Business Strategy

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Impact and influence of Macro environment on organisation and its strategy.................1
M1 Analyse of external or macro environment......................................................................5
TASK 2............................................................................................................................................5
TASK 2............................................................................................................................................5
P2 Analysis of internal environment and capabilities through utilising appropriate framework
................................................................................................................................................5
M2 Evaluation of internal environment for assessing organisation skill and structure.........9
TASK 3............................................................................................................................................9
P3 Implement of Porter's five force to evaluate competitive force in organisation...............9
M3 Appropriate strategies to improve competitive edge and market position based on the
outcomes:..............................................................................................................................11
TASK 4..........................................................................................................................................11
P4 Different theories, concepts and models to devise strategic planning............................11
M4 Produce a strategic management plan that has tangible and tactical strategies priorities and
objectives..............................................................................................................................12
D1 Apply of right information to understand environmental and competitive analysis to
develop right strategic direction and action..........................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Business strategy works as a plan through which effective decisions are taken by
organisation for attracting large number of customers. The main motive to develop an effective
business strategy is to gain competitive edge in market by accomplishing organisation goals and
objectives in minimum time period. For this purpose, it is essential to focus on company’s
mission and vision objectives, including current trend of marketplace that might influence
business operations and affect growth. This report is written from the perspective of Tesla which
is operating its business in auto-mobile and energy industry. This American company is
headquartered in California, United States and offer products at worldwide level (Ansoff, 2018).
To analyse the way operations and other functions of Tesla is effective by macro environment,
PESTLE framework is utilised in this report. While to highlight the internal capabilities, VRIO
model and SWOT analysis are taken. Along with this Porter's five forces and different theories
are implemented in organisation for developing effective strategic plans for chosen organisation.
TASK 1
P1 Impact and influence of Macro environment on organisation and its strategy
Macro environment includes all those forces which are beyond the control of an
organisation such as political changes, economical policies and many more, that highly affects
operational activities. To respond towards such changes in macro environment, a company needs
to develop effective business strategy, that helps in running operations successfully. Business
strategy can be defined as the summary of plans that helps company to meet with buyers
expectation to gain competitive edge in market. Tesla has been established in the year 2003 and
deals in an Automotive and energy based industry. This firm mainly specialises in manufacturing
the electronic cars and operates business in all countries. In order to develop strategy according
to external environment for reducing the impact and influences of uncontrollable aspects on
organisation decisions, it is essential for management of Tesla to conduct proper market research
(Bell, 2017). For this purpose, PESTLE analysis can be utilised in following way – TESLA.

PESTLE analysis Political factors- Political factor impact on functions of TESLA such as if government
prohibited use of natural resources such as Petroleum and oil then TESLA will get benefit
in their operations as company is offering electronic vehicles that reduce consumption of
natural resource. Trade restrictions, tax rates etc. are some example of political factors
that highly influence business operations and policies of a company as it impact on
business operations and functions of TESLA. This refers it is mandatory to follow local
rules of country. In the context of UK, it is a political stable country so it influence
positive aspect on organisation as government is open to adopt new business methods and
technology for providing better products and services to its resident individuals. Economic Factors- UK is an economic developed country where government mainly
concern on developing better fiscal and monetary policy, so that all local and
international companies can operate their business in its territorial boundary, profitably.
In the present scenario, Brexit impact on GDP and inflation rate of the country due to
which employment rates of organisation is impacted as companies are not able to manage

similar level of production so they reduce number of employees. UK residents earn good
amount of income due to less government interference in business such as low tax. So it
work as positive factor for Tesla to earn better amount of profits. Whereas, Brexit
negatively impact on business operations where due to new trade rules and policy,
management of Tesla requires to make changes accordingly, to operate business in
overseas market profitably. Socio-cultural Factors- Social culture factors includes all those aspects which are related
with taste, life-style, preference and trends which are followed by individuals. In context
of UK large number of persons belongs to different backgrounds and religion but they all
are concern about the environment factors. Therefore, the social culture aspects positively
impact and influence on business strategy of Tesla as management is offering
environment friendly products to consumers. Along with this by taking regular feedback
from customer customers, essential changes also have been made for product
development by respective firm,that enhances more value in business. On the other side,
due to high income inequality between people pricing strategies of Tesla will be impacted
that impacts on sales and production of electric vehicles. Technological Factors- According to present market conditions technology is an
essential factor as it is involved in all operations and functions of Tesla. For example- for
manufacturing electric and fuel efficient vehicles, it is essential for automotive companies
like Tesla to utilise latest technologies in production. Example- Mapping technology and
different modes such as sports and cruise controls are latest technology used by
management. The major concern in technological factor relates with automation,
innovation and new ideas due to which long term results will be achieved. In context of
Tesla, management undertakes several opportunities in UK market because people and
companies of UK are friendly with technology it work as positive factor for organisation. Legal Factors- Legal aspects refers to laws and legislations of a country under which
organisations perform their work. It is mandatory for all companies to perform their work
as per country and company laws. Moreover, carbon emission law of UK, are developed
for protecting interest of organisation stakeholders in order to manage company
operations and functions within appropriate manner (David, 2019). Tesla is developing
electronic vehicles so management must develop strategy which influence and impact on

organisation with in positive manner. Climate change act, 2008 work as a approach that
tackle climate changes due to which impact of greenhouse gas will be reduced. In context
of Tesla operations it is impacted by climate change act as management focus that its
production system will not generate and release more gases than the decided level.
 Environmental Factors- Environment aspects of the country are concern about climate,
weather conditions, water utilisation etc. UK is more concerned about environment
policies for controlling principle of organisation that is generating pollution in
environment. With the raise in awareness as per global environment conditions demand
of Tesla products is also increasing because organisation is offering all those products
that are safe for environment.
Stakeholder analysis
As per this strategy, stakeholder in a project will identify and gather information
according to the event in which they participate and take interest as per company project and
influence all activities related with operations. Steps of strategy are as follow:
Step 1- In the first stage, management of Tesla need to identify all those stakeholder or
persons who will impact by its particular project such as customers, government and suppliers.
Step 2- According to second stage all listed stakeholders will be prioritized as per
participation level, whose interests are needed to consider while making decision for
implementing a new project, as mentioned below High power, high interest- Individuals are needed to engage in major operations of
project and management of Tesla need to concern to make greatest efforts for satisfying
their needs. (Jenkins, 2015).
 High power, low interest- Stakeholders who are less interested in the organisational
functions but have high power to influence company’s decisions, are also needed to be
satisfied by enough work.
 Low power, high interest- Persons who belong to low power groups are interested in
project but they are not in power to influence project. Therefore, it states management of
Tesla to provide adequate information to them about new project, so that no major issues
can arise.
 Low power, low interest- These type of individuals nor interested and also not in power
for performing work due to which operations and functions are impacted.

Step 3- In the last, it is mandatory for organisation to communicate organisational goal
and objectives with its stakeholders systematically, for accomplishment of better results in
upcoming future.
M1 Analyse of external or macro environment
Macro environment factor undertakes all those aspects like changes in political laws,
legislations, trading policies etc. which are not controlled by management of a firm. In this
regard, it is essential for Tesla to determine impact of these changes while developing strategic
decisions to run business effectively.. Business strategy can formulate with motive of
performing operational work in such a manner, that reduces negative impact of macro
environment impact on organisational performance (John, 2018). Tesla also made modifications
in its operations and functions strategy to deal with political and economical conditions of UK
which are impacted due to Brexit. Further, due to changes in technological aspects various
threats are faced by management as it directly relates with business operations and functions.
TASK 2
TASK 2
P2 Analysis of internal environment and capabilities through utilising appropriate framework
TESLA is operating their business in energy and automotive industry which works as
positive factor for organisation. This refers by analysing there all internal aspects it is easy for
management to gain maximum output by utilising minimum resources. SWOT is implemented
for understanding all task and operations in effective manner.
SWOT ANALYSIS OF TESLA
Strength Tesla has good infrastructure as well as skilled employees, which are
considered as the main key factor of its success.
Tesla is the most prestigious automotive company in terms of sale and
revenue.
Tesla use Re-engineering for advancement and is the most innovative
company.
Tesla has brand recognition value and vast growing networks which leads to
more economic growth.

Weakness Tesla doesn't have maximum production as they face the time delay in
production and manufacturing due to continuous launch.
Tesla's CEO Elon musk accept that their production is decreased because of
limited supply of battery(https://bstrategyhub.com/tesla-swot-analysis/).
Tesla stands on one-man show as Elon mask is the one who handle
maximum number of projects like: The boring company and The space
exploration technologies corporation.
Opportunities Tesla has more technological advancement as it manufactures own battery
cell which helps in reducing production cost and gives opportunity to offer
products on less rates
Tesla is vast growing international market as the ASIAN market is more get
attracted towards their vehicles.
Tesla set-up new auto-mobile business which reduce market risk and give
opportunity to diversity its business from other companies.
Tesla launch Model 3 that is affordable model as it is less expensive model
compare to Model S thus with this they cover all the income group
segments.
Threats Tesla face several technology claims when it has launched autopilot
vehicles, which are not prove efficient in desired manner, so it arises the
major threat for its competitive image
Tesla faces price fluctuation due to more competition as there is price war
in the market to grab maximum customers.
Tesla faces aggressive competition \ due to presence of many competitors
like BMW, Toyota and more, that offers most innovative and eco-friendly
vehicles.
Tesla has limited support to Electric vehicle because people must get
attracted towards diesel vehicles.
Strength: The major strength of Tesla is its infrastructure and employees, where
infrastructure shows the internal structure of this firm that provides a clean and well manage

environment for its workers to work effectively. As healthy atmosphere always be first priority
of people especially in auto mobile industry, where quality of products concern more, therefore,
providing safe and secure environment will help employees of Tesla to give their best
performances. According to Forbes list,Tesla has awarded as the "America's best employer
2019" that provides better environment to its workforce. Tesla is also consider as one of leading
auto mobile company due to its innovative vehicles which attract and retain customers for long
period. Tesla has more brand recognition value as they lead the economic growth and most of the
people get attracted towards their product which increases its sale.
Weakness: Tesla also have some weakness which affects its growth due to internal
factors. Tesla faces ramp delay in the manufacturing and production because at launch of new
auto-mobile products, it has less production of existing one which affects sales. Tesla's CEO
Elon musk himself accept that their production is decreased because of limited supply of battery
and shortage, which has direct impact on its sales of electric vehicles (Noe, 2017). Tesla stands
on one-man show as Elon mask is the one who handle most of projects as The boring company
as well as space exploration technologies corporation and with that Elon mask have to give
100% result which creates pressure and that is the biggest weakness of Tesla.
Opportunities: In order to sustain in competitive market, Tesla has gained a number of
opportunities as well, where making own battery cells - helps in reducing the production cost.
Technological advancement is also provide biggest opportunities for creating innovation and
adding more eco-friendly features in vehicles, that helps in attracting more customers towards its
business . - Moving business in Asian market also provide chance to Tesla in generating more
revenue as it has large expansion in international market which will help in attracting new
customers more easily Tesla always comes with new businesses which give diversification in its
sales, where targeting middle level of population aid to earn more profitability by offering
innovative vehicles on affordable rates.
Threat: Tesla has a large number of competitors like BMW, Toyota etc. who always
comes with new strategies and policies to grab market attention. This would create threat for that
Tesla and assists to make change in its policy and price strategy according to the price
fluctuations in the market which turns to more competition.. Tesla has limited support to Electric
vehicle because low price of oil reduce customer's attraction (Phadermrod, 2019).

VRIO analysis: According to this analysis, the company get towards innovation and
product portfolio. It is also very effective in terms of betterment of vehicle safety and capacity of
production. This is the tool that is used to analyse the abilities of Tesla this explained below as:
RESOURCE
S
VALUABL
E RARE INIMITABL
E
ORGANISAB
LE
COMPETITIV
E
ADVANTAGE
Brand Image Brand
Image - - -
Temporary
Competitive
Advantage
Manufacturi
ng Capacity
Manufacturi
ng Capacity
Manufacturi
ng Capacity - -
Temporary
Competitive
Advantage
Innovation
Capabilities
Innovation
Capability
Innovation
Capability
Innovation
Capability - -
Sustainable
Competitive
Advantage
Human
Resources
Human
Resources
Human
Resources
Human
Resources
Human
Resources
Potential
Competitive
Advantage
According to the above analysis the organisation get the information of various resources
like valance, rare, inimitable and organisable. These are mention below as:
Valuable:
 Brand Image: Tesla's brand image is very much valuable, as Tesla allows the firm to
increase its productivity effectively and makes sure that they easily entered in the
international market.
 Manufacturing Capacity: It is valuable for the company to manufactures and produces
effective product by analysis the complete research and then develop the product to fill
the market gap.
Rare:

 Manufacturing Capacity: The manufacturing department is linked with the suppliers, that
ensures the supply of rare products to the company that enhanced the effectiveness of the
product this make it more rare.
 Innovation Capabilities: It is very rare for every firm to develop new product on the basis
of technological development, skills, etc.
Inimitable:
 Innovation Capabilities: Every innovative product of the company is patented, thus it is
inimitable for all the new products by the organisation.
 Human Resources: Skills, talent, knowledge, experience can't be copied by an employee
of any othercompany
Organisable:
 Human Resources: Tesla's employee is very much trained to use new advanced
technologies that enhance the productivity of the company in an effective manner.
M2 Evaluation of internal environment for assessing organisation skill and structure
With the analysis of internal environment, the strength as well as weaknesses of Tesla are
analysed and can modify according to business capabilities, skills and structure. This is essential
for respective organisation to perform work as per changing environment in order to achieve
organisational objectives in appropriate manner. In order to gain competitive advantage,
management of this firm needs to capture all the opportunities which are present in market -for
enhancing capabilities of business. Along with this, strategic decisions also need to be made to
deal with potential threat for organisation. VRIO model also help Tesla to make advantages in
projects by generating more value in its products through efficient policies and process, that
leads company to gain sustainability in market.
TASK 3
P3 Implement of Porter's five force to evaluate competitive force in organisation
Porter's five forces is an effective model that is utilised by business to understand the
competitive power and forces of other players in market. This model can also be used to
understand degree of competitiveness in market -. This is beneficial for planning and utilising
strategies of business that helps management to control the forces or to manage their strategy
according to competitive forces.

Threat of new entrant- New entrants in market in automobile industry includes those
manufactures that develop strategy as per low prices and want to supply more value for
customer. (Rothaermel, 2017). In context of Tesla management is offering new and innovative
electronic vechiles that assist management to gain competitive edge in market by competitive
edge. Therefore, the power of new entrant is low in market because it require high technological
tools. Similarly research and development department also require high engagement in business
operations and functions.
Bargaining power of Supply- There are large number of auto-manufacturing
organisation are present in market where to manufacture products on less cost of production,it is
mandatory to have effective relationship with suppliers, so that raw materials can be purchased
on cheap rates In context withTesla, the supplier power is high because this organisation is new
in market. So suppliers are in power to dominate market area. Therefore, to overcome from this
threat, Tesla develop effective manufacturing units which are high in technology adoption that
reduces bargaining power of suppliers and distributors.
Buyer's bargaining power- The main motive or aim of buyers is to buy good quality
products at low prices. In the present scenario, the nature of consumers is dynamic because they
highly concern on quality and eco-friendly features of vehicles, so it is complex for companies
that deal in automobile industry to satisfies their needs effectively. Tesla is new in market so
buyers have high power to make changes in pricing strategy amd demand for special discount.
This refers that bargaining power of customer's is high. So, to overcome form this threat,
management of respective firm to implement new innovation techniques in operations and
functions to offer products on profitable rates
Threat of substitutes- New entry of substitute products refer to those products that
satisfy similar needs of customers. Example- Ford focus on manufacturing electric products
which may consider as substitute of products that are offered by Tesla to targeted customers.
The power of substitutes is moderate because electric vehicles are new in market. (Salavou,
2015).
Competitive rivalry- Competition among all industries is too high so it work as a major
threat due to which market players impacts on profits and sales margin of organisation. Tesla
operates its functions and operations that ensures safety of environment. Moreover, with

sustainable products and differentiation strategy it is easy to deal with competitors by gaining
competitive edge in market which reduces threat of competition in market.
M3 Appropriate strategies to improve competitive edge and market position based on the
outcomes:
The strategy which improve competitive edge and market position of Tesla in automotive
industry is cost differentiation. It also defines the change in cost according to the rivals that are
in the market and company always focus on the change of market cost. It comes with the change
in price including the change in product thus it leads to be an effective result for the company.
Tesla uses this strategy as it comes with the different prices with -advancement in product, by
using own battery cells in vehicle and adding more features that doesn't creates pollution. It also
helps to keep the environment cleaned - that aid to attract maximum number of people towards
its business and increase its brand value. The company comes with suitable prices that attract
middle level and the upper level income group. Tesla inserts some luxuries factor by which they
cover all the income level. As much the people know about the product that much they attract
towards that which increases the sales of Tesla. This strategy improves the market position and
competitive edge of the company (Sarsby, 2016).
TASK 4
P4 Different theories, concepts and models to devise strategic planning
Porter's generic strategy: Tesla applies Porter's generic theory to attain the advantage of market
competition against other companies, which help to maintain sustainability of business as well.
Generic strategy shows the strategic approach of a company that measure the growth of the
company. Porter's generic strategy includes cost leadership, cost focus, differentiation and
differentiation focus. Tesla mainly uses cost differentiation strategy to getting up the competitive
advantage as company provides make different products which covers all the income group. with
that company comes with the electric vehicle that is less costly as compare to the others. Also
differentiate its product in terms of pollution control by using battery cells which keeps the
product cost low, Thus with all that strategy Tesla made their different and effective in terms of
other product and gains the competitive advantage.`
 Cost leadership strategy defines as Tesla is the one who leads the market with highest
sales and they have more technological advancement and innovation which make its

product different from others. Thus it set price according to advancement which leads to
cost leadership.
 Cost focus strategy is as due to diversification in market and product the company faces
more competition with that the company will be more aware and focused towards the
cost. Focus on cost also affect the change of costing in the market as to collect more
customer each company comes with new changes, strategies, policy, etc. Thus Tesla
always focus on cost and changes the cost if their is any need to be in the market (Shi,
2016).
 Differentiation strategy is a strategy that deals with the production of product which is
different from the market products. As Tesla comes with the different product as they
comes with environment friendly vehicle that creates less pollution and launch the
electric vehicles which have battery cells. This can attract a lot of people as now a days
everyone is affected by the pollution all wants to control the pollution and keep their
environment clean for that customer attracts towards Tesla vehicle.
 Differentiation focus is a strategy used to take the advantage of competitors. As there
are other companies like Nissan leaf, jaguar I-pace, who launch electric battery as to
compete with that Tesla comes with the advancement by extending luxury to that
vehicles. Tesla also introduce lithium ion battery which leads to higher charge and more
mileage as compared to other products.
M4 Produce a strategic management plan that has tangible and tactical strategies priorities and
objectives
Vision: To be the most powerful automotive company of 21st century by driving
transition of world to electric vehicles..
Mission: Tesla mission is to be the one who produces safest, efficient and self-satisfied
vehicles which fulfil the need of customer and also transit the world into sustainable energy.
Aim: Tesla's always wants to create a safe environment and always keep learning and
doing the best.
Objectives: Tesla have several objectives which are as follows as:
 To fulfil the need and demand of customers and increases the sales with in the period of 3
months.

 Manage the brand recognition and long term awareness in the market to attract more
number of customer's with in 60 days.
 To introduce the technology that gives benefit to gain competitive advantage in market
for achieving top position with in a year.
Benchmarking: Benchmarking is the set standard what company follows to achieve its targets.
Tesla also set the benchmark to accomplish its goals which are as follows:
 To keep the supply of electric vehicle and energy storage vehicle that keep the
environment clean (Skow, 2015).
 Tesla set the benchmark to produce the world's largest lithium ion battery which safe the
environment from pollution.
D1 Apply of right information to understand environmental and competitive analysis to develop
right strategic direction and action
Tesla is performing as a major competitor for other rival organisation by taking first
mover advantage in market through offering and introducing electronic vehicles. PESTLE and
VRIO analysis is done to understand market as well as micro and macro environment which
impact on strategy and functions of a company. Along with this Tesla is increasing their
investing in research and development by spending 1.5 billion U.S. Dollars in 2018 due to which
TESLA is recognised as leading electric vehicle manufacture among the world.
(https://www.statista.com/statistics/314863/research-and-development-expenses-of-tesla/).

Their are different strategy such as cost focus and differentiation strategy are
implemented by management of Tesla for gaining top position in market. In context of UK
market demand of electric vehicles is increasing day by day due to which company directed
their efforts towards organisation goals and objectives. Along with this it also helps to perform
all action and activities in proper manner by implementing differentiation strategy in all
functions and operations.
CONCLUSION
From all over discussion, it has been concluded that it is mandatory for every
organisation to formulate organisational strategy by considering essential aspects of macro
environmental factors. The main motive of this strategy, structures and framework is to
formulate effective results by understanding internal and external environment that leads
organisation to achieve business objectives in minimum time period. On the other side,
sustainability and productivity of organisation leads management to achieve more success in
market due to which management gain top position in industry. PESTLE, SWOT and Porter's

five forces model are some of the most effective tools which leads organisation to gain
sustainability in business by performing their operations in effective manner.

REFERENCES
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Online
Tesla's research and development, 2018. [Online]. Available Through :
<(https://www.statista.com/statistics/314863/research-and-development-expenses-of-tesla/). >