Business Strategy for Tesla: Analysis and Recommendations

Unit Number and Title Unit
32
Project Title Tesl
a
Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
PESTEL and SWOT Analysis......................................................................................................3
Critically analysing the macro environment to determine and inform strategic management
decisions.......................................................................................................................................6
VRIO Model................................................................................................................................7
Porters Value Chain......................................................................................................................8
Critically evaluating the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set.........................................................13
....................................................................................................................................................13
Porter's 5 five forces..................................................................................................................13
Appropriate Strategies to Improve Competitive Edge and Market Position Based on Outcomes
....................................................................................................................................................15
Evaluation of Different Types of Strategic Direction Which Available in Tesla.......................15
Produce a strategic management plan with the help of tactics, strategies and objectives.........20
Produce a set of valid strategic directions, objectives and tactical actions................................21
CONCLUSION..............................................................................................................................22
REFERENCES..............................................................................................................................23

INTRODUCTION
Business strategy is defined as the competitive actions which are used by organizations to
improve their performance, attract customers as well as to retain their strong position in the
competitive market. The strategies adopted by organization affect the success and risk factor of
business to a great extent. Thus, it is vital that service providing organization must emphasis on
adopting suitable strategic approach for achieving its business goals (Thompson, Strickland and
Gamble, 2015). The business strategy of the organization is influenced by several factors such as
internal and external business environment, competitive forces and long-term growth strategies.
Thus, while developing strategic plan it is very essential that these factors must be taken into
account.
The main aim of this report is to develop an understanding about business strategies of an
organisation and the factors which can impact those strategies. To fulfil this aim, this report is
based on Tesla which is an automotive manufacturing company and is currently focused on
improving their electronic vehicles. This report will evaluate the impact of external factors on
strategic decisions and how internal capabilities of the company can be used to attain growth by
business organisation. The study will also analyse a strategic plan for the organization so that use
of appropriate business strategy can help organization in achieving its profitability and success
goals.
PESTEL and SWOT Analysis
Tesla is a large manufacturer of auto mobiles which is known for its contribution against
developing technologies which are environment friendly and focused upon sustainability. There
are ample factors which can impact the functioning and strategies of Tesla, for which it is
important to study the environment in which this company operates. For this purpose, PESTLE
analysis of this company is conducted below which can provide an understanding about how
macro factors impact operations and business strategies of Tesla.
PESTEL Analysis
PESTEL analysis is a tool that is used to analyse the impact and influence of the external
macro factors on the performance and decision-making of the organization (Johnson, 2016).
These macro factors include Political, Economic, Social, Technological, Environmental and
Legal Factors. Each of these factors has different impact on the performance and policies of
company.

Political Factors
The first external factor which can affect the business strategy of Tesla is political factor.
The political stability in operational region of the organization helps in successful
implementation of the strategies. The government policies related to sustainability, employment
and resource utilization, taxation can influence the decisions related to products and services.
Thus, it is required that Tesla must analyse the policies and outcome of political changes which
not only affect regional or national outcomes but also influences the international trades and
results. The political instability can have adverse impact upon social, legal or economic domains
as well.
Tesla is a multinational organization which operates in various countries and one of them is
United Kingdom. At present, UK political environment is facing huge instability over Brexit
issue. As a result, people and political authorities of UK are stressing over increasing taxation
rates over luxurious goods which is a threat for Tesla. Thus, launching a new product in such
environment can be risky for the organization or can even cause a decline in sales of existing
products. The failure to establish compliance with government policies can result in operational
barriers and legal penalties (Johnson, 2016). The change in government and their policies can
influence the taxation or operational reliefs provided to organization. Hence, company must limit
their strategies over market penetration where they should focus upon developing their existing
products in existing market. There are various trade barriers in India few of them are: it is quite
difficult to get import licensing in India, procedure of testing, labeling and certification is quite
different from other nations. The import duty due to political factor, can impact Tesla to build
the factory in India, and like that offering a more affordable price for the products.
Economic Factor
Economic factors are related to the current economic condition of national and
international market in which the organization is performing their business activities. Issues that
are considered under the economic factor are change in the Taxation policy, recession, inflation
and economic crisis. These factors are more crucial for organization like Tesla Motors
(Thompson, Strickland and Gamble, 2015). The economic crisis and recession are most
important to study because it can affect the company in different ways. Condition like recession
and economic crisis can directly affect the operational efficiency of Tesla Motors because these

factors are directly related to the market place in which organization is currently working. Tesla
operates in region of UK where the most important factor which impact operations of Tesla is
Brexit. Brexit has resultant into enhancing trade barriers due to which this organisation has to
face more restrictions. Despite of this negative impact, positive impacts which facilitate Tesla
against economic factor are decreasing battery costs in UK and decreasing renewable energy
costs in UK. These factors are the positive influences for Tesla by which strategies of this
company is impacted as they are now stressing over trading more electronic vehicles in UK.
Social Factors
Social factors are connected to the personal views and perspectives of people that are
connected to operations and working of company. Social factors such as consumer trends and
choices in UK has a positive impact on Tesla as people in UK are more concerned about
decreasing carbon footprint by their lifestyle. Also, there is a high trend of using renewable
energy sources in UK. These positive influences and social factors impact strategies of Tesla as
strategies of this company is now stressing over penetrating their market in United Kingdom by
improving their electronic vehicles.
Technological Factors
Tesla is an automotive organization which is providing electrical cars to customers in the
global market. So, the technical or technological factors are more crucial for company. The most
influential factor in technological environment of UK for Tesla is the high rate of technological
change which results into continuous change of technological products. Technology is seemed to
be continuously improving and developing due to which every year a new age technological
automotive car is launched. This factor can negatively impact Tesla as now they have to cope up
with the ever-enhancing technology which will result in increasing cost of research and
development for this company (Amran and et.al., 2016). Due to above mentioned technological
factors, strategies of Tesla also get influenced as now the strategies of Tesla should consider to
allocate appropriate budgets against research and development so that constant changing
demands of consumers can be fulfilled.
Ecological Factors
Environmental factors are the influencers which impact the functioning of an organisation
such as climate change and policies to protect environment etc. (Jannesson, Nilsson and Rapp,
2016). Tesla operates in UK which is highly concerned about developing programs for
environment protect which positively influences Tesla as this company manufactures electronic
vehicles. These factors also impact strategies of Tesla as now this company will make sure to

comply with all the governmental program and develop policies in their strategies which will
ensure ecological sustainability. Tesla's mission is to accelerate the world’s transition to
sustainable transport energy. They are trying to create an entire sustainable energy ecosystem
where unique set of energy solution will be manufactured. The purpose of the Tesla motors to
develop better efficient product to provide sustainable transportation facility to world which is
free of pollution. This step of Tesla makes them sustainable and effective for environment.
Legal Factor
The legal factors are concerned about the legislation that are made by the legal authorities
of country (Ardley and McIntosh, 2019). There are various laws which are made and defined by
the authority of UK to keep the operations of automotive companies under control. These factors
can legally affect the Tesla Motors to perform some action that are out of the limit such as
establishing showrooms at certain locations which can drop their sales. This can even affect the
innovation policy of company. These factors even impact strategies of Tesla by persuading them
to follow all legal rules even if they are not profitable for them.
This is how some external factors can affect the company and its policy that are made to
improve the performance of company in the global market.
Critically analysing the macro environment to determine and inform strategic management
decisions
Macro environment includes external business environment factors which impacts strategic
management decisions of company both positively and negatively. Macro environment factors
such as enhancing social trend of environment sustainability positively impacts Tesla’s strategic
management decision as this organization manufactures electronic vehicles which run on
renewable energy sources. Macro factors such as economic instability and low income of people
negatively impact this organization’s sales and their management decisions.
SWOT Analysis
Strengths
Tesla is one of the best employer organization in the market. It is providing better
opportunity to the people who are skilled and well-educated. In the production of the electric car
Tesla motors is leading company (Schaltegger, Hansen and Lüdeke-Freund, 2016). The
reputation of organization is too good in the market place so this is advantage for company. Tesla
Motors is providing the vehicles that are best in the category. The CEO of Tesla Motors is a well-