: This strategy is used in case of completely new product and new market place
which influence the new as well as existing customers. If Tesla use this strategy need to make solid
business planning that help to beat the competition and growth the business industry. The manager of
Tesla company is bringing new electric vehicle, for this it should make strategy where it should launch
first and how it can expand its market (Yuliansyah, Rammal and Rose, 2016).
From the abovementioned strategy it has been recommended that Tesla should use product
development strategy that will help to growth of business industry and expand the business by selling the
attractive products at new market.
CONCLUSION
From the above report it has been concluded that business strategy are very important that helps
to run a business effectively. A business can grow by formulating number of strategy. Business strategy
help to maintain the quality of products and increases the number of customer. Every business concern
should make solid planning to expand the business and beat the competition. This report has covered
various topics such as external factors like political, economical, social, technological, legal and
environmental which impacts on business. Additionally, report has covered SWOT analysis of Tesla
organization that states strength and weakness of business industry. A part from this report contained
porter five model, porter generic strategy and Ansoff matrix in order to growth of business.

REFERENCE
Books and Journal
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Shuen, A., 2018. Web 2.0: A Strategy Guide: Business thinking and strategies behind successful
Web 2.0 implementations. O'Reilly Media.
Razak, N. A., and et.al., 2016. Theories of knowledge sharing behavior in business
strategy. Procedia Economics and Finance, 37, pp.545-553.
Linder, M. and Williander, M., 2017. Circular business model innovation: inherent
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Leonidou, L.C.,and et.al., 2015. Environmentally friendly export business str
Torrent-Sellens, J., 2015. Knowledge products and network externalities: Implications for the
business strategy. Journal of the Knowledge Economy. 6(1). pp.138-156.
Martinez-Simarro, D., Devece, C. and Llopis-Albert, C., 2015. How information systems
strategy moderates the relationship between business strategy and performance. Journal of
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Yuliansyah, Y., Rammal, H. G. and Rose, E., 2016. Business strategy and performance in
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Scholes, M. S., 2015.
Akter, S., and et.al., 2016.
Shuen, A., 2018
Razak, N. A., and et.al., 2016. Linder, M. and Williander, M., 2017
Leonidou, L.C.,and et.al., 2015 Torrent-Sellens, J., 2015
Martinez-Simarro, D., Devece, C. and Llopis-Albert, C., 2015
Yuliansyah, Y., Rammal, H. G. and Rose, E., 2016