Business Strategy

This document discusses the concept of business strategy and its impact on organizational capabilities and market position. It explores the macro and internal environment of Tesla, a leading American automotive company, and evaluates competitive forces using Porter's five force model. The document also provides insights into appropriate strategies to improve competitive edge and market position.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Applying appropriate framework analysis and evaluate impacts of macro environment......3
M1 Critically analyse the macro environment to analyse the strategic management decisions. 5
TASK 2............................................................................................................................................5
P2 Analyse the internal environment and capabilities of an organisation..................................5
M2 Critically examine the impact of internal environment on organisational capabilities,
structure and skill set...................................................................................................................7
TASK 3............................................................................................................................................8
P3 Applying porter's five force model and evaluate competitive forces....................................8
M3 Determine appropriate strategies to improve competitive edge and market position..........9
TASK 4............................................................................................................................................9
P4 Applying a range of model, concept and theories to interpret strategic planning.................9
M4 Produce a strategic management plan that has tactical priorities and objectives...............10
D1 Critically analyse the data applying environmental and competitive analysis to produce a
set of strategic direction, objectives and tactical action............................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy refers to the sets of several assumptions and actions that are used by an
organization to attract the large number of customers and achieve organizational objectives in a
competitive manner. This helps in facilitating appropriate direction in which a firm proceed in a
better manner. In this report Tesla is chosen to study the internal and external environment of
businesses. It is an American automotive company and largest manufacturer of electric cars. It
was formed in 2003 which headquarters in California, US and the company deals in the electric
vehicles and Tesla energy. Under this report discuss about the macro environmental factors and
its impacts on Tesla strategies and competencies. External environment is determined by
PESTLE analysis whereas, internal surroundings are analysed by using SWOT and VRIO model.
Also, examine competitive forces by using Porter's five force model and prepare a strategic
management plan.
TASK 1
P1 Applying appropriate framework analysis and evaluate impacts of macro environment.
Macro environmental factors has effects internal business strategies and capabilities.
Tesla known as a most leading American auto-mobile company which adopts and design
business plans and practices to achieve competitive edge in the marketplace (Ahmadi, Dileepan
and Wheatley, 2016). Several factors of macro external environment that influence the whole
operational activities and functions of business organizations that can be described by using
PESTLE analysis.
PESTLE analysis: This defines as a business tool which are used by an organization to
analyse and control the external environmental factors that are directly influence the overall
performance as well as productivity of businesses. This tool can used by Tesla to understand the
impacts of macro factors which includes political, economic, social, technological, legal as well
as environmental determinants upon organizational internal operations and strategies. Political factor: These factor includes taxation policy, trade practices, political stability
etc. which directly or indirectly effects the business operations and its functioning. Tesla
has several opportunities to strengthen their financial positions by using government
schemes benefits. UK have stability in their political environment that are in favour of the
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company to expands and grow globally. This will assist in increasing market penetration
and overall development of an organizations (Hamid, Said and Meiria, 2019). Economic factor: This includes several economic rates which are fluctuate due to
inflation and deflation in country's that impacts upon the business strategies and
expansion strategies. Economic factors involves interest rate, foreign exchange rate,
savings, inflation ratio and so on. Increase in international economy influence the selling
of electric vehicles positively which raise the sales at a great extent. Economic rises in
Asia, Europe and US leads towards the development of electric vehicles that are increases
the productivity as well as profitability of Tesla. Demand of the company's product has
risen but to develop at a fast rate it requires to discover price state of affairs that is
conformity it from targeting the middle class customers as now they generally reach high
class of people. Social factor: These forces includes culture, traditions, beliefs, backgrounds etc. that
influence business functioning and policies as the companies needs to satisfy their
customers or society (Jones and Livingstone, 2015). Rapidly changes in consumer
preferences increase the demand of electric car because they unlike traditional cars.
People are satisfied from these because they want to develop their lifestyles and living
standards so a company can fulfil society acknowledged in environment. Due to the
increment in wealth dispersion in developing countries like Asia, Europe and USA has
improved company's financial execution. Technological factor: It involves the advancement in the technologies as well as
automation and up-gradation in techniques that needs to practical in competitive
marketplace to fulfil the emerging need of people (Eglese, 2014). Due to the
technological advancement in automotive energy storage industry Tesla get benefits at a
wide range as this will helps in taking competitive advantages in the competitive
marketplace environment. This permits Tesla to be fuel efficient as well as make more
adoptable to innovations rather than traditional cars in automotive industry. Legal factor: Some of the examples are copyright, consumer, intellectual property right,
health and safety as well as anti-discrimination laws and legislations that are obligated by
an organisation in a lawful manner on the basis of its size and nature. In UK, every
vehicles must be EC approved that consider as a national approval of specific country
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whereas, Tesla ensures that following all legal rules of specific country helps in better
productivity along with smooth business functioning (Jones and Comfort, 2019).
 Environmental factor: Awareness about the environment protection helps in enhancing
the demands for electric cars that consider as a major opportunity for Tesla. The company
develop electric version of vehicles which controls on fuel usage as well as it hardly
effect carbon emissions. In order to protect environment Tesla has maintain and
developed its brand value in the market that is difficult for competitors to cope up with
the company.
M1 Critically analyse the macro environment to analyse the strategic management decisions.
External environment impacts on internal capabilities at a great extent because macro
environmental factors helps in identifying the market conditions. This will helps in effective
execution of organizational practices that are required most to know for an enterprise. These
forces assist in developing strategic management plan to formulate or innovate new things as
well as decisions. This also helps in finding opportunities to expand and grow a business
organization.
TASK 2
P2 Analyse the internal environment and capabilities of an organisation.
Tesla founded in 2003 in United States, now it is a multinational auto-mobile company
which successfully deals in several countries as a good brand image in the market. Internal
capabilities and strategies of an organization can be evaluate by using SWOT and VRIO
analysis.
Strategic capabilities
It refers to the business abilities to support its skills, capabilities and resources in order to
take competitive advantages to survive and increase its value (Kalia, 2015). There are several
key capabilities that are product development, manufacturing, research and development,
marketing and sales, government rules and relations as well as financial management.
SWOT analysis
Strengths Weaknesses
 High product differentiation is consider
as a big strengths of Tesla and has
 The company offer its products in high
prices which are not easily affordable
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positioned itself as a unique brand in
the marketplace by developing auto-
mobiles on electric energy.
 The company has integrated and
diversified marketing policies with a
aim of customer satisfaction and have
better control on service operations.
by all size of customers or people. This
results in limited market share of Tesla
as well as its small range of customers.
 Tesla has limited presence in many
countries which are developing like
China.
Opportunities Threats
 The company have an opportunity in
expanding ecosystem to explore the
related market opportunities.
 The company can also focus on market
penetration for expanding in new
countries as well as use diversification
strategy to increase their own customer
base and market shares.
 Brexit deal between UK and European
union creates some kind of threats for
Tesla's to grab opportunities.
 Wide range of competition in
automotive industry is a big threat
because aggressive rivals keeps on
innovative electric cars by adopting
latest technologies.
Resource based view
It is defines as an analytical tool that are used to investigate the ability of an
organizational resources tangible and non tangible for the purpose of alter their short term
competitive benefit into sustainable competitive advantages. Tangible resources includes
financial, physical and technological resources whereas, intangible resources of Tesla are
innovation, human resource, reputation as well as organizational capabilities.
VRIO model
This looks internal resources which helps in providing sustainable competitive
advantages (Knezevic, 2016). It is done for analysing the internal capabilities and resources of an
organization. Four resources/capabilities of Tesla motor's are market presence, offerings, system
software and human resources which are used for VRIO analysis. Valuable: Tesla has a valuable presence and effective brand in the marketplace which
facilitates the more customer satisfaction and it also provides superior quality of products
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and services as per the customers needs so its offering also placed value to their users.
The company uses Retalix software system which is used to perform the operational
activities effectively as well as within the specific period of time. Human resources are
also valuable for the company as they are skilled and trained that plays an important role
for accomplishing the goals and objectives of an organizations. Rare: The offerings of the company are rare in the market because they offers latest and
upgraded technologies as well as innovative concepts in the market. Also, there software
is rare because it was developed according to the particular business entity and suitable
for managing specific operational activities. In addition, their personnel are also rare
because they provide training and development programmes to trained and educate them
as per the requirements of an organization (Martínez, 2017). Inimitable: Retalix software is inimitable in nature because it is developed for controlling
and monitoring the Tesla's business operations and used inside the premise only. Also,
human resources are also inimitable as they helps in facing and overcoming from the
typical and critical situations.
 Organised: Tesla's staff are well organized and managed and capable to deal complicated
problems in easy manner and gives several options to remove obstacles in their
performance.
Resources Valuable Rare Inimitable Organised
Market
presence
Yes - - -
Offerings Yes Yes - -
System
software
Yes Yes Yes -
Human
resources
Yes Yes Yes Yes
M2 Critically examine the impact of internal environment on organisational capabilities,
structure and skill set.
Internal environment of an business organizations includes the structure, skills,
capabilities, practices, policies, norms, objective etc. which helps in achieving the organizational
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goals in an effective manner (Sai, Sevruk and Tunitska, 2018). These factors provide a strengths
to the business and made capable to solve the problems and critical situations. SWOT analysis
shows the strengths and weaknesses of an organization and helps in identifying opportunities as
well as threats. Whereas, VRIO model is used to understand their valuable and rare resources
which assist in taking competitive advantages.
TASK 3
P3 Applying porter's five force model and evaluate competitive forces.
Porter's five force model: It can be used by the strategic planners to analyse the industry
in which Tesla motors operates, in terms of attractiveness through profit potential and make
strategic decisions (Porter's five forces, 2017). Bargaining power of buyers: It is determined by the factors such as cost and ease of
switching to buy products or services from Tesla's competitors such as Honda and Ford.
The customers of a company have low bargaining power because the switching cost is
high. The company makes electric car products which attract upper level customers in the
market that are price insensitive due to its highly differentiated products as well as their
customers are more loyal. Bargaining power of suppliers: More suppliers are available in the automotive energy
storage industry so the bargaining power of suppliers is low because they can always
switch to new providers. Tesla motor's dependence on the long term partnership with
their suppliers who can supply to its needs and demands responsibly. Threats of substitution: Consumers are willing to pay for a product which depends on
the availability of substitutes products. Therefore a company have less threat of
substitution because there are few substitutes for their products. Tesla motors can tackle
threat of substitution by being a service oriented rather than just products as well as
identify the core needs of their customers. Competitive rivalry: This is determined by the several factors like competitors diversity,
product differentiation, exit barriers, seller concentration etc. The intensity rivalry in the
automotive industry is very high because the number of competing brands is large most
of them supply matching commodity with related level of efficiency and quality. Also
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major auto-mobile companies have announced their plans to increase its focus in this
segment. For example BMW, Volkswagen, Jaguar etc.
 Threat of new entrants: In automotive industry the treat of new entrants is very low
because of the strict barriers to entry. Large investment in infrastructure is requires to
enter into automotive industry which includes marketing, manufacturing, supply chain,
human resources as well as distribution activities.
M3 Determine appropriate strategies to improve competitive edge and market position.
Porter's five force analysis helps an organization to understand the forces which impacts
on the profitability in specific industry and provides decision making criteria towards the enter
into new market, increase capacity as well as formulate competitive strategies. It is based on the
dynamic features and characteristics of industry that are required to compete in the competitive
marketplace as well as shows market positions clearly (Salam, 2016).
TASK 4
P4 Applying a range of model, concept and theories to interpret strategic planning.
Strategic planning needs to use several kind of theories and concepts that are required to
identify the company's profitability. Porter generic strategy is used to analyse the Tesla's
profitability and estimate that earned profit is more or less than the average profit of the industry
(Sun, 2014). It includes the four kinds of strategies such as cost leadership, differentiation, cost
focus and differentiation focus. These can be described below: Cost leadership strategy: This kind of strategy is implementing in those companies
which wants to become a low cost manufacturer in an industry. Cost control is most
effective concept in an organization and all companies takes an advantage of low cost
which are depended on itself. Tesla's management can needs to focus on buying raw
material at low cost which ultimately leads in low prices. Along with its a company can
make chase of scale of economies and advanced technologies to take innovative step at
low cost as compared to its competitors. Differentiation strategy: This approach focused on making products something different
from its competitors. This is closely affiliated to industry and their uniqueness which are
beneficial for many buyers as well as organizations. Tesla use this strategy to take an
effective decisions and implemented in unique manner to take an competitive advantages
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this gives an organization to charge high prices from its customers. Company can able to
make their products unique as well as creative and develop positive brand image in the
market (Tansey, Spillane and Meng, 2014). Cost focus strategy: This type of approach is suitable for targeting a narrow market size
as well as it is used by those firm's whose main motive is to approach a small market
area. Tesla can use this strategy to increase their sales in many segments and maximise
their market shares and customer base by targeting several sets of segments.
 Differentiation focus strategy: Many businesses use this strategy to target markets in
some unique way. This is totally based on the needs of the customers so it I easy for
company to approach more customers by taking innovative steps in producing and
delivering products or services.
M4 Produce a strategic management plan that has tactical priorities and objectives.
Strategic management plan: This is a written document that are used by an organization
to convey market strategies, direction, goals, objectives, resources, priorities etc. within an
organisation (Utami and Lantu, 2014). Tesla develops their strategic management plan as they
focused on market development. Strategic management plan can be considered as follows:
Background: Tesla was established in 2003 which deals manufacturing and selling auto-
mobile products at a global level. It leads in the market positions as a manufacturing of electric
vehicles that are operates by batteries. The company produce its products without an percentage
of greenhouse emission. It has already expands its business in US, Europe, Canada, UK, China,
Australia as well as Hong Kong. Now, a company plans to launch their products in developing
countries such as Austria, Denmark, Germany and so on.
Mission: The mission statement of Tesla motors to speed up conversion of world to a
sustainable energy with a aim of people views as they don't have to compromise for driving
electric vehicles.
Vision: To become a top leading electric car company in entire world as well as focus on
satisfying customer's objectives.
Objectives: The main objective of Tesla to raise company's market share by 15% along
with its improve sales and profits by 10% within the next coming one year.
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Goals: The company have short as well as long term goals as it focus on price and quality
of product as a short term goals and increase their international access in many countries
consider as a long term goal of the company.
Strategies: Tesla use market development strategy to enhance its market share in new
geographical area as increase overall sales and revenue.
Tactics: To implement its strategies effectively a company is planning to diversify their
market internationally by increasing large base of customers. Use online as well as offline
promotional strategies to promote their products across world wide.
D1 Critically analyse the data applying environmental and competitive analysis to produce a set
of strategic direction, objectives and tactical action.
Market as well as business identification is mostly needed for Tesla motors as it
facilitates the overall informations about the internal and external market. For this analysis a
company use various theories, concepts as well as approaches to deal with shortcomings and take
competitive advantages in a better manner. Whereas, it also helps in planning a strategic plan for
expanding and developing market of the company in new geographical location (Zalengera,
2014). In addition, analysis leads in time consuming and most expensive methods because it
takes more time to study in an effective manner.
CONCLUSION
It has been concluded from the above report that business strategies plays an important
role in an organization as it provides a clear direction to perform operational activities. This will
assists in encouraging and attracting large customer base to achieve their organizational
objectives in successful way. For identifying the macro environmental factors PESTLE analysis
is used to evaluate overall market conditions whereas SWOT and VRIO is used to understand the
internal factors and their influences on strategies and decisions. To know competitive strategies
porters five force model is implemented and make strategies as per the cope up with competitors.
In addition porter's generic analysis is used to design a strategic management plan by formulating
objectives, tactics, goals as well as strategies.
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