Assignment on Business Strategy - Tesla

Business Strategy

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1 ...........................................................................................................................................1
P1 Impact and influence of macro environment ........................................................................1
TASK 2 ...........................................................................................................................................3
P2 Examine internal capability of an organisation ....................................................................3
TASK 3 ........................................................................................................................................4
P3 Implementation of Porter's Five force model ......................................................................4
TASK 4 ...........................................................................................................................................7
P4 Application of theories and produce a strategic management plan ......................................7
CONCLUSION ...............................................................................................................................8
REFERENCES..............................................................................................................................10
.......................................................................................................................................................10

INTRODUCTION
Business strategy is a course of action and set of direction which assist an entrepreneur to
accomplish organisational goal in an effective and efficient manner. Along with this, it is
regraded as a powerful determinant as it enable the firm to identify current and emerging trend of
market in order to take best and productive strategic decision for attaining high level of
productivity and profitability (Amit and Zott, 2012). Hence, it is a master plan for every
organisation which assist them to secure competitive position within an industry and provide
customer satisfaction which add value to company's brand image. This report is based upon
Tesla, which is one the leading firm in automotive industry and it is founded in the year of 2003.
It's headquartered in US and offers electric vehicles with a high quality of products. In this
study, it includes effect of external and internal environment over business function, application
of Porters five force model to analyse competitive force and usage of several theories to enhance
firms strategic decisions.
TASK 1
P1 Impact and influence of macro environment
Every organisation is surrounded by internal and external environment which has direct
collision over business decision making capabilities as well as on its proficiency which is
referred as business environment. It is a multifaceted, complex and dynamic in nature and has a
far reaching impact on the survival and growth of business. Moreover, it is regarded as an
component for firm as it help them to determine opportunities and threat as well as provide
proper direction to enhance their profit margin in an impressive manner (What is PEST
Analysis?. 2018). In order to attain sustainable profitability, PESTLE analysis is considered as an
effective tool for company to examine external macro environment. Hence, it helps organisation
to determine challenges among marketplace and based on that they take corrective course of
action. However, Tesla applies PESTLE analysis to examine its potentiality to obtain long term
growth which are as follows:
Political:This factor determine the extent to which government may influence economy
or a certain industry as it includes tax, fiscal policy, trade tariff etc. which affect company's
productivity. However, Tesla is at the forefront of electronic vehicle as it uses electricity and gas
as a fuel to run a car but it faced a pressure from government as they implement a rule regarding

tax credit policy i.e. states like Virgina and Colorado offer tax credit of around $5000 on buuying
a electric car which challenged Tesla business operation. Hence, Tesla took this challenge as an
opportunity and expand its branches to various countries with a high quality of products that help
them to gain their sales from local economy and add value among customer as well as improved
company's brand image.
Economical:It is concerned with economy performance which directly impact firm and
have resonating long term effect. For example, inflation rate, interest and foreign exchange rate,
economic growth patterns etc. that influence an organisation profitability ratio. Hence, one of the
major issue which Tesla undergoes that is economic instability of country, especially in Europe
and Asia which negatively effect firm financial performance (Aithal, 2016). However, being a
major leader among electric car industry, Tesla tackle its negative impact by introducing its car
on low cost which attracts more customers towards their brand and increased their purchasing
power which explore its volume of sales and enhance its profit margin.
Social: It scrutinize the social environment of market and gauge determinants like
cultural trends, demographics, population analytics etc. which impact enterprise strategic
decision making capability. However, Tesla proved its ability in acquiring wide range of
attraction from customer towards electric car but One of the main threat which Tesla faces in
social factor is that from its competitors like Nissan, Hyundai, BMW etc. as they also puts their
full contribution to introduce eco friendly vehicles and at the same time human nature is not
static as it keeps on changing according to the markets trends which negatively impact Tesla
proficiency rate. However, Tesla overcome this negative issue by investing heavily on its
infrastructure to manufacture latest model of vehicle among industry. By this, they are able to
survive in the competitive marketplace of UK and attain high level of productivity in an
innovative and creative way.
Technological:This factor pertains to innovation in technology that effect the operation
of company and market favourably and unfavourably. It refers to automation, research and
development, technological awareness that market possess. Moreover, Tesla is well known for
its innovation and creative nature as it uses latest technologies for their vehicles but there were a
huge demand among customer regarding online trading which highly impacted Tesla overall
performance. However, company seeks its full attention over present market trends and based on

that they introduce upgraded or updated apps and gadget which assist Tesla to obtain
maximisation of profit in an efficient way.
Legal:It encompasses various laws and legislation which is imposed by government fro
companies such as consumer law, safety standard, labour law etc. that influence organisation
business operation and function. However, Tesla is expanding its production into other markets
and takes an initiative to follow all international patent which protects them from intervention of
governments into their business function which add value to firm brand image among
marketplace.
Environmental: This include all those factors which is determined by surrounding
environment such as climate, weather, geographical location etc. that effect company's
profitability ratio. However, it is a platform where Tesla gains major strength as it mainly
produce environmental friendly product and uses more electricity than gas which create a
positive impact over customer perception towards organisation (Bharadwaj, Sawy and
Venkatraman, 2013). Along with this, Tesla vehi9cles are abided by environmental regulation
and it is very sensitive to follows the same which add value to its brand image and recognition in
order to gain competitive advantage.
However, the preceding explained PESTLE analysis enable Tesla to determine its macro
factors and allows them to make best strategic decision for attaining high level of productivity
and profitability ratio within UK industry.
M1 Critically analyse the macro environment to determine and inform strategic management
decision
As manager at TESLA identifies the macro environment influence on its business with
the help of PESTLE analysis, it has identified that as there are various social factors and
technological factors which keeps on changing as well as the customer demands keeps on
changing with the existing trends, it provides manager at TESLA to frame effective strategies in
order to overcome such influence on its business and therefore maintains sustainability in the
competitive business environment. Therefore other factors such as environmental factors,
political factors and economic factors will allow respective company to frame strategies
according to the economic situation of the country in which they are operating.

TASK 2
P2 Examine internal capability of an organisation
Business environment is regarded as important aspect of every organisation as it enable
them to be aware about ongoing changes as well as helps them to adapts those threat and use as
an opportunities for growth and development. Along with this, it assist an enterprise to make use
of available resources in order to obtain maximisation of profit in an efficacious manner.
However, for measuring or analysing the internal potentiality of company, SWOT analysis plays
a vital role for enlarging sales and profit margin. Thus, Tesla implies the same tool on their
business function which helps them to examine their potentiality to achieve organisational goal
within prescribed time limit. The SWOT analysis of Tesla are as follows:
Strength
 It has positioned its brand image among
marketplace in a unique way as it
deliver all products with an innovative
technologies which enable them to
robust sakes growth.
 It contain wide range of product
differentiation as it deliver battery
pack, gear box, motor etc. which aid
them to improve their proficiency ratio.
Weakness
 It has limited market presence as it
generates most of its revenue in US and
has a small presence over other
countries which effect its overall
productivity.
 Tesla products are relatively high price
compare to its competitors, especially
with those which contain combustion
engines that restrict the company from
rapidly growing in customers base and
market share.
Opportunity
 Increasing demand among customer
regarding environmental friendly
products provides a huge possibility to
Tesla for global sales expansion.
 Being a reputed company among
automotive industry, there is a high
level of opportunity for diversification
Threat
 In automotive sector, there is a high
level of rivalry or competition among
companies which becomes a major
challenging factor Tesla's profitability
ratio (Blackburn, Hart and Wainwright,
2013).
 Fluctuation in material prices impact

as they can acquire new business to
decrease business exposure to risk
which add value to company's brand
image.
company's productivity and volume of
sales.
However, with the application of SWOT analysis, Tesla is able to determine its existing
and future trends within marketplace as well as allows them to make corrective course of action
in order to gain competitive advantage in an innovative and creative way.
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities
Tesla which specialise in electric car manufacturing has a strength of enhanced brand
image in the market as it provides cost effective sustainable products in the market, due to which
it has the capability to grab the available opportunities in the market place and aids an
competitive advantage. Therefore business also has the weakness of high price of its products as
compared to its competitors. But due to its renowned brand image in the market it can overcome
the weaknesses and with its internal capabilities it can gain sustainability in competitive market
place.
TASK 3
P3 Implementation of Porter's Five force model
Every organisation survives in a highly competitive marketplace which impact directly
over its decision making capability as well as its proficiency ratio. Along with this, these
competition generates positive and negative outcome which effect company in ascertaining their
pre determine goal in an impressive and productive manner. However, in order to understand or
determine the competitiveness of business environment Porter Five Force model is considered as
a powerful determinant in a business function. However, it is a tool which assist the firm to
examine the market scenario and based on that implement effective strategic decision for gaining
competitive advantage. Hence, Tesla uses Porters five force model in their business operation
and function for determining it competitive forces which are as follows:
Threat of new entrants:It signifies that entry of new players always has the ability to
alter the market environment in a important ways. It creates pressures on existing players who is

forced to make adjustment in order to improve their overall performance among market.
Moreover, there are various factors which act as a barriers for new entrants as some of them are
financial, technological and even human resource related which effect firm's sales growth.
However, threat of new entrants into automotive industry is moderate as the main factor which
every new player consider is comprise between cost and performance (Chang, 2016). However,
Tesla undergoes with huge threat from it's competitors in terms of quality and cost of product
which impact company's profitability. Therefore, Tesla tackle this issue by developing
innovative technologies for its products which made them to face existing threat i.e. price and
performance and helps them to gain competitive advantage.
Threat of substitutes: It is also regarded as an important competitive force as it states that
new product or service meets similar customer need in a different way which effects industry
profitability. For the business who enjoys high brand loyalty from their customers and maintains
a better relationship with them gains a less threat from substitute brand. However, threat of
substitute for Tesla is low. Moreover, company faces a challenging factor from its alternatives
brands i.e. they also acquires low pricing strategy which attracts a large number of customers
and it affect Tesla volume of market share and its sales growth. However, firm adapts a
productive strategy in order to overcome the challenge from its substitutes brand by mainly
focus on service oriented rather than product which helps them to understand the core need of
customer more than what their buying. Due to this, company is enable to improve the overall
performance of company in an effective and efficient way.
Bargaining power of buyer:It deals with an ability or capability of customer to drive
price down of product. Along with this, each and every customer has more power to negotiate for
lower price and better deals. However, in an auto mobile sector there is a high level of
bargaining power of customer because most of the buyers are very conservative with their
spending (Ghezzi, 2013). In case of Tesla, buyers are often demands a lot based on marketplace
trends or condition as they desires to purchase best product by paying minimum price as possible
which puts a high pressure over Tesla business operation and profitability in a long run. Thus,
Tesla addressed their challenge by generating a large base of customer which benefits them in
two ways i.e. it decreased the bargaining power of buyer as well as render them an opportunity to
streamline its sales and production process. Along with this, they offered attractive or impressive

discounts to customers in order to restricts the customer negotiating capability and satisfy their
demands in an cost-efficient way (Schrader, Freimann and Seuring, 2012).
Bargaining power of supplier:Under this force, it addresses the potentiality of suppler to
drive up the cost of input which has major impact over business operation and function. Hence,
within an auto mobile marketplace the bargaining power of supplier is high as each of them
relies on premium materials, components and technology. This is because suppliers are in a
position to control or manipulate prices to their advantage. Moreover, majority of companies in
auto manufacturer buy their raw materials from numerous suppliers which challenges Tesla to
earn profit margin within an industry. However, Tesla tackle its challenge by building more and
efficient supply chain with multiple suppliers. Along with this, they takes initiative to
experiments with product design by using various materials so that if prices goes up of one raw
material company can shift to another which helps them to gain competitive advantage in an inn
innovative and productive manner.
Rivalry among competitors: This factor refers to number of competitors and their
potentiality to undercut companies within an industry. Along with this, the intensity of
competition in a marketplace decides the profitability of individual players. If the competitive
rivalry between companies is high, the pressure related to prices and margins on each firm will
be high. However, opposition among existing firms in vehicle industry is highly intensive.
Although Tesla is most recognisable brand in an automotive industry, but at the same time it
faces huge competition from its competitors like GM, BMW, Volkswagen etc. which influence
firm's overall long term profitability ratio as well as its volume of sales. However, it overcome
this impact with a corrective course of action as it builds a sustainable differentiation as well as
develops a scale so that they can compete better. Along with this, it takes an initiative to
collaborate with competitors in order to enhance their market size and also helps them to gain
competitive advantage.
Hence, from the above explained Porter five force model, Tesla is able to approach
towards new innovations and carving out the electric vehicle niche as their own, and also it will
lead the company as the best in years to come as setting the trend fro auto mobile market in
future ( Hoejmose, Brammer and Millington, 2013).

M3 Devise appropriate strategies to improve competitive edge and market position based on the
outcomes.
In order to improve its competitive edge and market position it is necessary for respective
organisation to apply diversification as the strategy so as to change their product line and provide
goods differently so as to meet the requirements and expectations of the customer. It is also
necessary for the respected organisation to analyse competitor products and strategies and
therefore provides sustainable differentiated products in the market so as to target larger
customer base and achieves maximum profitability and productivity. This will also assist the
company to improve its market share and sustainably competes in market place.
TASK 4
P4 Application of theories and produce a strategic management plan
Strategic planning is an organisational management activity that is used to set priorities,
focus resources, strengthen operation, ensure that employees and other stakeholders are working
towards common goals. Along with this provides many benefits to Tesla as it forces them to be
aware of future opportunities and challenges which helps them to create standards and
accountability for customers. Moreover, strategic management is the comprehensive collection
of ongoing activities and processes that organisation use to systematically coordinate and align
resources and actions with mission, vision and strategy throughout company. However, Ansoff
matrix is considered as one of the integral strategy which enable the firm to achieve their
business goal within prescribed time limit in a better way (Pretorius and Maritz, 2011). Hence,
this marketing strategy is established by Igor Ansoff in the year of 1960. However, Tesla applies
the same theory in their business function which is given below:
Market development:It is related with those firms who targets a new firms with current
product or service. IN case of small scale company, this particular tactics restricts them from
expanding their productivity from existing market to fresh industry where it becomes a difficulty
to compete with competitors.
Market penetration: It is the foremost element in this determinant as in which company
seeks for product development in an existing marketplace. However, under this, firm penetrate
its current market with existing product by modifying its promotional activity in order to

reposition the goods in a better way which add value to customer and improves company's brand
image.
Product Development:This is connects with those enterprises who contains strong market
size or share and thereby they desires to expand their product with acquiring innovative
technology. Along with this, it assist company to improve its overall performance as well as high
level of productivity among industry.
Diversification:It is concern with those organisation who takes an initiative to introduce
their new product in completely new geographical region. However, it is more riskiest among
other strategies as it need market and product development which impact over company's sales
growth and proficiency.
Thus, Tesla can apply diversification marketing strategy because it is one the leading
company among automotive industry. With the help of this, Tesla can enhance its profitability
ratio as well as enable them to obtain high return on investment (Oestreicher-Singer and
Zalmanson, 2013).
Strategic planning
It is regarded as one of the essential process which every organisation applies in order to
accomplish organisational goals or objective in an effective and efficient manner. Along with
this, it provide proper direction to firm which helps them to gain competitive edge in an
innovative and creative manner. Hence, Tesla develops a strategic management plan for
accomplishing their business objective within prescribed time frame that is described below:
Vision:Tesla's key vision is to adapt a innovative or creative ideas to bring alteration in
an automotive industry with a fair and transparent information which add value to customer and
firm's brand image (Peng, 2017).
Mission:Its main mission is to accelerate the world's transition to sustainable energy and
create a better and safe environment for customers and also to finding ways to integrate electric
batteries and energy solution.
Objective:Tesla primary objective is to generate demand and drive sales up and build a
long term brand awareness in order to manage corporate reputation.
Strategies and Tactics:Its created new strategy that enable them to satisfy their mission
and enhance its productivity in an effective manner. Moreover, they are mainly centring to build

a better relationship with customers and also with takes a corrective course of action to face all
current and emerging trend of company which leads them to attain sustainable profitability.
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives
In order to attain realistic goals in a proper manner, it is necessary for the managers to
develop and implement proper strategic marketing plan in a proper manner and necessary to
adopt proper tactics so as resolve short term issues in a correct manner. Therefore proper
strategic plan will allow the manager within the business to frame and implement proper
strategies according to the organisational situation and leads to attainment of goals and
objectives in a proper manner.
CONCLUSION
From the preceding explained report, it has been summarised that business strategy is a
combination of proactive actions on the part of management for the purpose of enhancing firm's
market position and improves overall performance among industry. Moreover, PESTLE and
SWOT analysis is an important tool which helps the company to identify its internal and external
potentiality and aid them to make best strategic decision in a better way. Moreover, Porter's
model assist organisation to examine its competitive force in order to increase productivity.
Hence, strategic management plan guides the company to accomplish their organisational goal in
an innovative and productive style.

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