Business Strategy: Macro Environment, Internal Environment, SWOT Analysis, McKinsey's 7S Model

This article discusses the business strategy of Tesla Motors, including the macro environment analysis, internal environment analysis, SWOT analysis, and McKinsey's 7S model.

BUSINESS STRATEGY

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
P1 Macro Environment...............................................................................................................3
LO 2.................................................................................................................................................5
P2 Internal Environment.............................................................................................................5
LO 3.................................................................................................................................................7
P3 Porter's Five Forces................................................................................................................7
LO 4.................................................................................................................................................9
P4 Strategic Planning..................................................................................................................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business Strategy is when a business sets of action or move in market to attract more
customers, to achieve goals and missions of business and to compete successfully. This helps in
outlining company so that they can carry and reach their desired goals. All business have their
own strategies in market which makes each business unique and have there strengths in market.
Tesla motors has established itself in 2003 which is a public business. Products business
is dealing with are electrical vehicles. Owner of organization is Elon Musk and has its
headquarters in California, United States. Elon Musk wants that people have best of facilities in
electrical cars than using fuel cars. Innovations and creativity is one of strengths that Tesla has
over competitors in market. Study would be covering internal and external factors which are
having an influence on firm. Porters five forces will be applied in firm's context and strategic
management plan of Tesla will be prepared.
LO 1
P1 Macro Environment
PESTLE
Pestle analysis is a tool which helps firm to analysis foreign market and then take steps
accordingly for expansion.
Political Factors
 Governments of all countries are in favour of organization because Tesla is going to help
countries to keep environment of country better. Resources like fuel is limited therefore
using gas and electrical factors are very essential for government of world to promote this
so that there can be a balance in nature. There is a free trade for Tesla agreement which
has been made therefore Tesla is going to make lot of profit from this factor. Also, there
is a stability in political parties in major market therefore it will be easier for firm to have
a better market for themselves internationally. Free trade agreement of government aids
business in conducting operations in other nation easily. That is beneficial in raising
revenue of organization to great extent (Sharma, 2016).
 Political instability can affect business major therefore business should make most right
now itself. Not all countries have a free trade policy which can make Tesla gain their
market.

Economic Factors
 Battery costing has decreased which can make firm have a lot of profit because
production cost has faded. It is because of cost diminution organization can reduce prices
of vehicle to make more sells (Andersen and et.al., 2017). Cost for renewable resources
has been ablated which will promote organization to have more sales because customers
will have lesser spending on car. Sells and promotions for buying electric cars have
increased rapidly and that is a very good factor for Tesla.
 Economic conditions of establishment can be negative because foreign dealing involves
exchange of currency which can affect economy of institution and country because
revenue company will generate will be lower than expected.
Social Factors
 Carbon footprint in environment will reduce which will provide society with a healthy
lifestyle for themselves. Eco-friendly are products which customers are looking for and
Tesla is able to have an advantage over this element. Use of renewable resource is a good
part for not using restricted resources and utilizing them for future use. There are a lot of
innovations and creativity which have taken place in establishment so that they aid to
improve and meet satisfaction of customers.
 Customers are very attracted to use fuels cars still therefore getting change in customers
is a limit which establishment is having in market and revenue Tesla is making is limited
(Long and et.al., 2019). Tesla is promoting themselves and making customers shift from
fuel cars to electrical or gas cars so that customers can have a healthier life in the future.
Technological Factors
 Technological factor is making portfolio of Tesla even stronger. Tesla is increasing
popularity of online mobile system in electrical cars and gas cars so that customers can
get more satisfied with products they are consuming. Automation in organization has also
increased so that work force in firm can be managed so that working of Tesla can take
place efficiently and effectively.
 Changes in technology is very rapid therefore it is very important for Tesla to keep
getting change in technology of firm so that they establishment can maintain standards
for themselves. Technology gives Tesla a competitive advantage but Tesla is not making
enough revenue which is why loans are being taken by establishment to make

technological changes in Tesla take place frequently. Hence, production and operation
cost of firm is increasing with rapid speed (Mosey and Kirkham, 2017).
Legal Factors
 Tesla is legally taking care of energy consumption regulations so that they are not
violating any factors. Business has expanded themselves internationally which is why it
is very important to take care of protection patent for business.
 Tesla will have to remain up to date about all legal factors of all countries which business
is expanding product in because if that is not done then expansion will take even longer
than expected (Rimmer, 2018). Regulation in distribution of dealership sales is not
present in countries Tesla is delivering products in. Tesla is not being able to directly sale
there product to customers directly which is why firm is having a lot of limitations in
market.
Environmental Factors
 Tesla is one of first companies to have zero waste disposal which is making firm eco-
friendly over all. Tesla is expanding in making more environmental friendly products so
that company can make environment worth living in and will be beneficial for long run
(Cusumano, Yoffie and Gawer, 2019). Gases and electrical cars are really helping
organization to meet needs of satisfying customers properly and helping customers to
create a better environment for themselves. Tesla has made a name for themselves in
market by focusing on environment.
 Greenhouse gases in world is increasing because of auto mobile in world which Tesla is
taking care of to some level. Due to climate change because of global warming it is
getting difficult for firm to make their products reach out to other countries.
STAKEHOLDER'S ANALYSIS:
Stakeholders' Analysis helps in the identification of the relevant stakeholders or the
interested parties in an organization. This analysis is usually conducted in order to group
different parties on the basis of their interest or participation level and develop proper
communication with every associated stakeholder. For Tesla, working in CSR integrated
framework has been the entire business model or framework: Communities is the highest priority stakeholder for Tesla, where the ecologically cleaner
cars and launching products based on zero- emission are the key features that Tesla is

using to satisfy the interest of communities. Making their patents available to the public
was one such community favoured decision that Tesla took in order to foster the overall
improvement in the quality of automotive manufacturing. Customers: The company ensures that the pricing factor associated with the production is
kept low where Tesla has started manufacturing their own batteries. They are also trying
to develop more charging stations thus increasing the access of the customers. This
comprises the majority of the stakeholders concern. Employees: Management of Tesla also ensures that aspects such as competitive salary or
developing special HR programmes etc. contribute in keeping the key stakeholder group,
i.e. employees, satisfied. Investors/ Shareholders: Developing long term strategies and using CSR based strategies
have helped Tesla in maintaining a growth chart. This has kept a loyal and focused base
of shareholders for the company who have contributes in company's growth over the
years.
 Governments: Tesla conforms to all the legal compliance requirements of the
government and the strategic plan thus developed contributes in the expansion of the
governmental interests.
The analysis above of the external environment factors helps in concluding that the
strategies that have been adopted by Tesla have motivated them to grow where both the aspects
have facilitated each other.
LO 2
P2 Internal Environment
SWOT
This is a strategic planning because this analysis helps establishment to identify SWOT
which will help establishment to understand competition in market and have a project planning.
Strengths
Tesla is having high innovation and creativity power therefore they are leading company
in producing electrical and gas cars. Over year's establishment has gained a strong brand name
for themselves which is making troupe have a good name among-st customers of firm. Tesla is
also having a strong control over production process of cars they are producing. Improvement is
a very important factor to have a growth in market therefore firm is having a good and strong

research and development department for themselves so that they can make a place for them in
market (Chen and Perez, 2018). CEO of organization makes sure that all team is motivated for
changes which are coming up in firm and accept them and work even harder to get more
innovation for betterment. Leadership qualities in company is also good and therefore company
is being able to deal with things so well. Political factor or support from government in company
is also huge therefore firm is being able to make a lot of profit. Distribution channels of Tesla is
very connected and that is a very good factor for organization because they will be able to satisfy
needs of customers at a higher rate.
Weaknesses
Weak spot of establishment is that they are not being able to reach out to their customers
from time to time and that is a very important factor since company is doing so much for
betterment of people. Tesla is making products which are futuristic which is making company
have an advantage in market but what is use of that factor when they are not being able reach to
customers. Technological changes which are taking place involving a lot of investment which is
a weakness of firm. Production of products which Tesla is dealing with is being manufactured in
just one place which is becoming a weakness for company since they are not being able to reach
out to other customers which are in need (McCain, 2019). Targeting for company is becoming
difficult and that is not having a positive impact in establishment. There are a lot of competitors
in market which Tesla has to compete with and if they do not look at that factor then that can
create a great disadvantage for company. Liquidity in firm is poor, and they are not having
enough liquidity which is making company have boundary in expanding themselves
internationally.
Opportunities
Tesla is having a lot of advantage on factor that they are being able to have a lot of
technological changes in firm which is making organization have an opportunity to expand
themselves further and have better innovations (Thomas and Maine, 2019). Technological
changes is making company have a wider range of thinking and innovations are being used in
company so that company can have a competitive advantage in market. There are a lot of new
products which are coming out from establishment for benefit of customers and that is making
company have a competitive advantage. Customers are rapidly shifting from fuel cars to gas and
electrical cars which is making Tesla have a competitive advantage which is a great opportunity

for business. Growth for this product of Tesla will be fulfilling needs of customers completely.
Mobility services in business is huge and that is making organization have a better contact with
customers of company. Products which are being produced by Tesla are not being able to reach
middle class because they are not affordable for them therefore Tesla is coming out with so that
they can make better changes which are affordable and customers will attracted to firm.
Threats
There are a lot of companies in market which are providing luxury to customers which
customers are getting more attracted to which is making Tesla not be able to make a place for
themselves in market (Hettich and Müller-Stewens, 2017). Tesla is not being able to meet
demands of customers because products which organization is producing are a limit for Tesla
because with gas and electrical cars there can not be more innovations like luxury of people.
There are bigger companies which are investing in making eco-friendly products which is
making company have a threat in future because companies like Ford, Audi, etc. will also come
in competition. Safety and security which organization is providing to customers is not up to the
mark. In case of a decrease in the price of oil then the company will not be able to make a profit
at all because the customers will shift to buy fuels cars more. The crashes and fires in Tesla car is
another threat for the firm because there are a lot of cases like these in the past. There is a
requirement for the changes to be made accordingly. The delivery to the customers is also not on
time which will make the company have more loss since they have only one manufacturing
plant.
MCKINSEY'S 7 S MODEL
The McKinsey 7S model for Tesla helps in integrating the different associated aspects
with the effectiveness of the organizational performance: Strategy: The strategies adopted at Tesla are integrated with the vision of the company
i.e. transition towards a sustainable energy force. The lower cost of the vehicles and the
increased fuel efficiency are some aspects that have been addressed under strategy aspect. Structure: The divisional structure of Tesla helps in achieving a range of diversified
practices thus increasing efficiency. Systems: All the units operating at Tesla are closely interlinked to each other forming a
central system.

 Shared Values: The ethical aspect is a highlighted principle formulating the basis for the
workplace ethics or value system for Tesla. Skills: Tesla has always given priority to skills rather than the degrees while selecting
their employees. Style: This refers to the approach adopted by the management and the leaders of Tesla
always work with their employees rather than working over them.
 Staff: This indicates the personnel size and Tesla being an international organization
employs a large quantity of skilled people.
Therefore, the internal analysis helps in concluding that the entire system and resources
that the Tesla holds is extremely developed and the only work that needs to be done is on giving
more empowerment to the employees.
LO 3
P3 Porter's Five Forces
This analysis helps in analysing the competition in the market which will make the
functioning of the company more efficiently and effective for the future and smooth running of
the company (Sikochi, Srinivasan and Pitcher, 2018). To understand the intensity of the market it
is very important to analysis this factor so that the business can benefit from it.
Threat to New Entrants (Low)
Tesla is having a lot of competition for themselves in the market which is a very
important factor for the company. Tesla is right now the leading company in producing electrical
and gas cars in the market but companies like Ford and Audi are also trying to come in the
competitions which can create a great threat to Tesla (Galpin, 2019). The organization has
created a strong brand name for themselves in the market over the years therefore it is next to
impossible for any company to take a competition with Tesla but the auto mobile industry will
have to shift to renewable resources for the future. There is a requirement of a lot of investment
if any company wants to come in the competition with Tesla. Experience of Tesla will help the
company for not allowing anyone to take over them which is a great advantage for the firm.
Therefore, the threat of the new entrants is comparatively lower for Tesla from the new entrants.
Threat to Substitute (Medium)
Threat to substitute is not present in the organization as of now but it will be in the future
and that is a very important factor for the company. Since, all the companies which are in the

auto mobile industry will have to turn eco-friendly will want to make the most from the factor
which will make Tesla have a lot of competition in the market. The fuel is limited, and they are
increasing the carbon footprint in the environment which is not a good factor for the industry
therefore all the companies in the industry can be a great substitute threat for Tesla in the future.
The goals and objectives of the organization is being achieved from time to time therefore by the
time the competition comes and the substitutes of the products start coming in them market Tesla
will already have a brand name for themselves (Gilson and Abbott, 2017) thus proving this as a
moderate factor.
Bargaining power of Suppliers (Low)
The cost of batteries and producing the product is reducing in the establishment there the
production of the products in the company can increase which will be very beneficial for the
organization. In the past the batteries were costing lot to the company therefore the prices of the
products had to be increased but now Tesla can increase there market base by reducing the price
of the product (Mayfield and Siriwardane, 2018). The product was not affordable by the middle
class customers which is why the customers base for the company was not increasing. Now that
there are so many innovations which have taken place that will make the company have a better
profit for themselves by reaching out to the customers.
Bargaining Power of Buyers (high)
The prices of the fuel in the market is increase which is why the company can make a lot
of profit if the prices of the electrical and gas cars of Tesla reduces. It is very important for Tesla
to take advantage of the factor that the fuel prices are increasing which will make the company
have a lot of advantage. Safety and security is not present in the product which is making the
company not be able to sell so many products as expected (Teece, 2018). The customers want a
lot of luxury in the products which is why the company is trying to innovate and product the best
of products so that they can make the company have a lot of profit.
Competitive Rivalry (High)
Tesla is already having a lot of competitive rivalry in the market for themselves from the
very beginning because there are a lot of companies in the market which are dealing with the
same products. Audi and Ford are the major competitors of Tesla in the market as of now
because they have already start making eco-friendly cars (YANG and LIANG, 2017). Electrical
cars are not affordable in the market therefore it is very important for Tesla to reach out to a

larger customer base so that they can capture a larger market than the other competitors. Tesla is
making a lot of changes in the car so that they can satisfy the customers completely and that is
making the company have a competitive advantage than the other competitors in the market.
Electrical cars are not being able to provide luxury to the customers which is creating limitation
on the selling of the product to the customers.
LO 4
P4 Strategic Planning
Vision The best use of solar energy will be made. The company is not having any
kind of discrimination which is based on culture, caste, race, etc. There are
a lot of innovations and creativity which are being done so that the
company can make a lot of profit from this factor.
Mission The mission of Tesla company is make the customers use sustainable
energy in the world. The company wants to eliminate the use of fuel cars
and make every shift to electrical cars because that can be fun, better and
quicker than the gasoline cars.
Objectives  To increase sales of new product Tesla by 10% till the end of year
2020.
 To increase the market, share by 30% till the end of year 2022.
 To enhance consumer experience by 10% in upcoming 6 months.
BCG Matrix  Dogs: Low market share and low product growth in market is not
present in Tesla because even if the product is new the company is
still having loyal customers who share the same motive and mission
as Tesla does.
 Question mark: Growth in market is high but the market share is
low of the products. This is not good for Tesla's portfolio, and they
have to make sure that there are no factors which are affecting the
company any how.
 Cash Cows: high market share but low growth in market of
products.

 Star: Tesla is having high market share with high product growth in
market and will be for a long run. Market share is not as high as the
competition in market but it comparatively very high for a new
product.
Strategies Ansoff Matrix helps the senior manager, marketers and executives in a
organization. This matrix can be divided into 4 sub-divisions which areas
follows.
 Market Development- The scope of making the product of the
organization reach the customers in the future is going to be higher
than right now. All the customers in the market will be shifting to
this product very soon and Tesla will have a great advantage in the
future.
 Diversification- There are a lot of innovative ideas and creativity
which is being used in the products of the firm. There are new
products which are being launched by the organization all the time
so that the customers can reach their satisfaction with the business.
 Market Penetration- The eco-friendly cars which Tesla has come
up with is going to penetrate in the market very quickly and that will
be very helpful for the organization. The carbon footprint in the
environment will reduce and that will be a great achievement of the
organization.
 Product Development- The employees of the company are very
much motivated to find out new ideas and innovations in the
company so that the company can make the changes in the company
accordingly that will help the organization to attract more
customers. The CEO of the company is very involved and him
selves tries to make the changes in the company which motivates all
the employees for the change in the firm to take place (Bilbeisi and
Kesse, 2017).
Tactics  Price- The prices of the product were high because the cost for the

raw material were higher and that made the company set prices of
the product very higher. Now the company has reduced the price so
that the middle class can also be targeted, and they can also afford
the electrical cars.
 People- The culture of the company policies is followed and the
employees of the company are very motivated to work for achieving
the objectives and aims of the company. The management of the
company is very much aware of the decisions they are making for
the company and now the organization is having a lot of advantage
in the market.
 Place- The company is having direct contact with the customers
which is making the company have a competitive advantage because
feedback's are taken by the company so that they can improve and
make the changes accordingly.
 Process- Tesla is using the right process measure because of the
experience they have gained over time and it is very important for
Tesla to know the decision-making of the management is being
followed properly (Rothaermel, 2017).
 Product- The product of the company are not satisfying the
customers completely which is the reason why the company is not
having a strong base for themselves in the market. Improvement is
happening in the company so that the company will be able to make
a better place for themselves in the market.
 Promotion- Tesla is not being able to reach out to the customers on
time and that is making the company have a lot of factors which
have to be worked upon so that they can make changes.
 Physical Evidence- The products of the company are very attractive
but the luxury in the products is missing therefore it is very
important for Tesla to get the changes in the company.
Evaluation Tesla is going to be a leading company in the future because the changes
which the firm is making right now they will help the organization to

capture the market even better. The organization is making a lot of
innovations and changes so that the customers can be satisfied and the
product can reach the customers on time and the expectations of the
customers are fulfilled. The competition in the market will increase but by
that time the company will already have a lot of experience will give the
company an advantage over the other companies in the market.
Recommendation Tesla has a great advantage for the product in future therefore they must not
give up on the dream they have for a long run which is very important for
Tesla and the environment. Other competitions in market are also shifting to
this objective which Tesla is having which is making the company unique
and they must continue to have this objective and goal achieved for a long
run in market.
CONCLUSION
Tesla is a very futuristic company which is keeping the future needs of the customers and
market in mind while making decisions for the firm. The organization is very motivated to get
new technological changes in the troupe and other changes in the establishment so that the
system can benefit from it. Tesla is making a lot of improvement in the products they are
producing for the customers so that they can satisfy the needs of the customers for making a
huge base in the market for themselves. The firm is taking the right decisions for the longer run
of the organization since the competition in this industry will shift to electrical and gas cars in
the future.

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