Analyzing External and Internal Factors for Tesla's Business Strategy

This report provides a comprehensive analysis of the external and internal factors affecting Tesla's business strategy. It includes frameworks for analyzing the external environment, critical analysis of the impact of these factors on decision-making, frameworks for analyzing the internal business environment, and a critical analysis of Tesla's internal capabilities. The report also discusses the competitive environment of the organization and provides strategies to improve competitive edge and market position. The case study focuses on Tesla Inc, an American electric vehicle and clean energy company, and its efforts to strategically compete in the market and gain a competitive advantage.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1) Framework to analyse external environment...................................................................3
M1) Critical analysis of impact of external factors on decisions...........................................5
TASK 2............................................................................................................................................5
P2) Frameworks to analyse the internal business environment..............................................5
M2) Critical analysis of internal environment........................................................................7
TASK 3............................................................................................................................................7
P3: Analysis of competitive environment of the organisation...............................................7
M3: Appropriate strategies to improve competitive edge and market position.....................8
TASK 4............................................................................................................................................9
P4: Theories, concepts, models that can help in strategic planning.......................................9
M4: Strategic marketing plan...............................................................................................10
D1: Critical analysis and interpretation of data and information.........................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy is a long term action plan which is formed by company so that it can
strategically compete in the market and attract customers to survive sustainably in the market.
With the help of efficient and effective strategies the company can analyse the impact of internal
and external factors on its sustainability in market so that appropriate steps can be taken which
can help in its continuous growth and development in market (Zaiss and Ladd, 2017). These
strategies also help in gaining a competitive edge in market, improving the performance of
employees and enhancing its brand image so that more customer satisfaction can be achieved.
These strategies also help in giving direction to the organisation so that its mission and
objectives can be achieved on time and within stipulated budget. In this report Tesla Inc is taken
which is an American electric vehicle and clean energy company headquartered in California,
US. The company specialises in manufacturing electric vehicles, Tesla batteries, solar panels and
roofs. In this report the external and internal environmental factors affecting the business
strategies will be discussed along with a appropriate growth plan which can be applied by it to
grow strategically in market and gain a competitive advantage.
TASK 1
P1) Framework to analyse external environment
As businesses operate in dynamic market environment it is important that the external
factors are analysed so that effective strategies can be formulated which can help in minimising
the negative impacts and take advantage of positive impacts of these factors. Tesla is an
international business organisation which makes it important to analyse the external environment
so that its aims and objectives are achieved
Vision: To create the most compelling car company of the 21st century by bringing a
transition in the world for electric vehicles (Capuder, 2020).
Mission: To accelerate the transition of the world to more sustainable energy by making
the Tesla cars more environment friendly, quicker and fun(Tesla mission .2018).
Objectives: The objective of Tesla is to increase the use of sustainable energy by people
through its electric cars so that pollution can be minimised along with the use of fuels and energy
(Objectives of Tesla .2020).

PESTLE analysis: Political: These factors are related with the rules and regulation of government which
impacts the trade tariffs, tax regulations etc. As UK is a politically stable country which
means that the rules and regulations do not change frequently this is beneficial for Tesla
in its business expansion in UK. Also UK government promotes the use of sustainable
source of energy which is also an opportunity for Tesla for its growth in UK. However,
the uncertainty in Brexit can affect the business due to difficulty in getting supply of raw
materials from EU and loss of the EU market (Afonso, 2018). Economical: These factors relate to the economical factors of a country like its GDP,
purchasing power of people, inflation rates etc. As the economic condition of UK is
stable it means that the people can afford to purchase its cars which is favourable for
Tesla. Also various incentives of UK government for renewable energy can help Tesla in
making more profits. However, the increasing inflation and fluctuating world economic
parameters can affect Tesla’s growth (Kauerhof, 2017). Social: These factors are related with the type of people in a country like their
demography, age, religion, living standard etc. As the people of UK are highly educated
and are conscious about the global warming they will be purchase more electric cars
which is a sustainable source of energy. However, people in UK are spending more on
education, travel and consumer goods which can affect the business of Tesla. Technological: These factors relates to the technological advancements of a country and
the frequency of R&D for bringing innovative products in market. UK is a highly
technologically advanced country which means that high quality of technology can be
available in UK for Tesla so that it can improve its products through innovation and
lower its costs. However, as technology is available easily it can lead the competitors to
use techniques similar to Tesla which can increase competition in market (Min and Kang,
2016). Legal: These factors relate to the legal framework of a country so that the interests of
stakeholders can be protected. It is important that all the legal compliances are followed
by Tesla so that it can efficiently survive in UK market and gain support from
government and stakeholders. Also this can help Tesla in protecting its intellectual
property so that its idea does not get copied which can help it in expanding its market.

 Environmental: These are related to the environment of a country like climate,
availability of resources, pollution etc. As Tesla sells electric cars, solar panels etc. which
are renewable sources of energy and also help in reducing pollution the demand of its
products in UK markets can increase which is beneficial for its business (Angwin and
Cummings, 2017).
M1) Critical analysis of impact of external factors on decisions
It is important that the external environmental factors are analysed so that effective
strategies can be formed which can help the company in achieving its aims and objectives on
time. This can help the company in forming strategic management decisions so that positive
impacts can help in the growth of company while the negative impacts can be minimised thereby
increasing the sustainability of company in market.
TASK 2
P2) Frameworks to analyse the internal business environment
The internal business environmental factors are those which can be changed and controlled
and must be regularly analysed by the company so that they can be directed towards achieving
company goals and objectives. Following frameworks can be used by Tesla so that the internal
capabilities can be analysed which can help it in gaining a competitive edge in market:
SWOT analysis: This is a strategic tool which can help in analysing the strengths and
weaknesses of company so that market opportunities can be captured and threats can be
minimised through strategic planning
Strengths
 Tesla has a string brand image in
market which can help it in expanding
its customer base easily. The company is highly technologically
advanced which help it in innovating its
cars so that better customer experience
can be achieved (Asif, 2017).
Weaknesses
 The cars of company are priced high as
the technique used by the company to
run cars on electricity is expensive.
 The market presence of Tesla is limited
which affects its growth in market and
also affect its expansion.
Opportunities
 The company can expand its sales in
Threats
 The competition in market is high as

other countries where it does not have
its presence. Tesla can expand its supply chain so
that it can increase its global presence
and can also lower its costs.
other car companies are manufacturing
electric cars which have increased
competition for Tesla (Guangul and
Chala, 2019).
 The raw material prices fluctuates
rapidly which affect the cost of
company cars.
VRIO analysis: This is another tool which can be used by Tesla so that the internal capabilities
which help it in gaining a competitive advantage in market can be determined. Value: It is the ability of the products and services of a company in creating value for its
stakeholders. Tesla manufactures electric cars which is a sustainable source of energy
which help in reducing the use of energy and fuels while also decreasing pollution which
is a valuable property of company that help in increasing value created for its customers
(Kancherla and Daim, 2018). The company's resources, employees, finances,
organisational structure, technologies, patent rights etc. help it in creating cars which
increase the value of its products in market. Rare: The company’s patented technology and continuous R&D which help it in
installing unique features in it cars makes the company rare and also help it in gaining a
competitive edge in market as additional innovative features are made available to
customers (Gomes, 2017). The technologies, patent rights, employees, organisational
structure etc. help the company in preparing products which are rare in the market. Imitability: As the company use unique technology and the technical staff which is
present in Tesla which help the company in innovate its products is difficult to be
imitated which decreases the imitability of company (Linder and Williander, 2017).
Tesla's patent rights, organisational structure, talented employees etc. help the company
in producing cars which cannot be imitated by other companies.
 Organisation: Tesla has a strong leadership and participative organisational culture
which make the organisation unique and also help the company in sustaining
competitively in market. The organisational structure of company help it in creating such

a culture so that string coordination can be created among workers so that its goals can be
achieved on time.
Thus, from the above SWOT and VRIO analysis it can be said that the internal capabilities of
Tesla are very strong which can help it in becoming highly competitive in market and also in
attracting a large number of customers. It must use its strengths so that the opportunities in
market can be captured and the threats can be efficiently dealt with.
M2) Critical analysis of internal environment
It is important that the internal environment of an organisation is analysed so that the
strengths and capabilities can be known which can help it in dealing with competition in market
in an efficient manner. It can also help it in dealing with its weaknesses so that the brand image
of company can be enhanced and customer satisfaction can be improved so that company aims
and objectives can be achieved.
TASK 3
P3: Analysis of competitive environment of the organisation
Porters five Force model was started by Michael Porter that helps Organisation in
identification of various competitive which are present in the external environment of a business
and can impact overall functioning of the organisation. Ii is a model that is based on different
major 5 factors that are part of every industry and can impact formulation of every organisation.
It consists of several factors that can act as a threat and can have a low or high impact on the
overall competitive strength of a industry. Five forces in relation with Tesla are discussed below. Industrial rivalry: It is a factor that is helpful for organisation and identification of
various competitive that can impact their operational functioning. There are high levels of
competition for Tesla as need to adopt innovation for this organisation to deal with other
competitors who are entering these Industries with low priced vehicles. There is
requirement to deal with strong competition by adoption of certain cost effective
strategies which can help them in threat of high competition. In case of automotive
industry, the competition has been increasing with the advancements taking place in
technology across different parts of the world, so it can be said that there is an industrial
revolution that is faced by Tesla (Ocasio and Radoynovska, 2016). The strategies which
can be used by Tesla are building sustainable differentiation, building economies of scale

so that it can compete better, collaborating with competitors etc. so that it can deal with
the present rivalries. Threat of substitute: The external factor which is related to higher amount of substitute
that is available in the market and can be easily substituted by customers for the products
that are being offered by Tesla. It can be said that overall threat of substitute is low in
case of Tesla as able to establish economy of scale various innovative products that are
being offered by Tesla cannot be easily offered by any other existing on you automotive
friend such as the electric vehicle range of Tesla. Show the prices at which high quality
are being offered by Tesla is not easily possible to be other brand that belongs to similar
industry. All these features have led to induction in the threat of substitute available for
Tesla (Foss and Saebi, 2018). The company can use the strategies like improving its
services, understanding the core need of customers, increasing switching cost of
customers etc. so that it can deal with this threat efficiently. Bargaining power of suppliers: It is a external force that actually identify is overall is
little of suppliers to influence the prices and functioning of a business organisation. Tesco
experiences high bargaining power of suppliers as they are fully dependent on them for
the quality of batteries and overall distribution of products by set suppliers on a limited
time business (STRATEGIC CAPABILITIES. 2019). Thanks it can be said that there is
requirement of long-term Association that has to be formed by Tesla with their existing
suppliers which can help them in getting a competitive advantage plus it can also help
them in getting cost effectiveness by formation of long term contracts and stable supply
of raw materials. The strategies that can be used by Tesla are building efficient supply
chain management and developing better relations with suppliers so that the bargaining
power of suppliers can be reduced. Threat of new entrants: This is a threat that is related with the new brands that can enter
in the automotive industry and impacts the prices of products and amount of competition
experienced by Tesla in the present scenario. Electric vehicle range that is offered by
Tesla cannot be easily imitated by any other brand that is leading to threat of new entrants
(Braun, Latham and Cannatelli, 2019). This threat can be dealt by Tesla through
innovating its products by spending money on R&D so that cost efficient and better

designed vehicles can be provided to the customers which can help in increasing their
value for money.
 Bargaining power of customers: It is a power that present with the customers to
influence the business policies and decisions of Tesla. It can be said that the vehicle range
of electric vehicles which are offered by Tesla is not easily present and offered at high
quality by other competitive brands. It is leading to creation of a competitive advantage
as customers possess no bargaining power because of the Limited number of options
available in the range of products offered by Tesla (Schaltegger, 2016). The strategies
which can be used by Tesla are building a large base of customers, rapidly bringing
innovations so that needs of customers can be efficiently met.
M3: Appropriate strategies to improve competitive edge and market position
Strategies are helpful for the organisation to plan the activities which have to be undertaken
to achieve predetermined goals. Porters five force analysis is a great tool that can help in dealing
with the impact of various forces external environment and can be a huge threat for organisation.
They have to be more efforts made to reduce the threat of such forces which are high such as
supplier power bargaining power of buyers must be managed threat of industrial rivalry. Some of
the strategies to manage such that are mentioned below:
1. Tesla must make efforts to increase the loyalty programs for their customers.
2. Tesla should have more focus on enhancement of the product quality and implementation
of innovation with time.
3. Aggressive marketing strategies must be adopted by having time to time campaigns to
attain distinguished position in the market.
TASK 4
P4: Theories, concepts, models that can help in strategic planning
Strategic planning is basically a process that helps centre termination of the strategy and
overall direction that can help in making different decisions such as allocation of resources. Is a
process that is undertaken by leaders in the organisation according to the Mission and vision of
the organisation (Filippov2017). It is actually help in formation of the strategies help in
increasing the overall productivity with various issues and challenges that are present in macro
environment. Case of Tesla Ansoff matrix is used to select a particular strategy.

ans off matrix is used as a management tool for identification of different strategies that can be
adopted by a organisation:
 Market penetration: It is a strategy that can be used by Tesla operating in the existing
market and with the present range of products (Das, 2016). For using the strategy there
will be need of additional marketing promotional strategies to promote their existing
range of products as there are no new categories of products which are added strategy.
 Market development: It is a strategy that can also again adopted by Tesla but in this
there will be movement to a new market along with the present age of product (Mergaerts
and Vander Vennet, 2016). For this strategy there is requirement of a detailed research
for understanding the new market segment that is targeted by Tesla can be adopted only
if attractive response is expected from a new target segment of a market.
 Product development: The strategy that can be adopted by Tesla where there will be
new product launches but in the present market base that is no new market that is targeted
by the organisation (Ocasio and Radoynovska, 2016). Strategy involves higher amount of
risk as there is no new market and higher amount of investment is being made in
launching a new product that can be accepted by present base of customers and maybe
there is a possibility that they do not like the product.
 Diversification: It is a strategy that can be adopted by Tesla where the organisation is
willing to enter a new market with a completely new segment of product (Revathi, and
Aithal, ., 2018). This is the strategy that can be used by Tesla to deal with the intense
amount of present weather strategy as there is expansion of the business in a completely
New Market territory plus there is complete new segment of product that is launched
which involves High investment of all the resources of Tesla.
It can be concluded from the above discussed strategies that market development can be
the most suitable strategy in the present scenario for Tesla. Behind is that this strategy can help
Tesla in utilisation of their core competencies for the purpose of their market expansion (Reich
and Benbasat, 2013). It can also help them in expanding their business different and market
segment which can lead to increasing their overall development.
Porter’s Generic strategies:
 The overall generic strategy is based on three different strategies
Cost leadership strategy: In this organisation can build up a strong base of customer

with the help of achievement of a leading position by offering competitive prices of
various products.
 Differentiation strategy: It is a strategy in which a advantage can be gained by
organisation by offering something different from already existing product by other
competitor brands (Abdelkafi and Täuscher, 2016).
 Focus: It is a strategy that is based on focusing of organisation at a time on one strategy
that is either cost leadership or differentiation strategy.
From the above discussion it can be said that differentiation strategy is most suitable strategy
for Tesla that they can offer to their existing customers a different range of products which can
help them in building up a competitive advantage which they have achieved present market by
their electric vehicles range (Rosca, Arnold and Bendul, 2017).
M4: Strategic marketing plan
Marketing plan for Tesla is mentioned below:
Vision: To be one of the most innovative brands by use of continuous improvement with the help
of innovative Technologies (Murthy, 2012).
Mission: Mission of Tesla is to escalate world by offering sustainable range of vehicles.
Objectives: About the brand is to enhance the market share by 15 percent incoming time period
of two years.
Tactics: The overall tractors can be used by understanding the marketing mix strategy of Tesla:
 Product: Products offered by Tesla consists of electrical vehicles, batteries and solar
panels. They can enter a new market with their existing range of products (Marx, 2015).
 Price: Overall pricing strategy of Tesla that has been adopted is premium pricing strategy
that is related with offering innovative product with high quality but again it is launched
on high prices (Cosenz, Rodrigues and Rosati, 2020).
 Place: Tesla has strong distribution Network and supply chain management the existing
Logistic management can be used as a tool in entering a new market (Karami, 2016). Promotion: There has to be use of extensive marketing techniques such as digital media
tools for the purpose of launching and approaching a completely New Market segment.
Implementation: The above mentioned strategies effectively implemented in order to take
advantage and achievement of laid down objectives of the strategic plan (Grover, . and Kohli,

2013). There is use of a financial budget which can help in allocating the financial resources
across different activities.
Evaluation: There has to be a detailed evaluation of the overall performance of Tesla that has to
be regularly followed up that can help in making a check of all the activities are taking according
to the plants schedule (Dodgson, 2018). It is also very helpful in keeping a track on the
successful implementation of all the formulated strategies that have been formulated in the initial
stages of the strategic management plan.
D1: Critical analysis and interpretation of data and information
Strategic direction can be regarded as various set of actions that can guide organisation so
that they can frankly perform their operations according to set objectives. It can be said that there
are certain frameworks such as pestle analysis that are applied by these organisations in order to
understand the forces of external market (Barberá and et. al., 2012). Requirement to form various
strategies by using porters five Force model based on which different objectives and tactics are
developed for organisation. These objectives and tactics have to be achieved in a specified time
period that is set in the overall strategic management plan and finally evaluation is done at the
end of strategic management plan in order to monitor and control different activities and check
whether there is any deviation in the actual achieved results.
CONCLUSION
From the above mentioned report it can be concluded that strategy formulation is a very
important part of Organization in order to deal with various external forces that can affect the
functioning in a negative manner. Formation of different strategies that can be formulated by use
of certain management tools that help in analysis and further making a detailed evaluation of
macro environmental factors and analysis which help in understanding the various internal

factors that are affecting internal functioning of the organization. Porter’s five forces model and
ansoff Matrix for the assist in form business strategic plan.

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