Business Strategy: Impact of Macro Environment on Tesla

This document discusses the importance of business strategy in achieving organizational goals, with a focus on Tesla. It analyzes the impact of the macro environment on Tesla's strategies and evaluates the internal environment and capabilities of the organization. The document also provides insights into how Tesla can improve its competitive edge and market position through strategic planning.

BUSINESS
STRATEGY
1

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
P1 Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies..............................................................4
M1 Critically analyse the macro environment to determine and inform strategic management
decisions......................................................................................................................................4
TASK 2............................................................................................................................................4
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks..................................................................................................................................4
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set..........................................................4
TASK 3............................................................................................................................................4
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation............................................................................................................4
M3 Devise appropriate strategies to improve competitive edge and market position based on
the outcomes................................................................................................................................4
TASK 4............................................................................................................................................4
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation...............................................................................................................4
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives.....................................................................................................................................4
D1 Critique and interpret information and data applying environmental and competitive
analysis to produce a set of valid strategic directions, objectives and tactical actions...............4
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5
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INTRODUCTION
Business strategy is basically the planning which the organisation does to achieve its
targets. It helps the organisation in enhancing their performance by effective decision making. In
order to achieve success in the market proper planning of strategies is very important because if
the organisation will not plan their strategies accordingly then it can affect the functioning of the
business (Yuan, 2020). As competition is increasing in the market its getting very tough for the
business to survive in the market so to avoid the loss in the organisation strategies are planned
which also helps the business in effective utilisation of resources. Business strategies helps in
unique positing of brand so that its demand in the market can be increased and more revenue can
be generated TESLA is one of the top automotive and energy generation company in the world
which provides the wide range of electrical vehicle and battery energy products it was developed
2003 and based in California. Tesla doesn't pay for any advertisement they mainly focuses on
guiding the customers through their workplace due to which it is considered as the best selling
electrical car manufacturer in the world. In this report it will observe that how business strategies
helps TESLA to achieve its goals in the market.
TASK 1
P1 Using appropriate frameworks analyse the impact and influence of the macro environment on
a given organisation and its strategies.
Macro environment plays an important role in the growth of the organisation. It impact
can be negative or positive because macro environment has various factors which can effect the
profit of the business. To analyse the macro environment effectively PESTLE analyses and
Stakeholder analyses has been used.
PESTLE ANALYSIS ON TESLA
Pestle Analysis includes various environmental factors like Political, social, economical,
legal, technological, environmental. It helps TESLA in implementing their strategies according
to the requirement of the people so that its demand in the market can be increased. Pestle
analysis helps in judging the environment in an appropriate so that it business can plan their
strategies accordingly
 Political factor: Political environment includes unemployment rate, economic condition,
tax rate. High tax in the economy can change the revenue generating structure of the
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business. In order to survive in the economy and achieve profit organisation has to pay
taxes for various organisational activities like export and import of goods and services.
Implementation of trade policies by the government can affect the performance and
revenue of the organisation. Expansion of free trade agreements provides opportunities to
Tesla in expanding their operations globally (Park and Mithas, 2020).
 Economic factor: This factor of pestle analysis includes trade levels, market growth,
currencies etc. which influence the auto-mobile business. For example the growth rate of
solar energy market's helps in determining the opportunities of solar businesses. There
are various economic factors which can influence the the revenue of TESLA Like
reduction in the battery cost, decrease in the cost of renewable energy, stability of
economy. If the battery cost will reduce in the market then it will help TESLA in
increasing its profit in the market by manufacture more variety of products.
 Social factor: To achieve success in the market organisation has to develop its goods and
services according to the needs and requirement of the customers because in today's
scenario every individual wants the new variety of goods and services so that their needs
and requirement can be satisfied properly. Developing the product and services of the
company helps TESLA in increasing its profit in the market. By increase the distribution
of wealth in the markets business can easily the increase its financial performance. This
factor helps in improving its services of TESLA because if it will follow the old tools and
techniques in their products then their demand in the market can be decreased.
 Technological factor: In TESLA technology plays an important role because it deals in
electrical products which cannot function without technologies. With the help of
technology company can achieve its target in a short time period. To increase the profit in
the market advance technology is used by TESLA. For example Tesla is using a self
drive feature in its products so that it can attract the attention of the customer. In the auto-
mobile industry technology is very important to provide the comfort to the customers.
 Legal factors: For the smooth functioning of the business there are some laws which the
organisation has to follow for example labour law, safety standard, consumer law etc.
These laws helps in proper management in the business. Organisation should provide the
job security to their staff so that there performance in the organisation can be increased. If
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the organisation is not providing proper working environment to the employees then
employees has the right to take action against it.
 Environmental factor: changes in the environment is unpredictable so organisation has to
plan its strategies accordingly so that it cannot face any loss in future. TESLA is basically
working on the decrease of greenhouse gas which will helps in the stability of the
environment. TESLA deals in electrical products which also helps the environment in
reducing the pollution (Yuliansyah and Mohamed, 2017).
STAKEHOLDER ANALYSIS ON TESLA
Stakeholder in an organisation plays an important role because they helps the business in
planning their strategies so that goals of the organisation can be achieved properly. Stakeholders
which helps the organisation in achieving its profits are government, customers, employees,
communities etc. To perform the activities of the business effectively there are some rules which
the stakeholders have made which is to be followed by the organisation.
Employees
In every organisation goals are achieved with the help of the employees and staff who are
working in the organisation so to increase the productivity of the business TESLA should
motivates its employees so that their performance can be increased and profit can be earn more.
Organisation should involve their employees in their decision making so that more ideas and
techniques can be develop in the organisation. If the company will guide and motivates its
employees then it can affect the performance of the employee and the organisation.
Consumers
TESLA should develop its products and services accordingly to the need and requirement
of the customer so that demand of the organisation can be increased in the market. If the
company produce the high cost of product then it can effect the growth of the company so to
avoid this TESLA should decrease the cost of engine they are using so that their product price
can be reasonable so that people can afford it easily. Organisation should function smartly so that
economic scale cannot get disturbed and targets can achieved effectively. TESLA should target
its potential customer so that organisation growth can take place in the economy. TESLA should
ask for a feedback from their customer so that their services can be improved in the market.
Government
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Government has made some rules and regulation which the organisation has to follow in
orders to achieve its profit without the interference of the government. Rules and regulation are
set by the government without effecting the economic scale of the country. To maintain its
position in the markets TESLA has to follow the rules and regulation properly which are set by
the government.
Investors
Investors are the people who helps the business to increase its profit in the market with
the help of the funds invested by them in the business. Investors invest in the business by the aim
of earning profit of the organisation face any loss in the company then it can also affect the
investors so organisation has to perform its activities accordingly.
M1 Critically analyse the macro environment to determine and inform strategic management
decisions.
With the help of Pestle analysis it has been observed that macro environment can
provides advantages and disadvantages to the organisation. If TESLA will not plan their
strategies according accordingly to the macro environment then it can affect the growth of the
company. TESLA develop its product according to the current needs and requirement of the
customer they mainly target young generation people as their customer because they can easily
understand the benefits of the products which they are producing which will also help in
increasing the demand of the product in the market. TESLA can be effected by the political
factor of the economy but with the right implementation of strategy company can overcome from
this issue easily and can earn more profit in the marketplace (Maniora, 2018).
TASK 2
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks.
Internal environment of the business includes all the elements which helps the
organisation to achieve its goals in the market. It involves management, employees, corporate
culture, human resource, labour management, plant and machinery etc. which defines the
behaviour of the employees. Internal environment of the business helps in determining the goals
of the organisation for which it has established in the market. Internal environment of the
business helps in proper utilisation of resources so that goals of the organisation can be achieved
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effectively. Internal factors of the organisation can be tangible or intangible these elements also
helps in knowing the strength and weakness of the company. In TESLA internal environment
helps to increase its productivity in the market so that its profit in the market can be increased in
the market.
VRIO framework
VRIO stands for valuable, rare, inimitable and organized. This framework helps the
managers of the organisation in analysing the company's capabilities and resources. It has four
bricks which represents the properties of the capabilities and resources which lead to
competitive advantage. If the resources of the organisation satisfies all the fours bricks then it
can be competitive advantage for the company and if in case it doesn't meet all the four
requirement then it can be advantage for the company (Suoniemi, 2020).
VRIO Analysis of TESLA
Core
proficiency
Valuable Rare inimitable Organized Advantages
Innovative yes Yes yes yes Competitory
advantage
Experience of
the customer
yes yes yes yes Competitory
advantage
Image of the
brand
yes yes yes yes Competitory
advantage
Range of the
product
yes No yes yes temporary
Innovative
Innovation in the organisation plays an important role to achieve competitive advantage
in the market. In order to maintain their position in the market organisation should always focus
on the innovative technique so that more profit can be earned in the market. As TESLA has
innovated its product by self driving technology its profit and demand has been increased in the
market.
Experience of the customer
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TESLA provides the best quality of products and services to the customers in terms of its
design and features which has increased its market share and customer loyalty in the market. Due
to the rise in the fuel price people in the market are looking for the products which are fuel
efficient so that they maintain their lifestyle without any loss which is the competitive advantage
for the company (Fraser, 2019).
Image of the brand
TESLA has build its unique image in the market because it provides the new and
innovative products to the customers due to which it is the top auto mobile company as
compared to others. Image of the brand in the markets helps the business to achieve its profit in
the market because if the people will be aware about the benefits of the products which the
organisation is providing then it will automatically increase the demand of the product.
Range of the product
Tesla product a wide rand of products to the customers which function through the
renewable energy Tesla has invented model 3 which is cheaper as compared to other car which
are manufacturing but it provides the great comfort to the customer. TESLA has various
competition in the market because competitors in the markets are also manufacturing the
substitute of the product which TESLA is providing sue to which it can a temporary advantage
for the company.
As compared to other organisation market share of tesla is 16 percent more it overall sale was
500,000 which is a big achievement for tesla in 2020 the total sales of tesla was 499,550 vehicles
which increases its growth rate in the market. it has achieved the profit of $721 million in 2020
due to high amount of sales.
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set.
To achieve success in the market resources and capabilities of the organisation is very
important. Internal environment of the organisation helps the business in proper utilisation of
resources so that profit of the organisation can be increased. With the VRIO analysis strength
and weakness of the organisation can be determined easily. It has four bricks which helps the
organisation in knowing their advantages and disadvantages which also helps the organisation in
planning their strategies accordingly. In TESLA internal environment helps in improving the
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services of the company as per the needs and requirement of the customers so that business can
achieve its profit effectively.
Swot analysis of Tesla
Strength: tesla is considers as the top employer company in the market it provides the best
working environment to the employees so that growth of the business can take place in the
market and more profit can be earned. Tesla is also one of the best leading company in the
marker it provides the best innovative services to the company in the market.
Weakness: In tesla various mechaninal complication can take place due to the innovation which
it does in the products due to which brand value can also get affected in the marketplace because
of which growth of the business will get affected in the market.
Opportunities: There are various growth opportunities for the business in the market because it
provides the best services to the company. Demand of automobile industry are increasing day by
day due to which it can create various opportunities for the business.
Threat: there are various threats which can affect the functioning of the business like unstable
manufacturing condition, customer adaptation as services of tesla are innovated then it is very
important for the business to adapt the changes so that growth of the business can take place in
the market.
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TASK 3
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organisation.
In a competitive market the firm is having various types of threat and these that can be
external as well as internal. These type of threat are very risky as they can change the working of
the company and that they can influence the decision making of the firm. Their are some of the
factors that poses a huge threat for the organisation. Michael Porter's are the one which help the
company to make strategy on the basis of the five forces. The Porter's five forces model for Tesla
is as follows:
 Threat of new Entrant – the new entrant in this force are the new firms that are trying to
enter into the market. The entry of the new firm will also have a huge impact on the
industry and their decision making. As the Auto mobile industry is very huge and they
are also having various barrier for the entry. So TESLA is having very little threat from
the new entrant (Nadanyiova and Das, 2020). This industry is having a high cost of brand
development and high cost of doing business. Although the new entrant still posses a
threat as in coming years all the cars will be electric, so a lot of new competitors are
trying to enter in to the market. The major threat with these entrants is that when they are
entering the market they try to penetrate the market and these things posses a huge threat
for the already established companies. It si also difficult for the new entrant to enter into
the same market with TESLA as they already have a very huge market capitalisation.
The electric auto mobile segment also needs a very high knowledge of the technology.
 Bargaining power of the suppliers – the suppliers are having a very huge impact on the
decision making of the firms as they are able to increase or decrease their prices. The
bargain power of the suppliers in case with Tesla is moderate. As TESLA is having a
very large number of suppliers. The bargain power of the suppliers refers to the power
that the supplier is having in order to control the prices. TESLA being the largest electric
car manufacturing company is having various different components for the car and these
components can be common element which many of the suppliers are giving but their are
also various different types of components that are rare and they also don't have that
many of supplier so in that case the bargaining power of the suppliers increases.
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 Bargain power of the buyer – this refers to how much power the buyer is having so that
they can control the prices. In case with TESLA as the bargaining power of the buyer is
very low as they don't have any major competitor in their segment and they are also not
having any major competitors in their electric segment so the bargaining power of the
suppliers is very low . The buyer have to buy the car in those prices which TESLA is
asking of them.
 Threat of substitution – threat of substitution refers to the power of the buyer to make the
substitution. Most of the time there are a large number of substitute for a single product.
In case with TESLA their Threat for substitution is moderately high. As the customer
will move towards those products which are giving them better option. If TESLA failed
to give their customers good product then they are most likely to switch to gas cars. As
the switching cost in case with TESLAis very low (Bayo-Moriones, 2020).
 Rivalry among existing competitors – this threat refers to the power of the competitors to
penetrate the market. The existing rival for TESLA are the big Auto mobile Giants like
the Toyota, Lamborghini etc. although in the upcoming years there will be electric cars
everywhere and almost all the competitors of TESLA is having the gas cars. All of them
have recently launched their electric auto mobile. Although the power of the competitors
of TESLA is high but it will get reduced in the upcoming years.
Tesla has done the partnership with the Panasonic for better production as a strategic alliance
these organisation are jointly working and investing $5 billion to earn more profit.
M3 Devise appropriate strategies to improve competitive edge and market position based on the
outcomes.
High competition in the market can affect the revenue generating power of the company
as discussed in the porter's five forces model. In order to continue its growth in the market
TESLA should provide the best quality of products and services to the customer by analysing the
market condition so that competitors cannot take advantages. As competition in the market is
becoming difficult due to which company can face loss in the coming years so to avoid this
situation company should provide innovative features and comfort to the customer so that more
customer can get attracted by the product and sale can be increased in the market. Sale of the
product can only be increased if product of the organisation is satisfying the needs and
requirement of the customer properly.
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TASK 4
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given organisation.
To analyse the strategic planning of TESLA Porter's generic strategies and extended model
of Bowman's strategy clock has been used.
Porter's generic strategy helps TESLA in maintaining its competitive advantage in the market. It
helps in increasing the sale and demand of the product in the markets. TESLA strategies reflects
that organisation is more focused on the development and innovation of technology in the
market. Focus on differentiation is the generic strategy which is used by TESLA which helps the
organisation in providing uniqueness in the products which helps in increasing the demand of the
product in the market. This strategy of TESLA has influenced the people to buy their products in
the market because in today's world people are more attracted towards the quality of the product
which the organisation is providing. Tesla generic strategy requires a suitable objectives so that
competitive advantage of the organisation can be ensured (Kristinae and Rahyuda, 2020).
Bowman's strategy clock was developed by Cliff Bowman it represents the various position of
the market where people have different needs and requirement in term of the money. As TESLA
mainly focuses on the differentiation strategy there main target is the small group of people who
are environmental conscious and rich because these people get attracted easily by the style and
look of the products which the company is providing. In the organisation like TESLA low cost
strategy cannot be applied because TESLA does not have the production capacity to perform on
the basis of cost. TESLA is only surviving in the market due to the product design and
uniqueness which it is providing to the customer due to which it has the competitive advantage to
increase its profit in the market.
Tesla is using marketing penetration as the growth strategy this strategy will helps in increasing
the sales of the business in the market. if the organisation will follow this strategy it will helps in
increasing the overall revenue of the business in the market.
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M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives.
Strategic management plan is made to ensure that the organisation is working properly or
not towards the achievement of goals. It helps the organisation to achieve its goals effectively by
planning and organising the resources of the business (Salman, 2019). If there will be proper
utilisation of resources of resources then organisation can easily achieve its goals within a short
period of time TESLA plan their strategies for a long term survival As it deals in electronic
products which helps in reducing the pollution from the environment which will also increase its
demand in the coming years due to increase in fuel price people are more into buying the
products which can fulfil their needs without affecting the financial condition of the business.
TESLA came in to market with the motive to providing the new and innovative products to the
customer so that its demand in the market can be increased. If the customer will get satisfied with
the products and services of the business then it can helps the business in achieving their long
term goals. TESLA unique strategy of developing electric cars in the market helps the customer
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Illustration 1: Bowman's stragic clock of tesla
Source: Available through
<https://www.tutor2u.net/business/reference/strategic-positioning-bowmans-strategy-clock>

with new quality of goods due to which it has become one of the top mobile company in the
world.
D1 Critique and interpret information and data applying environmental and competitive analysis
to produce a set of valid strategic directions, objectives and tactical actions.
As per the analysis TESLA is generally focuses on the differentiation strategy which can
helps the organisation to increase its profit in the market if the organisation will focus on the
uniqueness of the product which they are manufacturing they can easily achieve their target in
the market because people in the market wants the new and innovative products which can
change their lifestyle which they following. If the organisation will continue providing the same
quality of products then it can affect their demand in the market. TESLA has various competitors
in the markets which are providing the substitute of the product which TESLA is providing
which can affect the growth of the company (Tikhomirova and Tesla, 2020). In coming scenario
more electric cars will be produces in the market as per the demand of the customers because the
competitors in the markets will get the opportunities to increase its profit as per the needs and
requirement of the customer if TESLA will not provide the uniqueness and more comfort to the
people then it can affect the revenue and demand of the organisation. TESLA has developed its
business strategies according to its targeted customers so that profit can be increased in the
market easily.
CONCLUSION
As per the report it has been observed that business strategies helps TESLA in achieving
its desired goals in an effective manner so that its demand in the market can be increased. There
are various analysis which are used to evaluate the impact of macro environment on the business
which helped the business in planning their strategies effectively. Effective planning of strategies
in the business helps in increasing the demand and profit of the business. Due to its uniqueness
and comfort TESLA has increased the demand of electric vehicle in the market.
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