Impacts and Influence of Macro Environment on Tesla

This report analyzes the impacts and influence of macro environment on Tesla, evaluates the internal environment and capabilities of Tesla using SWOT analysis, and provides recommendations to improve competitive edge and market position.

Business Strategy

Table of Contents
INTRODUCTION................................................................................................................................3
LO 1............................................................................................................................................3
P1 Impacts and influence of macro environment on Tesla.........................................................3
M1 Critically analyse the macro environment to determine and inform strategic management
decisions......................................................................................................................................6
LO 2............................................................................................................................................6
P2 Analysation of internal environment and capabilities of Tesla using SWOT........................6
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set..........................................................8
LO 3............................................................................................................................................9
P3 porter's five forces model for evaluating competitive forces of a given market sector.........9
M3 Devise appropriate strategies to improve competitive edge and market position based on the
outcomes. .................................................................................................................................10
LO 4..........................................................................................................................................10
P4 applying a models , theories and concept to understand interpretation of strategic directions
To Tesla.....................................................................................................................................10
CONCLUSION..................................................................................................................................13
REFERENCES...................................................................................................................................15

INTRODUCTION
Business strategy help organization to develop and innovate their services. To grab new
opportunities in market and to maintain effectiveness of their business. Strategy help to compete
with their competitors and maintain their business growth in a long run. Tesla is one of the leading
company in auto mobile sector and due to their new products like electric vehicles help them to
expand. In this report we will prepare macro environment and its influence on Tesla. Also analyse
internal environment and its effect on growth of Tesla. Porters five forces also need to be study to
know competitive advantage. Different theories and models are used in strategic planning for
business.
LO 1
P1 Impacts and influence of macro environment on Tesla
Macro environment effect overall working and development of Tesla. PESTLE is one of the
best tool to analyse effectiveness of external market.
Political factors
Government interference effect overall business of Tesla. Political stability in an economy
help Tesla to grow their business. Tax rates in an economy effect overall profitability of their
business (Phadermrod, Crowder and Wills, 2019). Trade policy in an economy make them
ineffective to expand their business. Education system and development of infrastructure help them
to establish their business. Government of some economies and countries provide incentives on
electronic cars and develop opportunity for Tesla to grow in major markets. Foreign trade policy
and labour law influence them to develop and innovate their services. Government support help
them to improve their financial situation.
Economic factors
Economic growth of a nation is important for development of business. Consumers income
is increase then drive to purchase quality product and services also increases which help Tesla to
increase their sales. Company develop their business in an new economy then they need to analyse
unemployment rate in an economy to know that people are able to purchase their products or not.
Due to decrease in prices of battery in some territories help Tesla to develop (Safari, Farhang and
Rajabzadehyazdi, 2016). Need to analyse purchasing power of their customers to know demand of
their products.
Social factors
Culture and values of people in an economy effect overall sales of business of Tesla.
Attitude of an individual help organization to develop and innovate their services (Schawel, and

Billing, 2018). Cultural barriers in a territory influence customers to purchase product of Tesla. Due
to increase in environment consciousness in an individual help Tesla to expand. Social influence
help to increase demand of their electric vehicles. Tesla can grow its business internationally at an
developing level. Company need to improve their wealth in developing markets.
Technology factors
Availability of technology in an economy help business to develop and innovate their
services to engage large number of customers towards their products and services (Fozer and et.al.,
2017). Tesla need to research market where they are going to develop their business. They need to
know innovation and awareness of market towards technology development. Due to increase in
popularity of online mobile system help Tesla to develop.
Environmental factors
Increasing rules for welfare of society and to reduce pollution have a huge impact on growth
of business. Climate change effect business and develop opportunity for their business to grow at a
large scale. Due to their electronic cars which help to reduce pollution in environment improve
effectiveness of their business and attract large number of customers towards their products and
services. Environment have a huge impact on availability of raw materials.
Legal factors
Organization need to know consumer laws and employment laws in an economy where they
are going to expand their company (Wee, 2017). Tesla need to know basic pay or salary provided to
employees in an new economy. Health and safety laws in a new economy. Tesla safety features help
them to attract customers and initiates success for their company.
Stakeholder analysation of Tesla
Various stakeholders internal as well as external are interested in Tesla motors company.
These stakeholders tend to affect directly or indirectly the business environment and running of the
company. The internal stakeholder of the company are its employee and management teams. Thus,
for ensuring success of the organization the company has to take care of its employees salaries as
well as their career opportunities. More over, since the investees and stakeholders has invested in
the company by the interest of the success of the company. Thus, these both stakeholders influences
the strategies of the company and their implementation of strategies ensures the company
profitability & growth.

M1 Critically analyse the macro environment to determine and inform strategic management
decisions.
Political factors analysis of Tesla determine the governmental impacts on business and
macro environment. New global trade agreement and political stability in the major market are the
political factors are significant to Tesla. Decreasing battery costs and renewable energy cost ,
economic stability issues are the economic factors which affects the Tesla automotive market.
Increasing popularity of low carbon lifestyle, preference for renewable energy and high rate of
technological change , increasing automation in business are the social and technological factors
affect the Tesla automotive market. Rising standard on waste disposal and energy consumption
regulation are the factors that affect the Tesla automotive market(Zhou and Wen., 2019).
LO 2
P2 Analysation of internal environment and capabilities of Tesla using SWOT
Strength-
Tesla has taken a new place in the market because of the innovative ideas and design they
have launched in the market. This has resulted in attracting new and eligible talents looking for a
place in the company so that they can be a part of Tesla. Apart from that Forbes has featured Tesla
as best employer of America in 2019 (Gupta, Gupta and Gupta, 2019). Tesla has dominated the
electric car market as they are the first one to took the initiative in this segment of the concerned
industry. Model 3 Tesla is the most sold model of the company. The cars they offer in the market is
considered as best in the segment as they are the ones who offers highest range on a single charge
and that is up to 600 kilometres.
Weakness-
It has been analysed that Tesla also have several weaknesses like for example they are not engaged
in making updated technology that promotes sustainability, so this has hampered the goodwill of
company. It has also been analysed that company has smaller market presence (Bohari, Hin, and
Fuad, 2017). The majority if their presence is in United states, they have smaller presence in China
and Russia which they need to develop. They must also promote their products on social media so
that they can reach out large range of consumers. It has also been analysed that Tesla products are
expensive than other cars which is being provided by other competitors. It has also been interpreted
company has a limited supply chain that is acting as their weakness. They must lay emphasis on
making better relationship with suppliers so that they can increase their presence in global market.

They must also make use of better marketing strategies.
Opportunities-
Company offers an innovative product which offers a subsequent amount of technology
which runs on renewable energy which is a expensive one but still after offering all these features
they are the least expensive in the segment who offers this type of quality (Gürel and Tat, 2017).
The company is also working on making the battery on their own which they extract from others so
that they can reduce the price of the product. They have the scope to make a move in the Asian
market as the reach of the market is big there which will help the company be more stable in
finance and to grow their share in market.
Threats-
Company is facing a lot of competition from the existing car makers such as Toyota, Ford,
Audi, Volvo etc. as they offers cars which are hybrid and offers autonomous driving. Many of the
companies is working in the same segment and they are planning to offer their products in a less
price range which can create difficulty for Tesla (Dawes, 2018). Company has faces many real
cases where their design has been proven weak and flawed which has affected the image of the
company in the global market.
VRIO analysis
The VRIO analysation of Tesco shows the Tesla's strategic advantages & important competencies.
The greatest competencies of Tesla includes its innovative CEO as well as its unique futuristic
design of modern electric vehicles which proved to be its sustainable competitive advantage as its
competencies can't be easily replicated by any other company. Moreover, Tesla's highly advanced
strategic advancement benefited the company in achieving its organizational objectives and goals.
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set.
Tesla has the support from the both government and political bodies, Tesla started its operation due
to this Tesla is taking lot of advantage from the government. The CEO of the Tesla have great
leadership and the team spirit, it is inspirational and highly motivating is success factor for the
Tesla. Weakness in the SWOT analysis of the Tesla are the poor liquidity as compare to other
competitors such has ford has USD 20 billion where as Tesla has only USD 3 billion which is very
poor and it is not sufficient for survival of the Tesla. Tesla has only one plant with having capacity
to make 500000, it is difficult for Tesla to achieve higher volume or target.

LO 3
P3 porter's five forces model for evaluating competitive forces of a given market sector
Threat of new entrants-
Tesla operates in an automotive industry and has strong brand image in the market. In the
context of this factor, it can be said that there is a moderate intensity due to bargaining challenges.
Tesla has ability to develop its model that are fully electrical. The characteristic of this vehicle high
speed and long mileage. If an individual enter this industry then they will have to invest in research
and promotional activities for beating competition and becoming as like Tesla. This investment can
increase operational cost so, it is the main reason of moderate intensity of this power (Lewis, 2017).
Bargaining power of buyers-
In this context, it is stated that bargaining power of customers is significant in this industry.
There are several factors that affect bargaining power of customers such as: price sensitivity, no cost
for customers to switch from Tesla's model to another electric vehicle (Perera, 2017). Customers of
Tesla are more loyal, and they want to be only Tesla's customers as they want an electric car. On the
other hand, some of its customers believe that prices of Tesla's electric vehicles are high which they
cannot afford. It makes them able to switch shop so, it is the reason that this power is significant
and moderate.
Bargaining Power of Suppliers-
Business of the company depends mostly on the suppliers. Suppliers of the company have
forward integration which is of low level which breaks them control the factor of distribution.
Suppliers of the company operates on a moderate scale which influence the level of supply and
restrict it to a specific degree. This aspect of the model states that the force of the supplier is
moderate. This is the reason why they have limited control on the sale of their products.
Competitive Rivalry-
Tesla faces a lot of competition from other auto makers as they are aggressive and use many
ways to bring innovation into the market and promote them on a huge level. For instance
conducting marketing campaigns for their products. Tesla has designed their marketing mix in order
to beat other manufacturers of the company. Tesla has an advantage that they are the first mover in
this segment which has helped them to obtain more share in this segment. The cost of switching is
relatively low which is a strong force of this aspect and a negative one for the company.
Threat of Substitutes-

This industry faces low cost of switching which rise the level of competition. There are
many medium of transport such as public which is cheaper and attracts the customers for the same
reason. Company has a strong advantage and that is they offer the quality and technology which
their substitutes don't offer in the market (Rastogi and Trivedi, 2016). This states that the substitutes
in the market don't fulfil the needs of the user in a more practical manner. This aspect of the model
is considered as a second priority as company considers formulating the strategies as their priority
so that they can gain the strength to fight the competition in the market.
Recommendation of Porter's Five force model
According to the Porters five force model the various strengths associated with Tesla are it is a top
employer company, it is the leading automotive company, the company has best in class electric
cars, the company dominates the US sales of electric cars, the company's cross sell and
diversification and innovations of the company. Moreover, the various weakness of the company are
its manufacturing compilations, unable to meet demand which might affect the value of the brand,
lack of high volume productions as well as shortage of batteries.
M3 Devise appropriate strategies to improve competitive edge and market position based on
the outcomes.
Being Tesla first in the market able to take advantage of having no competition in the narket and
stable their position in the market, Tesla establish expertise by focusing on particular to develop
specialization in the market Tesla market specific expertise will set apart from the competition.
Tesla study their competitors and learn the skills of there how they target a market problem , by
identifying the market problems tesla see solution in a different way than there competitor
LO 4
P4 applying a models , theories and concept to understand interpretation of strategic
directions To Tesla
Tesla ansoff Matrix
Tesla ansoff model is an proper marketing planning that that can be used by different
fuel manufacturer vehicle to make a strategic decision for the company . Tesla is using the four
strategies for growth in the market.
Market penetration
Business sales their existing products in a existing market they need to bring changes to
attract customers. To sell their products in an existing market they need to reduce cost or provide
offers to their customers. Need to bring changes in their electric vehicles. Due to their positive

image which help them to attract customers easily. Need to improve mileage of their vehicles so
that customers are easily attracted towards their product.
Product development
Customers choices are changing day by day and to engage them with organizations. Tesla
need to develop new product in their existing market. Due to innovation in electric vehicles help
them to attract customers more easily as compare to competitors. Tesla need funds to develop new
product because they are already working on their electric vehicles. Developing their fuel efficient
vehicles with good mileage is an opportunity for Tesla.
Market development
New market development help Tesla to expand their business at a large scale. Tesla need to
research on a new market to know demand for their electric vehicles. Developing countries help
Tesla to grow at an extreme level.
Diversifications
When business develop new product for new market. Due to development of their new
products like energy storage products, solar panels they are able to expand their company. Mainly
underdeveloped areas where shortage of electricity is a problem they can develop company in this
markets.
Justification
Product development strategy is one of the best strategy for Tesla to engage customers
easily. Due to innovation and creativity in their new product help to increase sales and profitability
of their product. Due to changes in customer preference new electric vehicle help them to grab new
customers in an existing market.
Strategic plans help Tesla to achieve objectives and goals of the company. During the
making of this plan some objectives that the Tesla is trying to satisfy during the execution of the
plan. This strategic plan helps to understand the objectives and main goals of the company.
Goals- The main objective of those plans are to identify goals of the company and develop
the new ways to use resources of the company to achieve goals. Strategic plans outline the
objectives including the ways in which the success or failure will be measured in this.
External Factored- this plans directly affect to the external factors like sub contractors ,
economy , competition and arability of the qualified employees. This plan helps to identities all the
external factors of the Tesla company and it also create a comprehensive image of how they will
affect the successful exaction of the plans, and strategic planing helps to develop the new methods
to deal with external factor's. Reports that are used to help develop this portion of the strategic plans
including the revenue forecast of the company and sales projections.
Strategy : Product development Since the mission of the Tesla motors is to

develop the most compatible car of the 21st
century which transform the world into the
electric vehicles
Suitability of the strategy Suitability of the Tesla's strategy is as this
company is the innovator of the industry.
Acceptability of the strategy The acceptability of the company is as this
company is working for the eco-friendly
environment, the company is working for
designing the electric vehicle which would have
the least harmful effect on the environment.
Feasibility of the strategy The feasibility of the strategy is through this
product development strategy the company will
have the scope of earning more profit and would
have increase in the rate of ROI
Strategic management plan
Swinging for
the fences
Green
campaign
Supercharge
network and
support tool
Unusual
prising
strategies.
Customer
service.
Perfect timing
Swinging for
the fences of
the Tesla's
strategic plan
suggests that
implementatio
n of high risk
business will
eventually tend
to generate
high return.
Tesla
aggressively
promotes go
green
campaign to
enhance the
consciousness
of people
towards the
green
environment.
the most
innovative
approach
announced by
Tesla is its goal
to deploy a
battery
swapping
station in each
of its service
outlets . This
support feature
of tesla will
ultimately
increase its
market share.
The pricing of
the Teslas cars
are dependent
upon its best
offerings.
Moreover,
Tesla has
offered its
customers the
best value for
their money.
Thus, the
company offers
the great deal
with the most
affordable
conventionally
fuel efficient
Tesla provides
the best in
class customer
service. One of
its servive is
batterys
swapping and
supporting
charging
system.
Tesla is not the
innovator of
the electric car.
The invention
of the concept
has taken far
beyond. But
Tesla is known
for its perfect
timings. Thus,
the company
has launched
its first electric
car at the most
appropriate
time when
there is the
awareness of

cars green
environment in
the market
M4 Produce a strategic management plan that has tangible and tactical strategic priorities
and objectives.
Strategic management plans define as the set of goals , strategies, objective and tactics that Tesla
use to coordinate and align action and resources with the values of the company strategic plan is the
part of the strategic management. It is a document which helps to communicate within the Tesla
organisation, strategic planning is important for the Tesla to create cohesive vision , direction and
set goals for future growth of the Tesla
CONCLUSION
In this report Tesla need to develop their business in new economy to develop themselves as
one of the leading company in market. Pestle help organization to analyse effectiveness of new
market to innovate their products and services. SWOT analysis help to know strength and weakness
of their business and opportunities in near future that help them to develop their business at an
dominant level. Porter models help to earn competitive advantage and to attract more customers
towards organization services. Ansoff matrix model help Tesla to innovate new product and
services.

REFERENCES
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