Business Strategy Introduction

Business Strategy INTRODUCTION Business strategies refers to those actions and activities that can be used by a company for the effective running of the firm. Impact and influence of the macro environment on the organisation and its strategies Micro environment refers to the outside components that create effect on the business activities and actions of the firm. This analysis consists various factors which are as following: Political factor- This factor consists of beneficial fiscal policy, tax policies, trade tariffs and other political factors that affect the business and business strategies of

Business Strategy

INTRODUCTION
Business strategies refers to those actions and activities that can be used by a company
for the effective running of the firm. It can be those plans that can be designed and developed by
the management of the company so that the firm can achieve its set goals and objectives (Akter
and et. al. 2016). These strategies are essential to monitor the future direction of the business and
establish a strategic position in the market. This report is related to Tesla Inc. which is an
American automotive and energy company. This company was founded in 2003 and
headquartered in Palo Alto, California, US. This company manufacture electric vehicles and
Tesla energy, it also produces scalable clean energy generation and storage products. This report
will be discussed about the impact of macro environment, organisation's internal environment
and capabilities. Further, it will define about the competitive analysis by using porter's five force
model. A strategic management plan is also developed by using various theories, models and
concepts.
TASK 1
P1. Impact and influence of the macro environment on the organisation and its strategies
Micro environment refers to the outside components that create effect on the business
activities and actions of the firm. In context of Tesla, there are various external factors that
impact the strategies and activities of this organization in different manners. To monitor the
impact of these factors that management of this company can use PESTEL analysis.
PESTEL Analysis
It is a tool that can be used by the administration division of an organization to determine
the impact of external factor which have an impact on an organisation. In Tesla the
administration of the firm can use it in the environmental scanning component of strategic
management. This analysis consists various factors which are as following:
Political factor- This factor consists fiscal policy, tax policies, trade tariffs and other
political factors that affect the business and business strategies of a company etc. in context of
Tesla, there are many initiatives taken by the government for providing support to make
innovation in the development of the hybrid engines and electric driven power train (Amran and
et. al. 2016). In US, the Department of Atomic Energy has provided $465 million subsidised
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loan. Tax credit of $7500 for purchasing electric vehicles is providing by the federal authorities.
It positively affects the business of the organization and assist in the development of the firm.
Economical factor- It include Inflation rates, interest rates, foreign exchange rate,
economic development patterns and others. In current era, electric cars are getting popularity and
this positively affect the economy of the company as well as country (Burlton, 2015). In Tesla,
the attraction towards electric vehicles assist in exploding the income of the firms which assist in
accelerative the gainfulness of the company and affect the economic condition of the firm in
favourable manner. Another factor for the development of the organisation's economy is
decreasing battery costs which is an essential cost factor in the total cost of any electric vehicle
and help in economic growth.
Social factor- This factor involves taste and preference, cultural trends, demographics,
population and others. At present, the taste and preferences of the peoples are changed and they
love the idea of electric car because these cars are eco friendly and affect environment in
unfavourable manner. Electric cars are less expensive in terms of maintenance and running cost
but modification in clients’ demands and needs positively impact its sales. Now these days,
peoples are following trends and maintaining a standard in the society so they are giving
preference to electric vehicles. This positively affect the business of the company in term of
increasing customer base and sales.
Technological factor- This factor highly affects the business strategies and business of
the firm. In Tesla, fast technological changes affect this company favourable and unfavourable
manner. This company manufacture its product by using advance technologies like electric cars
and others which positively affect it in terms of managing competitive edge at the marketplace.
In its products this company implement artificial intelligence and automation which is beneficial
for its growth because no other firm use it at high level.
Environmental factor- This factor consists all the elements which effect and monitored
by the surrounding environment. The management of Tesla produce eco friendly vehicle like
electric car which eliminates the use of fuel that is better for the environment. The company
manufacture electric vehicles which are energy saving and help this organisation in build a
strong brand image so that known as a leader among industry (Burlton, 2015). The company
follow all the environmental laws like pollution act, carbon emission act and others.
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Legal factor- This factor refers to laws and legislations that are utilized by the
organization for the correct moving of its business. In these laws some are positively affect Tesla
and some are negatively. For example, many states temporarily blocked the sales of this
company's product instantly from manufacturer to consumer (Chang, 2016). Because according
to them, these provinces manufacture needed the involvement of third party dealership. It affects
the car delivery of Tesla and dealership is a cost consuming and less benefits providing process
in term of profit. If the company will follow these rules and regulations then it formulate new
strategies against these laws.
TASK 2
P2. Internal environment and capabilities of a company by using effective framework
Internal analysis refers to the expedition of firm's ability, agonistical viability and cost
perspective in the market. In Tesla, the management of the company can use SWOT analysis to
monitor the incorporate measures of a firm.
SWOT Analysis
It is a strategic tool and technique which can be used by a company to analyse and
determine the strengths, weaknesses, opportunities and threats of a company. SWOT analysis of
Tesla is as mentioned below:
Strengths Weaknesses
 The management of Tesla used new
and latest technologies in its products.
There are some examples of top brands
which have implemented technologies
of this company like Mercedes-Benz a
user of Tesla power train.
 There are 45,000 employees who are
working under it and make contribution
in the development of the business of
the firm.
 There is less customer awareness about
the products and services of this
company cause of their sustainability
angle.
 Another weakness is that this company
produce its products in one plant and
the capacity to make 500,000 products
so it bound the production of the firm
and affect its sales (Higgins, Omer and
Phillips, 2015).
Opportunities Threats
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 By devising creation in its present
products by using technologies, the
firm can attain various opportunities of
growth.
 Worldwide, sales contraction, global
supply chain expansion and business
variegation are some opportunities for
the business of this firm (Kourdi,
2015).
 There are various competitors in the
market like Ford, Fiat Chrysler Auto-
mobiles, General Motors and others
which are generating competition for
the company by manufacture substitute
products.
 Fluctuation in material prices is an
another threat for the business of the
firm.
VRIO Analysis
It is an investigation which is utilized by the management to supervise the capabilities of
a company. In Tesla, this model can be exploited by the establishment division of the
organization to analyse the capabilities of the firm. This model consists Value, rarity, inimitable,
organisation.
Value- It refers to those resources which are beneficial and able to provide benefits. They
can able to reduce the impact of threats. In Tesla, the administration of the organization use
valuable assets which are help in solving a major issue of the humanity like minimizing reliance
on fossil flues. The firm's technological advancement, supply and resolution energy petition
demands are beneficial for the whole world.
Rare- It indicates that resources are rare and can be adopt by few organisations are
considered to be rare. In Tesla, the management proprietary application and current R&D to
manufactured effective an d innovative unconventional force creations like cars and batteries that
are rare. These products have technological advantages and rare in number.
Inimitable- It indicate unique, casual and social. In context of Tesla, the production
department use unique technologies and R&D capabilities to manufacture an inimitable vehicles.
This company spent huge amount to manufacture inimitable products so that no other player can
replicate it and it is hard to do it to them.
Organisation- It refers to the need of capability to assemble and coordinate resources
efficiently. In Tesla, effective leadership, culture of the company and practices indeed help in
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making the firm capable to attain the sustainable competitive advantages by getting opportunities
by usi8eng alternative energy segment (Leonidou and et. al. 2015).
The business of Tesla able to sustain its business in long run with the help of its internal
capabilities. These capabilities basically refer to the strategies, plans, policies and those
resources which are rare and help the company to earn profit. The management of Tesla also
develop and design different strategies like pricing strategies, promotional strategics etc. for the
effective running of the company which help in increasing the sales of the firm and maximizing
the profit also. The firm is also use quality material to produce its products which also a internal
capability of the company. These all things help the company to sustain in the market till long
period of time and gaining competitive advantages.
TASK 3
P3. Porter's Five forces model to evaluate the competitive forces
Porter's Five Force Model
It is a tool which is used by the administrations to determine the rivalry of a business. In
Tesla, this model can be used by the management to monitor the agonistical power in the market.
The agonistic investigation of this company is mentioned below:
Threat of new entrants- The risk of new entrants is low in context of Tesla because there
are huge amount required to enter in automobile sector so it is hard and difficult fro new
investors to enter in this industry (Linder and Williander, 2017). This company manufacture
premium, high performance, technology and innovative cars and target niche market. So there
are less risk or threat of new entrants. The consumers are also little indecisive about the idea of
electric and eco friendly vehicles so they are confused to investment on the purchasing of
vehicles. So according to it there are less competition due to its quality products which provide
satisfaction to its target audiences needs and wants.
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Source: Porter’s Five Forces of Competitive Position Analysis,(2019).
Bargaining power of suppliers- There are less number of suppliers in the market who
provide material and resources according the needs of the company to manufacture products. So
the bargaining power of suppliers is high because they are in a better position to make control
and manipulate cost to their benefits. There are less number of organisation who manufacture
products like Tesla so there are some particular suppliers who supply needed material to them
and they demand cost according their benefits. Due to less vendors, the competition between
suppliers are less but they charged high prices to organisations for material.
Bargaining power of buyers- Tesla manufacture vehicles which are developed by using
advance and high technology so they have high cost and amount which is hard and difficult to
afford to everyone (Pisano, 2015). So the negotiation quality of purchasers is high because the
consumer of present time is very conservative in context of spending their income. Additional
range of factors which affect bargaining powers of Tesla customers consist buyer's ability to go
for substitute goods and services and the extant of products differentiation between various
electronic vehicles manufactures.
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Illustration: Porter’s Five Forces of Competitive Position Analysis

Threats of substitute products- In Tesla, there are low risk of substitute products because
there are less number of firms which developed product like this company which are formulated
with the use of advance technologies and incorporated with artificial intelligence. To develop
products like Tesla, there are needs a lot of resources, machineries, equipments and huge capital.
There are low switching cost which enable competition and such as public transportation, to
attract customers easily.
Rivalry among existing firms- Tesla is is the well known organisation for electric
vehicles, all main automobile organisations have also announced their plans to maximize their
focus in this segment. So the rivalry among existing firms is moderate because it is hard fro new
entrants and substitutes to exist in this limited sector. Rivalry is lower when buyer demand is
developing quickly, cost to switch firm is high an there are less competitors. There are small
number of firm which manufacture electronic vehicles so competition is less and cost of
switching is also low. This aspect of the five force analysis of Tesla points to competitive rivalry
as a high priority strategic manage consideration in the automatic and energy solutions industry
environment.
These forces of the market can be easily handled by Tesla because the company use
effective marketing and business strategies and policies which are useful for the company to
overcome the market conditions in an easy manner or way. The force of bargaining power of
supplier is high but the company manage it because it use rare resources for its unique products.
The product of this organisation have high demand inn the market so this force easily overcome.
TASK 4
P4. Use of different theories, concepts and models, interpret and devise strategic planning for the
firm
There are various models that the at can used by the company for strategic planning. In
Tesla, the management of the company can used follow and apply Ansoff Matrix for it which is
as mentioned below:
Ansoff Matrix
It is a framework and structure which is exploited by administrations for making strategic
decisions. In Tesla, this model can be used by the administration of the company to monitor the
strategy or making decision regarding growth and development plan of actions which can be
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beneficial for the future improvement of the administration (Razak and et. al. 2016). There are
four strategies that can be useful for the growth of the firm, they are as following:
Market penetration- It is the first development strategy which can be adopt by the
company to make development in the business of the firm. According to it, by implementing this
strategy, the firm can propulsion its present goods in existing market. To achieve more profit and
growth, they can develop a new marketing strategies and use new promotional channels which
can be beneficial for the development of the firm (Rosemann and vom Brocke, 2015). In Tesla, if
the management of the organization adopt this plan of action and launch its present commodities
in existing market then they can make innovation or using new promotional channels. So that
they can create awareness about new products and getting attention towards products. It is less
effective growth strategy. There are no risk because the product is launched in the same make so
there there is no threat that it will liked by the customer or not.
Market development- It is some other development strategy, which is more effective than
penetration, in which a company can attain its growth and development by lunching its present
products and services at different location and geographical market. In Tesla, the management of
the company can adopt this strategies and achieving its growth, they can use different sales
channels and market segmentation so that they can manufacture products according to the
lifestyle and standard of the people. They can use product mix for monitoring the needs and
demands of the customers so that they can provide vehicles according to their demands. This is
risky strategy because product is launched in a new market place so it is difficult to find out that
which promotional channels re better to create and attract consumers.
Product development- In this growth strategy, the management of the company can make
development in the business of the company and enhance the productivity of the firm by making
innovation in the product or launching its in existing market. In Tesla, the management of the
company can make innovation by using various different technologies like advance technologies,
artificial intelligence and others. This strategy is beneficial for helping in the growth of the firm
in comparison to market development. This is risky development strategy because it is hard to
find out that product is liked by the customers or not.
Diversification- In this development strategy, there are high risk because product and
market both are new so it difficult for the management to select the right tools to create
awareness and making ensure that product will be effective which provide satisfaction to the
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customers needs (Schaltegger, Hansen and Lüdeke-Freund, 2016). In Tesla, the management of
the company can launch new product according to the customers needs or trends so that they can
afford vehicles as per their lifestyle and standards.
After determining all the growth strategies it can be recommended to the management of
Tesla that they should adopt market development growth strategy because with the help of it they
can identifying the needs of the customers of that place and make innovation or use technologies
in its products so that they can offer vehicles according their demands (Scholes, 2015). It is
beneficial for the company because if they fulfil the customer demands then it will help in
increasing sales and economic condition of the firm. If the company adopt market development
growth strategy then it can operate is business in new market with its existing products. With the
help of it it can effectively get information about the needs and requirement of the customer the
it easily handle the market and satisfying the needs of the clients.
Strategic management plan
It is an activity and act of organisational management which is used by the company to
set priorities, focus energy and monitor that employees and stakeholders are working with the
collaboration to attain the shared goals. In Tesla, the management of the company also do
strategic planning for the company so that when it expend its business in new market such as
India then it can achieve its objective by utilizing resources, strategies and technologies. There
are some components which are including within this plan, they are as following:
Strategies- It refer to that plans and actions which are used by the management of a company to
achieve the aims and objectives of the firm. There are various strategics can be applied by the
Tesla during the time of market development. Some of them are as following:
Market analysis- It is an effective analysis which is beneficial to find out the needs and
demand of the customers. With the help of this strategy, the management of Tesla can
identifying the customers demands according to the trends and their living standards that which
kind of vehicles they expected form the firm which can be help in make their life more
comfortable or help in maintaining their lifestyle.
STP- It is another analysis which can be used by the management of the company to
provide the products according to the requirement of the consumers. In Tesla, the management of
the company target successful business executives and entrepreneurs for its products who are
also city dwellers that are tech savvy and eco friendly. They target upper middle class customers
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and in segmentation, ideally more males are inclined to buying the vehicles (Thompson,
Strickland and Gamble, 2015). In positioning, they positioned their electric and hybrid vehicles
that have horrible performance and style.
Vision- The vision of the company is to establish a strong brand reputation and position in the
market by manufacturing eco friendly vehicles.
Mission- To speed up the world's transition to sustainable energy and achieve it by producing
electric and hybrid vehicles, batteries and energy solution (Wheelen and et. al. 2017).
Objectives- The Smart objective of the company is that the management of the company make
increment in the sales of the company by 15% within 2 years when they expand their business in
new market.
Tactics- It refers to those strategies and plans which are develop by the firms to solve short term
issues in less period of time. In that kind of situation the management of Tesla can adopt various
tactics like innovation, fluctuation in prices and others. With the help of innovation, they can
make improvement in the existing product according to the customers needs and offer it to them
so that they can make satisfaction (Yuliansyah, Rammal and Rose, 2016). By making change in
the pricing strategies according to the market and available resource's, it is also helpful for
increasing the sales of the firm.
CONCLUSION
As per the above information, it can be monitored that business strategies play an
effective function in the development of the firm. They are helpful for achieves the business
objectives of a company and increasing its sales. PESTEL a analysis is an effective model is
helpful for providing the content about the effect of outside components on the business and
business strategies of a company. SWOT analysis is effective fro monitoring the strengths,
weaknesses, opportunities and threats of the business of a firm. Porter's five force model is help
in evaluating the competitive forces in a market and different growth strategies of Ansoff matrix
beneficial to monitor the strategic direction.
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Online
Tesla Pestle Analysis. 2019. [Online]. Available Through:
<https://www.marketingtutor.net/tesla-pestle-analysis/>.
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<https://www.cgma.org/resources/tools/essential-tools/porters-five-forces.html>.
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