Business Strategy of Tesla Assignment

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
PESTLE analysis on TESLA..................................................................................................1
Stakeholder Analysis on TESLA............................................................................................3
SWOT analysis on TESLA ...................................................................................................3
VRIO framework on TESLA.................................................................................................4
TASK 2............................................................................................................................................6
Porters five forces model on TESLA.....................................................................................6
Strategic Management Plan....................................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business Strategy is defined as the course of action that which helps to any of the
entrepreneur for the purpose of achieving it's target and goals. It is helpful because it determines
that how any of the organisation is required to work on daily basis so that they can compete with
the competitors. This file is based on Tesla Inc. which is one of the automotive sector company.
It was found in year 2003 by Elon Musk. The main motive of this company is to manufacture
electric vehicle where they wants to give unique design to their cars. This file will include about
various internal and external factors that can affect the working policies of TESLA. In second
task, recommendation will also be given with strategic directions which is available with the
organisation.
TASK 1
PESTLE analysis on TESLA
PESTLE is the analytical framework which helps to tell about external factor that should
be considered while taking any of the business decision. In this, PESTLE stands for Political,
Economical, Social, Technological, Legal and Environmental factors. In context of Tesla, this
analytical tool will help them to enhance their business in a systematic manner. The detail
structure of PESTLE is mentioned below: Political Factor:The major area which is affected by political factor is related with tax
policies, trade tariffs etc., and many more. In terms of TESLA, political factor might
decrease the overall profit of the organisation because if tax rates are changed then they
have to pay additional amount of tax which will affect of overall profit of the
organisation (Amran and et. al., 2016). This factor create problem in growth strategy. for
example: if tax rate on electric vehicle is increase where as fuel vehicle is not changed
then it will only affect electric Automotive organisation. Economical Factors: Here, economical factor mainly impact on purchasing power of
the customer because it is directly connected with inflation rate, interest rate, foreign
exchange rates etc. In context of the TESLA, this factor has provided lots of benefit to
the organisation because in recent period of time government wants to promote electric
vehicle due to which it has been easy for the customers to purchase the cars of TESLA.
Due to this factor, impact can be seen in cost differentiation because there is high
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chances that sometimes rate of vehicles might increase and even sometime it might
decrease also. Social Factor: It is important for all the organisation that they must consider the trend
while manufacturing any of the product. In context of TESLA, it is necessary for them to
consider current trend, norms and values of the society so that they can sustain in the
market. This factor can effect the product differentiation strategy. For example: TESLA
should try to target that market where people given more preference to electric vehicle to
save the environment so that their sale can be increased. Technological Factor: It is much and more important for any of the organisation to
introduce themselves with the new technology which can influenced the customer. The
market of UK adopt only those vehicle where latest technologies are introduced so it is
necessary for TESLA to have the proper knowledge about the market and latest
technology which is trending in the marketplace (Barberá and et. al., 2012). This factor
can affect the growth strategy. For example: For the purpose of tackling with these
issue, organisation is required to introduce new features in their car so that customers can
be attracted and if they will not be able to deal with this then huge problem can be
created for them. Legal Factors: This is one of the most important factor that need to be considered by
every organisation because simple changes in the law might create lots of problem in day
to day working policies. In context of TESLA, they are required to take their decision as
per the guidelines of Companies Act, 2006 because that governs how business should be
operated. Equality Act should be considered where they are required to treat every
employees equally. This factor will have the option to affect on cost differentiation
strategy because there is high probability that it will increase the overall cost of the
organisation.
 Environmental factors: As per the scenario of UK, various marketplace have number of
environmental standards that can have both positive and negative impact which direct
effect on the profitability of TESLA. For the purpose of removing negative impact
TESLA have shown their active participation in the area of CSR activity where they are
trying to provide various facilities to the people who are living within UK. This factor
have potential to impact on growth strategy. To understand, lets take a example: Here,
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organisation is required to manufacture that types of vehicle due to which environment is
not affected and if it is found so then there is high chances that growth might decrease.

Stakeholder Analysis on TESLA
Stakeholder Analysis is the important concept that helps stakeholders to identify and
analyse the needs and interest of stakeholder in any of the project in which organisation is
working. It is mainly used at the time of planning and development where it focus what are key
factors that need to be considered at the time of taking any decision (Bharadwaj and et. al.,
2013). In context of TESLA, they are required to consider the idea and concept of every
stakeholder which tells that how any of the work is required to be done with minimal efforts in
order to achieve the targets. There are four different steps in the process of stakeholder and they
are (Undertaking stakeholder analysis: the key steps, 2009): Define the shared goals: All the stakeholders of TESLA are required to share that what
actually they want achieve with the services which they are delivering to their customers. Define stakeholder group: There are number of stakeholder who is connected with the
organisation but it is important for TESLA to understand and find who are those
stakeholder who can help them to influence for the better progress of the company. \ Analyse the relationship: In TESLA, it is necessary to understand that what are the
available sources that company have because they will help stakeholder to prepare better
plans which will also help them to build better relationship.
 Develop the engagement plan: Engagement plans are formed at the time above three
stage. The stakeholders of TESLA should know how they are required to coordinate so
that every stakeholder can work together for the progress of organisation.
SWOT analysis on TESLA
SWOT is a strategic planning technique which helps to identify the internal system of the
organisation. It is helpful for every organisation because it clears the doubt that in which area
organisation is required to still improve so that overall performance can be enhanced. Here,
SWOT stands for S is for Strength, W for Weaknesses, O for opportunity and T is related with
the Threads of organisation. In context to TESLA SWOT analysis will help them to overcome
the weakness which their company have in recent period of time.
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 Strength: TESLA is among one of those company which is completely dependent upon
technology and they have the idea and knowledge that how they can take advantage from
the current market. Their major strength is that they have strong brand image in the
market, even they do have strong innovative idea which they do apply while
manufacturing the new car (Blackburn, Hart and Wainwright, 2013). Weaknesses: Everyone in this world do have some sort of problem or weakness on them
where they are required to work more so that improvement can be done in future. In
context of TESLA, there are number of weaknesses which can be found in this
organisation and among them limited market presence is one of them. They are unable to
show much and more presence in the market due to which new customers are not
attracted towards the organisation. Secondly, the price which they have decided for their
vehicles is very high and that is one of the reason that everyone cannot afford the cars
which is of TESLA company. Also, they supply chain is very weak due to which they are
unable to reach each and every part of the world. Opportunity: This is one of the aspect of SWOT which mainly focuses on the external
factor because opportunities are always created from the external factor. In context of
TESLA, they do have number of opportunities which they need to grab for the purpose of
achieving missions. Firstly, TESLA do have the option where they can expand their sale
at global level so that financial position can be improved. As there are very few number
of automotive company, there is high probability to earn additional amount of profit if
they think for business diversification (Drnevich and Croson, 2013).
 Threats: At present, there are number of threats which have raised in front of TESLA. It
is important for them to know what are those threats which can create issues in future for
the organisation. The biggest threat for TESLA is Fluctuations in material prices because
there are number of raw material whose prices have been increasing due to which prices
of TESLA vehicles is increasing day by day. There are number of companies which have
better dealership regulation but when it comes to TESLA, they do not have dealership
regulation due to which there is no proper supply chain in the market.
VRIO framework on TESLA
VRIO is the analytical tool that tries to find out the internal resources and even
capabilities so that additional advantages can be taken from the current market. VRIO stands for
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Value, Rareness, Imitability and Organisation. In context of TESLA, it will be helpful for them
to know about available resources through which determined targets can be achieved.
(Source:Applying VRIO Framework to Tesla, 2018)
 Valuable: It is necessary that resources which are available with the organisation must
be valuable and it is possible when applied strategies are effective for organisation so
that more number of opportunities can be created in future. There are various resources
available with the TESLA out of them their battery pack and supercharger network
provides them competitive advantage in the market.
 Rareness: It is more important for any of the organisation to know that whether their
product is rare or not in the market through which advantages can be taken. In context of
TESLA, almost every product of their company is rare in the market because they only
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Illustration 1: VRIO of TESLA

uses those technology which provides additional advantage to them. For example: their
direct sales approach is also totally different from other organisation.
 Imitable: At present, each and every organisation try to check whether resources which
their organisation uses can be copied or not and if it can be copied then it is not possible
to earn more amount of profit for longer period of time. When it comes to TESLA, they
have maintained strong position in the market because it is not possible to imitate the
product because they are very expensive due to which every organisation does not get
the option to copy their product and services (Ghezzi, 2013).
 Organisation: It is necessary for TESLA to coordinate and assemble the resources
which are available with them. In organisation everything should be managed and
controlled systematically so that competitive advantage can be taken in the market. Here,
organisation explore its maximum resources which is available with them due to which
other similar organisation are unable to compete with TESLA in the market.
It is said that company do have number of strength due to which they are capable of
ruling this particular market and even they are no other firm who is capable of competing with
them at the moment. Although there are weaknesses but still they are not in high number which
can affect the company. In addition, VRIO also shows that their product are imitable in nature
and even it is different from other organisation due to which they are capable of performing
really well in the market.
TASK 2
Porters five forces model on TESLA
It is the business model which is very helpful for the process of analysing through
business operations can functions can be performed in a smoother way. The analysing process
helps to develop new and modern strategies through which effective results can be obtained in
future. This model is helpful because it tries to identify all those factor which is affecting day to
day activity of an association (Grover and Kohli, 2013). Even TESLA will also be benefited if
they will try to adopt porters five model for the process of developing new strategies and plans.
Here, porter five forces model stands for Bargaining power of suppliers, Bargaining power of
buyers, Threats of entry, Threats of substitutes and Competitive rivalry.
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 Bargaining power of suppliers: It is the condition which is related with the bargaining
power of suppliers. Here, supplier have the option to demand high brand value were they
have the option to provide low quality for the product which they supply. In context of
TESLA, they have the low bargaining power because they have very less number of
suppliers in the market. Because of all this reasons they are unable to develop better
relationship in the marketplace. Bargaining power of buyers: It is the factor which refers to the power of buyer where
they have the option to demand better quality for less amount of money and this is the
main reason that organisation have to supply product at low price. In terms of TESLA,
the bargaining power of buyer is very low because company only deals in the qualitative
products and for that they charge higher amount of money and that is the reason that
buyer have low bargaining power when it comes to TESLA. Threats of entry: In simple words, it is the situation where it is checked that whether new
organisation can enter or not and if they have the option to enter then are they able to
sustain in the market or not. When it comes to TESLA, they have low threats of new
entry because the cost which is required in this field to enter into this market is very high
due to which there is very low threat for the organisation (Hoejmose, Brammer and
Millington, 2013). Threats of substitutes: In this model, it is checked what are the available alternative
which is available in the market. In context of TESLA, they do have the threats of
substitution because there are number of option available with customer that they can
purchase the vehicle of other company even at low price also. But, the quality which
TESLA provide is found very rear in the market and that is the only main reason that
customers are connected with the company.
 Competitive rivalry: It is very important factor for any of the organisation because it tries
to find out the strength and weaknesses of the rivalries company. This helps organisation
to take additional advantage from the market place. In context of TESLA, there are
number of companies who deal in the same market such BMW, FORD etc., and many
more. But when it comes to sale the product, TESLA leads the market at current scenario
but still other organisation does have the option that they can take lead in future.
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In short, it can be said that TESLA need to understand the situation and find who are their
main rivalries due to which they market can be affect and by looking at this they are require to
make new plans and policies. Company need to know what can be the substitute of there
companies product and by considering this they are required plan new and different policies. As
there are new companies who want to enter into similar form of market they must try to reduce
the price of there companies product so that they can easily sustain in the market.
Strategic Management Plan
It is considered as the documents through which communication process becomes much
easier within the organisation. It helps to ensure that every employee are working for the similar
objective and goals (Köseoglu and et. al., 2013). There are number of tools which is used in
Strategic Management Plan through which TESLA can check the result. Here, Bowman's
Strategy Clock is discussed below:
Bowman's Strategy clock upon TESLA
In this model, it is check that how organisation can plan better so that tough competition
can be given to the rivalries. Altogether, there are eight position in Bowman's model and they are
explained below: Low Price and Low Value Added: Here, company have the option to introduce new
product where they can sell it in the market with less price and even features can also be
reduced. Low Price- If in future, TESLA wants to earn more profit then they are required to
deliver the product in low price so that they can be more successful in the market. This
will help them to increase the sale and because of that they can earn more amount of
money (Li and Tan, 2013). Hybrid: TESLA have the option where they can introduce new vehicle in which features
will be less and even priced will also be cheap. This strategy can be adopted by TESLA
in future. Differentiation- It is the situation where company wants to deliver the best product in
the market with value added. The quality of product and branding helps in this type of
strategy
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 Focused Differentiation- In this strategy, company have the option to sell their product
at high price and users can only purchase it if they have high perceived value. TESLA
does follow this strategy for earning more profit. Risky High Margins- Here, TESLA have the option to set to price of their product for
uncompetitive strategy. Monopoly Pricing- If market have the option of monopoly then TESLA do have the
option to do monopoly in the market with their goods and services. Loss of Market Share- This leads to disaster for competitive market. The high value for
same product is charged by competitors.
Ansoff's growth vector matrix to analyse organisation's strategic positioning
It is the business model framework which is helps the management team for gaining
additional advantage in the market. There are different types of strategic position and they are
explained below: Market Penetration- In this TESLA have the option to take lead in the market with
increasing the sale of their product in their existing market by increasing the market
share. Even it is less risky option for the organisation (Maté, Trujillo and Mylopoulos,
2012). Here, company has the option to do advertisement and make aware about the
product and technologies which they uses in there vehicle while selling in the market. Market Development- Under this, TESLA do have the option to take growth by
targeting the new market with the help of existing product which they manufacture on
regular basis. It is riskier for the organisation when it is compared with market
penetration. Product Development- Here, TESLA can try to manufacture new product and introduce
in the existing market. It is less risky for TESLA because existing market do have the
faith on all those products which are introduced by the company.
 Diversification- It is the most risky option for any of the organisation because here they
are required to enter into new market and even the product which they want to introduce
is also new. In context of TESLA they do not believe in diversification much and more.
For ex: company will required to add on the new technologies in there cars and after that
they are required to sell it in the new market in which they have never conducted the
business activity.
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While talking about TESLA, they should about Market Development because there are
million of customers who are willing to show their interest in the vehicle of TESLA, but
company doesn't try to enter into new market. The main reason behind not entering into new
market is related with improper supply chain.
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CONCLUSION
It can be concluded from the above file that business strategy is helpful in achieving the
targets of company which are determined by the organisation. If any of the organisation wants to
achieve their predetermined goals on time then it is necessary for them to analyse the internal
and external factor with the help of SWOT and PESTLE. This model helps to tell them which
strategy is required to be adopted so that share and profit in the market can be increased. Ansoff's
matrix help to identify that were company wants to perform its daily basis activity for the
purpose of achieving the targets.
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REFERENCES
Books and Journals
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Bharadwaj, A. and et. al., 2013. Digital business strategy: toward a next generation of
insights. MIS quarterly. pp.471-482.
Blackburn, R. A., Hart, M. and Wainwright, T., 2013. Small business performance: business,
strategy and owner-manager characteristics. Journal of small business and enterprise
development. 20(1). pp.8-27.
Drnevich, P. L. and Croson, D. C., 2013. Information technology and business-level strategy:
toward an integrated theoretical perspective. Mis Quarterly. pp.483-509.
Ghezzi, A., 2013. Revisiting business strategy under discontinuity. Management Decision. 51(7).
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Grover, V. and Kohli, R., 2013. Revealing your hand: caveats in implementing digital business
strategy. Mis Quarterly, pp.655-662.
Hoejmose, S., Brammer, S. and Millington, A., 2013. An empirical examination of the
relationship between business strategy and socially responsible supply chain
management. International Journal of Operations & Production Management. 33(5).
pp.589-621.
Köseoglu, M. A. and et. al., 2013. Linkages among business strategy, uncertainty and
performance in the hospitality industry: Evidence from an emerging
economy. International Journal of Hospitality Management. 34. pp.81-91.
Li, Y. and Tan, C. H., 2013. Matching business strategy and CIO characteristics: The impact on
organizational performance. Journal of Business Research. 66(2). pp.248-259.
Maté, A., Trujillo, J. and Mylopoulos, J., 2012, November. Conceptualizing and specifying key
performance indicators in business strategy models. In Proceedings of the 2012
conference of the center for advanced studies on collaborative research (pp. 102-115).
IBM Corp..
Online
Undertaking stakeholder analysis: the key steps. 2009 [Online] Available Through:
<http://www.ssc.govt.nz/node/6253>
Applying VRIO Framework to Tesla . 2018. [Online] Available Through
<https://dpsiv.wordpress.com/2017/02/15/applying-vrio-framework-to-tesla/>
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