This report analyzes the macro and internal environment of Tesla, including the application of frameworks like PESTLE analysis and SWOT analysis. It also discusses the company's resources and capabilities.
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Table of Contents INTRODUCTION...........................................................................................................................1 TASK 1............................................................................................................................................1 P1 Apply appropriate frameworks to analyse the macro environment for a given organisation1 TASK 2............................................................................................................................................3 P2 Using appropriate frameworks analyse the internal environment and capabilities of a given organisation.................................................................................................................................3 TASK 3............................................................................................................................................7 P3 Apply Porter’s five forces model and to evaluate the competitive forces of a given market sector for an organization............................................................................................................7 TASK 4............................................................................................................................................8 P4 Apply a range of theories, concepts and models, interpret and devise strategic planning for a given organisation....................................................................................................................8 CONCLUSION.............................................................................................................................11 REFERENCES..............................................................................................................................13
INTRODUCTION Business Strategy is considered as the competitive actions and tactics that organisation utilises for attracting its consumers, enhancing performance, competing effectively as well as attaining organisational objectives (Akter and et. al., 2016). Moreover, this is also known as the master plan that firm' management execute in order to secure competitive position at market area, performing operations, satisfying clients as well as attainment of desirable goals. This is very much crucial for firm to perform its operations and practices effectively and efficiently. As per the scenario the chosen company for this report is Tesla, which is an leading automotive firm that specialises in producing electric cars. It operates in several countries such as Europe, UK, china and many more. This report covers the application of effective framework to examine the macro environment, utilisation of appropriate models to analyse internal environment and capabilities. Moreover, application of Porter's five forces model are also mentioned. Apart from this, strategic plan is also formulated in this report. TASK 1 P1 Apply appropriate frameworks to analyse the macro environment for a given organisation The macro environment of of firm is associated to external factors which influence the decision making as well as performance of organisation. Moreover, these components has a viable effects upon strategies that company willing to perform (Bentley, Omer and Sharp, 2013). Moreover, this is also helpful in understanding several external factors for making appropriate business strategies for firm. So, for the macro environment, the line manager of TESLA applied the PESTLE analysis for developing tactics for its business which are discussed below: PESTLE analysis It is defined as the framework that is applied for observing as well as researching various environmental elements which effect the business performance. Also, it is utilised whenever firm desired to initiate a new enterprises or enter into internal market. So, the line manager of TESLA performed the PESTLE analysis that are explained below:Political factors:This is the factors that highlights the countries political environment which effects the tactics as well as strategies adapted through organisation. It is the factor that consists instability, labour law, international trade policy and many more. As the UK is governed through the parliament system. This isfair, stable as well as render 1
opportunity to enterprise in order to expand their business into another country. In relation to TESLA, they are performing within UK that is a opportunity to extent their business into another area due to proactive government, political stability and others. As this operates into auto mobile manufacturing industry that has stability into political situation for more production. There are few negative impact due to Brexit as it may reduces their sales.Economic factors:It is the economic performance that consists exchange rates, economic growth and others. The UK economic position is stronger in comparison to others. In context of TESLA, they have more chances for growing its business into another part of respective country. The many opportunities which is available for them are maximisation in foreign direct investment, fifth highest GDP and so on. The negative impact of exploring its business is for spending large amount of wealth upon free open work as well as money aids into slow recovery from recession.Social factors: This aspects consists values, customs, demographic characteristics and so on (Bharadwaj and et. al., 2013). As United Kingdom have higher social standards that leads for effective situation to TESLA in order to operates its business effectively and efficiently. It consists of 64.1 million densely populated places that have higher standard as well as cheap personnel which aids chosen firm to increase its profitability and business as well.With raise into education cost, less individuals purchase TESLA products as they give more preferences to study other than anything else. Therefore, this is crucial for firm to undertake respective elements for more profitability.Technological factors:In this whole technological innovation as well as advancements are included. United kingdom is known as the more economically developed country (MEDC) that has huge entry for applying new innovation. This have optimistic effects upon TESLA due to experiences into informations technology, creativity skills and many more. This factors effects respective organisation in respect of slow technological developmentincomparisontoU.S.So,TESLAhaveopportunitytoexpandits enterprises into particular market for accomplishing customers requirements effectively and efficaciously.Environment factors:This factors is essential due to enhancingshortage of raw materials, pollution targets etc (Bharadwaj and et. al., 2013). UK have developed 2
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effective improvement into environmental factors in order to minimise pessimistic effects to business. Respective country is going through the issues related to weather condition which effects company production. TESLA is so much effected by such aspects as they have its own indoor area for manufacturing auto-mobiles, electric cars. It is effected through UK weather for demand unit that results in delay into delivery. Legal factors:The many regulation involves patent, copy rights, and many more. It assists to perform business practices in ethical way. There are many legislation that have executed through UK government to operates successfully at market area. TESLA have to comply whole regulation while producing its products like auto mobiles in order to obviate punishments. It develops consumers loyalty towards enterprises and its practices that they are doing into market area effectually (PESTEL analysis of the UK. 2017). So, the above analysis aids TESLA formulating strategies as well as plans in order to perform the business practices appropriately fro accomplishment of goals. Thus, the chosen company have to prefer whole these factors for effective results.Also, from the above analysis this also seen that the macro environment impacts the entities positively as well as negatively. The positive aspect, respective organisation can able to expand their business into market areas as well as it have to comply all the legislation in this business and if they don not do so then it will impact their business negatively. TASK 2 P2 Using appropriate frameworks analyse the internal environment and capabilities of a given organisation This is essential for firm to do internal environment research as well as abilities for formulating plans fro attainment of goals with the utilisation of techniques, procedures and many more (Ghezzi, 2013). So, the TESLA line manager have to examine internal environment to know about strengths, weaknesses, opportunities an threats consequently they formulate plan of action to attain profitable. Therefore, they utilises SWOT analysis for internal environment and VRIO analysis to ascertain organisational capabilities which are discussed below: SWOT Analysis of Tesla- As per the view point of DacTeoli and Jason, it is the business strategy tool which is utilised to evaluate how an entities compares to their competitors. 3
Strengths:Tesla is one of the industry leaders in quality and technology with complete focus on electric cars. The brands is well known and popular among people and has a strong brand equity. Tesla offers a business model that is not only unique but the product concepts offered are also new. The brand has positive strategic partnerships with brands like Panasonic. Tesla is famous among younger age groups as these are the people who are most active on social media. The company is also one of the top employer companies in the world and dominates the sale of electric vehicles in the US.Weaknesses:Tesla has a limited production volume of its products and the products not well differentiated. The brand is may be popular in niche markets but has a low awareness in the mass market. With other brands being dependent on various suppliers, Tesla is highly dependent on single-source suppliers. The brand has prohibited sales in some sates in the US. Customers have to sometimes wait for a longer period of time because of delay in production. Tesla has been facing problems with the global extension of their sales network. The cars manufactured by Tesla have low economies of scale despite having high cost structure. The company is also completely dependent upon continuousinnovationsincetoughcompetitionisposedtothebrand(Hoejmose, Brammer and Millington, 2013). Tesla currently suffers from a limited presence in the market. Tesla has reported a decrease in its production rate due to a limited supply of batteries.Opportunities:The market is growing continuously and there is a continuous need for innovation and increasing oil and gas prices are making people shift their thoughts towards purchasing electric cars. The company has an opportunity of offering new lower- price models that will appeal to a wider range of customers. With the luxury market growing at an increasing rate, there will be customers who are willing to pay premium for Tesla's products. The company is in the planning stage to make its own battery cells. This move can be a game-changer as Panasonic is the primary supplier of battery to Tesla. This move will not only help the company increase its rate of manufacturing, but reduce the production cost as well. Threats:Aggressive competition is posed by brands from both self-driving technology and alternative fuel vehicles. There are brands who are not only planning to launch environment friendly vehicles, but also offering them at a lower price. This is a definitive 4
threat to Tesla as the company thrives on its unique value for innovative cars that are very expensiveandunaffordableformanypeople.Sincetheproductsareengineered complexly, Tesla's cars and other energy products have reported major flaws. There is a lack of trust from the Chines market. Tesla highly depends on the customers' willingness to adopt to electric vehicles. Currently, the company directly sells its products to consumers without any involvement of dealership that increases the selling prices. However, there are some states such as Virginia and Texas that prohibit direct sales of the company's products and requires such sales to go through dealership. VRIO analysis: This is considered as the portion of resource based view that is a perspective which analyse the relation among firm's internal characteristics as well as their performance. Moreover, it also the analytical procedures for assessing organisation's resources as well as identifying competitive advantage (Köseoglu and et. al., 2013). This is vital for TESLA to utilise VRIO for ascertaining resources as well as abilities efficaciously and effectually. So, the respective organisation capabilities are examine that are discussed below: Resources/CapabilitiesValuableRareImitableOrganisedImpact of Competitive Advantage Unique designYES---Competitive advantage Supply chain management YESYES--Temporary Competitive advantage Secured batteryYESYESYES-Not used Competitive advantage Proficient employeesYESYESNOYESLonger period Competitive advantage Valuable: TESLA have various valuable resources some of them are mentioned below:Unique design: The design formulated through respective organisation is innovative as well as eye catching for enhancing consumers to buy its goods for enhancing their profitability effectively and efficiently. 5
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Supply chain management:It is the valuable resource for TESLA as they supply its goods to potential consumers at targeted market area as well as on time. This aids them to accomplish their clients requirements for gaining higher profitability.Secured battery:The TESLA formulate battery which needed higher innovation as well as technology which assists in accomplishment of competitive advancement. Also, they has copyright of it so this is secured as no one can able to copy that. Proficient employees:It is considered as the most valuable resources of TESLA for attaining expected outcomes. They have skilful, creativeand talented workers for working performance. Rare:Supply chain management:It is rare resources of TESLA as they have adapted unique supply chain management in comparison to its rivals. It aids in accomplishing clients needs at specified time duration with effectual quality.Secured battery:TESLA utilises unique as well as superior quality battery for its auto- mobiles goods for meeting customers desires. This is considered as rare resources and can not be copied through other firms for its own utilisation. Proficient employees:The staff who are performing into TESLA are proficient, talented and creative in order to attain objectives efficaciously. With its skills, it may developed innovative products in simple manner for their clients. Imitable:Secured battery:As the battery produced through TESLA is so much creative which utilises advanced technologies that can not be copied through another one so it is secured. Through this resources, their objectives can be accomplished efficaciously. Proficient employees:This resources of TESLA is imitable as it can not be copied through anyone as their employees are very much loyal towards its organisation and so much dedicated and hard-working for working performance. Organized: Proficient employees:The respective organisation possess talented, knowledgeable staff for effective performance of working. It is the resourcesthat are organised when specific organisation adapt any modification into its operations or technology. 6
TESLA have performed SWOT Analysis for ascertaining internal surroundings that aids to identify business strengths and weaknesses. Like wise, VRIO analysis have conducted in order to get knowledge about its business abilities and resources for achievement of expected targets (Leonidou and et. al., 2017). TASK 3 P3 Apply Porter’s five forces model and to evaluate the competitive forces of a given market sector for an organization Porter's five force model is considered as the framework that is utilised to examine the competitive surrounding's of firm. It assist firm's manager to make effectual plans for attaining objectives efficaciously (Li and Tan, 2013). So, with the assistance of this TESLA may ascertain capable market area as well as competitive force. All the force are explained below: Threats of new entrants:It is refers as the force in which new organisation enter in market due to less regulations, legislation etc. TESLA so have less threats of new entrants as this produces. Upgraded as well as premium vale products like vehicles, cars and others. It havetargetedcertainrange of consumerto purchase goods. Thesmall organisation can not make same kinds of products. Thus, the treats of new entrants is very low. Threats of substitutes:This is refers as the circumstances in which there is secondary of product which are manufactured through certain firm at market area. This threats can be low and high. If the threats is higher consumers can easily switch to other goods. TESLA have low threats of substitutes as only few firms are manufacturing premium value of auto mobile so there is no option for purchaser to switch its requirements. Bargaining power of suppliers:This isrefers as the position in which facilitator have the power to bargain for product price at market. If bargaining power of suppliers is high then they charge high cost for poor quality products (Mithas, Tafti and Mitchell, 2013). So, TESLA suppliers have high bargaining power as it render premium as well as advanced technology resources to its enterprises. Herein, respective organisation have to pay what ever they charged through its suppliers. Bargaining power of buyers:It is refers as the circumstances in which buyers may alter goods or services cost according to its needs. In this, if purchaser bargaining power is 7
higher thereafter they want to superior quality products at lower cost as well as in respect of purchaser and in case power is low then it buy low quality at high price. For TESLA, the bargaining power of consumer is lower as they render premium quality goods through utilising advanced technology as well as targeted certain individuals group. Competitive rivalry:This is refers as the circumstances in which another firm rendering similar good or services at lower cost. This is vital for enterprises for understanding it rivalry in order to formulate appropriate decision for attainment of targets. All company have to face problems due to rivals in order to survive for long term. In relation of respective firm, competitive rivalry is very much high as various another organisation is also rendering similar kinds of products like Ford, BMW and many more (Tesla Inc. Five Forces Analysis (Porter’s Model) & Recommendations. 2019). Thus, the above Porter's five force model analysis will aids TESLA to ascertain the position into market area for developing effective strategies which help in accomplishment of objectives. This is crucial for them to examine all components of particular model for knowing thatsuppliers,buyerbargainingpower,competitiverivalry,threatsofnewentrantsand substitutes is high or low (Oestreicher-Singer and Zalmanson, 2013). TASK 4 P4 Apply a range of theories, concepts and models, interpret and devise strategic planning for a given organisation. The several theories as well as models which are utilised through firm for strategic planning development are explained below (Pisano,2015). TESLA has adapted two models such as Porter's generic and Bowman's extended model of strategy which are discussed below: Porter's Generic model: It is considered as strategy which basically concentrating upon attainment of competitive advantage at chosen location. The several forms of competitive benefits within this are discussed below: Cost leadership:In this strategy, company has lower level production at market area. It includes technology, scale of economies and many others. This aids in accomplishing cost benefits for respective organisation. TESLA has possibilities for attaining cost leadership in order to maximise inventory of industry and profit as well. 8
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Differentiation:In this strategy, firm become creative and render higher value to their consumers, TESLA have opportunity for adopting specific strategy in order to add unique features in its products for accomplishing their needs. The cost is high more innovative products. Focus:It is considered as the competitive advantage preferences within respective industry. This factors divided into two that are mentioned below:Differentiation:It is considered as strategy where TESLA has to seek for differentiation into target segment. This can be added upon innovation as they developed several products for their clients. Cost:With the help of this strategy, respective organisation can able to focused on accomplishing cost advantages in target segment. It is mainly focus on rendering products at low costs. In order to obtain advantages. So, the respective organisation have to use the differentiation strategy by implement unique ideas in order to attain the competitive advantage. Moreover, this can also used cost leadership strategy for taking corrective actions top reduce the cost. Bowman’s strategy clock This is considered as the model which is utilised into marketing for analysing competitive position of firm as compared to competitors offering (Razak and et. al., 2016). This have two dimension initial one is product price as well as another is perceived product value through brand. It is the model that have 8 positions which are discussed below:Low price and low added value:It is not so much competitive strategies as well as herein firm will keep its cost lower and so not facilitate premium valued goods to clients.Low prices:It is defined as strategy where firm can able to set low cost for products as well as tend to produced huge goods quantities. This can be utilised by TESLA so that they may produced higher volume of output.Hybrid:Herein, firm is formulating goods with moderate differentiation and product cost is also moderate.Differentiation:Herein, firm has to concentrate upon rendering higher values to its clients. With the help of this, TESLA can develop higher differentiation goods for perceiving values. 9
Focus differentiation:It is considered as the strategy which is used to facilitate high differentiated goods but only to chosen consumer segment. This intent is to provides products at high price levels.Risky high margins:With this, firm will set higher price for their products without providing any additional values to clients.Monopoly pricing:It is defined as strategies which is utilised when there is only one enterprises that deals into overall industry. This minimises possibilities of consumers to buy any another products. Loss of market share:Within this, firm sets moderate range of products price that have lower perceived value. As TESLA is manufacturing highly differentiated goods and facilitating higher product qualityforfacilitatingmoreperceivedvaluetoclients.So,fromtheabovestrategy Differentiation strategy is appropriate for TESLA for gaining profit and enhancing market share. Strategic Plan: Strategicmanagementplanningisdefinedasthedocumentwhichisutilisedfor communicating firm's objectives, strengthen operations, focus energy and many more. Moreover, it is the management plan which is formulated to develop and execute strategies (Reichand Benbasat, 2013). This will aids TESLA to attain objective efficaciously. Executive summary:TESLA is leading brands as they are planning to enter into new market so its SMART objectives is tolaunch products and services of firms within Tajikistan market in 2 years for enhancing profitability by 25%. Organisational structure:The organisational structure of TESLA is functional or U- form. Mission statement:The mission statement of TESLA is to speed up the transition of world towards sustainable energy. Vision:TESLA vision is to develop car that is very much compelling of century by driving world transition to electric cars. Values:Itsvaluesisto“Performeffectively,bearingrisk,constantlearningand environmental consciousness”. Portfolio analysis: This is performed through TESLA for identifying rising stars, digs and cash cows. BCG matrix are mentioned below: 10
BCGmatrixismodelwhichisestablishedthroughBostonConsultinggroupfor evaluating strategic position of business brand portfolio as well as their capability (Scholes and et. al., 2014). As they introduce their all products into new market as TESLAproducts such as Model S may enhance the sales. Hence, this may be the rising star in that market place. Moreover, the TESLA also manufacturing schedule for MODEL 3 so previously they struggle with the manufacturing of Model 3 so in new market also it may comes under Dog category. In addition to this, the Zero Emission Vehicle credits may be the cash cow as this needed for auto makers which a particular vehicles portion sold emit no greenhouse so it develops cars which run upon battery and may enhance sales into new market. Thus, ZEV is cash cow. SMART objectives: To launch products and services of firms within Tajikistan market in 2 years for enhancing profitability by 25% Resources implication: PARTICULARSAMOUNT(£) Raw materials100, 000 Promotion15, 000 Advertisements25, 000 Recruitment of more proficient staff50, 000 TOTAL190000 Evaluating and monitoring plan:Herein, the strategic plan are evaluated as well as monitored through the strategy which are expanded below: SAF strategy:This is established through Gerry Johnson as well as Kevan Scholes which is utilised for analysing strategic possibilities for TESLA.Suitability:It is mainly focused with problems which is associated to strategies of firm (Smith, 2013). This assists to examine either market develop as well as differentiate strategy is suitable for TESLA or not.Acceptability:This is related with desired as well as results from performance with strategies. It will aids in analysing financial aspects as well as preferences that fits with stakeholders. 11
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Feasibility:This aids in examining strategiesfeasibility through assessing internal strengths as well as weaknesses. Tactics:Products:It introduce the TESLA's products that is cars and other vehicles.Price: For introducing its products into new market the cost will incurred that is approx £190000.Place:The place in which the respective organisation plan to expand their business in Tajikistan.Promotion: In order to promote their new business into new market the respective organisation utilises various promotional tools such as social websites, twitter, Facebook and other.People: For their new business Tesla targets the people who are of middle and upper class.Process: The process that is adopted through respective organisation in order to expand their business inTajikistan are initially they are opening small ventures in that it only sell its vehicles. After sometime if all the things will go nicely then they started to manufacture cars in that area. Physicalevidence: As currently also the people only believe to whom who are presented in that areas so for this respective organisation are opening its new ventures. IMPLEMENTATION Money:It includes several practice which are based on money related terms as Budget, accounting, collection, funds and so on. In an organization, money is acknowledged as the use of money in order to achieve business objectives in effective manner. In context of, a new strategic plan money denoted as fund which are potential requirement of an organization for the effective implementation of its target strategies. Manpower:For a business organization, it is required to have a skilled workforce that provide a desired contribution in order to attaining target objectives of firm in effective manner. Thus, for attaining target objectives Tesla required to enhance capabilities and skills of their workforces in order to completed target objectives in productive manner. Methods:This element is describing a chain of several tasks in order to create, design and sell desired products and services to target customers. In respect of Tesla, best 12
appropriate methods have accessed by manager or superior authorized bodies in order to attain desired growth opportunities easily. Materials:It can be defining a tangible input that requires for the creation of good in order to providing quality services to customers as per their requirement and need. Machinery:In an organization both the tangible and intangible practices are processed by machinery or equipment. These are defining as large part that assist in creating finished good at desired level. Control and review: As respective organisation are opening their new business into new market so for this they are using process due to which various issues incurs such as more time consuming, more wastage etc. So, in order to review as well as control it they are using SAF strategy so that it can accomplish their objective effectively and efficiently. CONCLUSION As per the above report, it has been concluded that business strategy is the crucial aspects which is adapted through firm for maximising competent position and their offerings within marketplace. This is more importantfor company to examine the influencesof external environment that will permit them to devise effective strategies in order to maximise their development. Moreover, the internal environment evaluation is also crucial for assessing their strengths as well as weaknesses with their abilities which will aids to make future strategy. Moreover, models such as porter's five force analysis assists company for analysing industrial position. Apart from this, for effective strategic planning, the firm's management have to utilised several techniques as well as models such as porter's generic,Bowman’s strategy clockand others. This will aids to analysecompetitive position of firm as compared to competitors offering. 13
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